It's wrong to say only banks were bailed out and the public was ignored. Here's how it all works.
Lehman Brothers
Markets Don’t Know What To Do If you’re a trader, running a position and inclined to make occasional knee-jerk buy/sell decisions based on economic news, what would you have done yesterday with these headlines: Producer Prices show inflation is less than expected, Industrial Production rose 0.5% in October, the most in three months, Capacity Utilization
Heard former Lehman bond trader Larry McDonald on Bloomberg this morning talking about financial reform. Below is his premise, and here’s a link to McDonald’s full regulatory analysis. Best part of the post is where he comments on each key component of the House/Senate bills that have to be reconciled. This Thursday, the-beginning-of-the-end of Wall
Current Financial Reform Bill Status The House-Senate conference committee is where the action will be on the Financial Reform Bill. Several key issues will have to be resolved there, including restrictions on derivatives trading by banks, mortgage broker compensation and yield spread premium, the proposed liquidation fund to be financed by financial firms and the
Lehman’s Aurora unit was well known for originating Alt-A jumbo mortgages—Alt-A was for lesser credit quality, lower down payments and limited income documentation borrowers. When credit markets seized, Aurora got in trouble and Lehman collapsed. Now as Lehman is engaged in asset sale activities, the Aurora unit could be gearing back up. They’ve got a
Ironically enough, it’s not all bearish as companies in all industries continue to fail. It’s a bull market for bankruptcy lawyers, as powerhouse firm Sidley Austin is reportedly receiving $1100 per hour to advise on the Tribune Company bankruptcy. This surpasses only Weil, Gotshal & Manges’s fees for presiding over the largest bankruptcy ever filed
As the money market fund industry continues to get hammered by withdrawals—about $500b has been redeemed by customers since August—the Fed is stepping up to provide up to $540b in loans to money market managers: The initiative is the third government effort to aid money- market funds, which in stable times are a key source
I walked into a Starbucks with a buy-one-get-one-free coupon for a Grande Latte. I handed it to the girl and she looked over at a little chalkboard that said, “Buy One, Get One Free.” “They’re already buy-one-get-one-free,” she said, “so I guess they’re both free.” She handed me my free lattes and I walked out
Four days ago, AIG had used $61b of it’s $85b Fed loan to meet cash needs in the short term and buy time for them to sell off some divisions of the company to raise longer-term money and regain some stability. Today, the New York Fed allowed AIG to tap $37.8b for additional short-term liquidity:
Morgan/Goldman Now Traditional Banks The last two remaining Wall Street investment banks gave up their relatively non-regulated status and are now commercial banks as the Federal Reserve approved Goldman Sachs and Morgan Stanley to become bank holding companies yesterday. The reason? Morgan and Goldman can now permanently borrow from the government, since banks can borrow
I was lying awake the other night, worrying about all of the debt on my credit card. The jet ski, mink socks, the ATV, my new plasma TV, ruby encrusted dog food bowl, surround-sound stereo – they are great, but darn they cost a lot. And then it dawned on me: it wasn’t my fault!
The US Consumer Price Index was down 0.1% in August and up 5.4% year over year through August versus being up 0.8% in July and up 5.6% year-over-year through July. Like last month, this was the largest YOY spike since 1991, and is due mostly to the oil price spike we had during early summer.
Never seems to go too long before republican presidential hopeful John McCain provides another completely valid reason for us to continue with our series on his economic policy meandering. Here’s what McCain said today … The fundamentals of our economy are strong. McCain said this today … one day after Alan Greenspan said this is
Consider this list of news for the week (even though it’s only Monday): Best Buy Co. agreed to buy Napster (digital downloading of music) for $121 million. Reddy Ice Holdings (the largest US manufacturer of packaged ice) suspended its quarterly cash dividend indefinitely and said it was undertaking a strategic review of its business. 5,000
Remember when the mortgage business was fun? People enjoyed their work, and the industry stayed out of the news? When your parents didn’t quite know what you did for a living? When rates mattered more than underwriting guidelines? When we thought that the worst was over – people would liken this to a baseball game
Credit Spreads What is a “credit spread”? It is a yield difference, usually compared to a US Treasury security with a similar maturity, which reflects the issuer’s credit quality. One indicator that the bank could be in trouble is the widening of its credit spreads, evidence that investors believe the debt is riskier. Washington Mutual’s
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