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Tag >> Finance
Jul 24
2009

How now Dow?

Posted by Ron F in RiskrecessionFinanceCapital

Ron F

Back in the early Nineties, I worked oh so briefly on Wall Street, where I was quickly introduced to the splendors of technical analysis. I've since forgotten them all except for the marvelous name of Fibonacci.

 But they've made an abrupt reappearance via this piece today.

Jul 23
2009

Frank would ban naked swaps trading

Posted by Ron F in RiskRegulationObama AdministrationFinanceDealsBanks

Ron F

I see that Barney Frank is open to the arguments we made here, and that's reassuring given the disaster that naked swaps created via AIG.

And I really can't fathom the criticism that Tim Backshall of Credit Derivatives Research is making here. That is, how does requiring that one party to a swap have an insurable business interest in the underlying debt prevent them from hedging their holdings?

Jul 23
2009

Goldman's bail-out doesn't end with warrant payments

Posted by Ron F in RiskRegulationObama AdministrationFinanceBanks

Ron F

As Yves Smith points out over at naked capitalism (scroll down), this FT article has a very misleading headline.

Yes, Goldman has paid 100% of the face value of the $1.1 billion in warrants it gave the Treasury in return for TARP funds, and that's more than J.P. Morgan is willing to cough back up. But Goldman is still getting taxpayer support in several important ways.

Jul 21
2009

CIT is the canary in the coal mine

Posted by Ron F in SpendingrecessionObama AdministrationFinanceCapital

Ron F

CIT's struggles say more about the economy than the big banks' ability to hang on via the Fed's feeding tube, not to mention the stock market's return from the depths on happy talk from CNBC and the like.

Reason I say that is this piece points out that much of the business CIT does is factoring retailers' receivables. And as goes retailing, so goes the economy. After all, no other sector depends so much on consumer spending, and that spending represents 70% of GDP.

Jul 20
2009

The Treasury seems to be missing a big zero

Posted by Ron F in RiskRegulationObama AdministrationFinancecomplianceBanks

Ron F

This pissing match would not be very enlightening except for one thing. Everyone seems to be assuming that the banks have paid back their TARP money, yet based on what the Treasury spokesman here says, the total returned to taxpayers to date amounts to a mere 10%, unless not all of that $700 billion has been spent, and I'm pretty sure most if not all of it has been.

So when the Treasury guy complains that Barofsky isn't counting right, and that the true the cost to the taxpayer is less than 10% of what he says it is, because he's not taking into account all of the fees that the banks have paid and the value of the assets that the Treasury has lent against, something tells me that Barofsky's numbers are closer to the truth than the Treasury's.

Jul 15
2009

Don't ask, don't tell: Why does the Fed gets a pass from reporters?

Posted by Ron F in RiskRegulationObama AdministrationFinanceCreditBanking

Ron F

I attended the Investors Working Group shindig today, and found the recommendations involving the Federal Reserve and credit derivatives compelling, as my previous post suggested.

But most of the other reporters in the room were skeptical the suggestions would get much of a hearing in Washington. And they may be right. As Jason Zweig of the WSJ put it afterward to ex-SEC chairman and co-chair of the group Bill Donaldson:  "I couldn't ask the obvious question, which is why, when everyone knows Washington is a fully paid subsidiary of the sell side, anyone expects it to listen to the buy side?" 

Jul 15
2009

Time to draw the line between speculation and hedging?

Posted by Ron F in RiskRegulationObama AdministrationFinanceCreditBanking

Ron F
I see that the FT has jumped the gun by weighing in on the financial regulatory recommendations by a group led by two former SEC chairmen. (The report issued by the group was embargoed until noon today, when the two, William Donaldson and Arthur Levitt, are scheduled to meet the press.)

While the article focused on the group's opposition to the Obama administration's plan to give the Fed more oversight, echoing the concerns I expressed the other day, it missed the recommendations on derivatives regulation that would go far beyond the administration's own proposal.

In a nutshell, the Investors Working Group would like to limit over-the-counter dealings in credit default swaps to those hedging an economic or "insurable" interest in the underlying debt instrument. And they aren't alone.

Jul 14
2009

Goldman's golden goose: Credit default swaps

Posted by Bill Gerneglia in RiskRegulationrecessionObama AdministrationFinanceDealscompliance, bankruptcy, Banking

Bill Gerneglia

By now everyone knows that Goldman Sachs' big quarterly profit came from trading. But trading what?

This analysis suggests that its pot of gold lies in credit derivatives. The bank's exposure to credit default swaps as a percentage of assets was a whopping 1,048% as of March 31, far and away the most of any big bank. (The bank with the second highest exposure, HSBC, clocked in at less than 500%. The percentage of assets devoted to CDS at J.P. Morgan Chase, which has the biggest absolute exposure, was 323%.)

Jul 14
2009

Why even discuss a CIT bail-out?

Posted by Ron F in RiskRegulationrecessionObama AdministrationFinanceDealscomplianceBanking

Ron F

These guys make a good point about the talks regarding CIT. If the big, no-strings-attached banking bail-out worked, then CIT can be allowed to fail without causing anyone a moment of sleep, no?

Evidently not. Why else would there be all this huddling? Yet the only other reason cited here is that because CIT traditionally lent to small business, it would seem unfair to bail out the Goldmans and Citis of the world and not CIT.

Jul 07
2009

Risk rewarded, and then some

Posted by Ron F in recessionFinancecomplianceCareers/ManagementBusiness practices

Ron F

There are those who say more regulation would do little to prevent financial crises, because greed always finds a way to circumvent rules.  

To them, I say take a look at these charts and get back to me.

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