Treasury is right to go long

Oct 27, 2009 15:27 UTC

Timothy Geithner wants to lock in low rates for the government while he can, extending the maturity of Treasury debt to 72 months from 49, a 26-year low.

It’s a smart move — if he can pull it off.

To do so, he’ll have to increase longer-term issuance by 40 percent, to $600 billion, according to FTN Financial estimates cited by Bloomberg. That could put pressure on interest rates, nipping the recovery in the bud.

It’s a risk he should take. The bigger risk is that the government continues to fund itself at the short end of the curve, requiring Treasury to roll over its obligations more frequently.

With short-term rates near zero, Treasury has drastically reduced interest costs by selling so much short-term debt. At a certain point it may have to do so in a less receptive market.

This week, Treasury plans a record $123 billion worth of issuance. A big buyer, meanwhile, is leaving the market: The Federal Reserve will exhaust its $300 billion purchase program for Treasuries once it buys another $2 billion.

Still, demand remains healthy. Monday’s 5-year, $7 billion auction of TIPS was well received. And at 3.52 percent, the current yield for the 10-year remains near historic lows.

Yet demand won’t be this strong forever.

For one, there’s demographics. As boomers age, more Treasury securities will be sold to finance retirements. The Social Security trust fund, the largest holder of U.S. government debt, will exhaust its surplus by 2016.

At that point, the fund will cash in its IOUs, forcing Treasury to borrow more. That sounds like a long way off, but those estimates assume an optimistic increase in employment and payroll taxes.

At the same time, recent Treasury data point to slowing demand for U.S. debt among foreigners (although a report from Barclays analyst Anshul Pradhan last week suggested that the data understate Chinese holdings by as much as $100 billion).

Retail investors, hedge funds and banks have stepped in to absorb much of the supply this year. But as tolerance for risky assets returns, even they might lose their appetite.

Staying at the short end of the curve also makes Ben Bernanke’s job more difficult. If inflation picks up or if an asset bubble arises, he may want to raise rates or sell securities to shrink the Fed’s balance sheet. Will he hesitate if Treasury is still flooding the market with paper?

So Geithner is right to seek balance sheet flexibility, and he should move quickly on his plan to extend the maturity of debt.

In the long run, however, what matters is getting spending under control. Confidence in the dollar will evaporate if we continue borrowing 5 to 10 percent of GDP every year.

COMMENT

Morning Links 10-26

Oct 26, 2009 14:12 UTC

Detroit house auction flops (Reuters) “Despite a minimum bid of $500, less than a fifth of the Detroit land was sold after four days.” The article notes that “total vacant land in Detroit now occupies an area almost the size of Boston.”

Underpricing risk: Rescuers fear Yuppie 911 (MSNBC) A parable for risk management in the modern age. Since the government has proved itself adept at rescues, folks across the investing spectrum end up in sticky situations they were never prepared to handle on their own. What happens when so many people end up in the same situation that the government’s rescue facilities are overwhelmed? What happens when contingent liabilities break the federal government’s balance sheet?

Rally fueled by cheap money brings sense of foreboding (FT) One of Gillian Tett’s correspondents thinks October ’08 may just have been a dress rehearsal for the crash to come…

The “benefit” of Somali pirates (channel4) Somali’s get to catch their own fish…

Great Depression-esque bad debt at US banks (Alphaville) A great post from Tracy Alloway, using Moody’s data.

Reckless strategies doomed WaMu (Seattle Times, ht CR) Part 1 of 2.

Geithner wides bills-to-bonds gap with new sales (Bloomberg) Smart. The average maturity for Treasuries had reached just 49 months recently as Treasury sold more short-term debt. Better to lock in low rates now to reduce rollover risk.

Installing Windows (imgur)

More U.S. children being diagnosed with Youthful Tendency Syndrome (The Onion)

Super cool…(funnier the second time through)

#100….and counting (+ charts)

Oct 23, 2009 21:42 UTC

Another failure in Georgia. And two in Naples.

#100

  • Failed bank: Partners Bank, Naples FL
  • Acquiring bank: Stonegate Bank, Ft. Lauderdale FL
  • Vitals: as of 9/30, assets of $66 million, deposits of $65m
  • DIF damage: $28.6m

#101

  • Failed bank: American United Bank, Lawrenceville GA
  • Acquiring bank: Ameris Bank, Moultrie GA
  • Vitals: as of 8/11, assets of $111 million, deposits of $102m
  • DIF damage: $44m

#102

  • Failed bank: Hillcrest Bank Florida, Naples FL
  • Acquiring bank: Stonegate Bank, Ft. Lauderdale FL
  • Vitals: as of 10/1, assets of $83 million, deposits of $84m
  • DIF damage: $45m

#103

  • Failed bank: Flagship National Bank, Bradenton FL
  • Acquiring bank: First Federal Bank of Florida, Lake City FL
  • Vitals: as of 8/31, assets of $190 million, deposits of $175m
  • DIF damage: $59m

#104

  • Failed bank: Bank of Elmwood, Racine WI
  • Acquiring bank: Tri City National Bank, Oak Creek WI
  • Vitals: as of 9/30, assets of $327 million, deposits of $273m
  • DIF damage: $101m

#105

  • Failed bank: Riverview Community Bank, Ostego MN
  • Acquiring bank: Central Bank, Stillwater MN
  • Vitals: as of 8/31, assets of $108 million, deposits of $80m
  • DIF damage: $20m

#106

  • Failed bank: First DuPage Bank, Westmont IL
  • Acquiring bank: First Midwest Bank, Itasca IL
  • Vitals: as of 8/31, assets of $279 million, deposits of $254m
  • DIF damage: $59m

This week’s bonus: a promotional video from Sheila….

One problem I have: It’s not fair to compare the number of bank failures during this cycle to the number in past cycles. As a % of GDP, the deposits in failed banks is far higher this time ’round:

(Click chart to enlarge in new window)

deposits-in-failed-banks

Yes, I include Citi, BofA and Wachovia in the failed bank bucket. None of them could have withstood last year’s crisis were it not for bailouts and ultra-easy money.

Also, it’s important to remind folks that the big four banks have grown significantly larger in recent years….

create animated gif

COMMENT

…one other thing, I know De Beers Diamonds were under scrutiny for antitrust, is there something similar for Bank Monopolies ?

Posted by Casper | Report as abusive

Is Fed’s choice tough enough?

Oct 23, 2009 19:44 UTC

An insider’s insider. That’s how Patrick Parkinson, the Federal Reserve’s newly appointed head of bank supervision and regulation, has been described.

A 30-year Fed staffer, Parkinson is a long-time defender of derivatives and an architect of Treasury’s proposal to give more regulatory authority to the Fed. His appointment is the latest indication that policy makers aren’t prepared to take bold steps to corral the banking sector.

Earlier this week, Bank of England Governor Mervyn King called it a “delusion” to believe regulation can prevent speculative activities from resulting in failures.

Like Paul Volcker, King says banks need to be split in half. The essential services they provide shouldn’t be polluted by risky investment banking activities.

American regulators, however, appear willing to settle for incremental reforms likely to perpetuate the status quo. Sheila Bair is intent on ending too-big-to-fail, but when I asked her at The Economist’s Buttonwood conference whether she would support policies to proactively shrink big banks she said: “No, I don’t know how we would do that.”

At the same conference, Larry Summers bemoaned the structural problems of banking, yet on policy he hedged: “Too-big-to-fail is too-big-not-to-be-regulated.”

Others, including Alan Greenspan, say too big to fail is too big to exist. (Greenspan, incidentally, calls Parkinson a “superb choice” for the job)

Daniel Tarullo, who heads the Fed’s committee in charge of bank supervision and with whom Parkinson will be working closely, also says regulation is the way to go.

If regulation is the path we’ve chosen, it would make sense to hire a strong regulator.

Yet “the credentials Parkinson brings are more political connections than supervisory savvy,” contends Fordham law professor Richard Carnell. “He’s the perfect senior staff insider to help cement the Treasury’s commitment to the Fed as systemic risk regulator. But does he have the savvy to supervise banks?”

A good question since bank regulation is an insiders’ game. “There’s no political constituency for bank soundness regulation until it’s too late,” Carnell says.

Good regulators lean against the wind, forcing banks to raise capital when times are good or restricting risky activities that put the system at risk.

Parkinson’s record suggests he’s unlikely to get tough on Wall Street. As Zero Hedge noted, Parkinson dutifully supported the Commodity Futures Modernization Act, which deregulated the derivatives market and sowed the seeds for last year’s systemic crisis. (A spokeswoman for the Fed declined to comment.)

This augurs badly. While Wall Street gets back to business as usual, Washington dithers with watered-down reforms that won’t interrupt the party. Those in charge have demonstrated a remarkable lack of courage in taking on the big banks. My hope is that Parkinson proves the exception to the rule.

COMMENT

Much worse than a 30 year old, the candidate is a 30 year “staffer” of the Fed.This is somewhat like handing command of the Navy, post Pearl Harbor, to a battleship admiral at the very moment your aircraft carriers have found the enemy fleet off Midway.

Posted by sangellone | Report as abusive

Lunchtime Links 10-23

Oct 23, 2009 18:59 UTC

Macklowe’s Worldwide Plaza Successor wrestles towering dilemma (Bloomberg) “The partnership [that bought Macklowe's busted property] paid $370 a square foot for Worldwide Plaza, while competitors paid $1,000 a foot or more for similar buildings at the height of the five- year U.S. property boom.” That means they can drop rents to $30-$50 per sq foot from $80-$100 that was common not long ago. That’s bad for CMBS holders and banks who own the debt on busted properties, but fantastic for folks in the real economy who suddenly have much more money to spend on things besides rent. But instead of allowing price adjustments like this to happen, policymakers scream “deflation” and institute all manner of spending schemes to prop up asset prices.

The payroll hidden in plain sight (AAO) A rare blog entry from accounting expert Jack Ciesielski.

John Meriwether is back, risk must be too (Ed Harrison) He blew up his first fund, LTCM, in the late ’90s. He blew up his second fund last year. Now he’s back for thirds. No doubt he’ll find some investors stupid enough to back him…

Man staged nearly 100 car crashes in cash scam (Reuters) Interesting gig.

Religion flowchart (holytaco)

Woman flashes $27k at bar, gets robbed (AP)

$13 an hour? 500 sign up, 1 wins job (NYT)

Cirque du Soleil trampoline practice (We get the point after a minute, but it’s pretty cool)

Afternoon links 10-22

Oct 22, 2009 19:53 UTC

CFPA clears house panel (Bloomberg) A step in the right direction.

More aid for Pakistan (Newsweek) But is the money doing any good?

Why mortgages aren’t modified (Ed Harrison)

How the current economy has affected dentists, vasectomies, guns and shark attacks (CoinbyCoin) A good video, though be careful re: his chart of “leverage,” which looks to me like excess reserves in the banking system. A better measure of the economy’s leverage is debt to gdp.

The problem is not TBTF, it’s TDTR (NakedCapitalism)

Court deals blow to owner of huge apartment complex (NYT)

Pay curbs are not the answer (Reuters) Ken Feinberg’s pay restrictions feel awfully good, but they aren’t enough (not least because only TARP assistance counts as extraordinary. What about TLGP!) What we need is a wholesale redesign of the financial sector. Probably impossible, unless the biggest banks actually fail and have to be rebuilt from the ground up.

Dick Bove says WFC a “standout” bank, downgrades to “sell” hours later (ZeroHedge) See the video for yourself.

Scary good Tom Cruise impression (YouTube)

Job posting: Charmin ambassador (Charmin)

Anvil shooting (for the guys…)

COMMENT

Being that Israel’s politicians want to change the rules of war so that they can order the killing of civilians, perhaps we could ask other alleged criminals what changes they would like in the criminal code.

Posted by colin dale | Report as abusive

Wells farrago

Oct 21, 2009 21:18 UTC

All seems well at Wells Fargo: a 60 percent jump in third-quarter earnings and an increase in its capital cushion.

Below the surface, however, the banking system is still sick, and its biggest players are not serving the credit needs of the economy.

“What we have is a bunch of dead banks that don’t want to lend money,” says Paul Miller, analyst with FBR Capital Markets. He points to the continued decline in net loans at Wells — $800 billion this quarter, down from $864 billion in December — as just the latest example.

“Everyone’s patting themselves on the back for saving the banking system, but all we’ve done is postponed the day of reckoning. And so lending is declining across the board because banks know they are sitting on major capital holes.”

In the real economy, this means banks are extending loans to busted borrowers, pretending that they will make good eventually.

And the government is supporting them wholeheartedly in their effort. The end result is a banking system that is making fewer new loans and pulling lines of credit in order to gird its collective balance sheet against the losses it knows are lurking.

In the end, productive sectors of the economy — in particular small businesses — can’t get credit.

Wells Fargo’s results and balance sheet confirm that there are still big issues to be worked out. The rise in net income was largely a function of hedging gains — $3.6 billion worth — which enabled the company to beat Wall Street’s expectations.

Also, a growing chunk of the bank’s interest income is coming from securities as opposed to loans.

Earnings will be under pressure for some time, according to Miller, because Wells has “fewer than five quarters of losses covered” by loan loss reserves. He thinks the bank’s future earnings could be significantly reduced by the need to rebuild them.

As for its capital position, while it’s good news that tangible common equity increased this quarter — to 4.7 percent from 4 percent — that still doesn’t account for off-balance sheet exposure, which in Wells’ case is north of $1 trillion, according to their last quarterly filing with the SEC.

Banks are supposed to account for this exposure beginning next year. Wells says it is bringing only $28 billion of “risk-weighted” assets back onto its balance sheet. Chris Whalen of Institutional Risk Analytics is concerned: “The economic reality is they’re on the hook to cure defaults and other problems on most of those structures.”

How they get to $28 billion, he doesn’t know, and since the company doesn’t do a regular conference call with investors allowing for questions, we’ll have to wait for the company’s next 10-Q filing to understand why.

There’s also the small matter of TARP. Wells has yet to pay back the $25 billion it received from taxpayers.

Last month, CEO John Stumpf told Bloomberg that he plans to pay it back in a “shareholder-friendly” way, which means he’ll try to earn his way out rather than dilute shareholders by raising new equity. That’s good for Warren Buffett, who’s the bank’s biggest shareholder, but it’s not good for taxpayers.

The bottom line is that Wells is far from out of the woods. Like the other big banks, it will continue protecting itself by nursing the balance sheet. As it does, the credit needs of the real economy will continue to go unfulfilled.

COMMENT

well said Andrew…

Don’t get me wrong, TARP should have never existed in the first place.

Posted by Bryce Carter | Report as abusive

Afternoon Links 10-21

Oct 21, 2009 21:15 UTC

MUST READ SPEECH–Mervyn King says to break up big banks (Bank of England) The head of the UK’s central bank says we should break up big banks. This is big news since King may actually be granted the power to do so next year when a conservative government stands to win power. Unfortunately, on this side of the pond, policy makers say that while TBTF is a problem, breaking up the big banks just isn’t practical. But it’s suddenly MORE practical if England is on board. Big bank will have a harder time arbing regulators if they work together!

Volcker fails to sell a bank strategy (NYT) A rare interview. Volcker again makes clear that he wants the biggest banks busted apart. He thinks, and he’s right, that we need a return to some form of Glass-Steagall, where banks are prevented from using insured deposits to fund risky activities like trading. Unfortunately, he has no influence in the administration as the last line of the article makes clear. (I’m particularly disappointed, since the big reason I endorsed Obama is that I’d hoped Volcker would play an active role. My bad.)

Fed’s new top bank supervisor supported CFMA (FutureNewsToday) That’s the Commodity Futures Modernization Act, which basically put the derivatives market beyond the scope of regulation. Ironic this guy gets promoted to chief bank supervisor a day after Frontline’s interview with Brooksley Born. Just another item to file under business-as-usual.

Rising debt a threat to Japanese economy (NYT) Stimulus fans take note.

Goldman Sachs’s Griffith’s says pay inequality helps everyone (Bloomberg) It trickles down!

Paterson pushes soda tax, again (NY Post) I like this idea. Governments need revenue. Makes sense to tax things that are socially destructive. Soda contributes mightily to obesity and diabetes. Hopefully Mayor Bloomberg revives the congestion tax for cars in NYC.

Time-lapse unemployment by state (WSJ, ht CB)

Store clerk accused of stealing winning lottery ticket (AP)

Cool skateboard trick (imagevat)

Wallaby comes to class, eats Cheetoh

COMMENT

Thanks for including my blog, Future News Today, in your list of links. The story of Patrick Parkinson’s links to CFMA has gone completely unnoticed by the MSM – with your exception of course. I actually thought I was the first to notice this, but after I published my story I found out Zero Hedge had beat me to the punch. In a case of spooky-action-at-a-distance, he had almost the same links as I had and highlighted almost the exact same passages. I will say that he just presented the links without a writeup, leaving it as an exercise for the reader to make the connections. While I tried to tie everything together explicitly.

And as you note in more spooky-action the Frontline report for that night highlighted exactly the CFMA and the Congressional hearings that Parkinson spoke out at. It also highlighted the President’s Working Group on Financial Markets where Brooksley Born was apparently chastised by Summers and Rubin for her insistence on regulating the derivatives markets. So Parkinson would have been present during those discussions. Ironic indeed. I watched that program just moments after publishing my post and felt like I was experiencing déjà vu.

Here is a wonderful article written by Washington Post writer Manuel Roig-Franzia back in May 2009 titled “Credit Crisis Cassandra: Brooksley Born’s Unheeded Warning Is a Rueful Echo 10 Years On”. It covers in greater detail much of the same information that the Frontline story does.

Tilson’s and Tongue’s slideshow

Oct 21, 2009 13:42 UTC

This is a slideshow that the folks at T2 Partners regularly update. This is the most recent version released this week. The pdf is too big to upload here, but you can get it from Scribd.

They also include a couple investment recommendations at the end. Use at your own risk.

BlogArt: Bankers and Pirates

Oct 21, 2009 02:48 UTC

Bank CEOs and/or managing directors would be a more precise target for this cartoon. But the point is taken…

bankerspirates

COMMENT

LOL!

Posted by DannyW | Report as abusive

Evening Links 10-20

Oct 20, 2009 22:48 UTC

IRS examining 100,000+ suspicious claims for homebuyer credit (WSJ) It’s a credit, which means folks without tax liability can get cash back from the IRS. Also, “taxpayers don’t have to file their claims as part of a real-estate transaction, and can instead” file/amend their 1040 to claim the credit, making it easier to commit fraued.

Congress waters down ratings agency legislation (Reuters) Ratings will continue to be referenced in federal laws, and a provision was scrapped that would have–for one year—prevented new employees from rating the debt of companies for which they’ve previously worked. But what did you expect?

The secret Paulson-Goldman meeting (Felix) Another excerpt from ARS’s book.

Massive furloughs in Chicago (CBS2)

Wall Street 40% bonus rise feeds spending on $43 steaks, co-ops (Bloomberg) Fed/Treasury policies mean we’re doing just fine in NYC, thank you very much……or are we?…..

NYC wages fall hardest of anywhere in the country (BLS, ht Business Insider) But these are average wages, not median wages. The fall off is due to a steep drop in bonuses in financial services.

Why the dollar is falling (Economist) A helpful summary.

How big is Antarctica? (twitpic)

Close call (Youtube)

Funny resignation e-mail (dump.com)

Anti-theft lunch bag (skforlee, ht JP)

“Are you a Predator that’s been fatally wounded? There’s an app for that” (imgur, ht Reddit)

Hi!

9px5t

The inflationary threat to stocks

Oct 20, 2009 19:01 UTC

Would inflation be good for stocks?

With the monetary and fiscal spigots open wide, some investors say equities are a good place to be. But David Einhorn of Greenlight Capital has warned that inflation could compress price-to-earnings multiples. A look back to history suggests his fears are warranted.

(Click chart to enlarge in new window)

p-e-and-cpi-chart

The Federal Reserve has lowered rates to virtually zero and expanded its balance sheet significantly, stuffing banks with excess reserves that are available to lend. If the market picks up, banks will find themselves surrounded by creditworthy borrowers again and excess reserves could quickly flow into the real economy, increasing inflation.

In the meantime, many analysts argue that the government is likely to keep printing money to finance runaway fiscal deficits and large unfunded obligations for Medicare and Social Security, increasing inflation.

The Fed will tell you that deflation is the primary risk facing the economy as the private sector continues to de-lever. And inflation is hardly guaranteed. There’s still time for the Obama administration to get America’s fiscal house in order and the Fed can choose to tighten monetary policy. Highly unlikely both, but nevertheless possible.

If inflation is in the cards, why might that be bad for stocks? One reason is that investors will pay less for future earnings.

Historically, according to Howard Silverblatt of Standard & Poor’s, investors have valued stocks of the S&P 500 at about 17 times earnings. If a company stands to earn a dollar per share in a given year then investors will tend to pay $17 for a share of its stock.

But if you add inflation to the mix, future earnings lose their purchasing power, which means investors won’t pay as much for them.

Einhorn, at the Value Investing Congress on Monday, said that if we wind up with significant inflation, distant earnings will be discounted at higher rates, meaning “P/E ratios will collapse.”

We see this relationship in action if we compare the average P/E multiple of the S&P 500 with inflation as measured by the Consumer Price Index. In the 1960s, when inflation was low, P/E multiples were high. In the 1970s, when inflation was high, P/E multiples were low. After Paul Volcker beat back inflation in the early 1980s, P/E multiples began a two-decade expansion.

To be sure, investors use expected inflation rates when discounting future earnings. That said, when building their models they tend to extrapolate the future based on the present.

Depending on its relative impact on revenues and costs, inflation may or may not be good for company earnings, but it will certainly shrink the multiple investors are willing to pay for them.

COMMENT

A fine theory Richard, but the increase in the discount rate of future earnings more than offsets any increase in earnings during inflationary periods.

What’s interesting to note is that during the ’70s, the earnings of the S&P 500 actually outpaced inflation, increasing from $1.80 at the beginning of 1972 to $4.06 at the beginning of 1982, when inflation finally moderated.

But what happened to stock prices during that time? They were flat. The S&P was at 102 on 12/31/71. It was at $122 on 12/31/81. So despite earnings that more than doubled, stocks were actually up only 20%.

Why?

Because the average P/E multiple for the index declined from 18 to 8.

Oh, and when Volcker moved to kill inflation, it hammered earnings by 25%. But the market saw inflation was declining and the P/E multiple again increased, so despite the fall in earnings, stocks were UP in 1982.

Posted by Rolfe Winkler | Report as abusive

Be wary of the gold trade…

Oct 20, 2009 18:01 UTC

Looking out a few years, I’m as bearish as anyone, I admit. But I’m a little worried that suckers could get caught in this gold rally. A hedge-funder I spoke with at the Value Investing Congress said half of the sessions were devoted to doomsday scenarios, precious metals, etc. Today there was a keynote from Eric Sprott of Sprott Asset Mgmt. Fully 70% of his assets under management are in precious metals, silver and gold.

But he’s been in the trade for 10 years. And Einhorn built up his gold position long before it leaped past $1000.

While I believe that gold is a good insurance policy to hedge sovereign risk, I think it could be some time before that thesis really plays out, before we max out the national credit card as it were. In the meantime, gold’s price could be highly volatile.

Right now, I suspect we could be seeing a lot of herding into gold as retail investors and other latecomers pile into the trade.

Folks inclined to jump into gold should be very careful here.

(As always: don’t make any buy/sell decisions based on anything you read in this space, nor construe anything written here as investment advice. You don’t want to anyway….I’m a shitty market-timer.)

COMMENT

gld broke out, big vol

bond funds took in huge bucks, too.

it’s when they pile out of bonds and into gold that you have to worry about it being too crowded.

i may have my facts wrong, but then so does obama

Posted by yo | Report as abusive

Jamie Dimon, 9/13/08

Oct 20, 2009 17:35 UTC

An excerpt from the introduction of Andrew Ross Sorkin’s new book Too Big to Fail:

At 7:30 AM on Saturday September 30, 2008, Jamie Dimon got on a conference call with two dozen of his top managers.

Like most people on Wall Street–including Richard S. Fuld Jr., Lehman’s CEO…–many of those listening to the call assumed that the government would intervene and prevent [Lehman's] failure. Dimon hastened to disabuse them of the notion.

“That’s wishful thinking. There is no way, in my opinion, that Washington is going to bail out an investment bank. Nor should they,” he said decisively. “I want you all to know that this is a matter of life and death. I’m serious.”

Then he dropped his bombshell, one that he had been contemplating for the entire morning. It was his ultimate doomsday scenario.

“Here’s the drill,” he continued. “We need to prepare right now for Lehman Brothers filing [for bankruptcy protection].” Then he paused. “And for Merrill Lynch filing.” He paused again. “And for AIG filing.” Another pause, “And for Morgan Stanley filing.” And after a final, even longer pause he added: “And potentially for Goldman Sachs filing.”

There was a collective gasp on the phone.

I’ve only just started it, but it’s a page-turner.

COMMENT

this is very interesting & incredible that our nations leaders financial as well as political were warned about the impending disaster that was going to happen
due to the way the national & international financial giants were controlling the markets “especially trading in derivatives” bundled mortgages. The Hedge fund brokers who made billions dealing in this World of make believe money.
Now ask yourself why nothing happends time after time when these same people and or their chosen replacements do the same thing continuously and never are held accountable. Wouldn’t that be unique.

Posted by JLawsonRealtor | Report as abusive

Brooksley Born on Frontline Tuesday

Oct 20, 2009 01:43 UTC

From PBS:

“We didn’t truly know the dangers of the market, because it was a dark market,” says Brooksley Born, the head of an obscure federal regulatory agency — the Commodity Futures Trading Commission (CFTC) — who not only warned of the potential for economic meltdown in the late 1990s, but also tried to convince the country’s key economic powerbrokers to take actions that could have helped avert the crisis. “They were totally opposed to it,” Born says. “That puzzled me. What was it that was in this market that had to be hidden?”

In The Warning, airing Tuesday, Oct. 20, 2009, at 9 P.M. ET on PBS, veteran FRONTLINE producer Michael Kirk unearths the hidden history of the nation’s worst financial crisis since the Great Depression. At the center of it all he finds Brooksley Born, who speaks for the first time on television about her failed campaign to regulate the secretive, multitrillion-dollar derivatives market whose crash helped trigger the financial collapse in the fall of 2008.

Born’s story is well-known, but it will be interesting to hear her tell it in her own words. If you can’t catch the show on PBS, it will be available online as well.

COMMENT

Other than AIG might not have screwed to such an extent if somebody was watching, explain how Born’s actual regulatory proposals would have helped avert the credit crisis of 2008.Good luck.

Posted by JCH | Report as abusive
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