Investors will get a little time to catch their breath after Friday's record-breaking Alibaba trading debut, but not too long.» Read More
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.”
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.
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:
A prominent investment banker in New Zealand, recently diagnosed with lung cancer, has started a blog to share his story.
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."
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.
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!
Two short words can evoke terror in the heart of any true Keynesian: Liquidity Trap.
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?
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.
There’s something new going on in Washington, DC.
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.
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.
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.
Even after the Dow and the S&P 500 closed at new all-time highs, closely followed contrarian Marc Faber keeps sounding the alarm.
Eugene Fama, the University of Chicago investing researcher, once again warned investors against the lure of active management.
Fares Noujaim, an executive vice chairman at Bank of America has left the company abruptly.