Notes From the Fieldby Martin Weil

Posts Tagged ‘banking’

May 20, 2015

“thankyou thankyou thankyou thankyou thankyou thankyou thankyou thankyou thankyou thankyou thankyou thankyou thankyou…”

600 of them in an email from a Credit Suisse lawyer to the US Department of Labor for the latter’s decision to allow CS to avoid notifying its pension clients that the bank had plead guilty to conspiring to help US investors avoid income taxes and was levied with a record $2.6B fine.

As a result, the bank was able to remain in the US pension business.

December 3, 2014

IPOs, Who Are They Good For?

If your model of the stock market is that companies that are building businesses come to the stock market to finance those businesses, your model is wrong. The stock market is where companies that have built businesses go to cash out their shareholders.

The always astute Jason Zweig on why companies really go public. As he says, it is not to raise money to operate, they have already done that by raising private capital. It is to create a market to facilitate insiders and early private investors cashing out their shares by selling into a broader and deeper public market. See this example on Bloomberg about the current financing of Uber.

September 17, 2013

My “Ferdinand Pecora” Article is Published by Advisor Perspectives

“Where, Oh Where, Is Ferdinand Pecora?”  – my Op Ed on the fifth anniversary of the financial crisis – is published in Advisor Perspectives, a leading interactive publisher for Registered Investment Advisors, wealth managers, and financial advisors.

August 16, 2013

Summers vs. Yellen as Next Fed Head, an Op-Ed

For supporters of stronger regulation, it comes down to a choice between someone they do not know and someone they do not trust.

That is the NY Times reprising the outside-the-beltway attitudes towards the two leading candidates, Janet Yellen (“do not know”) and Larry Summers (“do not trust”), for Chair of the Federal Reserve, when Ben Bernanke retires early next year. Count me among those “supporters of stronger regulation” with serious misgivings about Mr. Summers. I fault his role in political decisions that contributed mightily to the severity of the 2008 financial crisis, specifically beating back the Commodity Futures Trading Commission’s attempts in the late 1990s to bring regulatory oversight to the then-nascent world of private derivatives contracts between regulated banks.

After the financial derivatives-driven  1994 bankruptcy of Orange County and spectacular collapse of Long Term Capital Management in 1998, an event itself that threatened to bring down the financial system at the time, Mr. Summers, then a senior official in the Clinton Administration, testified to Congress “the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves.”

It would take another ten years for the full consequences of this set of beliefs to be fully manifested in the failures of Bear Stearns, Lehman, AIG, Fannie Mae, Freddie Mac and the near collapse of the global banking system.  However, everyone learns from his mistakes and if Mr. Summers, the frontrunner in this race, becomes the next Fed Head, one can only hope he has learned from his.

July 12, 2013

Senators Warren and McCain Offer New Glass-Steagall Bill

The NY Times reports that Elizabeth Warren, who came to Washington to reform the banking industry, has teamed up with John McCain to introduce legislation to restore a modernized version of the Depression-era Glass-Steagall Act, repealed in 1999. Says Barry Ritholz of The Big Picture who is quoted in the Times piece.:

For about 70 years, Glass-Steagall managed to keep the riskier, more damaging part of Wall Street away from what should be the boring, straightforward side of finance. It was the height of stupidity repealing Glass-Steagall.

This should be interesting.

August 9, 2012

My Weekend Reading

Wired Magazine’s How Wall Street Got Addicted to Light Speed Trading. There may be positives to High Frequency Trading in terms of efficiency and/or liquidity gains. But to me, the practice looks like sanctioned gaming of the system by large institutional players at the expense of investors. One that would not be possible if we had a regulatory structure whose main focus was serving the public, rather than the industry’s, interests.

h/t Barry Ritholz

November 2, 2011

The always on-target Martin Wolf

“Creditors can huff…” is Wolf’s latest Op Ed in the FT (registration required) on the hypocrisy of lenders (Germany and China) decrying the borrowing practices of debtors (Greece, Italy, the US).

Do creditors rule the world? Not really. In the short run, they can threaten to turn off the credit. But their surpluses depend on the willingness and ability of others to run deficits. It would be more sensible to admit that there has been too much borrowing by the profligate because there was too much lending by the supposedly prudent.

October 21, 2011

Historical quote(s) of the week

America is good enough for me

J.P. Morgan

Whenever he doesn’t like it, he can give it back.

William Jennings Bryan

The Gilded Age and the Populist Movement of more than 100 years ago sounding very current in terms of the Occupy Wall Street movement.

September 22, 2011

The future of banking?

I had not heard of BankSimple before today. But if this introductory video is any indication, they are onto something that could alter the way we use and think of banks. Their web application looks to combine banking basics with cash management features. Banking with some very powerful financial planning/cash management tools that are very fast and really simple to use.

h/t Felix Salmon

June 25, 2011

Nothing starts a weekend like a wry smile

Charming, materialistic, aggressive, self-centred, Machiavellian, thrill-seeking alpha males with little respect for rules who eat stress for breakfast …
The characteristics that make for good traders and investment bankers are pretty much the same as those that define psychopaths, according to Michael Price, co-director of the Centre for Culture and Evolutionary Psychology at Brunel University in London.

This from an article in today’s Financial Times, entitled appropriately enough Alfred Hitchcock’s “The Bankers.”

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