Banking Archive

Comments on Senator Sanders article on the Fed

Dear Senator Sanders, Thank you for your attention to this matter! My comments appear below: The Veil of Secrecy at the Fed Has Been Lifted, Now It’s Time for Change By Senator Bernie Sanders November 2 (Huffington Post) — As a result of the greed, recklessness, and illegal behavior on Wall Street, ...Read More

Euro Zone Strikes Deal on 2nd Greek Package, EFSF

The markets like the announcement. Of course they also liked QE2… Unfortunately, as previously discussed, without the ECB the EFSF isn’t sustainable. It’s like trying to lift up the bucket by the handle when you are standing in it. Nor is it cast in stone yet, but all subject to details. Also, ...Read More

Major Banks Likely to Get Reprieve on New Capital Rules

The real problem is if you understand what a bank is, you wouldn’t be trying to use capital ratios to protect taxpayer money. First, notice that the many of the same people clamoring for higher capital ratios have also supported ‘nationalization’ of banks, which means there is no private capital. So it ...Read More

Re: The Sunny Side

[Skip to the end] (an email exchange) >    >   On Tue, Sep 16, 2008 at 10:24 AM, Tom wrote: >    >   Hi Coach, >    >   While financial markets are in a meltdown not unlike the post 9/11 >   experience, >    yes, major deleveraging going on >    >   the good news is that central banks around the world ...Read More

Blood flowing around the clot

[Skip to the end] 2008-06-05 C&I Loans Outstanding 5yrs back 2008-06-05 Commercial Paper Outstanding SA 5yrs back Seems banks have taken up much of the slack from the commercial paper markets, but at wider spreads. Bodes well for bank earnings while it lasts, as the real economy manages to chug along, led ...Read More

2008-01-21 Update

Major themes intact: weak economy higher prices Weakness: US demand soft but supported by exports. US export strength resulting from non resident ‘desires’ to reduce the rate of accumulation of $US net financial assets. This driving force is ideologically entrenched and not likely to reverse in the next several months. In previous ...Read More

Re: banking system proposal

Dear Philip, Yes, as in my previous posts, bank stability is all about credible deposit insurance. I would go further, and have all regulated, member banks, be able to fund via an open line to the BOE at the BOE target rate. That would eliminate the interbank market entirely, and let all ...Read More

Commercial paper outstanding continues to fall

Seems to be unwinding in an orderly fashion as lending continues to flow back to the banking sector. UPDATE 1-US commercial paper in biggest weekly drop since Aug Thu Dec 20, 2007 10:41am EST NEW YORK, Dec 20 (Reuters) – The size of the U.S. commercial paper market suffered its biggest weekly ...Read More

Bank losses remain less than a year’s earnings

(Reuters article) Big Banks Lower Outlook, Overshadowing Fed Plan Three major U.S. banks said they expect more write-downs and loan losses in the fourth quarter, eroding investor enthusiam over a Federal Reserve plan to ease the global credit crunch. The warnings from the three banks, Bank of America, Wachovia and PNC Financial ...Read More

Bank capital NOT a constraint on lending

Here’s the response to Jan’s (Goldman) concern about lost capital constraining lending. Bank capital grows endogenously- it’s not a constraint on lending apart perhaps from the very near term. Banks ‘know’ the cost of capital, and the roe’s they need to make to pay for new capital. For example, if Citi paid ...Read More