Category Archives: Investment banks

The Banks and Orwell

I continue to be amazed at the bank cheerleading in the press. Admittedly, article writers are not responsible for headlines, so I do not know who to hold responsible for this New York Times item, “As Stress Tests Are Revealed, Markets Sense a Turning Point.”. How much have bank stocks rallied since March 9? Declaring […]

Wells Fargo, Morgan Stanley, GMAC Plus Others Need to Raise Capital as Result of Stress Tests

The drip drip drip of stress test rumors is disconcerting, and I am perplexed at the logic. I could have seen leaks early on, to box the banks in, particularly since the markets are insisting on rallying on what ought to be bad news (and if you think the bank capital raises are over, I […]

Now It’s Official: Securities Industry Regulator Takes Care of Self, Not Investors

I really should be past being surprised at misconduct in the securities industry, but when it extends to supposed regulators, it is a clear sign that the entire system is hopelessly beyond redemption. The case example is FINRA. Some excerpts from its website: The Financial Industry Regulatory Authority (FINRA), is the largest non-governmental regulator for […]

A Conflict of Interest is Not a Conflict of Interest If It Involves Goldman

The “all animals are created equal, but some are more equal than others” logic appears to operate in full force as far as Goldman is concerned. Violations of normal rules of conduct are not merely tolerated, but are asserted to be acceptable. Now admittedly, the latest news tidbit, of former Goldman co-chairman Steven Friedman staying […]

Musings on Credit Default Swaps

As readers may know, I view the credit default swaps market with more than a bit of skepticism. I can point to cases where it has caused harm: 1. Bagholders. Dealers claim that CDS are really not bad at all because they haven’t been taking risk, oh no, they hedge their position with offsetting swaps. […]

Lewis Testified Treasury and Fed Pressed for Silence on Merrill Woes

Perhaps I am reading too much into a late breaking Wall Street Journal story, but inquiring minds do wonder. The Journal tells us that Bank of America CEO Ken Lewis told the New York attorney general’s office in February that he had been told by Hank Paulson and Ben Bernanke to keep quiet about deteriorating […]

Guest Post: Open Letter To The SEC Regarding Wall Street’s REIT Bait-And-Switch

Submitted by Tyler Durden, publisher of Zero Hedge Zero Hedge regularly gets visits from the SEC and FINRA, and we can only hope they are taking some of the troubling behavior we have identified seriously. Today’s case looks like a clear regulatory violation. A few weeks ago I noticed Merrill Lynch/Bank of America on an […]

Stress Tests Favor Big Trading Firms Over Regional Players

Since the Associated Press has not yet had its position on fair use defeated in court, you’ll have to go visit them to read the text of their “exclusive” story. It is a doozy. But by any standards, the broad outlines confirm yet again that crony capitalism trumps taking the best course of action for […]

Nationalization in Denial?

As this blogger and others have noted, the bank rescue programs have been designed to work around constraints more than to fix the underlying problem, which is a lot of bad debt that needs to be restructured and renegotiated, including the debt of the banks themselves. Instead, the boundary conditions have included “No more Lehmans”, […]

"Don’t set Goldman free, Mr Geithner"

John Gapper makes a fundamentally important point in his Financial Times comment today, that Goldman should not be permitted to wriggle free of TARP strictures by repaying the emergency backing of last November, at least not until Treasury has imposed structural reforms. Why? Whether Goldman formally has government funding or not, it has been designated […]

Wall Street Firms Looking to Circumvent TARP Bonus Caps Via Salary Increases

I know one can maintain outrage for only so long, and I find it deeply disturbing to look at the inability to rein financial industry pay in despite horrific results. If these people are so valuable, let them go to boutiques and prove it, where you eat what you kill rather than feed off a […]

On Traders Behaving Badly and Cognitive Bias

The Jim Cramer chatter precipitated by his Daily Show appearance included some links to an infamous interview Cramer gave in 2007, where he discussed how he would, as a hedge fund manager, push the prices of stocks he was short down via the futures market. It was arguably a public admission of market manipulation. What […]

Steve Waldman Believes Banking Industry Sick Since At Least the S&L Crisis

Steve Waldman makes some bold claims in tonight’s post: In two recent Surowiecki posts (here and here), Surowiecki points out that during the banking crises of the early eighties and early nineties, banks were arguably as insolvent as our banks are today, but hey, with a little time and without any radical changes, everything turned […]

Will Banks Start to Walk Their Talk? Don’t Hold Your Breath (Mark to Market Edition)

The new meme from big embattled banks, starting with Citigroup’s leaked Pandit memo yesterday and Bank of America CEO Ken Lewis’ declaration that the bank will be profitable in 2009, is that things will be OK and all this talk of nationalization is unwarranted. I’ll reserve judgement till the fat lady sings. The record of […]