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  Wednesday, 17 Nov 2010 | 12:47 PM ET

A Conversation About Put-Backs

Posted By: John Carney

The vast windows of the room had a terrific view of Central Park at night. It hardly seemed like the time or place to discuss the mortgage repurchase exposure of Citigroup, Bank of America and JP MorganChase.

But somehow the conversation had wandered in that direction.

“Here’s a good number to ponder—$500 million,” the young hedge fund manager said.

“What about $500 million?” I said.

“That’s the amount that Goldman Sachs spent litigating the Abacus deal with the SEC. A single deal gone bad. $500 million to wrangle with the SEC, and another $500 million in fines to settle the case.”

» Read More
  Wednesday, 17 Nov 2010 | 12:22 PM ET

Hey, Sheila Bair, What's Wrong With Accounting Anarchy?

Posted By: John Carney

One thing that has long escaped me has been the point of battles over accounting standards. In particular, I don’t understand why regulators get into arguments with the accounting standards boards over mark-to-market accounting.

FDIC Chairwoman Sheila Bair on CNBC'c Power Lunch
CNBC.com
FDIC Chairwoman Sheila Bair on CNBC'c Power Lunch

This morning Sheila Bair, speaking at a SIFMA conference, outlined the objections regulators have to proposals to adopt mark to market—otherwise known as “fair value”—accounting standards for financial instruments. Here’s what Bair said:

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  Wednesday, 17 Nov 2010 | 11:29 AM ET

Kiwi Investment Banker Shares Cancer Struggle—and Hope—on His Blog

Posted By: Ash Bennington

A prominent investment banker in New Zealand, recently diagnosed with lung cancer, has started a blog to share his story.

Cancer Treatment
AP
Cancer Treatment

It begins with an opening paragraph that can make you look at life a little differently:

"I have been through an intense health evaluation over the past 3 weeks \(arising from an orthapedic specialist spotting an abnormality in the bone at the base of my thumb which had been giving me a bit of discomfort\). This resulted in my receiving a diagnosis on Friday 29 October that I have lung cancer that has metastasised to other parts of my body \(Stage 4—and there is no Stage5\). That is the bad news."

» Read More
  Wednesday, 17 Nov 2010 | 11:02 AM ET

Gregg: The Case Against Monetary Populism

Posted By: Lori Ann LaRocco

The lame duck session of Congress that began on Monday will be the last Capitol Hill performance of one long-time deficit hawk, said Senator Judd Gregg of New Hampshire.

There will be plenty for Gregg to tackle in his last few weeks in the Senate: the battle over extending or ending the Bush tax cuts, a fight over earmarks, and attempts to reign in the Federal Reserve. We hit on all of this and more in our conversation.

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  Wednesday, 17 Nov 2010 | 8:47 AM ET

Government to Benefit for Oversubscription of GM IPO?

Posted By: Ash Bennington

Rising Tide of Anger at Germany over Bailout Obstructionism (Financial Times) No surprises in the first graf here: Everyone seems to agree on two things: 1) The Germans want bondholders to experience some pain; and 2) the official German explanation for why involves the language of 'systemic' concerns about sustainability: "German officials insist their campaign to get private bondholders to shoulder more bail-out costs is not just about domestic considerations. The government is more concerned that the current system—which condemns well-managed states to bailing out badly managed ones—is unsustainable." Straight forward enough. But graf two is very interesting: "But even some of those well-managed states have expressed anger at German tactics. Countries such as the Netherlands, Finland and Austria, all normally allies of Germany in economic governance issues, have raised questions about Berlin’s behaviour." How inscrutable indeed are those backroom discussions in Farnkfurt!

»Read more
  Tuesday, 16 Nov 2010 | 4:32 PM ET

Chris Whalen: California Will Default on Its Debt

Posted By: Ash Bennington

A Global Panoply of Ugly Tidings (BusinessWeek) Inflation in Asia. Debt Crisis in Europe. Here in New York, the Dow down 200. And commodity prices fall, presumably on demand fears. All in all, not a great day in the market.

»Read more
  Tuesday, 16 Nov 2010 | 4:24 PM ET

Economist Robert Shapiro Springs the Bad News about the Liquidity Trap

Posted By: Ash Bennington

Two short words can evoke terror in the heart of any true Keynesian: Liquidity Trap.

Dr. Robert Shapiro
Source: NDN.org
Dr. Robert Shapiro

I recently spoke with Dr. Robert Shapiro about the overall state of the economy —and the dreaded liquidity trap scenario. Dr. Shapiro was Under Secretary of Commerce for Economic Affairs during the Clinton administration, and the principal architect of President Clinton's 1992 economic program.

The formulas representing the liquidity trap concept are both dizzying and varied — but Dr. Shapiro breaks the idea down into a highly digestible form :

"You know you're in a liquidity trap when—no matter how low the interest rates are—lending doesn't occur. Or very little lending occurs."

That's really the crux of a very complex concept: When you're stuck in a liquidity trap, banks don't want to lend and businesses and consumers don't want to borrow.

So how does the liquidity trap scenario occur?

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  Tuesday, 16 Nov 2010 | 4:21 PM ET

State AG Robosigning Settlement Brewing

Posted By: Diana Olick

Sources on both sides of the 50-state attorney's general investigation into so-called "robo-signing" foreclosure practices tell me they are nearing a settlement. As Bank of America , JP Morgan Chase and Iowa Attorney General Tom Miller square off today before the Senate Banking Committee, the framework of a deal is taking shape.

»Read more
  Tuesday, 16 Nov 2010 | 2:58 PM ET

The Surprising Rise Of Hard Money Populism

Posted By: John Carney

There’s something new going on in Washington, DC.

Senate Committee on Banking Housing and Urban Affairs hearing during which Federal Reserve Board Chairman Ben Bernanke delivers second semi-annual report on monetary policy.
CNBC
Senate Committee on Banking Housing and Urban Affairs hearing during which Federal Reserve Board Chairman Ben Bernanke delivers second semi-annual report on monetary policy.

Under the usual rules of the politics of money, high unemployment results in criticism of the Federal Reserve from the left. The Fed is usually accused of having a monetary policy of being too tight when unemployment creates political waves.

The critics have traditionally been Democrats—such as banking committee chairs Wright Patman in the late 1960s or Henry Gonzalez in the early 1990s.

But monetary policy beyond the zero-boundary at a time of high unemployment has sparked off a tidal wave of criticism coming mainly from the right. On Monday we had the open letter to Ben Bernanke from a mostly conservative and Republican affiliated group calling for the Fed to stop its latest quantitative easing program.

» Read More
  Tuesday, 16 Nov 2010 | 2:42 PM ET

What is the Fuel of the Future for the US?

Posted By: Lori Ann LaRocco

On Wednesday, Senate Majority Leader Harry Reid is expected to put the Pickens Plan for energy independence up before the Senate.

The bill would create a 10 year plan to fund solar, wind and natural gas initatives. Also included in the plan are tax credits which are designed to speed up the adoption of vehicles running on natural gas. Reid's plan is slightly different than T. Boone Pickens' original proposal, which emphasized wind power (an area in which Pickens hads a substantial financial stake). Pickens later changed his plan—and his investment strategy—to include a broader array of alternative energy plays, including a larger role for natural gas.

Many on Wall Street and on the Hill doubt Reid's bill will pass because the relatively low price of oil has sapped the political drive for alternative energy. In fact, one of my energy contacts told me he is telling his clients his Pickens Plan "power play" is to buy more oil companies!

I decided to sit down with two people to get their perspectives on the plan. Gregory Boyce, Chairman and CEO of Peabody Energy, the world's largest private sector coal company, and Richard Soultanian, Co-President of the utility cost management firm, NUS Consulting.

» Read More

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  • NetNet is where you'll find the low-down and the high jinks of Wall Street. It's the place for insider stories, trader gossip, and tales of the foibles of the moneyed crowd and the culture of finance.Wall Street news and commentary served fresh all day long.

 

  • Jeff Cox is finance editor for CNBC.com.

  • Lawrence Develingne

    Lawrence Delevingne is the ‘Big Money’ enterprise reporter for CNBC.com and NetNet.

  • Stephanie Landsman is one of the producers of "Fast Money."

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