Rolfe Winkler

Afternoon Links 3-17

March 17, 2010

Google flips the bird at China (google.cn) Do a search on google.cn for “tianamen.” Those aren’t the image results you’d see if Google still cared about mollifying Chinese authorities.

Such a lovely place

March 17, 2010

Cross-posted from today’s NYT.

Wall Street’s closest link to the lyrics of “Hotel California” had been the indulgent pink champagne. But Senators Christopher Dodd and Bob Corker are bringing a more modern slant. A provision Corker added to Dodd’s plan to overhaul financial regulation stipulates that even if Goldman Sachs and Morgan Stanley, or other banks that received funds from the Troubled Asset Relief Program, check out as bank holding companies — they can never leave the Federal Reserve’s embrace.

Winding down

March 16, 2010

Regulators need to approach the notion of resolution with resolve. To avoid the next financial mega-collapse, like Lehman or American International Group, Senator Chris Dodd’s new bill for reforming U.S. financial regulation gives watchdogs powers to liquidate all big financial firms, not just banks. This resolution authority should be useful – if regulators aren’t tempted to keep firms afloat instead.

Lunchtime Links 3-16

March 16, 2010

Corporate debt coming due may squeeze credit (Schwartz, NYT) This is a big reason why quantitative easing — when it ends this month — won’t be gone for long. To avoid debt deflation, the Fed will be forced to absorb much more debt onto its balance sheet.

Lewis on his book on 60 Minutes

March 15, 2010

As Felix points out, Michael Lewis has done well in his new book “The Big Short” to describe how the subprime crisis was aided and abetted at the highest levels of finance. And in profiling some of the traders that made money in the process, he puts a human face on the short side of the trade. But Lewis pulls one crucial punch, in my view, undermining the value of the book.

Evening Links 3-14

March 15, 2010

Private equity’s Trojan Horse of debt (Morgenson, NYT) Great piece from Gretchen. Another example of private equity — in this case TPG and Apax Partners — taking cash out of a corporate balance sheet by loading it with debt. See also the case of Thomas H. Lee Partners and Simmons.

Bank failure Friday

March 12, 2010

Valley National got a package deal — they picked up LibertyPointe last night and got another tonight. Plus, don’t look now, but NYC is suffering a veritable wave of bank closures. Two in two days. These are the first in the Big Apple since 1999.

Fragile riches

March 12, 2010

This week was a positive one for paper wealth. Forbes reported on Wednesday that the average net worth of the world’s billionaires jumped 17 percent to $3.5 billion apiece. More mundane quarterly data from the U.S. Federal Reserve on Thursday showed that American households’ collective wealth rose 5.4 percent in 2009. Trouble is, governments everywhere are propping up markets and asset values, and recent increases in wealth could easily evaporate.

Bank failure Thursday

March 12, 2010

Generally you don’t see midweek failures unless everyone’s taking Friday off.

2,200 page train wreck

March 12, 2010

The just-released examiner’s report of the Lehman collapse reads like the financial crisis equivalent of the 9/11 Commission Report.

Lunchtime Links 3-11

March 11, 2010

Financial reform: Dead? (Wutkowski/Younglai, Reuters) Talks broke down over the consumer financial protection agency it appears. On the one hand it’s a shame reform can’t get through Congress, on the other hand what was under discussion was so watered down it deserve to be called “reform.” Regulators will be disappointed not to get resolution authority, on which they’d pinned their hopes of ending the “Too Big to Fail” paradigm.

Lunchtime Links 3-10

March 10, 2010

Obama foreclosure prevention plan lagging, new data shows (Nasiripour, HuffPo) More great work from Shahien….it appears someone on the Congressional Oversight Panel shared a letter written to them by Geithner in which the Treasury Secretary outlines the latest HAMP data. It doesn’t look good and just provides more evidence that only mods that reduce principal will work over time. As noted yesterday, it’s a very expensive proposition….see next link.

Lunchtime Links 3-9

March 9, 2010

Treasury getting more comfortable with principal write-downs, sort of (Nasiripour, HuffPo) Principal writedowns are the only sure-fire way to slow foreclosures, but that means hitting banks’ capital big time. Consider, for instance, that three-quarters of the ~$1 trillion of second-lien mortgages in the U.S. are on commercial bank balance sheets. Writing down principal to some level that again gives folks equity in their home would wipe out a meaningful share of these second-liens. Many banks may not have the capital to withstand that. And if folks think principal writedowns will become official policy, suddenly many will just stop paying their mortgage. These are big reasons this is so controversial inside the administration. Nasiripour has done a great job outing that controversy…

Quote of the Day

March 8, 2010

From reader CB:

Rolfe, as you likely know there is no cost of living increase in Social Security payments this year for the logical reason that there has been no increase in the cost of living.

Go for it Gary

March 6, 2010

Gary Gensler — regulator and, yes, Goldman alum — has distinguished himself in Washington. As CFTC Chairman, he’s fought to impose stricter rules on OTC derivatives and recently proposed rules that would cut the leverage currency traders are allowed to deploy from 100:1 to 10:1. Lest we all forget how dangerous leverage can be when traders misuse it, there’s LTCM to serve as exhibit A. In a clear sign that Gensler is fighting the good fight, traders are screaming about the proposed rule. Fantastic.