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Posted
Oct 07 2009, 07:23 PM
by
Vad Yazvinski
Rating:
Money Blog: Top Stocks Blog - MSN Money
“Whenever you find yourself on the side of the majority, it is time to pause and reflect” -- Mark Twain
One of the main arguments "perma-bears" used in justifying why the recent stock rally is (and was) destined to fail miserably, has certainly been a widespread expectation of an upcoming collapse in the commercial real estate market.
Just yesterday the Wall Street Journal reported that "banking regulators are girding for a rerun of the housing-related losses now slamming thousands of banks that failed to set aside enough capital during the boom to cushion themselves when the bubble burst. 'Banks will be slow to recognize the severity of the loss -- just as they were in residential,' according to the Fed presentation, which was reviewed by The Wall Street Journal".
This is true. It has been clear for a while that hundreds of smaller banks heavily exposed to commercial real estate market are likely to fail or require more capital during the next 18 months or so. But isn't everyone expecting that at this point?
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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
Jun 04 2009, 02:25 PM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
 Angelo Mozilo (pictured) co-founded Countrywide Financial 40 years ago and helped it become the country's largest mortgage lender. Countrywide is long gone -- having been swallowed up by Bank of America (BAC) last year -- but Mozilo's final years in charge are back in the spotlight now that federal regulators have charged him with fraud and insider trading.
Regulators say that Mozilo and two other execs pitched Countrywide as a quality lender that made good loans, but secretly began making riskier and riskier deals to keep up with competitors. It started matching the terms of any loan being offered in the market -- even those obviously risky subprime ones that would never have passed muster normally.
It was an unsustainable business model, the Feds say, and Mozilo knew it. Executives had been warned of the new credit risks they were taking on. Mozilo sent internal e-mails that said Countrywide was "flying blind," and that one of its products was "toxic," according to the complaint by the Securities and Exchange Commission.
Around the same time, Mozilo started unloading Countrywide stock.
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Posted
Jan 16 2008, 03:50 PM
by
Jon Markman
Rating:
Money Blog: Top Stocks Blog - MSN Money
During times of great volatility in the stock market, a lot of people will turn to high-yielding money market funds to stash their funds. Yet late last month, I wrote a column – “Your safe money might not be so safe” -- observing that in some cases, money market funds might not be so worry-free themselves.
I highlighted one money market fund at brokerage Charles Schwab -- Schwab Value Advantage Money Fund -- as an example of the type of fund that has in the past obtained a significant amount of its yield from investments in commercial paper issued by troubled banks’ structured investment vehicles.
Schwab spokesperson Sarah Bulgatz disagreed with my assessment of the fund. Here is her response:
“It is a mistake to imply that all structured investment vehicles (SIVs) have subprime mortgage exposure. In Schwab's case, our money market funds have no direct investment in subprime mortgages or collateralized debt obligations. We do hold a small percentage of highly-rated SIVs, but these SIVs themselves have very limited exposure to subprime. As of January 2008, Schwab’s taxable, non-government money market funds have less than 3.7% of their funds invested in SIVs, and these SIVs themselves have on average less than 1% of their investments in subprime. That translates into less than 0.04% of Schwab’s money market portfolios indirectly exposed to subprime. Since our money market funds are all managed similarly, the percentage of SIV holdings within each fund are close to the average. To say, as the column does, that "If you … keep cash in the Schwab Value Advantage Money Fund you have had a sub-prime time bomb ticking away in your brokerage account," is simply not true.
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Posted
Sep 22 2008, 01:51 AM
by
Jon Markman
Rating:
Money Blog: Top Stocks Blog - MSN Money
Watching Treasury Secretary Henry Paulson make the rounds of Sunday morning television shows to make his case for applying a trillion dollars' worth of CPR to the U.S. banking system, I was struck by the prosaic quality of his argument. You sure didn’t have the sense that he thought this was any big deal. I mean, it was almost the same tone as you’d hear on a recorded message of the day’s surf forecasts. Wake me when we’ve spent all our money.
The humdrum quality of technocrats like the former Goldman Sachs chief makes me wistful for the days of Franklin Delano Roosevelt. Now there was a guy who was mad as hell about the state of the banking system, and wasn’t going to take it anymore. And could he ever deliver a speech.
FDR’s Inaugural Address in 1933 – in which he excoriated bankers for their greed, selfishness and incompetence -- was his most famous, and you may be amazed to discover how relevant it sounds today. "There must be an end to speculation with other people's money!" he said.
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Posted
Jan 07 2008, 11:18 AM
by
Matt Koppenheffer
Rating:
Money Blog: Top Stocks Blog - MSN Money
No, seriously, the American Dialect Society annually anoints one word as the word of the year based on a vote from the members of the organization, and "subprime" took the trophy this year. The ADS defined subprime as "an adjective used to describe a risky or less than ideal loan, mortgage, or investment."
Professor Wayne Glowka, a member of the society, was quoted as saying: "When you have investment companies losing billions of dollars over something like bundled subprime loans, then you have to consider whether it's important." Amen to that
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Posted
Mar 16 2008, 07:37 PM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
The proposed sale of Bear Stearns on Sunday to JPMorgan Chase for $2 a share, or $236 million, will keep litigation lawyers busy for years as enraged shareholders seek to recover anything from the disaster.
The losses from Bear Stearns' demise are shocking, so shocking that Asian and Australian stocks tumbled on the news. The dollar was fallling. Crude oil jumped over $111 a barrel, and European shares were expected to open lower as was the U.S. stock market.
From a peak price of $171.52 in January 2007, Bear Stearns managed to lose 98.8% of its peak market value of $20.2 billion in less than 15 months, all because the company bet everything that the housing market and the markets for securities backed by subprime mortgages wouldn't break. It did
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Posted
Jun 24 2008, 01:05 AM
by
Charley Blaine
Rating:
Money Blog: Top Stocks Blog - MSN Money
If you're a GE shareholder, you've probably been pondering the idea since April 11, when the company shocked investors around the world by reporting a first-quarter profit decline that absolutely no one expected.
Since then, there's been chatter in blogs (See this from George Yared) and message boards about whether Immelt's tenure should end. Some posts are on MSN Money.
The New York Times noted on Sunday that Wall Street seems to have fallen out of love with GE. Douglas McIntyre, a Top Stocks partner blogger, says the company is in need of a major change in direction. "It's a dog of a stock," he wrote this week.
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Posted
May 12 2008, 07:12 AM
by
Douglas McIntyre
Rating:
Money Blog: Top Stocks Blog - MSN Money
Based on the figures from the Bureau of Labor Statistics, U.S. unemployment was 5% in April. Those figures showed that 146.3 million Americans were employed in the civilian work-force and 7.6 million Americans were unemployed.
It should not come as a surprise to economists that the weakest parts of the economy last month were construction, manufacturing, and retail. The segments with some growth were healthcare and professional services. (For a complete list of jobs by sector visit 24/7 Wall St.)
The economy may be in a recession now. Some experts believe that growth will only slow modestly over 2008. Warren Buffett and George Soros have said that they think the downturn will be long and deep.
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Posted
Oct 23 2008, 09:34 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
For anyone wondering where the billions of dollars in worthless mortgage-backed securities will wind up, look no further: The mirror.
Fannie Mae and Freddie Mac, the formerly quasi-public, now taxpayer-owned mortgage behemoths, are stealthily sopping up the worst of the structured mortgage debt Wall Street churned out during the boom.
In a story that barely made the back pages of the nation’s newspapers, the Federal Housing Finance Agency announced Fannie and Freddie will start purchasing $40 billion per month of “underperforming mortgage bonds.”
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