Wall Street banks may appear to be offering higher salaries to junior employees, but the increase may not be as generous as it looks.» Read More
Nicole Lapin, of CNBC's Worldwide Exchange, explains what she's long and what she's short this week.
"Crisis-Hit Banks Flooded Fed with Junk" (CNBC via Financial Times) I first wrote about the issue of collateral quality on Wednesday. The story continues, in today's Financial Times: "Banks flooded the Federal Reserve with billions of dollars in 'junk bonds' and other low-grade collateral in exchange for much-needed liquidity during the crisis, as the financial sector struggled under a crippling credit crunch, new data show". Watch for the details of just how bad that collateral really was to emerge over the next few days, as journalists and others continue to pore over the Fed's spreadsheets.
It will take some time to tease out the broader trends from the data; in the meantime, look for thought provoking anecdotes will drive the discussion. For example, the following: "Within a day of easing the collateral requirements, Credit Suisse had borrowed $1 billion from the PDCF, using it for the first of only two times, against a collateral portfolio that was made up of 91 percent equity. "
Bad Employment Numbers: 39,000 New Jobs—Economists Predicted Number 3.5 Times Higher \(CNBC via Reuters\) Bad Numbers: "Nonfarm payrolls rose 39,000, with private hiring gaining only 50,000, the Labor Department said. However, overall employment for September and October was revised to show 38,000 more jobs than previously estimated." The expectations were far higher: "Economists had expected payrolls to increase 140,000 last month and the unemployment rate to be unchanged at 9.6 percent." More raw data: "Employment in the goods-producing sector fell 15,000, weighed down by manufacturing payrolls which fell 13,000 and construction shedding 5,000 jobs. Employment in the private service-providing sector rose 65,000 in November, though retail hiring fell a surprising 28,100 despite expectations of a busy holiday season. The workweek was steady at 34.3 hours in November and average hourly earnings edged up 1 cent."
I regard prediction as something of a scandal. The world is far too complex and unpredictable for anyone to spend too much time forecasting. For the most part, it’s far better to forego fortune telling and instead figure out how you can be robust and agile enough to deal with unexpected shocks.
But when the shadowy benefactors behind NetNet’s infiltration of CNBC issued an edict requiring me to make five predictions for 2011, I set aside my qualms. My very first prediction involves the exit of one of the biggest guys in finance from the corner office. Click here to find out who and read the rest of the predictions.
Bank of America customers should ignore speculation that the bank could be the next target of WikiLeaks, the head of the FDIC said today.
We were so caught up with the Fed’s big document dump yesterday that we missed the important testimony about put-back risk given yesterday by Federal Reserve governor Daniel Tarullo to the Senate banking committee.
Tarullo message was very clear: the big banks have failed to properly reserved for put-backs.
Banks will be accused of employing discriminatory credit standards when making mortgages in a series of fair housing complaints that a national consumer coalition plans to file beginning next week.
The National Community Reinvestment Coalition plans to challenge the widespread practice of requiring borrowers asking for FHA-backed loans to have higher FICO scores than the minimum required by the FHA, according to a report from Ken Harney at New Times .
The FHA requires a minimum FICO score of 500. Borrowers with down-payments as low as 3.5 percent must have a score of at least 580. Borrowers with scores between 500 and 580 must put a minimum of 10 percent down.
Several banks require higher rates. At the start of 2009, many banks moved their minimum FICO score for an FHA backed loan up to 620. Wells Fargo and Bank of America recently raised their required score to 640. FICO scores run from 300 to 850, with higher scores supposedly indicating a lower risk of future defaults.
The trustee seeking to recover funds for the victims of Bernie Madoff’s Ponzi scheme is suing JPMorgan Chase for $6.4 billion. He claims that the firm profited from the fraud by acting as the primary banker for Maddoff's investment company.
Here's the official press release from the trustee:
The answer I suspect is this: Yes—but only in very small measure.
\(Let's not be grandiose, after all.\)
Despite the stock market’s relatively robust performance in 2010, this has been a bad year for active managers—in fact, as bad as it’s ever been.
Just one in four beat their benchmarks for the year, according to data from Bank of America Merrill Lynch, which said this is the “toughest year on record” for active management.
At the same time, the growth guys have mopped up the value guys, no matter what the world’s most famous value investor, Warren Buffett, says.
CNBC's Patti Domm and Jeff Cox discuss the jobs report and the current dilemma of long-term unemployment.
CNBC's Patti Domm and Jeff Cox discuss the recent GDP numbers and what factors have been affecting it.
Investors give and investors take away, and nowhere has that been more true lately than in value stocks.
Wall Street banks may appear to be offering higher salaries to junior employees, but the increase may not be as generous as it looks.
Investors may be warming up to the stock market, but they're taking the safe way in.
Here are the five best Wall Street movie villains of all time—and what they'd say about Yellen and the Fed if they were at Jackson Hole this week.