Does it frost anyone else’s cookies that the FDIC comes out with a “list” of 252 “problem banks” (up 47% from the third quarter) but refuses to name names? Really, what’s the point? (Yes, we’re aware of the potentially dire consequences of calling banks out but this is about entertainment value.) Anyway, since SheBair insists on keeping it under wraps, let’s decide here who’s on it, or should be. Hopefully a note from the woodland creature will be forthcoming.
Related: “Who Is Next?”
Archive for February 2009
So what happens when your federal agency get publicly skewered with the most detailed, scathing (and likely accurate) verbal disemboweling this side of a re-run of “The Equalizer?” Why, you get double digit budget raises, of course.
The Securities and Exchange Commission is expected to receive a 13% funding boost next year, bringing its 2010 budget to about $1.02 billion.
The boost comes after several years of static funding levels and at a time when the SEC has been criticized sharply for inadequate oversight of the markets and enforcement of securities laws.
The administration said the SEC would use the additional funding to increase staff and its use of technology to “pursue a risk-based, efficient regulatory structure that will better detect fraud and strengthen markets.”
SEC May Get 13% Funding Increase [The Wall Street Journal]
As you know from the Opening Bell, change is in the wind for student loans, but not exactly in the way we expected. Sallie Mae is down 40% today on the news that subsidies for student loans may well be a thing of the past if Obama’s budget gets its way.
It will come as no surprise that we are hardly fans of subsidies, but we are hard pressed to find a subsidy we like better. True, this may have the effect of deflating the bubble in higher educational costs, but Sallie is only about a fifth of the size of Fannie.
This isn’t exactly the place we’d look to shock the system just now. (Now that we think of it, however, it would get a bunch of those snotty college kids and MBAs into the workforce filling potholes).
Hmmm. Dumb the country down. Reduce the number of property owners. This way we could make millions of jobs building dams and manufacturing solar panels by hand. Could work.
Obama Calls for End to Loan Subsidy for Sallie Mae, Citigroup [Bloomberg]
The aforementioned population restructuring at the House of Blankfein is said to be going down circa now. Presently filling the conference rooms are research and equity sales.
I don’t know if I ever told you guys about this but I’ve got this game I like to play with myself sometimes called “Middle-aged fraudster Or Pre-Teen Princess?” Occasionally I get tripped on trick questions, the answers of which turn out to be “confused adolescent boy” but my track record’s prettay prettay prettay good. Basically I’m kind of a pro at this, bested only by Larry Robbins, who’s like crazy good. Today, though, I have to swallow my pride and tell you that I straight-up failed this one. Answer: “[They spent their allowance on] ponies and an $80,000 collectible teddy bear.”
Antigua and Barbuda Prime Minister Baldwin Spencer, he of “I’m not sure if Allen Stanford’s here but my gut feeling is probs not,” needs your help. His gov wants to meet with employees of Sir Stanford’s companies in the area, but is having trubs with the logistics, namely an appropriately-sized space and sufficiently festive food.
“It’s quite a lot of employees, we have to find a venue,” PM Spencer said in an interview with the Antigua Sun. “And how do you feel about shrimp puffs,” he asked us in our minds, knowing we know a guy. Also causing Baldy sleepless nights is what to do with the employees once they get there. Twister, sure, and perhaps an after party key party, but what else? As of now he’s drawing blanks.
Spencer explained that they want to have something tangible to tell the employees. “We recognise that a number of critical questions will be put to us. The whole idea was to generate some degree of confidence and to let the employees know that the government will be doing all that it can within pragmatic and practicable areas to bring assistance,” Spencer said. “It is a complicated issue, not a straight forward matter but we are interested in the welfare of the employees.”
While we can’t be of any assistance there (and given that we’re of the Wall Street CEO school of inspiring confidence via memos free of any actual deets, we don’t want to be), but we do have some ideas re: a space to throw the thing. Mind you these are merely jumping off points, and surely you can do better, but just to grease the wheels, what about:
So unless you just crawled out of bed still in your Greenspan Underoos because you no longer have an office to go to, you probably know that General Motors is looking at a 2008 loss of $31 billion. Don’t worry though, because this is about what we expected.
Perhaps it is our cynical side, but does anyone really believe that these firms are going to be anything but a huge gravity well for cash for the next 20 years? In all seriousness, under what scenario is it possible to imagine that anything resembling General Motors can even arguably make back a fraction of what has been and will be dumped into it in the next five years?
In 2006, Nissan- the best of the Japanese manufacturers that year on this metric- pulled in about $2,100 in profit per car (Honda and Toyota were in the $1,200 – $1,500 range). Assuming General Motors could manage to recover Nissan’s margin (and this is Disneyland levels of fantasy) they would have to push over 14 million vehicles out the door just to cover the 2008 loss. For perspective, GM sold about 8.3 million vehicles in 2008 with more than a dozen brands, and not only have they been forced to cut capacity and brands, but demand might not even get that good again.
Ok, that’s probably not a fair analysis, since the $31 billion is sunk cost. Surely, we aren’t going to have to dump that much money into GM again… right? Ok, what about the $12 billion in underfunded pension liabilities yet to come? The $[whatever] billion in cash they are about to ask for? The however much they burn through in the next five years?
It might be time for GM to punt.
General Motors Corp posted a nearly $31 billion loss on Thursday for 2008 and said its auditors were likely to cast doubt on its viability as it seeks an expanded federal bailout to stay afloat.
GM, which asked for up to $30 billion of U.S. government aid, posted losses in all of its major units during the fourth quarter and it burned through $6.2 billion of cash. Revenue plunged by more than a third.
GM posts massive loss, auditor may question viability [Reuters]
Cuts are said to be going down circa now at Bank of Amerillwide, with associates in High Grade Capital Markets bearing the brunt of the cannings, as well as at least a gaggle of asses in LevFin Syndicate. Apparently analysts are “at risk” today through early March, with VPs and above, who weren’t shown the door by January 21, getting the axe at the next round in May.
“Nothing to see here. Move along, move along! Sign that the economy might have to reset itself? No, no. Not that at all. Quite the reverse. You people see problems, I see opportunity.”
In reality, it seems pretty clear that the economy needs to do some major adjusting. Unfortunately, there is simply no quick fix. Equally unfortunately, expectations seem so high (even Bernanke was talking beginnings of a recovery at the end of the year) we wonder if there isn’t a rather big disappointment ahead.
New U.S. claims for state unemployment benefits unexpectedly jumped last week to a 26-year high while total claims cracked the five million mark for the first time ever, the latest evidence that the already severe recession is deepening as it extends into its second year.
Separately, durable goods orders plunged in January, a sign of future demand fell, and a barometer of capital spending by businesses dropped, according to data showing how the recession is battering the factory sector.
Initial claims for jobless benefits rose 36,000 to 667,000 after seasonal adjustments in the week ended Feb. 21, the Labor Department said in a weekly report Thursday. That’s the highest level since Oct. 2, 1982, although the labor force was much smaller then.
Total Jobless Claims Top 5 Million; Durable-Goods Orders Drop [The Wall Street Journal]
Bearpont Morgan Mutual said today it expects cuts from the Washington Mutual acquisition to clock in at about 12,000 total. Boy-toy CEO Jamie Dimon to forgo the razor indefinitely in show of solidarity.
