Marsh & McLennan finally examines a split 21 Dec 2007 Boss Michael Cherkasky is out as well. He cleaned the stables well after two major scandals. But the group s awkward structure was his downfall. Combining insurance brokerage, consulting and a detective agency is neither simple to manage nor sensible.
Thain prepares Merrill for a kitchen-sinking 21 Dec 2007 Temasek s mooted $5bn capital injection indicates that the Thundering Herd s new boss will take another $8bn or more of writedowns. He needs the Singaporeans to replenish capital without resorting to fireselling assets like its Bloomberg stake.
MBIA’s CDO-squared surprise shows bad judgment 20 Dec 2007 Shareholders and lenders pummelled the bond insurer after it revealed $8.1bn of exposure to the riskiest sorts of CDOs. It should have come clean earlier. Now it has lost even more of the market s confidence, just when it may need it most.
Massive ACA downgrade reflects raters’ incompetence 19 Dec 2007 Ratings agencies are bond insurers de facto regulators. By downgrading ACA by 12 notches in one fell swoop, Standard & Poor s failed in this role. Rather than highlighting ACA s deterioration over time, it pushed it off a cliff leaving bondholders holding the bag.
Aussie CDO rumpus adds blame to fear and greed 17 Dec 2007 Several Australian municipal councils are reported to be considering lawsuits against the bankers who sold them CDOs. But like others the world over, they bought the CDOs out of hunger for high yields, and they should take most of the blame themselves.
Rising US inflation undercuts case for rate cuts 14 Dec 2007 Consumer inflation in November was 4.3%, up from 2% in August. That pace is above anyone s target. With the overnight rate at 4.25%, the case for further cuts is looking weak, especially as retail sales are strong. An end to Fed rate cuts would hurt equities and help the dollar.
Rewriting history, for immortality’s sake 13 Dec 2007 Alan Greenspan and Sandy Weill are worried about their legacies. Rightly so. The dangerous implications of their past decisions are becoming all too clear. But as retirees albeit influential ones they can't do much more than offer a bit of revisionist history.
Hedge funds face financing squeeze in 2008 12 Dec 2007 Most hedge funds managed to survive the credit crunch in 2007 in reasonable shape. But next year will be much tougher as prime brokers scale back cheap funding. The answer is to secure longerterm financing but for many it may already be too late.
Fannie Mae and Freddie Mac should be privatised 12 Dec 2007 The US mortgage giants have outlived their public usefulness. They ve also proved themselves no more prudent than competitivelydisadvantaged freemarket rivals. Their subsidies should go, and they should be left to live or die on level terms with other financial institutions.
Credit crunch accelerates FTSE churn 12 Dec 2007 Tighter credit and a generally unforgiving attitude by the market to poor performers has led to much more rotation in the bluechip index than normal. Expect that to continue.
Demise of SAC offshoots is guide to hedge fund future 11 Dec 2007 Big hedge funds will get bigger while the minnows struggle. Two tech funds started by SAC alumni are cases in point. One is recombining with Steven Cohen s giant fund. The other is closing. Neither has performed badly they were just too small to hold investors interest.
UK must end financial compensation confusion 11 Dec 2007 Overhauling financial service consumer compensation has become a red tape nightmare. Three separate reviews only one triggered by Northern Rock could mire the industry in piecemeal reforms. Swiftly concluding the review of bank deposit compensation is the best way forward.
Crunching costs threaten UK equities 10 Dec 2007 UK companies financing and input costs are soaring and the consumer looks weak. Yet the UK equity market is counting on higher earnings growth in 2008. That leaves lots of room for painful disappointment.
Brazil’s sovereign wealth fund is pointless 10 Dec 2007 Brazil has more foreign debt than reserves, so does not need a sovereign wealth fund a rich country s plaything. Its payments surplus is too small to require intervention against the real s rise. It should let the market rule and benefit its citizens through cheap imports.
MBIA receives rare vote of confidence 10 Dec 2007 A $1bn infusion from Warburg Pincus checked a freefall in the monoline s shares. Whether it s enough capital to see MBIA through the credit crunch is unclear. But in a business where market confidence is crucial, attracting a highprofile backer may be more valuable than cash.
Perelman latest to test Spac investor gullibility 7 Dec 2007 The Revlon boss has filed for a blankcheck IPO. Despite his iffy track record, investors will probably give him the $500m he wants. After all, two relatively obscure financiers just raised the largest Spac ever. Investors should be more skeptical.
Munich Re activist takes softly-softly approach 7 Dec 2007 Don t expect a repeat performance of Algebris attack on Generali. Cevian is more likely to work behind the scenes to improve the German giant s sluggish performance. Cost cutting rather than spinoffs will probably be on its menu for change.
Bloomberg not for sale, or so he says 6 Dec 2007 The New York mayor s deputy, a former private equity boss, will become president of Bloomberg LP. Bloomberg insists this doesn t presage a sale of his company. He said he d never run for mayor, too. But a buyback of Merrill s stake in Bloomberg could be on the cards.
A really useful mortgage bailout toll-free number 6 Dec 2007 The Bush administration thinks some 1.2m adjustablerate mortgage holders could be helped by its new plan to freeze teaser rates for five years. But all those borrowers may swamp its tollfree phone counselling service. Here s a proposal to automate it and speed things along.
Dollar’s fall gives buyout investors a headache 5 Dec 2007 The weak dollar is taking a toll on buyout funds raised in Europe that invest in America. Although it s largely a question of presentation, this won t please the fund investors. But hedging is nearly impossible currency risk comes with the territory.