Credit Line

DOJ Is Assessing Size Of Criminal Penalty It Can Levy On Volkswagen "Without Putting Company Out Of Business"

When two weeks ago the DOJ announced a whopping $14BN settlement "ask" from Deutsche Bank, some wondered if there was an element of punitive retaliation aimed at Europe's "assault" on Apple's taxes. That question will surely grow louder when overnight Bloomberg reported that the DOJ is now assessing "how big a criminal fine it can extract from Volkswagen AG over emissions-cheating without putting the German carmaker out of business."

Frontrunning: September 22

  • Stocks Advance in Unison With Bonds as Fed Inspires Global Rally (BBG)
  • Soothing Fed gives stocks their mojo (Reuters)
  • Yellen helps Clinton dodge a bullet (Politico)
  • State of emergency called to quell Charlotte unrest over police shooting of black man (Reuters)
  • Hillary Clinton Leads Donald Trump by Six Points in Latest WSJ/NBC Poll (WSJ)

Developing Countries Emulate The US, Turn Citizens Into Debt Slaves

One of the big advantages of being a Latin American or Asian country used to be - somewhat counter-intuitively - the lack of credit available to most citizens. The banking system in, say, Brazil or Thailand simply wasn’t “advanced” enough to offer credit card, auto, or mortgage loans on a scale sufficient to turn the locals into US-style debt slaves. But that, alas, is changing as those countries adopt their rich cousins’ worst habits.

Frontrunning: September 8

  • Stock futures flat ahead of economic data, ECB meeting (Reuters)
  • Trump in TV event with Clinton, says Putin better leader than Obama (Reuters)
  • 5 takeaways from Trump and Clinton's military forum (The Hill)
  • Matt Lauer Fields Storm of Criticism Over Clinton-Trump Forum (NYT)
  • Vladimir Putin Just Wants to Be Friends (BBG)
  • Hanjin Shipping’s Troubles Leave $14 Billion in Cargo Stranded at Sea (WSJ)

The Fed Fiddles While Free Markets Burn

" is unmistakable via Mr. Fischer’s latest remarks that both the Fed. and others are quite content at bowing their monetary fiddles... All while free market capitalism burns at the altar of monetary imperialism."

Chicago Is Pushing For A Massive Bailout Of Its Public School System

Perhaps riding high on the small victory of a slight reprieve in the amount of money the city would have to contribute to fund the liabilities over the next few years, Rahm Emanuel is now quietly asking the city to change investment rules that would allow Chicago to purchase debt from sister agencies such as the Chicago Public School system - said differently, Rahm Emanuel wants to bail out the Chicago Public School system.

China's Petro-State "Lender Of Last Resort" Conundrum

China is increasingly becoming the petro-state lender of last resort. The primary reason for that is producer states are rapidly running out of time to prevent full scale political implosion on the back of chronic economic pressures. For all the hype around current ‘price recovery’, it means absolutely nothing for most producer states. It’s becoming painfully obvious that the prevailing geopolitical price of survival is structurally out of sync with geological costs of production.

Chesapeake Forced To Pledge Entire Company As Collateral To Preserve Existing Credit Facility

Today the stock of CHK is surging following the good news that contrary to some expectations, it did not lose access to its $4 billion line of credit. However, that came at a cost: to preserve its full $4 billion availability, Chesapeake was forced to pledge almost all of its natural gas fields, real estate and derivatives contracts. In addition to most of its gas and oil reserves, Chesapeake pledged as collateral all hedge contracts, property, deposit accounts and securities, subject to certain undisclosed carve-outs, according to the regulatory filing. In other words, the entire company.

Valeant Throws Its Former CFO Under The Bus; Accuses Him Of Cooking The Books After Coming Over From Goldman Sachs

Back in October, we tried to "tie the Valeant roll-up together by presenting The Goldman "Missing Link" in which we showed that Howard Schiller, Valeant's CFO from December 2011 to June 2015, previously ran Goldman Sachs’ health-care practice until 2009, when he became the chief operating officer of Goldman’s investment bank. The next year, the bank advised Valeant on its breakout purchase of Biovail Corp. Today, as part of its stunning announcement earlier today, the company - in looking for easy scapegoats - also threw its former CFO under the bus and accused him of cooking the books.

The Liquidity Endgame Begins: Whiting's Revolver Cut By $1.2 Billion As Banks Start Slashing Credit Lines

Whiting, the largest oil producer in North Dakota's Bakken shale formation, had $2.7 billion left on a loan revolver at the end of 2015. Its CEO Volcker said on Thursday he expects Whiting will have "at least $1.5 billion" left on the loan after the redetermination, implying a cut of $1.2 billion. What is most troubling is that as recently as late February, or just a few weeks ago, the company said it expected a cut of no more than 30%, which would have been roughly $800 million.

The Next Cockroach Emerges: Including Undrawn Loans, Canadian Banks Exposure To Oil Doubles

One month ago we also wondered what other cockroaches may be hiding inside the uncharacteristically optimistic Canadian banks' balance sheets. The first answer was revealed today when Bloomberg reported that if one includes untapped credit loans Canadian banks’ exposure to the struggling oil-and-gas industry more than doubles from the current C$50 billion in outstanding loans generally highlighted by Royal Bank of Canada, Toronto-Dominion Bank and the country’s four other large lenders in quarterly earnings calls and presentations, to C$107 billion ($80 billion).