Dallas Fed's Fisher Rages Against TBTF, Says Only Way To Remove Systemic Risk Is Shrinking The MegabanksSubmitted by Tyler Durden on 06/03/2010 21:10 -0500
In a speech before the SW Graduate School of Banking, Dallas Fed's Richard Fisher comes out swinging, blasting his boss Ben Bernanke and his policy of globalized moral hazard: "Let me make my sentiments clear: It is my view that, by propping up deeply troubled big banks, authorities have eroded market discipline in the financial system. It is not difficult to see where this dynamic leads—to more pronounced financial cycles and repeated crises." And just in case listeners missed the point, he followed up: "Just this morning, the Washington Post summarized the impasse that inevitably blocks treatment of the TBTF pathology. In an article on preparation for this weekend’s Group of 20 talks on bank reform, it was noted that “some” participants “remain hesitant to lean too hard on banks they consider vital to their national economies.” This hesitancy only perpetuates the problem: The longer authorities delay the process, the more engrained behemoth financial institutions become; the more engrained they become, the less extricable they are. And so the debilitating disease of TBTF spreads. What appears “vital” becomes “viral” and grows ever more threatening to financial stability and economic stability."
Time to look past short-term market turbulence and see why fundamentals are improving. It will be volatile, but the market will keep grinding higher. Choose your stocks and sectors carefully, however, the big beta moves are over.
Failed CajaSur Fallout Accelerates: 4 Spanish Savings Banks To Merge In "Cold Fusion", €135 Billion In Assets At StakeSubmitted by Tyler Durden on 05/24/2010 12:23 -0500
Reuters and Bloomberg report that 4 Spanish savings banks are set to merge, likely as a result of the pent up fallout from the failure of CajaSur, which as we noted earlier, was taken over by the Bank of Spain. The culprit it appears is Caja de Ahorros del Mediterraneo which is merging with 3 other banks, Caja de Ahorros de Asturias, Caja de Ahorros de Santander y Cabria and Caja MP de Extremadura, to prevent a collapse. Since Spain apparently lacks the FDIC's tender wealth redistribution hand, it is still unclear whether the transaction will obtain government funding. Just as the subprime collapse started with a few names toppling, this could easily be the start of implosion of the allegedly insolvent Spanish banking system.
Lars Schall of MMNews Germany has recently interviewed many outspoken critics of the inner workings of our global financial system including former Federal Housing Commissioner and Solari Inc. President Catherine Austin Fitts and Associate Professor of Economics and Law at the University of Missouri,Kansas City (UMKC) William K. Black. Below is my recent interview with Mr. Schall.
Here's a partial list of ways in which we've REALLY been bailing out the behemoths.
Bear's execs say, "We didn't do it. It's not our fault. Evil speculators conspired against us, and investors irrationally made a run on us." They have no clue and they sound pathetic. Perhaps they should have read two little books.
Anyone (I'm talking to you, Larry Summers) who says that giant banks aren't bad for the economy should be sent this list ...
Goldman employees have incriminated the company in the quest for compensation, but I have the solution...
As Bruce Krasting disclosed yesterday, Goldman's Josh Birnbaum "slipped" when disclosing the firm's prop equity positions, in listing the companies his firm was actively shorting. We hope none of these were naked shorts as that would not reinforce the case of prudent risk management by Goldman's discount window-accessible hedge fund (in other words, the entire firm). Today, via the full exhibit list, we learn that in addition to Bear Stearns, in July 2007 the firm, via Josh, was also actively shorting a variety of other mortgage-related firms at the Structured Products Group via puts, which in addition to Bear, included Moody's, National City, PMI,WaMu , and Capital One. The firm only had a micro S&P long offset. As the list demonstrates, the firm had a big delta short in fins offset with no financial longs, thus refuting Josh's testimony that this was a "hedge" when in reality this was nothing than a directional short bet on fins. What is more troubling is that Josh was planning on expanding the list to a whole slew of other firms, and specifically competitors, most of which eventually going under: including Lehman, Merrill, and Morgan Stanley.
I think he did.
Goldman Sachs claims great risk management skills, while it shirks responsibility for its role in the near collapse of the U.S. economy. The former is a myth, and the latter is a dodge.  As taxpayer wealth was destroyed, Goldman exploited the financial crisis it helped cause, while the U.S. was (and remains) at war.
Goldman Sachs released its 2009 annual report today showing it made net revenues of $45.17 billion with net earnings of $13.39 billion. In its shareholder letter, Goldman says it repaid TARP money, but did not mention the massive new taxpayer subsidies it continues to enjoy.
"Goldman did not and does not operate or manage our risk with any expectation of outside assistance."
Yet due to the influence of highly placed Goldman Sachs former officers, Goldman received--and continues to receive--enormous assistance from taxpayers.
CalPers Joins Everyone Else Who Has Lost Money Or Stands For Reelection, In Reevaluating Goldman RelationshipSubmitted by Tyler Durden on 04/20/2010 19:37 -0500
Today's Casablanca moment of the day is brought to you by CalPers. The latest entity to be shocked, SHOCKED, at just what Goldman's standard operating procedure has been for many, many years is none other than the world's largest pension fund, the California Public Employees' Retirement System (and repeat Goldman client), which itself has been having quiet a few problems recently, and not just ethical ones, but more importantly performance related ones. The irony is that were Goldman to close tomorrow, the outcry from all these same hypocritical bandwagoneers would have been ten times louder.
Politico has released the Voice Mail that Lloyd's blasted to all employees on Sunday night. In it we read that Lloyd still thinks his firm has a reputation, let along one which must be defended. The most amusing part is where the CEO tells workers to "maintain the level of focus
on our clients" - we assume this means using Goldman's extensive idiot-rolodex, calling up the dumbest of the dumb money and using GS' "brand and reputation" in selling them whatever the most recent version of toxic crap that the smarter money du jour wants to short via Goldman and its second to none flow and prop desk.
Former Outdoorsman, Goldmanite And "Chump" Neil Kashkari Discusses PIMCO's Equity World Domination StrategySubmitted by Tyler Durden on 04/18/2010 23:07 -0500
A former Goldmanite who failed to bail out the world and was called a Chump by Elijah Cummings, proceeded to chopped down trees for kindling and fight off bears in the backwoods, is now stuck peddling a second-tier equity product for a bond fund. The world sure is messed up.
Athens Exchange Posts Craigslist Ad ISO "Market Surveillance System", Launches New Greek Bank FuturesSubmitted by Chopshop on 04/18/2010 15:23 -0500
Though the Greek push-of-war between the ECB and IMF has been postponed until Wednesday, a new FTSE/ATHEX-CSE Banking index futures contract begins trading on Monday. With the fiscal future of Greece literally hanging in the balance, what could possibly be more fitting in the interim than the launch of a new futures contract containing the words 'Greek' and 'bank' ?