Botched bailout rebounds on Bankia 17 May 2012 Both Spain’s government and the newly-nationalised bank’s chairman deny depositors are fleeing. Yet the latest share price plunge inflicts further pain on clients who participated in the lender’s IPO last summer. That makes it harder for the government to restore confidence.
Ethical economy: Bad ideas spawn Lesser Depression 16 May 2012 When Lehman failed, there were good reasons to think the pain would be brief and concentrated. Almost four years on, the rich world has not fully recovered. Policymakers are following flawed expert advice. A rethink on both unemployment and debt is urgently needed.
Greek banks’ twin crutches are rickety 16 May 2012 With deposit flight accelerating post the election fiasco, the country’s banks are kept afloat by the promise of a recapitalisation from bailout funds and further emergency liquidity assistance. But both crutches would be kicked away if Greece pulls out of its bailout programme.
JPMorgan shareholders give Dimon slap on wrist 15 May 2012 The U.S. mortgage hangover eclipsed last week’s trading losses at the bank’s annual meeting. And subdued investors were mostly supportive of Dimon. But they didn’t let him off entirely: 40 pct voted to split the chair and CEO roles. While falling short, it’s still a protest vote.
Goldman extracts pound of flesh from Chesapeake 15 May 2012 The troubled U.S. gas company has received the Wall Street firm’s expensive imprimatur as a lender on its now upsized $4 bln loan. At an onerous rate of interest, the cash buys Chesapeake time to finish asset sales. Barring an outright default, Goldman has the best of the deal.
Brazilian meddling threatens shareholders, again 15 May 2012 Dilma appears to be widening her interventions from the industrial sector to the banks. Having ousted Banco do Brasil execs this weekend, it’s hard to miss the state’s hand in a worrisome plan for the bank to take control of troubled car-lender Votorantim. Investors, look out.
Italy protests too much over bank downgrades 15 May 2012 The national bank lobby has called a credit-rating downgrade of lenders “an assault against Italy”. True, bigger Italian lenders seem to have enough capital and liquidity. But the real assault could come from rising stocks of their own sovereign debt.
Spain’s taxpayers main losers from Bankia bailout 15 May 2012 Following last week’s rescue, the state is the biggest shareholder in the country’s biggest property lender. Retail shareholders who bought in last year’s IPO also face further dilution. The beneficiaries are Bankia’s creditors - and Spain’s other big lenders.
Murky U.S. bribery law gets a dose of clarity 14 May 2012 Morgan Stanley recently showed how to avoid legal charges, and an appeals court will soon define whose palm can’t be greased. That’s good news for multinationals sweating unpredictable enforcement of a very confusing statute. But an overhaul by Congress is still long overdue.
Jamie Dimon should show some clawback cojones 14 May 2012 JPMorgan may have stomped on Dodd-Frank’s spirit, but it should comply with the letter of the law when it comes to compensation. To remain credible, Dimon should insist that Ina Drew and other CIO execs responsible for its trading losses hand back some of last year’s pay.
Dodd-Frank opponents return to the drawing board 14 May 2012 JPMorgan’s prop-like $2 bln trading flub gives ammo to proponents of more stringent bank oversight. Yet Mitt Romney and many in the GOP have promised to gut Dodd-Frank and Volcker. One tactic may be to embrace Dallas Fed President Richard Fisher’s call to make banks smaller.
JPMorgan hammers another nail in VaR coffin 14 May 2012 The U.S. bank’s $2 bln loss has again highlighted the flaws of using Value-at-Risk to gauge trading exposures. That will help regulators ditch the measure. The bigger challenge, however, will be making capital rules less dependent on figures produced by banks’ computer models.
JPMorgan has more questions to answer 11 May 2012 Boss Jamie Dimon has eaten humble pie over the giant U.S. bank’s unexpected $2 bln of trading losses. But key questions remain about the firm’s risk management, the role of regulators and the lessons that may be applicable at JPMorgan and elsewhere.
Spain’s latest bank reform won’t be its last 11 May 2012 Lenders must set aside a further 30 billion euros against real estate losses and segregate troubled property assets. Though this is helpful, bad debts will rise elsewhere. And the government is providing less than 15 billion euros of fresh capital. That won’t restore confidence.
Dimonfreude is irresistible, but may be dangerous 11 May 2012 The glee is understandable: JPMorgan, scourge of regulators and king of Wall Street which broke Bear, Lehman and MF Global, at last receives its comeuppance. But one of the few banks that sidestepped the crisis has been proven fallible. That will shake confidence in the system.
Jamie Dimon’s Ahab meets his Moby Dick 10 May 2012 JPMorgan’s $2 bln hedging loss is as much a blow to the CEO’s reputation as it is to the bottom line. The mess occurred in the core treasury unit and evokes similar mistakes predating Dimon’s arrival. Even a driven banking captain can be hobbled by a trading whale.
Bankia rescue leaves former bailout supremo behind 10 May 2012 The Spanish bank’s woes have cost chairman Rodrigo Rato his job. That marks an ironic twist for the man who was IMF chief at the start of the crisis, charged with dispensing lectures and bailout money to the fallen. It’s a timely reminder that theory and practice are worlds apart.
Madrid hopes it’s fifth time lucky 10 May 2012 Spain is going back to the drawing board again to clean up its banking system. Since cash is short, it will be tempted to use financial engineering. But if it’s too clever, investors won’t be impressed.
Weak trade and weak banks pose Chinese puzzle 10 May 2012 Weak April imports are a clear sign that China’s domestic demand is sputtering. The government might like to respond with looser monetary policy, but many banks are too short of funds to help. Beijing’s usual methods may not produce the usual results.
Facebook not only IPO to spread underwriter wealth 9 May 2012 The social network’s 33 banks make up one of the biggest cabals of late. But it’s by no means a record. Over 15 years, that belongs to Goldman Sachs. A bigger change for Wall Street is the trend toward hiring more banks to jointly lead deals. That skews fees and bragging rights.