Bloomberg is now reporting that Wells Fargo will need $15 billion in new capital as a result of its stress test. This is a lot less than Bank of America’s $34 billion (or so), but it’s still something of a comedown for a bank that has been making the argument that it
Wall Street & Markets
For the stock market, is it 1982 or 1974?
Barry Ritholtz asks the big question for stock market investors:
In terms of historical analogies, investors should be asking themselves: Is this move more like 1982 or 1974?
It’s gotta be 1974. Late that year, the stock market began to bounce back from the collapse of 1973-1974. It topped out in late 1976, then spent the next six years …
Tough times for Wall Street’s “middle class” in Ridgewood, NJ
Mark Clothier and John Helyar have written a fine Bloomberg article about tough times in Ridgewood, NJ, that doesn’t seem to be available anywhere on the Bloomberg site but is reprinted at length in the Newark Star-Ledger (thanks to Jim Kim of Fierce Finance for the initial tip, although I ended up having to find the article myself). …
In the future your bank might also sell you toilet paper and diet Coke
Adam Smith, who works out of our London office, has a story up on Time.com today about the problems caused by folks no longer trusting banks. He throws some numbers at us:
According to the Chicago Booth/Kellogg School Financial Trust Index, a new quarterly measure of Americans’ confidence in financial institutions, faith in banks — on
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The Senate cramdown of mortgage cramdowns
Noam Scheiber has a nice explanation of why mortgage cramdowns lost out in the Senate Thursday but safe harbor for mortgage servicers will probably make it into law.
Both provisions are about making it easier to change the terms of troubled mortgages—in particular by reducing the amount owed to reflect the collapse in home values over …
Chrysler: Bankruptcy wins
Chapter 11 bankruptcy is one of the greatest glories of American capitalism. It evolved organically during the financial crises of the late 1880s, was replaced with a more punitive code in the 1930s, and then was resurrected and codified in the late 1970s. Chapter 11 allows companies that got in over their heads to seek a way out that …
Gary Becker says markets aren’t rational; endorses Yglesias approach to financial regulation
University of Chicago economist Gary Becker, in the midst of a mostly predictable analysis of the financial crisis and criticism of the Obama stimulus package at lunch at the Milken hoedown today, said a couple of interesting things:
1) Becker has built an estimable career around the notion that individuals generally respond rationally …
So where would you rather put your money, in hedge funds or in GE and GM?
Orin Kramer, the chairman of the board that oversees New Jersey’s public pension system (and himself a hedge fund manager), says he got a call from a reporter a while back asking him whether pension fund managers could ever be expected to “understand hedge funds in the way they do GM or GE.” That got a little bit of a laugh from the …
Surowiecki gets bold in defense of Tim Geithner’s non-boldness
Jim Surowiecki, riffing on my post from last week on possible reasons for Treasury’s less-than-bold approach to the banking crisis, which was itself a riff on a Ryan Avent riff on a Gary Weiss profile of Tim Geithner (yes, we bloggers are news-gathering dynamoes), writes:
It’s true that the administration’s approach may not be bold in
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Publicly traded investment banks = big mistake
Scott Minerd, a former big-cheese investment banker at Morgan Stanley and Credit Suisse who now runs Guggenheim Partners Asset Management, isn’t a big fan of today’s investment banks. He made this clear a couple times this morning at a Milken Instutute Global Conference discussion on Private Versus Publicly Held Financial Institutions: …
Stress tests: Sympathy for Ken Lewis
I’m sitting in a one-tenth full meeting room at the Beverly Hilton for a 6:30 a.m. panel discussion on Private Versus Publicly Held Financial Institutions: Which Are Best Positioned? More than 300 people had signed up, but maybe the just added session on the swine flu siphoned people away. Or maybe the swine flu siphoned people …
The end of independent research on Wall Street
Remember how during our last Wall Street dust-up (way back in 2001/2002) we made 12 investment banks pay nearly half-a-billion dollars to fund independent stock research? They were then to pass along this research to their brokers and individual customers to go with their own (ostensibly deeply conflicted) opinions of companies.
That …