Hedge fund managers aren't concerned about the sharp price drops of Fannie Mae and Freddie Mac stock this week while waiting for a bigger payday.» Read More
Over the weekend, Joe Nocera of the New York Times accused the primer issued by four Republican members of the Financial Crisis Inquiry Commission of attempting to explain the crisis with dogma.
The Republican minority, fearing their view would get short shrift, pre-emptively put forward a CliffsNotes version of their theory of the case. In other words, they responded to a report that hasn't even yet been written, much less read and voted on by the members, Nocera wrote :
Now Peter Wallison, one of those four Republican commissioners, has fired back in a blog post titled Joe Nocera's Hypocritical Attack. He begins with attacking the idea of a pre-response:
The primer that I and three of my Republican colleagues signed sought to outline the major issues that we thought the Commission should address. It was not a reply to or a dissent from the report of the Democratic majority, which is still a work in progress. It was issued on December 15 because that was the date on which, under the law that established the Commission, its report was supposed to be issued, and the primer was released in recognition of this statutory deadline. It is now being used by the left to attack us as partisans for dissenting from the Commission's report even before the report has been issued. Nocera's article is an example of such treatment.
The dispute gets really interesting when it gets specific and substantive, however. Nocera argues that the story line in which the government helped create the housing bubble is wrong because it wasn't the government that pushed Fannie Mae and Freddie Mac into subprime lending. It was the market.
If chaos in the municipal bond markets is the big financial story of 2011 heaven help us all.
The story of weakness in the muni market is threatening to cross over into the mainstream media — just as the U.S. housing market story crossed when that bubble spectacularly imploded — like an economic supernova metamorphosed into a financial black hole.
60 Minutes did a layman's introduction last night to the budget woes faced by the states. (Meredith Whitney spoke on camera: She called the state debt issue "certainly the largest threat to the U.S. economy". ) The Wall Street Journal ran a piece this morning on the ongoing woes in muni-land. And The Financial Times Alphaville did a wrap-up today , linking to other troubling stories they'd done in the past.
So what is going on here?
If you're new to the topic, here's a summary necessarily stripped of nuance in the interest of concision.
Like seemingly everyone else in this economy, some of our individual states are in serious financial trouble.
Meredith Whitney predicts that we'll see 50 to 100 municipalities debt defaults next year. Experts within the industry are saying they can not reconcile her numbers with the situation they see on the ground. Some go as far as to say that her prediction does not make sense. First of all, when it comes to the number, my sources tell me that her numbers needs to be defined — are those muni's unrated? Rated? There is a big difference between the two and the spread of defaults is huge: 39 defaults that were rated vs. 1,400 unrated. Investors need to remember not all munis are the same in the 2.8 trillion market. I decided to sit down with Robin Prunty, Team Leader for State Ratings for S&P whose team recently did an extensive report on the health of the muni market.
CFO's commit accounting fraud because of greed and because of pressure from their bosses.
The Wall Street Journal has revealed the identity of the government's cooperating witness CW-2.
According to the article by Susan Pulliam, CW-2 is Karl Motey — a 46 year old technology analyst who runs Coda Group, a research firm in Los Altos, California.
The Journal cites a "person familiar with the matter" as the source of the revelation: Neither Motey, nor the FBI, nor the Manhattan U.S. attorney's office would comment.
The Journal reports that "Mr. Motey [is] near the center of the action in helping federal authorities develop evidence to bring charges" We already know about the witness, identified as CW-2, from the government's complaint.
The WSJ reports that: "A key cooperating witness working for the U.S. in a major insider-trading investigation made more than 60 calls with corporate managers, seeking to gather evidence for the government…"
Animal rights radicals have been harassing Goldman Sachs employees in Washington, DC, according to a lawsuit filed in a DC Superior Court.
The radicals are members of two groups Stop Huntingdon Animal Cruelty (SHAC) and Defenders of Animal Rights Today and Tomorrow (DARTT). They accuse Goldman of earning blood money and torturing puppies.
Goldman filed a complaint alleging that the SHAC and DARTT members have been showing up with bullhorns and placards alleging that Goldman murders dogs. They've also been showing up at the home of Michael Paese, Goldman's head of government affairs.
The suit seeks a permanent injunction against members of the group from committing violence, trespassing or making threats against Goldman employees.
Citigroup analyst Jessica Fashano, 27, jumped to her death from the roof of the Trump Place apartment tower on Riverside Boulevard yesterday.
Why she chose the Trump building, where she did not live, is among the many unanswered questions surrounding her death.
A woman who is a resident of the building reported seeing Ms. Fashano in the elevator: Fashano reportedly asked the woman how she could get to the roof.
Executives at Lehman Brothers and Ernst & Young should breathe a sigh of relief upon hearing the news that New York prosecutors are planning to file civil fraud charges alleging the accounting firm was complicit in misleading investors in the investment bank .
The charges will reportedly arise from Lehman's infamous Repo 105 transactions deals that Lehman allegedly put in place to make its balance sheet look healthier at the moment it was reporting its quarterly results to investors. Basically, Lehman said it was selling assets in deals that were really nothing more than short-term loans. The bankruptcy examiner highlighted these loans back in March.
Why should executives at Lehman and Ernst & Young be relieved?
The decision by the European Union last week to create a permanent bailout fund may not end the sovereign-debt crisis but it will—eventually—end the European Union as we know it.
The idea behind a common currency was to allow free trade and investment between European countries without the risk of competitive currency devaulations. It was supposed to make Europe more inviting to global capital and credit investment. It was an attempt to create monetary stability without the imposition of a centralized fiscal and political regime.
All of these were noble goals. But the attempt has failed.
The permanent bailout fund will create moral hazard, inviting euro zone members to engage in budgetary brinksmanship and free-riding that will make bailouts more likely. To ameliorate the moral hazard—and to satisfy the demands of the Germans—the Europeans promise that the bailouts will come with “strict conditionality.”
JPMorgan's chief U.S. equity strategist, Tom Lee, said that a "construction boom" seems imminent and should boost stocks.
Global investment management firm Pimco underperformed its peers last month, according to estimates by data tracker Morningstar, following internal strife at the company.
A lot of people think of it as an Old Boys Club but the truth is, Wall Street likes to hire 'em young, says former trader Raj Mahal.