Where The Hell Is The Outrage?
by ilene - October 19th, 2009 5:37 am
Great post by Mish. There’s a lot to be outraged about, and Mish provides a comprehensive list which, if you feel it, share it with friends and family. – Ilene
Where The Hell Is The Outrage?
Courtesy of Mish
Many have pointed out the problems; few have expressed outrage over what is happening in general, not just at Goldman Sachs. Let’s take a look.
My take is at the end.
Letting The Dice Roll
Rolfe Winkler at Contingent Capital is writing Letting Goldman Roll The Dice.
Is Goldman really such an indispensable financial intermediary? One look at the firm’s revenue breakdown shows that it’s more casino than anything else, and some of the markets it makes still put the economy in danger.
Goldman, in other words, generates most of its revenue trading its own money and earning vigorish on customer transactions. It’s a hybrid hedge fund and bookie, with an investment bank and asset management business thrown in for good measure.
With that in mind, one is left to wonder whether Goldman was really worth saving last year. What have taxpayers received for the $50 billion worth of cash and guarantees, for giving Goldman access to the Federal Reserve as its lender of last resort?
Saving Goldman was largely about saving the derivatives market, which is so big and unstable that the death of one counterparty could mean the death of all. With big commercial banks like JPMorgan Chase in deep, saving the derivatives business was as much about protecting depositors and maintaining the integrity of the payment system as it was derivatives themselves.
To Goldman’s credit, they’ve rebuilt their capital levels faster than anyone. Their leverage ratio has fallen from 35 to 16 in less than two years, despite pressure from equity analysts to juice returns by deploying “excess capital”. But at $50 billion, the bank’s mark-to-myth, or level 3, assets remain as high as its tangible common equity, the cushion it has to absorb losses.
Wall Street and its protectors at the Fed and Treasury tell us the bailout was necessary to protect the financial system, to protect Main Street. That may be. But Main Street still owns much of the risk while Wall Street gets
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Throwing Bernanke under the bus
by ilene - June 25th, 2009 9:40 pm
Here’s Edward Harrison’s take on the Bernanke hearings. – Ilene
Throwing Bernanke under the bus
Courtesy of Edward Harrison at Credit Writedowns
In case you missed it, Federal Reserve Chairman Ben Bernanke was on Capitol Hill this morning making his case in regards to the Bank of America – Merrill Lynch deal. The Chairman stated in unequivocal terms that he did not pressure anyone. Rather, he stated that he cautioned Ken Lewis about the prudence of invoking a MAC clause and doubted whether Lewis could be successful in extracting himself from the deal (I agree that the MAC clause was not going to help BofA).
Whether Bernanke is justified in his defense is irrelevant at this juncture. What is relevant, however, is that the Bank of America – Merrill Lynch deal has become a central episode for political recriminations and posturing. As I said two weeks ago:
My take here is that the Bank of America case has become very political – and that means the blame game is going to be played. Someone — Bernanke, Lewis, Thain or Paulson — is going to take the fall. The knives are out.
Indeed, the knives are out and it is looking increasingly likely that Bernanke will be the scapegoat. Below is a Bloomberg News video with Rep. Edolphus Towns (D-NY), Chairman of the House Oversight Committee. If you listen to what Towns is saying, it does not look very good for Ben Bernanke.
Next on the hot seat: Hank Paulson.
Earlier today at Credit Writedowns, courtesy of Edward:
Is Bernanke Toast? If he is, Summers is a shoo-in
Here’s a conspiracy theory for you. As I am not much of a conspiracy theorist, I ill keep this one pretty simple. Here’s the chain of events.
Back in late September when the world was falling apart, Ben Bernanke, Tim Geithner and Hank Paulson were all desperate to keep things from unravelling. As a result, they were pleased that Ken Lewis and Bank of America were willing to pony up massive $44 billion to take over Merrill Lynch. They might even have encouraged the deal (i.e. we will smooth the way. There will be no FTC hurdles. We will soft peddle investigation into Countrywide mortgage fraud, etc)
The problem, of course, was that Merrill Lynch was a bottomless pit of…
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site