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Posted
Sep 01 2009, 06:26 PM
by
Jon Markman
Rating:
Money Blog: Top Stocks Blog - MSN Money
When the century-old investment bank Lehman Brothers collapsed a year ago, it spawned not just a global financial firestorm but a cottage industry of insider accounts of where it all went wrong. Three major books have been published and more are on the way -- each proposing to tell us the darkest secrets of the world's worst-run brokerage. (My take on it: New column.)
Any endeavor that pits Type A personalities against each other in a battle for control of the public discourse is bound to be competitive, and one like this in which reputations are at stake will naturally be especially fierce. That makes the effort by Lawrence G. McDonald, a former vice president at Lehman, particularly compelling, as he was first out of the gate.
In a late-night conversation from his vacation in Paris, the former fixed-income trader told me that the book, "A Colossal Failure of Common Sense," took him and co-author Patrick Robinson one hundred and seventy-three 17-hour days to research and write -- including Christmas and New Year's. Not that anyone's counting. Because he was first off the starting line with a publishing contract and a plan, he managed to grab co-workers for interviews "at a golden moment of frustration," he says, a time when they wanted the bad apples at Lehman exposed. The bottom line is about what you'd imagine: An overmatched boss failed to listen to smarter underlings and drove the company into the ground. The details are amazing, which makes the read compelling even if you feel you know the whole story already.
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Posted
Jul 30 2009, 01:08 PM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
This article was written by Minyanville's Megan Barnett
'Tis the season to pile on to Goldman Sachs (GS), in case you missed the memo. The hatchet jobs that appeared in Rolling Stone and New York magazines have apparently caught the attention of the men and women of Capitol Hill.
Not surprisingly, they want a piece of the action. In fact, it appears they're positively desperate to debunk any conspiracy theory about Goldman's influence over government -- even if it means displaying their ignorance of how Wall Street works for all the world to see.
Today's Wall Street Journal brings us the story of a Senate probe into fraud at some of Wall Street's biggest mortgage-bond-market players, including Goldman and Deutsche Bank (DB). This follows on news earlier this week that members of Congress wrote to Fed chairman Ben Bernanke to inquire as to whether Goldman Sachs was too lightly regulated.
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Posted
Mar 05 2009, 02:13 AM
by
Bernhard Warner and Matthew Yeomans
Rating:
Money Blog: Top Stocks Blog - MSN Money
This post comes from partner site The Big Money.
Eight percent growth in 2009. That's the lofty outlook China delivered on Thursday, reiterating a growth rate that remains unchanged even as the rest of the global economy continues to sink, the Wall Street Journal and Financial Times report this morning. Both newspapers are a bit suspicious of Premier Wen Jiabao's rosy outlook. The FT points out Jiabao spoke of choosing the right policy mix to achieve the 8% target, but he was vague as to what that might be. The WSJ adds that Jiabao failed to deliver on a long-rumored new economic stimulus package. There's a lot riding on this target. Not meeting it could lead to further social unrest, even Jiabao acknowledged.
Jiabao's vague address probably won't please market watchers. Shares in the U.S. surged on Wednesday, breaking a five-day string of losses, on hopes China might introduce a new stimulus proposal, the WSJ writes. Yesterday, the newspaper writes, the so-called "China trade" was back on. Shares in Japan and China, though, remained buoyant on Thursday, climbing slightly after Jiabao's address, the BBC reports.
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Posted
Feb 10 2009, 03:14 AM
by
Bernhard Warner and Matthew Yeomans
Rating:
Money Blog: Top Stocks Blog - MSN Money
This post comes from partner site The Big Money.
President Obama did not mince his words Monday night, warning of a "lost decade," The Wall Street Journal writes. Other newspapers seized on the president's prospect of financial "catastrophe" should Congress fail to take action to pass his stimulus plan, which now stands at about $800 billion.
Of course, this is a president trying to win over unconvinced Republican lawmakers and a fair number of Americans. There's bound to be tough talk. The WSJ likened him to a prosecutor in his prime-time news conference, saying he "alternated between bipartisan outreach and tough words for Republicans who, he said, backed failed policies that helped drive the country into economic distress."
Obama also set benchmarks for his plan, saying its success should be judged by whether it creates or saves 4 million jobs, stabilizes the housing market and gets credit markets operating again, the newspaper wrote.
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Posted
Feb 02 2009, 03:05 AM
by
Bernhard Warner and Matthew Yeomans
Rating:
Money Blog: Top Stocks Blog - MSN Money
This post comes from partner site The Big Money.
All eyes are on Washington as President Obama's $819 billion stimulus package makes its way through the Senate this week after being passed by the House Wednesday. Continuing its focus on executive pay, the Wall Street Journal takes a look at potential compensation restrictions for firms that receive government aid. Details of the restrictions, and the rescue package as a whole, are expected to be announced later this week by Treasury Secretary Timothy Geithner. "It won't be easy to upend a compensation system that is woven into the fabric of the U.S. financial system. Many Wall Street employees work under employment contracts that can't be unwound," the Journal reports. The government is also considering splitting off the Troubled Asset Relief Program from the Treasury in an effort to improve public perception of the program.
There is growing support among senators for added provisions to the package that would directly help homeowners avoid foreclosure
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Posted
Dec 30 2008, 03:15 AM
by
Bernhard Warner and Matthew Yeomans
Rating:
Money Blog: Top Stocks Blog - MSN Money
This post comes from partner site The Big Money.
It gets harder and harder to distinguish between news about the U.S. auto industry and news about the economy itself. The Bush administration, which not long ago resisted using the Treasury Department bailout program to rescue the automobile industry, has now extended its support to failed automakers by tossing $6 billion at GMAC, the ailing financial arm of General Motors. As The Wall Street Journal rather stiffly phrases it, the move "represents the second tranche of government aid that redounds to the benefit of giant private-equity firm Cerberus Capital Management, which owns Chrysler and, until these recent moves, a majority stake in GMAC." The Journal pointedly notes that "John Snow, a top player at Cerberus, was the Bush administration's Treasury secretary before Henry Paulson."
GMAC filed last week to change its status to that of a bank so that it could qualify for Treasury money. This is not a huge conceptual stretch; like the nation's banks, as the New York Times notes, GMAC "has been reeling from both the paralysis in credit markets and huge losses from its mortgage lending subsidiary, Residential Capital."
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Posted
Dec 24 2008, 02:55 AM
by
Bernhard Warner and Matthew Yeomans
Rating:
Money Blog: Top Stocks Blog - MSN Money
This post comes from partner site The Big Money.
The grisly discovery of yesterday’s suicide by U.S.-based French banker Thierry Magon de La Villehuchet—co-founder of Access International Advisors who may have incurred as much as $1.5 billion in Madoff-related losses—features prominently in a number of business publications today. But behind that story, new details continue to emerge. The European fallout includes Union Bancaire Privée, a private Swiss bank with $700 million of client money invested. The New York Times reports that representatives of UBP met with Madoff as recently as Nov. 25. The Wall Street Journal has Vienna-based Bank Medici as one of the most exposed European banks, with around $2.1 billion invested with Madoff. The Journal strings together a number of recent findings and suspicions to paint a fuller back story of the missed opportunities to catch the alleged fraud before it swallowed so many investments. The Journal says that “in 1991, a consultant hired to review a corporation's investments with Mr. Madoff made in the late 1980s grew suspicious about his returns.” And the deceit was reportedly quite transparent: “Mr. Madoff claimed to have traded more options than had been traded in the entire market on a given day, meaning his strategy would have been impossible to execute. That pattern was apparent on client statements from as recently as 2006, meaning Mr. Madoff had been making the same improbable claims to his investors for at least 17 years.”
Who’s at fault? A couple of interviews result in the expected finger-pointing. The Financial Times has Bill Brodsky, head of the Chicago board Options Exchange, saying that “inspector-level SEC staff had not received enough training to enable them sufficiently to check for fraud.” The target for much of the reproach, outgoing SEC Chairman Christopher Cox, offers an interview to the Washington Post. He’s proud of SEC’s enforcement record, so don’t expect any Madoff-related second thoughts yet: “That's why Madoff is such a big
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Posted
Nov 20 2008, 06:41 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
A quick look at bank stocks would indicate that Wall St. is not terribly impressed with the Paulson $700 billion bailout plan. Citigroup, the whipping boy of the group, may be at a multi-year low. But, so is Goldman Sachs, the most sublime of all US financial institutions. Even Jamie Dimon's JP Morgan, arguably the best run bank, has been pulled into the vortex of selling
The trouble is that investors think that the amount of money being put into the financial system is far too little. If it was adequate, this argument goes, bank stocks would be worth more than Confederate dollars.
Citi is supposed to lose as much as $2.72 a share in 2009, at least according to the more pessimistic numbers. Banks have underperformed analysts' guesses most of this year. Why should next year be any different? The Wall St. consensus is that Goldman will make $10.73 EPS, which is actually up from where 2008 is being pegged. So, why has its stock dropped from $234 to $55 in less than a year?
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Posted
Nov 10 2008, 03:35 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
AIG probably has the wrong management in place. A retired CEO from Allstate may not be the man. The insurance company lost another $24 billion in the third quarter.
The current plan at the damaged insurance company is "if at first you don't succeed, try, try again." It is the American character never to give up on something that has be started, no matter how futile the cause. The U.S. government's financial rescue program has a bit of that spirit in it. Regardless of how bleak a large insurance company or bank's prospects may be, the Treasury and Fed are prepared to barrel ahead.
One reasons that giving up on troubled financial companies seems to be a bad idea is the lesson of Lehman Brothers. As it fell, it damaged large numbers of firms which held its paper.
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Posted
Oct 24 2008, 06:39 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
No matter where economists look there is no evidence that a recession in the US, EU, and Asia is doing anything but deepening. The stock markets are the least of it. Some of the indexes in the largest countries are off 40% from their peaks reached a year ago. Banks are failing. In cases where the government has not stepped in some have disappeared and others have been merged into more healthy institutions. Healthy for now, that is.
The financial sector could easily lose several hundred thousand jobs in the US. New York City expects employment in the banking and brokerage sector to fall by 150,000. Marriages like the ones between Bear Stearns and JP Morgan and Wachovia (WB) and Wells Fargo will clearly put tens of thousands of people out of jobs. Goldman Sachs apparently will let 10% of its workers go.
The trouble has spread well beyond banks. Merck, Xerox, GM, and Chrysler just said they will push more poor souls out the door. Even a successful tech company such as Hewlett-Packard has taken significant numbers of people out of its workforce.
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