Geithner Pushes For Oversight (WSJ)
At the Congressional hearing today we’re going to hear Geithner’s best on systemic risks to economy, and changes necessary to prevent them going forward (there’s good reasons for not making brash decisions when emotions are high, you end up with things like the Patriot Act). There’s talk of changes to the rules of risk management in Banks, though we’re not entirely sure what that might look like; the only thing concrete that we’ve seen from the Administration thus far is that they want the ability to seize or take over any institution that’s imminent collapse could cause damage to the economy. Good stuff.
“One area where the U.S. is departing from its European allies is the Obama administration’s approach to hedge funds, private-equity firms and venture-capital funds. Mr. Geithner is expected to ask Congress to require all of these firms over a certain size to register with the Securities and Exchange Commission and disclose certain information so government officials can determine whether their size or complexity puts the broader economy at risk.”
AIG Managers In Paris Resign, Billions Could Default (WSJ)
“The executives at Paris-based Banque AIG, Mauro Gabriele and James Shephard, have resigned in recent days but have agreed to stay on for a transition, according to people familiar with the matter. In the wake of their resignations, AIG must replace them to the satisfaction of French banking regulators.
If they don’t, French regulators may appoint their own designee to manage the bank — an outcome that could trigger defaults under the bank’s derivative contracts. The private contracts say that a regulator’s appointment of a manager constitutes a change in control, according to a person familiar with the matter; the provision is often included in derivative contracts where parties want to preserve a way out if something about their counterparties changes.”
EU Leader Condemns US “Road To Hell” (FT)
I’m sure it wasn’t meant like that, probably a cultural difference. Something lost in translation, or maybe, I dunno – he’s been drinking?
“”The US Treasury secretary talks about permanent action and we, at our spring council, were quite alarmed at that . . . The US is repeating mistakes from the 1930s, such as wide-ranging stimuluses, protectionist tendencies and appeals, the Buy American campaign, and so on,” he told a European parliament session in Strasbourg. “All these steps, their combination and their permanency, are the road to hell.”"
PIMCO Calls For Fed To Double Balance Sheet (Reuters)
I’ll leave it to you: Genius or Mad Man?
“Bond giant Pacific Investment Management Co said the Federal Reserve needs to double its balance sheet up to $6 trillion to replace the amount of wealth destroyed in the United States, an executive said on Thursday.
Liabilities on the Fed’s balance sheet should rise to between $5 trillion and $6 trillion later this year amid the financial crisis that roiled global markets, said Brian Baker, chief executive Pimco Asia Ltd.
“Right now, the Fed has spent about $3 trillion. We believe there has to be further stimulus policies put in place,” Baker told Reuters.”
Barclays Officers Land In Hot Seat (WSJ)
So, here’s what’s up: the kids over at Barclays have been doing their best to keep the bank from Government control (kind of not easy in Britain), but it doesn’t look like they’re going to be successful. Meanwhile, not only have they put themselves up for re-election early for the board seats, but they’ve been trying to sell all kinds of shit. Oh, and also, if they try to raise capital they turn control of the bank over to investors from the Middle East:
“Along the way, Messrs. Varley and Agius have made some calls that are now putting them in a tough spot. Last fall, in an effort to avoid government ownership, the bank raised £7 billion from investors from Qatar and Abu Dhabi, who received securities similar to preferred shares paying 14% annual interest.
The deal includes a clause that could give the Middle Eastern investors control of the bank if Barclays issues shares to raise fresh capital before June 30. Many shareholders still are angry that they initially didn’t get the same terms, according to a person familiar with the matter.”
Governments Unwilling To Prosecute Pirates (Bloomberg)
While it’s clear they could prosecute them, they’re not – it’s just too much of a pain in the ass, apparently. So this is really more like a pirate catch and release program, pirate fishing?
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- Use the Bloomberg command
NH BLG_DEALBREAKER <GO>
to access Dealbreaker
let’s put the mateys in guantanamo!
Pirates are the enemy of all mankind – traditionally regarded as outlaws they were subject to summary execution by any authority of any sovereign. I don’t know why that rule isn’t followed today. After a few thousand of these scumbags set out in their shitbox dhows and never return the fucking Somalis might get a clue and knock it the fuck off.
Hire a few ex SEALs and let them track the pirates. The amount to fund those guys will be less than the amount already paid in ransoms. i mean one ship fought them off with water cannons.
“If they don’t, French regulators may appoint their own designee to manage the bank — an outcome that could trigger defaults under the bank’s derivative contracts. ”
What?!?! Would that mean we won’t have to fork over any more billions?! We should have done that ages ago!
Plus the added benefit of blaming it on the French. Bunch of cheese eating surrender monkeys.
@4 – um, you are an idiot.
If the defaults are triggered that means we have to fork over MORE billions.
Once again we see the folly of Congress fomenting populist outrage. I hope AIG’s key employees all get fed up and resign – and leave the problem for Congress to figure out.
@4
Would assume a default would cause us to fork over much *MORE* billions.
Not sure why you think defaulting would improve our position…
Eric Dinallo on Squak Box: ” We allowed WS to create a shadow world which we could do nothing about” I really hope there is a tape of what he jsut said because he nailed it.
How do you get on Art Cashin’s friends list?
@6,7 – Not necessarily. We could let the counterparties get what they can through bankruptcy court. The US taxpayer is currently making counterparties whole because of “systemic risk”.
Whatever navy captures the pirates should indeed hang them from most convenient yard-arm. Of course, the second-guessing, victim-mongering pukes of the MSM will shortly thereafter start running stories along the lines of “The last time Fatima Faarah saw her husband Mohammed, he was setting off from this small port in Puntland on a fishing voyage. He never returned. Mohammed was hanged aboard the U.S.S. Whatever as an alleged pirate. But people in the village say he and the 6 men hanged alongside him were simple fishermen…”
@10
Bankruptcy would involve wiping out shareholders, correct? If so, there goes the 80% of AIG that taxpayers own…
8- wtf does williams sonoma have to do with it? Did he get a bunk breadmaker as a wedding gift or something?
And who is “overseeing” Tiny Tim’s taxes this year?
@ 11 — LMAO – that reads like a friggin NPR piece– all you need is the baby crying in the background
@6,7– “The private contracts say that a regulator’s appointment of a manager constitutes a change in control, according to a person familiar with the matter; the provision is often included in derivative contracts where parties want to preserve a way out if something about their counterparties changes.”
Doesn’t sound like the whole firm defaults, only, potentially, those private contracts.
http://tinyurl.com/curfx2 Seriously congress? Seriously?
whatever happened to walking the plank?
@16
Pretty sure that (1) when a firm defaults on a contract, it has to do something to make whole the counterparty (e.g. pay up immediately) and (2) most/many contracts and debt agreements have cross-default language, so this could lead to the “whole firm” defaulting, whatever you mean by that.
“Treasury Secretary Timothy Geithner will ask Congress to bring large hedge funds, private-equity firms and derivatives markets under federal supervision for the first time as part of a revamp of U.S. financial rules.” http://tinyurl.com/ddrmud
@19 if the firm defaults, how can it make the counterparty whole? that makes no sense.
@17/20 Please stop posting links here to your shitty little sites. K? Thx.
@21
You’re retarded.
Q: How many French men does it take to defend France?
A: Who knows?
#22, you consider Bloomberg a “shitty little site?”
@ab– you must have worked in the AIG risk department. no wonder we’re screwed.
first off, @11, that’s brilliant.
second, i really hope that the people at AIG tell the govt to do one. then when they leave and some fuckwit in govt is in charge of doing deriv trades then there will be even more bailout money to mop up the mess! and people* will look back and say “maybe the $160mil in bonuses would have been better than another $160bil in losses”.
*- obviously this will be govt in some form or another.
watching the govts of the world mess this up is painful, car crash, teeth-pullingly painful.
OK, here’s a dumb question — why not have something like an electric cattle guard around your ship? Nothing beats the combination of electricity and water, and imagine the look of surprise on Falafel Fred’s face when he gets his kabobs Tasered and falls back into the water?
Allah Allah akhbar indeed!
Installation fees, maintenance — could be a real moneymaker.
@26
Really? Since you don’t understand how a defaulting company can make it’s creditors whole (liquidation, for example?), you should just go back to the Yahoo Finance message boards.
@11 – Nice work.
New rule:
DB is not twitter.
There is no reason to use tinurl (etc).
You want to post a link, be transparent and post the actual URL.
That is all.
Aren’t CDS brokers just pirates of finance? Shouldn’t they be hanging from Wall Street lamposts then, by logic above?
Whatever the economic climate, the correct answer is always to buy Bill Gross’s bonds. As Bill Gross’s bond portfolio goes, so goes America!
Seriously though, could he just start doing infomercials instead of blanketing CNBC, bloomberg, and every op-ed page he finds willing to publish his self-serving drivel? I want to see his economic analysis where it belongs: between shamwow and the new wave oven.