Rolfe Winkler

Bank of New York pays full price for small gain

February 2, 2010

By Rolfe Winkler

Bank of New York Mellon is growing – at a price. The giant trust bank on Tuesday agreed to buy PNC Financial Services’ back-office operations for $2.3 billion. That works out to 23 times annualized fourth-quarter 2009 earnings. That is a heady multiple for only a marginal boost in market share.

Lunchtime Links 2-2

February 2, 2010

Homeownership rate falls to 2000 level (CR) At 67.2% it’s still way overstated. Home “ownership” is a misnomer in cases when the owner has withdrawn mortgage equity or when the price of the home has fallen below the principal value of the mortgage. A better measure of homeownership, I think, is just to look at total owner’s equity as a % of household real estate. The most recent Fed Flow of Funds report (page 104, line 50) puts the figure at just 37.6%

Lunchtime Links 2-1

February 1, 2010

President’s budget (gpoaccess.gov)

Barney Frank: The poor should rent, not own (Indiviglio, Atlantic)

Citigroup said to plan sale of private equity unit (Keoun/Keehner, Bloomberg) Citi cites raising cash to pay down debt as the reason to sell this unit. Of course this would also get Pandit some brownie points with Paul Volcker, who wants commercial banks out of private equity, hedge funds and proprietary trading…

Obama’s blowout budget

February 1, 2010

Now that the worst of the financial crisis is behind us, one would think the budget deficit might start to come down. Actually, no. Obama’s proposed budget sets a new deficit record — $1.6 trillion this year compared to $1.4 trillion last year.

Bank failure Friday

January 30, 2010

#10

    Failed bank: First National Bank of Georgia, Carrollton GA Acquiring bank: Community & Southern Bank, Carrollton GA Vitals: at 9/30/09, assets of $832.6m, deposits of $757.9m Estimated DIF damage: $260.4m

#11

Spanish canary in the European coal mine

January 29, 2010

The quote of the day comes from Marc Chandler, currency strategist at Brown Brothers Harriman, who has graciously offered to let me reprint a note he sent today.

Lunchtime Links 1-29

January 29, 2010

Kohn, Bair warn banks about interest rate risk at FDIC symposium (Wutkowski, Reuters) The Fed says rates will stay low for an “extended period.” But that doesn’t mean “forever” so the Fed, along with other bank regulators, have warned bankers to prepare their balance sheets for higher rates. The populist line that banks need to “lend more” to get the economy going is just foolish. Regulators know the score: banks that lend too much at these low rates, or are using too much cheap short-term funding, will be caught out when rates head back up. Text of Kohn’s speech here. PDF of Sheila Bair’s here. (Bair’s speech is shorter and less wonkish)

Program note: Felix to interview Roubini

January 29, 2010

Reuters’ super-blogger Felix Salmon will be interviewing Nouriel Dr. Doom Roubini in Davos at 12:20 EST.

Splitting hairs on the Bernanke vote

January 28, 2010

In the Bernanke confirmation vote this afternoon, seven senators wanted to be seen opposing Bernanke but didn’t actually want to stop his confirmation. In other words, they wanted a campaign talking point, not an actual fight.

Gekko’s back

January 28, 2010

The trailer for Oliver Stone’s sequel to Wall Street.

Great cast too…in order of sheer coolness: obviously Douglas, toss up between Frank Langella and Eli Wallach, Josh Brolin, and Shia LaBeouf.

Lunchtime Links 1-28

January 28, 2010

Bernanke didn’t have staff support on AIG bailout (Ed Harrison) Ed has a copy of a letter from Rep. Darrell Issa, in which he claims Fed staffers weren’t keen on bailing out AIG. He wants another subpoena.

Geithner’s faulty apologia

January 28, 2010

Tim Geithner’s appearance in front of Congress today was another embarrassment, perhaps more for the people’s representatives than the Treasury Secretary. Still, Geithner offered a clumsy defense for paying out 100¢ on the dollar to AIG’s counterparties, which included more than Goldman Sachs.

Morning Links 1-27

January 27, 2010

Note: Apologies for no links yesterday. Busy day writing columns!

SEC to vote on new money fund rules (Johnson, WSJ) Unfortunately, the SEC won’t do away with $1 NAVs, price fluctuations will be published on a 60 day lag. So investors will continue to treat money funds as cash equivalents, even though they aren’t, and the systemic risk they pose won’t really go away.

Hayek vs. Keynes Rap Anthem

January 26, 2010

Two economic giants in a freestyle face-off. An instant classic… (ht Rej)