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  Thursday, 4 Nov 2010 | 3:59 PM ET

Bachus: Ending the Bail Out of Fannie and Freddie

Posted By: Lori Ann LaRocco

Change is in the air in Washington and we are hearing more and more from the GOP leadership their plan to get America back on the path to prosperity. One of the top House Republicans who will take the lead in shaping Wall Street reform is Representative Spencer Bachus (R-Alabama).

Bachus is expected to be named Chairman of the Financial Services Committee when the Steering Committee meets in December. An outspoken critic on the Administration's spending and policies, Bachus took the time with me to lay out his plan on reforming the financial services industry.

» Read More
  Thursday, 4 Nov 2010 | 2:38 PM ET

Flaws Revealed in Citigroup's $50 Billion Loan Pipeline

Posted By: Ash Bennington

The flaws in the pipeline through which Citigroup moved mortgages into mortgage-backed securities may create far more opportunities for investors to demand their money back than the bank is expecting.

Citigroup
Mark Lennihan
Citigroup

In our article Tuesday , John Carney and I wrote about loan acquisition channels at Citigroup. Based on description of the flaws of those channels, we believe that Citi is far more exposed to mortgage put-backs than is commonly thought.

A mortgage put-back occurs when an investor in a mortgage-backed security successfully demands that a bank repurchase the underlying mortgages that do not adequately satisfy the representations and warranties the bank made about the mortgages when it originally sold the security. A bank can be forced to repurchase the mortgage at par under certain circumstances.

Citi says our view has "absolutely zero basis in fact." So let's take a deeper look at just one of their loan channels to examine Citi's potential exposure.

In April of 2010, former Citigroup executive Richard Bowen testified before the Financial Crisis Inquiry Commission \(FCIC\) . Bowen's testimony under oath before the FCIC reads like a roadmap to Citi's correspondent loan acquisition channels, and has been invaluable in our understanding of Citi's loan acquisition process.

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  Thursday, 4 Nov 2010 | 1:15 PM ET

Gold, Silver & Why Paulson Hearts Bernanke

Posted By: Lori Spechler

Gold investor John Paulson should send Ben Bernanke a nice present this holiday season. The yellow metal is off to the races due to the $600 billion in QE2 announced yesterday. Not unexpected, the result is still a weaker dollar and buying in all the so-called precious metals: gold, silver, platinum and palladium.

Gold Bars
AP
Gold Bars

And John Paulson, the hedge fund manager who made billions in the mortgage meltdown, is long not just gold but gold stocks. According to this article by someone named John Carney , Mr. Paulson has an 11.3% stake, or 39,911,282 shares in AngloGold Ashanti at $32 per share. At today’s stock price, that one position has made over $930 million.

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  Thursday, 4 Nov 2010 | 12:40 PM ET

Goldman Compensation Down 26%...But It's Still Better Than the Rest of Wall Street

Posted By: Ash Bennington

The mood at the Park Avenue Ferrari dealership may be more dolorous than usual this bonus season. Traders may be about to take a big hit .

Historically, Wall Street traders have received the highest bonuses on The Street; this year, with trading profits down 12% so far, there may be some belt tightening by the boys and girls on the trading desks.

At Goldman Sachs , where most revenue is generated by trading, there has been a 26% reduction in average compensation for the first nine months of 2010. Still, in relation to the other big banks, Goldman is set to pay out the largest dollar figure amount in total compensation, according to the article cited above: a total of $387,655 in total compensation per employee.

\(If $387,655 doesn't sound like enough cash to lead the lifestyle of a Goldman Sachs trader, fear not: the money isn't distributed equally.

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  Thursday, 4 Nov 2010 | 12:11 PM ET

Britain Holds Steady: Rates to Remain Unchanged, with No New Easing

Posted By: Ash Bennington

One day after the U.S. Federal Reserve announced a decision to spend an additional $600 billion on easing, The Bank of England has opted to leave rates where they are , and not to escalate its own quantitative easing policy.

The growth situation has been gradually improving in the U.K., posting a reasonably strong number of .8% this past quarter. But inflation is well ahead of the 3.1% annualized target. And there have been warnings from retailers that higher raw goods prices are beginning to creep into the price of finished products.

It's worth remarking that, overall, fears of inflation are higher among the British people than they are in the United States.

In the mid-1970s, The U.K. experienced a ruinously high inflation rate of nearly 25% per year — and that memory is deeply seared into the DNA memory of the British public. Even at its worst — during the miserable malaise era of Jimmy Carter — inflation the United States remained well under 15%. That's nearly 10% lower than what the British had endured just a few years earlier.

Perhaps we have lessons to learn from our stoical brethren on the other side of The Pond?

»Read more
  Thursday, 4 Nov 2010 | 11:44 AM ET

Blanche Lincoln Is Gone. Will Dodd-Frank Derivatives Rules be Next?

Posted By: John Carney

The hard fought battle last summer over derivatives regulation reform may be about to be replayed—but this time one of the strongest proponents of stricter legislation will be absent on the field of battle.

U.S. Sen. Blanche Lincoln (D-AR)
Getty Images
U.S. Sen. Blanche Lincoln (D-AR)

Democratic Senator Blanche Lincoln became a staunch advocate of derivatives reform while facing a primary challenge from her party's left. Many thought that she would soften her stance on derivatives following her primary victory, especially because even many Democrats thought her proposals went too far.

Instead, she stuck to her guns, proposing amendments to Dodd-Frank that limited the ability of banks to engage in proprietary trading of derivates, forcing them to spin-off or separately capitalize derivatives trading desks. A slightly modified compromise version of this proposal made it into the final bill, albeit with an implementation time table that stretched out for years.

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  Thursday, 4 Nov 2010 | 11:30 AM ET

Jobs In The Rough

Posted By: Stephanie Landsman, Producer for "Squawk Box"

Prameela Nagaraj holds a bachelor's degree from the State University of New York at Binghamton. Since graduating in 1997, she has held regulatory paralegal positions at UBS and Merrill Lynch. But, you won't find her working for a financial services firm now. Nagaraj starts this week as a seasonal salesperson at a Coach Outlet Store in New Jersey.

Out of work man
Out of work man

"This job is from November third until January fifth. The day of the interview it was made clear this was only seasonal work. But, I hope this job opens a door for me... after a long time of looking and being frustrated. " says Nagaraj.

Nagaraj isn't alone.

» Read More
  Thursday, 4 Nov 2010 | 10:34 AM ET

The GOP Victory Could Make 2011 the Year of the Put-Back

Posted By: John Carney
Fannie Mae and Freddie Mac may throw a surprise wrench into the profits of our largest banks next year by demanding sizable repurchases of mortgages contained in flawed pools that underlie mortgage-backed securities. »Read more
  Thursday, 4 Nov 2010 | 9:02 AM ET

Kanjorski Loss Leaves Big Void on Finance Panel

Posted By: Jeff Cox
With Rep. Paul Kanjorski vanquished, the congressional horse-trading will begin to determine the leadership structure of the House Financial Services Committee. »Read more
  Thursday, 4 Nov 2010 | 8:53 AM ET

Did the Fed Not Go Far Enough?

Posted By: Ash Bennington
A roundup of the morning headlines. »Read more

About NetNet

  • 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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