Rolfe Winkler

American Idol creator gambles on an encore

May 31, 2010

By Rolfe Winkler

Pop impresario Simon Fuller is ready for an encore. He wants his hit TV show American Idol back. This time it’s shaping up to be a duet, as Fuller has another deep pocket to join his own. The empire is bigger too, with image rights to Elvis Presley and Muhammad Ali added to the mix. But Fuller may yet come to regret a return to the same stage.

Bank failure Friday

May 28, 2010

Happy long weekend everyone!

#74

–Failed bank: Bank of Florida – Southeast
–Acquiring bank: EverBank, Jacksonville FL
–Vitals: assets of $595.3 million, deposits of $531.7 million
–Estimated DIF damage:$71.4 million

Morning Links 5-28

May 28, 2010

For some people, CDOs aren’t a four-letter word (Goldstein, Reuters) Great sleuthing from Matt. He tells the story of Donald Puglisi, who continues to make major bank as the rubber-stamp independent director for toxic CDOs.

Buffett warned Congress about derivatives…

May 27, 2010

…in 1982.

Fast forward 28 years and the Oracle dispatched lieutenants to Washington to fight sensible derivatives reforms that would have made it more expensive to maintain his $63 billion portfolio of them. Luckily the White House beat back the “Berkshire provision.”

Lunchtime Links 5-26

May 26, 2010

Fed’s next move could be reduced rate on dollar-euro swaps (Hilsenrath, WSJ) The Fed is charging so much that it discourages European central banks from drawing on the swap lines. That’s good. If we’re dealing with a liquidity problem, as opposed to a solvency problem, the idea is to lend freely, but at penalty rates, not market or below-market rates…

Lunchtime Links 5-25

May 25, 2010

Question of the day: Why is there still nearly $3 trillion parked in money market mutual funds? They yield nothing, they aren’t FDIC guaranteed, they CAN break the buck, and they’re less liquid than bank accounts. Thinking back to autumn ’08, when credit markets start to seize up, cold hard cash stuffed in your mattress looks more appealing. You can withdraw cash from a bank account, not so a money market fund. Not that I’m recommending that, it’s just that if you’re not getting any benefit by holding the money market fund, why bother? (401k money may be stuck, but others aren’t…)

Sunday reading 5-23

May 23, 2010

Must Read — Padded pensions add to NY’s fiscal woes (Walsh/Schoenfeld, NYT) Putting in overtime for a utility, and counting that as hours worked for the police force in order to pad pension payouts.

Bank failure Friday + teachable moment for investors

May 22, 2010

Just one small bank shuttered tonight.

#73

–Failed bank: Pinehurst Bank, St. Paul MN
–Acquiring bank: Coulee Bank, La Crosse WI
–Vitals: assets of $61.2 million, deposits of $58.3 million
–Estimated DIF damage: $6.0 million

Walking away without, er, walking away

May 21, 2010

LPS

Who says you can’t get something for nothing?

James Hagerty quotes interesting data from LPS Applied Analytics that shows banks struggling to handle the backlog of mortgage delinquencies are allowing non-paying borrowers to stay in their homes longer.

Lunchtime Links 5-21

May 21, 2010

Euro’s slide may give U.S. more rope to hang itself (Crane/Swann, Reuters) Great piece from my Breakingviews colleagues Agnes and Chris. Flight to the dollar helps keep U.S. borrowing costs low, but that’s a curse because it discourages us from dealing with our own debt problem.

Lunchtime Links 5-20

May 20, 2010

FDIC says things look great! (Wutkowski, Reuters) FDIC’s quarterly profile of the banking sector was full of good news. Loss estimates for failed banks are down; bidders are paying more for failed banks; the deposit insurance fund has plenty of cash and the problem bank list only grew a bit. In other words, there’s light at the end of the tunnel. Trouble is, that light could be a freight train in the form of higher rates or reduced government support for housing. As support is removed, to the extent it flows through to mortgage rates, we’ll see house prices head back down, giving the banking system more seizures…

Lunchtime Links 5-19

May 19, 2010

Consumer prices unexpectedly fall (Mutikani, Reuters) The Fed will view this as support for its low rate policy. But while consumer prices are falling, asset prices have been on a tear, taking a breather only after the Greek crisis erupted. The re-inflation of asset prices is investors’ response to low rates: they’re chasing risk. That encourages more bubbly lending, sowing the seeds of more violent debt deflation later.

Euro’s deep dive continues…

May 18, 2010

As of this writing, the euro is cliff-diving again. It’s now down near $1.22, a four-year low. The proximate cause of the sell-off is a German plan to ban naked short-selling in stocks and certain government bonds.

Lunchtime Links 5-18

May 18, 2010

Blackstone-led group drops bid for Fidelity National (Davies, Reuters) Probably smart. Even at $32 per share, the buyout shops would have paid nearly 9x this year’s anticipated EBITDA while deploying over 5x leverage. Doable, but not cheap. Yes, Fidelity National has stable cash flows to pay debt, but its business is not immune to business cycle hiccups. Meanwhile, FIS is going to lever up anyway to buy back shares.

Shock therapy

May 18, 2010

The “flash crash” in U.S. stock markets on May 6 shocked investors. As one response, it makes sense to coordinate circuit-breakers and other safety switches across trading venues. But the goal shouldn’t be to eliminate sudden drops. Markets are volatile, and smart traders build in a margin of safety. That’s a useful message that is reinforced by the odd surprise.