The equity markets seem to have finally realized that conditions are ugly in the credit markets, due to get uglier, and the mess will pull down the real economy. And the bad news continues. The dollar index fell to a new low. Wachovia said the value of its subprime securities, largely “super senior” tranches of […]
Read more...The Wall Street Journal reports that investment bank UBS will be capping the cash compensation of the employees in its securities arm at a mere $750,000, with any additional amount paid in…..stock. The interesting part of UBS’s move is that it is making it so explicit within, and therefore outside the firm. I wonder whether […]
Read more...As conditions degrade from bad to worse at many Wall Street firms, the public is occasionally treated to explanations of Why Things Went Amiss. But firms usually provide detail only when they believe they can get persuade their chump shareholders that the problem is behind them. According to Morgan Stanley, the problem was stupid traders: […]
Read more...Royal Bank of Scotland estimated that investment banks will be forced to take $100 billion in writedowns as a result of the implementation of new accounting rules that restrict their latitude in valuing financial instruments that cannot be priced readily. Citigroup alone has $135 billion in so-called Level 3 assets, and that number rose by […]
Read more...The Financial Times appears to have broken a story (nothing similar yet on Bloomberg, the Wall Street Journal, or the New York Times), “Risk of securities fire sale mounts,” reporting that the structured investment vehicle rescue plan, the so-called Master Liquidity Enhancement Conduit (MLEC) is suffering from delays and failure to expand its support beyond […]
Read more...Various analysts and reporters took keen interest in Citigroup SEC filing Tuesday that revealed that the bank had deployed $7.6 billion of a total $10 billion liquidity facility to assist its floundering structured investment vehciles (SIVs), but stated it does not believe it has to consolidate the SIVs. CreditSights estimated that Citi’s losses on asset […]
Read more...This is a great post, “Why Market Leaders Don’t Listen to Investment Bankers,” by Charles Green at HuffPo. The set-up for this story is why it isn’t so dumb for companies to keep a lot of supposedly unproductive cash on hand. You can make similar argument for why companies shouldn’t divest their cash cows. A […]
Read more...The recent excesses of the financial services industry seem to be coming home to roost at the same time. Just when the arcane paper that sold like hotcakes a mere few months ago is now languishing in dealer inventories, so to is coming accounting treatment that gives the firms far less latitude in how they […]
Read more...The Financial Times reports tonight that if Merrill wants Larry Fink, the head of Black Rock, to become CEO, the price is probably $400 million. That’s the estimated cost of buying out Fink’s stake in the company, an necessary step, since would otherwise have an incentive to make decisions that favor Black Rock (Merrill now […]
Read more...A guy whose nickname is “the Hammer” might not seem a great fit with public service, where finesse generally goes further than brute force. So it isn’t a complete surprise that a Bloomberg article, “Paulson’s Focus on `Excesses’ Shows Goldman Gorged” by Mark Pittman, contains some harsh criticisms of the Treasury secretary. We’ve commented before […]
Read more...Breaking news over a weekend is rare indeed, so the financial press is having great fun with the demise of now former Citigroup CEO Charles Prince, speculating over his likely replacement and possible futures for the financial giant. Some are calling for a break-up, and news stories suggest that interim chairman Robert Rubin has long […]
Read more...The question posed in the headline isn’t exactly the one Gillian Tett and Paul Davies address in a long and worthwhile analysis at the Financial Times, “What’s the damage? Why banks are only starting to uncover their subprime losses.” But that’s because, as the piece make clear, we are only at the end of the […]
Read more...The New York Times has an odd piece today, “Where Did the Buck Stop at Merrill?” which seeks to determine whether the unexpectedly $8.4 billion third-quarter writeoff was not just former CEO Stanley O”Neal’s failing, but also one of Merrill’s board. Another shoe may be about to drop, since the Wall Street Journal claimed that […]
Read more...Maybe I am getting a bit burned out. I almost took a night off because I couldn’t get worked up as I normally do about the stories du jour. Yes, Chuck Prince is expected to resign on Sunday. I’m surprised he lasted this long. He was over when he made his now-infamous remark: When the […]
Read more...There is a very critical page one story in the Wall Street Journal, “Bear CEO’s Handling of Crisis Raises Issues,”wrapped in the veneer of balanced reporting, on Bear Stern’s chief James Cayne. Let me be clear about one thing: I am in no position to judge whether the charges made against Cayne are accurate. But […]
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