Category Archives: banking

The Upside of Falling Bank Stocks

Posted on July 15, 2008 by Felix

Financial stocks are plunging right now: if Fannie and Freddie can be brought to their knees, then no bank is safe. And falling bank stocks are systemically very worrying: the equity cushion is an important part of the way in … Continue reading →

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Paulson Bailout Has Very Limited Success

Posted on July 15, 2008 by Felix

The top headline on the front page of the FT this morning: US loans rescue passes its first test The top headline on the front page of FT.com this morning: US bail-out fails to calm nerves It’s not that things … Continue reading →

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The Astonishing Growth of Bank Deposits

Posted on July 14, 2008 by Felix

Paul Kedrosky finds this chart of total US bank deposits in a WSJ story about FDIC insurance. But step back a minute: just look at how total deposits have grown over the past ten years! Since 2000, bank deposits have … Continue reading →

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Bloomberg Buying Bloomberg?

Posted on July 10, 2008 by Felix

Blind trusts are popular with politicians: the idea is that the politician in question can’t have any conflicts of interest with respect to his investments if he doesn’t know what his investments are. As a result, you’re not going to … Continue reading →

Posted in banking, Media, Politics | 1 Comment

Valuing Investment Banks

Posted on July 9, 2008 by Felix

Heidi Moore has found a June report breaking down Lehman Brothers on a sum-of-the-parts basis: Lehman Brothers asset management alone is worth $8 billion if it is valued the same as its peers using a multiple of 20.1 times the … Continue reading →

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What is a Covered Bond?

Posted on July 8, 2008 by Felix

What is it about covered bonds which makes them so impervious to English? Hank Paulson had nice things to say about them today, but if you didn’t know what they were already, the WSJ explanation would hardly shed much light … Continue reading →

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Transparency: Sometimes Even Investment Banks Like It

Posted on July 7, 2008 by Felix

Gari has a question about the new disclosure rules surrounding credit default swaps. Basically, up until now they’ve been treated, for disclosure purposes, like derivatives, under FAS 133; as of November 15, they’ll be treated like guarantees, which come with … Continue reading →

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How Models Caused the Credit Crisis

Posted on July 7, 2008 by Felix

Ryan Chittum asks if we want to know what caused the global credit crisis, and suggests that if we do, we should "start here", with a 22-page report about subprime lender IndyMac from the Center for Responsible Lending and former … Continue reading →

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The Rule That Reduced Banks to a Quivering Blob of Matter

Posted on July 3, 2008 by Felix

Andrew Ross Sorkin’s article about Steve Schwarzman and FAS 157 is the gift that keeps on giving. First Barry Ritholtz took a swipe, then Jack Ciesielski attacked it forensically from a professional accountant’s point of view, and now Gari has … Continue reading →

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A Friendly Poaching

Posted on July 3, 2008 by Felix

We’ve seen the stories dozens of times: a second- or third-tier European bank gets the bright idea that it really needs to beef up its investment-banking business. But it can’t afford to buy an investment bank outright, so instead it … Continue reading →

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Quote of the Day: Jamie Dimon

Posted on July 2, 2008 by Felix

Jamie Dimon’s in Aspen right now, and Charlie Rose asked him last night about the amount he paid for Bear Stearns. I love the metaphor Dimon used in response: Buying a house and buying a house on fire are two … Continue reading →

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Private Equity in Hedge Funds: A Weird Combination

Posted on July 1, 2008 by Felix

File under "things which really don’t make a whole lot of sense": Lehman Brothers aims to raise $3 billion to $5 billion for a fund to buy strategic minority stakes in hedge-fund managers, according to sources at the bank. The … Continue reading →

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How Bear Died

Posted on June 30, 2008 by Felix

Bryan Burrough has a compulsively readable 10,000-word blow-by-blow account of the demise of Bear Stearns in August’s Vanity Fair. Go read it: it’s the best thing yet on what happened. And it does a good job of answering two of … Continue reading →

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Yes, Vikram Pandit Is a Robot

Posted on June 30, 2008 by Felix

Yesterday, going on the strength of a WSJ op-ed, I wondered whether Vikram Pandit was actually a robot. Turns out that yes, he is. Bess Levin has an email he’s sent out to every single Citi employee: You may have … Continue reading →

Posted in banking, leadership | 1 Comment

Is Vikram Pandit a Robot?

Posted on June 29, 2008 by Felix

I’ll leave to others commentary on any substantive points which may or may not have been made in Vikram Pandit’s WSJ op-ed on Friday; I’m more interested in his use of language. Here’s his first and last paragraphs: If there … Continue reading →

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The Citi Plunge Continues

Posted on June 26, 2008 by Felix

Citigroup is now worth less than $100 billion, and is trading at about 85% of its book value of $20.73 per share – $17.73, to be precise, at just after noon today. Goldman Sachs analyst William Tanona now has Citi … Continue reading →

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Have Any Bank Boards Done Anything Right?

Posted on June 26, 2008 by Felix

Francesco Guerrera and Peter Thal Larsen have a long and intelligent article on banks’ boards today. They point out that board members, the people with ultimate oversight over the multi-billion-dollar losses which have devastated the industry, have emerged all but … Continue reading →

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Why Wall Street Analysts Shouldn’t Own the Stocks They Cover

Posted on June 25, 2008 by Felix

The normally-astute Evan Newmark has gone a little crazy in his latest missive for Deal Journal: he’s decided that it would be an excellent idea if Wall Street stock analysts were to start trading for their personal accounts in the … Continue reading →

Posted in banking | 1 Comment

Illinois-Countrywide: Potentially Devastating

Posted on June 25, 2008 by Felix

I’m a huge fan of Tanta, but I think she’s either being far too dismissive of Illinois attorney general Lisa Madigan’s lawsuit against Countrywide, or else she’s being faux-naive. This case is a very big deal for Angelo Mozilo, for … Continue reading →

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How M&A is Getting Less Lucrative for Wall Street

Posted on June 23, 2008 by Felix

The M&A industry is struggling, now that financial buyers (private-equity shops) can’t snap up companies willy-nilly using cheap debt. On the other hand, if this morning’s news is anything to go buy, friendly strategic deals using equity rather than debt … Continue reading →

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Still No Vision at Citigroup

Posted on June 23, 2008 by Felix

Another day, another 6,500 job cuts at Citigroup’s investment bank. (For reference, that’s pretty much exactly the total number of employees that Salomon Brothers had in the early 1990s. Now, it’s just 10% of the investment-banking workforce at Citi.) But … Continue reading →

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Expanding Santander

Posted on June 20, 2008 by Felix

Europe has too many banks. Now that it has a single currency, the fact that each country is dominated by its own national banks is looking increasingly old-fashioned. And so it makes sense that, sooner or later, a genuinely European … Continue reading →

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Adventures in Acceleration, Goldman Sachs Edition

Posted on June 18, 2008 by Felix

If you’re a bond, being accelerated is not a good thing. If you’re a Goldman Sachs analyst, likewise. Analysts normally have a two-year gig, after which they go on to MBAs or some other job, but Goldman Sachs has decided … Continue reading →

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Has Einhorn Cashed In His Lehman Chips?

Posted on June 17, 2008 by Felix

If you haven’t read Hugo Lindgren’s piece on David Einhorn, go read it now, it’s excellent. I even like the way that Lindgren links Einhorn’s poker prowess to his short-selling abilties: A few days before this year’s conference in May, … Continue reading →

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The Long Crisis

Posted on June 16, 2008 by Felix

Jesse Eisinger reckons that America is cognitively incapable of understanding a long crisis as opposed to a short one: As a culture, we’ve gotten so good at disseminating and assimilating an idea and then moving on, that we can no … Continue reading →

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