Bailout

Closing loopholes

Posted on December 10, 2009
Remember how Gary Gensler persuaded Barney Frank to close a big loophole in the derivatives-regulation legislation? I was hopeful then -- poor, naive soul that I am -- that the banking lobby had been effectively neutered on the loophole front.

The bank-recapitalization supertax

Posted on December 10, 2009
My colleague Peter Thal Larsen has an interesting take on the numbers associated with the UK banker supertax, and how a 50% tax on a £6 billion bonus pool can generate only £550 million in revenue:

Chart of the day, hedonic treadmill edition

Posted on December 10, 2009
Here's my favorite pair of charts from David Kochanek's latest hedge fund compensation report. The first shows how much people get paid, by job title:

Chart of the day: Credit card late fees

Posted on December 10, 2009
This chart comes from the Center for Responsible Lending's latest report on the latest tricks and hidden fees in the credit card industry:

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America?s broken colleges

Posted on December 09, 2009
Kevin Carey has a must-read and very sobering article on US higher education in the latest issue of Democracy. Basically, it isn't working, for the vast majority of people who consume it, especially if they're poor.

How investment banking is like a video game

Posted on December 09, 2009
Paul Kedrosky is nominally talking about a Swedish poker player, but really he could be talking about any number of i-bankers, hedge-funders, and private-equity types:

What happened to the W Union Square?

Posted on December 09, 2009
There are two reasons why it's hard to report clearly on things like the foreclosure auction of the W Union Square. The first is that there is a very complicated capital structure, which journalists have difficulty explaining. And the second is that it's really hard to resist ledes like this, in the WSJ:

Information consumption charts of the day

Posted on December 09, 2009
I love these charts, from a new paper (37-page PDF here) on how much information Americans consume each day:

Well done, Darling

Posted on December 09, 2009
To nobody's surprise, bankers are complaining about the UK's 50% supertax on their bonuses this year:

Counterparties

Posted on December 09, 2009
Simon Johnson slaps down Gerry Corrigan -- Baseline Scenario

Why homes aren?t investments, cont.

Posted on December 09, 2009
Do you ever get the feeling that you must be right about something just on the strength of how ludicrous people sound when they argue against you? Take this, in defense of housing-as-an-investment:

Counterparties

Posted on December 09, 2009
Mexico's Carstens moves from FinMin to Banxico. Where next, the OECD? -- Reuters

Chart of the day: The big banks get bigger

Posted on December 09, 2009
This chart comes from the Congressional Oversight Panel's latest report, and it's pretty self-explanatory. Here's the COP's gloss:

Did executive pay help cause the crisis?

Posted on December 08, 2009
Lucian Bebchuk, Alma Cohen, and Holger Spamann explain how executive pay at investment banks helped precipitate the crisis:

Information visualization of the day, unemployment edition

Posted on December 08, 2009
Latoya Egwuekwe deserves some kind of prize for this. Looking at the unemployment rate is one thing; really seeing it is another. Very, very well done.

Might the consumer banking revolution be coming?

Posted on December 08, 2009
I had a fascinating meeting this morning with Anil Arora, the CEO of Yodlee (a firm you've probably never heard of), and Josh Reich, of i2? (a one-man consulting shop you're very unlikely to have heard of). But at the end of it both Josh and I came out with a sense that maybe -- just maybe -- we might be near the cusp of the long-overdue revolution in consumer banking that millions of Americans have been waiting years for.

The Craggy Range strategy

Posted on December 08, 2009
Eric Arnold reports back from a blind-tasting wine stunt:

How banks fail at foreclosure auctions

Posted on December 08, 2009
Buying homes at foreclosure auctions is not for the faint of heart, and James Hagerty's WSJ article today does a good job of explaining many of the potential pitfalls -- up to and including finding concrete poured down the toilet. But what really puzzles me is the degree to which banks seem to be just giving money away here:

Counterparties

Posted on December 08, 2009
Krugman defends cap-and-trade -- NYT Let's levy a windfall tax on Goldman Sachs! -- NYT Why is Deutsche Bank raising its ETF fees? -- FT

Where else could Kashkari have gone?

Posted on December 08, 2009
A defender of Neel Kashkari writes in:

The Andy Warhol Foundation?s motives

Posted on December 07, 2009
If you have any interest in art-world machinations, Richard Dorment's account of the nefarious doings of the Andy Warhol Foundation is a must-read. But there's one bit which rings false to me:

Capping bank size

Posted on December 07, 2009
Simon Johnson joins in the chorus advocating a hard cap on bank size:

The economics of kissing-and-telling

Posted on December 07, 2009
Now that it's obvious that Tiger Woods has had affairs, why would he pay millions of dollars to buy silence from the "Tiger lilies"? What's the marginal cost to Tiger of the publication of explicit details about an affair, over and above the cost of the revelation of that affair in the first place?

Pimco picks up Kashkari

Posted on December 07, 2009
It looks like Neel Kashkari did manage to get that financial-services job by year-end after all: he's moving to Newport Beach and joining Pimco as a managing director in charge of "new investment initiatives" (which seems to mean, at least in the first instance, equities)...

Iceland?s long night

Posted on December 07, 2009
If you're wondering how well a country can function in the absence of a working financial system, it might be worth taking a look at Iceland, where GDP shrank 5.7% in the third quarter, with no expectation of a bounceback until 2011. And for all that Reuters's PR guru Jolie Hunt and others might love to go there on holiday, I don't think the tourism market is going to be particularly big so long as there's only 4...

Gold: The Glenn Beck indicator

Posted on December 07, 2009
Ken Vogel's very good article on the rip-off gold merchants sliming their way around the broadcast punditosphere never attempts to guesstimate the total amount of money that's changing hands here. But it's clear that the gold bubble is bringing out some most unsavory profiteers, who are singing up right-wing talk show hosts as spokesmen and selling not bullion but coins, which they can mark up to basically whatever they like.

The bailout profits

Posted on December 07, 2009
So, all's well that ends well, right? The government's making an $18 billion profit on its TARP bailout, or at least that part of it which went to the banks. (Never mind the $30 billion in losses on the money that went to AIG.) Kuwait has made $1.1 billion on its Citigroup investment -- a gift horse the Arab state decided not to look in the mouth, selling out at a profit now rather than trying to hold on for further gains...

Counterparties

Posted on December 07, 2009
Fortune's stocks picked to last through the 2000s -- Josh

Can ARMs be swapped to a fixed rate?

Posted on December 06, 2009
A friend of mine took out a 5/1 ARM in early 2005, which is about to reset. Lots of other 3/1 and 5/1 ARMs are resetting over the next couple of years, which is one reason it's important to keep interest rates low. The standard reset rate for a prime borrower is 1-year Libor + 225bp; with Libor at 1%, that works out at an extremely affordable 3...

Neel Kashkari, mountain man

Posted on December 04, 2009
Today's must-read is Laura Blumenfeld's tale of Neel Kashkari, mountain man, building a wooden shed in the wilds of Northern California:

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