IndyMac’s bailout could add to taxpayer woes 15 Jul 2008 US authorities have stumped up some $300bn in emergency loans and are on the hook for untold billions more to support Fannie and Freddie. Depositor bailouts could add to the bill. Yes, they d be insurance payouts, but the FDIC s skinny capital puts taxpayers at risk.
Fannie and Freddie could swamp the Fed 15 Jul 2008 Opening its discount window to the mortgage giants poses a problem. If the GSEs are forced to borrow, the likely sums would strain the Fed s current balance sheet. Aside from anything else, that could make it harder to control interest rates.
TCI suffers after war on two fronts 15 Jul 2008 Chris Hohn s UKbased hedge fund suffered a 12% fall in June s volatile markets. TCI is shielded by long lockups and a strong track record. But two big activist campaigns on different sides of the world may have been a step too far. Investors are in no mood for heroics.
SEC’s brake on short-sellers should be temporary 15 Jul 2008 Forcing investors to borrow shares in Fannie and Freddie before shorting them isn t impeding free markets it s closing a loophole. And it may prove helpful if it arrests destabilising downward stock momentum. But the SEC should avoid throwing up permanent barriers to shorting.
Perfect storm makes Fed job nearly impossible 15 Jul 2008 With producer price inflation up 9% and real retail sales falling despite tax rebates, the US economy suffers both downturn and inflation. With the financial crisis, the Fed's job has become impossible. Emerging may take years; the Fed must first discover what went wrong.
Should rescued GSEs now be slowly killed off? 14 Jul 2008 Fannie Mae and Freddie Mac distort the US economy, and one option now available is gradually to kill them off. They can t be closed immediately, but if they were run down though higher fees and lower salaries, market forces would probably replace them within five years.
Rumours shouldn’t be SEC’s priority 14 Jul 2008 Sure, the US regulator should go after actual wrongdoing. But negative rumours are inevitable when sentiment is at rock bottom and financial firms investments are in trouble. The priority ought to be executives who have assured investors all was well when it plainly wasn t.
Bureaucrats should stay out of CDO mire 14 Jul 2008 US legislators want to bar rating firms from slapping tripleAs on structured finance deals not first blessed by the SEC. But that's not regulators' expertise. Instead, they should eliminate perverse incentives by forcing banks to hold more capital against newfangled deals.
Fannie, Freddie are US government’s monster SIVs 10 Jul 2008 Like the banks that ignored their contingent exposures to offbalancesheet vehicles during the boom years and lost billions when things soured, the US chose to pretend it wouldn't ever have to back the mortgage giants. Now it faces an unpleasant reality.
GLG latest hires confirm hedge fund power shift 10 Jul 2008 With its two latest hires from Morgan Stanley, the UKbased hedge fund group should more than plug the hole left by Greg Coffey s resignation. GLG s ability to lure top traders who might easily go it alone confirms the growing power of top hedge fund franchises.
Hedgies’ poor six months is less dire than it appears 9 Jul 2008 The average hedge fund lost 0.75% in the first half of the year. For investors paying stiff fees for steady returns, that s a disappointment. In reality, though, plenty of funds track market performance to some extent. Against the S&P 500, say, hedge funds didn t do badly.
SEC should look to UK’s rules for equity swaps 9 Jul 2008 US regulators are thinking of changing disclosure rules for nonvoting stakes held through derivatives. It s about time these instruments can be used to amass positions on the sly and to sway management. The UK shows how it should be done.
Templeton was value investment’s trend-setter 8 Jul 2008 Sir John Templeton pioneered globally diversified mutual funds and investing in Japan. His returns were not as good as Buffett's value investment's other leading light. But he made money in public markets rather than private, and handily outperformed broad indices.
Letter to the editor: Gulf exchanges 8 Jul 2008 Gary Long, president and COO of Investcorp, says NYSE Euronext s plan to invest $250m in the Doha Securities Market is encouraging, but more progress needs to be made if Gulf markets are to experience truly sustainable growth.
GLG answers critics with Goldman star raid 7 Jul 2008 Poaching Driss BenBrahim from Goldman to replace Greg Coffey is a coup for the UKbased hedge fund group after recent travails. It's not clear how much of GLG's $250m Coffey pot it had to raid to fund the hire, but it shows the shift in power from universal banks to boutiques.
Thain faces fire-sale dilemma at Merrill 7 Jul 2008 Reports suggest the Merrill Lynch boss is leaning towards selling some or all of the firm s Blackrock and Bloomberg stakes to raise capital. But that wouldn t be easy, and would crimp earnings. Raising new equity risks diluting shareholders, but may be a smarter solution.
Venture capital needs less capital 3 Jul 2008 VC firms are stuffed with cash they can't put to work. The IPO market is the worst since 1978 and venturebacked M&A is down over 40% from last year. The flailing economy isn t solely to blame. It's time to return money to investors.
TPG may have get-out clause with B&B. Oops 2 Jul 2008 If the UK mortgage bank is downgraded again and it is already on credit watch the private equity group would be able to pull out of its deal to inject capital. All the more odd that B&B allowed underwriters to renege on an earlier deal to provide equity at a higher price.
Wounded banks join missing decade club 2 Jul 2008 Lehman blames rumourmongering shortsellers for investors' shortage of confidence. The firm s shares may have fallen hard in recent months, but it isn t alone in taking its shareholders back 10 years. Citigroup, WaMu, UBS and many others are firmer members of the club.
Bank of America may need to raise more capital 1 Jul 2008 Buying Countrywide for less than a quarter of book value might look cheap. But the mortgage lender could saddle BofA with as much as $30bn in losses and more in legal costs. That would easily wipe out the buffer, and force BofA boss Ken Lewis to shore up the balance sheet again.