Turns out mortgages weren’t the only toxic assets Wall Street decided to package into CDOs. Small community banks issued billions of dollars in trust preferred securities before the credit crunch as a way to prop up their capital cushions. Problem was, the only way they could sell the so-called TruPS to investors was to combine them with other trust-preferreds in CDOs. Continue reading »
cdos
So there’s this guy. A mild-mannered professor who retired a decade ago and decided he would serve as an independent director of this new booming financial product called a CDO. He collected a few thousand bucks a year for basically signing some documents. Sounded like a decent gig and a good way to make some extra pocket change. Continue reading »
The government’s going to stick its nose in Morgan’s bidness, not inform anyone at the bank about what it’s up to and then leak the investigation to the press? OH NO, THEY DI’INT. This was not how Dick Bové wanted to start her morning but, damn it, you bitches have forced her hand.
Stan O’Neal Speaks, Clarifies The Whole Destruction Of Merrill Situation, Explains What The CDO Problem Felt Like (“Being Punched In The Face…Kicked In The Balls”)
By Bess Levin
A lot of people are of the mind that many of the decisions made by Stan O’Neal were responsible for the fall of Merrill Lynch. Decisions such as the ones to fire very senior, long-time employees once he was named CEO, take on a massive amount of risk, perhaps more than was, let’s just call it “prudent,” in the name of profit, etc, etc, etc. The fact that he increased ML’s investments in CDOs from around $1 billion to around $40 billion (-ish) in about 18 months or so, which caused the bank to writedown $8 billion (give or take a few mill) in October 2007, and book its largest quarterly loss ever ($2.24 billion) are things such people cite when they make this argument. But here’s another theory, which is being tested out this morning. Tell me what you think of it: None of this was Stan O’Neal’s fault.
Now, before you jump down my throat, hear me out. This lesser known interpretation of facts comes from someone extremely familiar with the firm, and events that transpired during the O’Neal era. Someone who could tell us, definitively, if we’ve been wrong all along about the former CEO. Obviously, I’m talking about Stan O’Neal. Continue reading »
And back at the let’s break-the-banks-or-not Davos game–today: Stiglitz gives his two cents. The Nobel Prize laureate, on team Roub-WB, is calling for more regulation.
“When they win they walk off with the profits, when they lose the taxpayer pays,” he pointed out. “We really need to go more directly at these issues like incentives.”
(click image for full power point presentation; via The Big Picture)
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