Market panic turns its baleful eye on HBOS 15 Sep 2008 The UK lender s property exposure and weak funding make it an obvious target. If the loss of confidence in the shares ever crosses over to the balance sheet, HBOS will face big problems. UK regulators have a delicate task plan for the worst without aggravating investors fears.
AIG isn’t insured against perfect market storm 15 Sep 2008 The US insurer shouldn t look like Lehman, but it does. While its business is decent in places, it's overshadowed by losses it was too slow to recognise, a lack of capital and freefalling shares. Bob Willumstad could still come to regret turning down a lowball offer.
Flowers finally makes money on the credit crunch 15 Sep 2008 The buyout firm couldn't clinch investments it looked at in several financial institutions. But it snagged an advisory role for Bank of America in its weekend purchase of Merrill Lynch. It's not the obvious role for JC Flowers, but advisory spots may be up for grabs.
RAB woes point to deeper hedge fund malaise 11 Sep 2008 The UK hedge fund has cut fees in return for a longer lockup period. It made some bad calls. But many funds must now work harder to raise, keep, and use money profitably. As the model comes under strain, managers will struggle to meet investors expectations.
Market right to cast gimlet eye on US credit 10 Sep 2008 Default risk, even after taking responsibility for the GSEs $5.4 trillion of liabilities, remains miniscule. But credit traders think the US is now less of a sure thing. They re right to be sceptical the US could have to pony up more than it hopes to save the mortgage giants.
Cowdery makes not so bold move with IPO 9 Sep 2008 The entrepreneur wants to float Resolution in the midst of a financial crisis and weak stock markets. But after making a fortune on a closedlife book, his reputation should be strong enough to get the deal done. Then he will have to show he can turn old banking dross into gold.
US mortgage bond bailout is symptom of economic statism 9 Sep 2008 Treasury s plan to prop up the MBS market reflects a growing appetite for economic intervention. It represents a reversion to New Deal attitudes, away from the freemarket approaches of the 1980s and 1990s. But government omnipresence doesn t usually work.
Options running out fast for Lehman 9 Sep 2008 It needed a capitalboosting deal before reporting earnings, set for next week. Tuesday s 45% stock price plunge suggests investors won t wait even that long. Sure, Lehman shouldn t be at risk of going under. But CEO Dick Fuld may be out of chances to keep the firm independent.
TPG’s WaMu bet could test notion of control 8 Sep 2008 Some buyout investors shied away from the US thrift because they couldn t get full control. Now WaMu's CEO has rightly been replaced just months after TPG invested $2bn. It may not always be so easy, but if TPG can get most of what it wants, its rivals might have to rethink.
GSE bailout turns tables on CDS players 8 Sep 2008 Selling default insurance on Fannie and Freddie once looked brave. But it turned out to be a winning bet. The bailout has triggered the contracts, but a lot of the GSE debt still trades around face value. Protection sellers have earned premiums and shouldered little risk.
New Fannie and Freddie bosses look good on paper 8 Sep 2008 Herb Allison and David Moffett bring fresh blood and some muchneeded financial and organisational nous to the ailing mortgage giants. Good though that is, the US government is now calling the shots. That reduces the role of the chiefs to heavily supervised caretakers.
Fannie and Freddie Q&A 8 Sep 2008 The nearnationalisation of the Fannie Mae and Freddie Mac raises some basic questions. Richard Beales and Edward Hadas ask and answer them.
Let the market kill the GSEs – politicians won’t 8 Sep 2008 Fannie Mae and Freddie Mac have no place in a wellordered economy, but are difficult to euthanize. The market, which has brought them down, should finish the job. The GSEs' guarantee fees should be raised enough to make them uncompetitive once the mortgage market recovers.
UK building societies should stay boring 8 Sep 2008 Without uppity shareholders to please, mutuals should be well placed to weather a downturn. The Derbyshire and Cheshire are merging with Nationwide because they were too racy. That doesn t preclude further consolidation but does mean it s less likely among duller peers.
Paulson’s bazooka hits target with precision 7 Sep 2008 The nationalisation of Fannie and Freddie hits some right notes. The CEOs are ousted, equity and preferred holders are hosed and the businesses run off. This should help stabilise US housing. But it leaves the inevitable task of dismantling the GSEs to a future administration.
Pension funds face doubts over PE allocations 4 Sep 2008 How much should investors entrust to buyout firms after the LBO bust? Skewed returns and the effect of leverage leave the answer murky and investors uncertain. That may help explain why private equity funds have managed to raise a lot this year, but not as much as in 2007.
Deutsche Börse hedge funds should make aims clear 3 Sep 2008 Atticus Capital and The Children s Investment Fund say they want changes to the German stock exchange s Supervisory Board. But they don t say who should go or why. Oddly, they seem to back the bourse s strategy. They can t expect support if they are so opaque.
Ospraie losses hurt investors, managers – and Lehman 3 Sep 2008 The commodities hedge fund group is closing its $2.8bn flagship fund after it lost nearly 40% of its value. It shows how tough life has been for hedge funds. Fund investors will feel the pain, as will Ospraie s respected managers. Poor old Lehman has a walkon role, too.
The next nasty surprise for US housing and banks? 3 Sep 2008 Many hope US home prices will recover enough in the next few years to head off mass defaults on the $200bn of option adjustablerate mortgages outstanding. That looks increasingly farfetched. The loans may reset sooner than expected causing a new wave of delinquencies.
Foreign snub of GSE debt has silver lining for US 2 Sep 2008 Overseas investors are paring their holdings of Fannie and Freddie debt, despite the US government s backing of the GSEs. But erstwhile buyers appear to be ploughing funds into US Treasury bonds instead, helping to keep rates low, thereby benefitting the world s biggest debtor.