Tag: banks

regulation

US releases draft regulatory framework for Financial Institutions

Colin Henderson

The US administration released a draft of their proposed regulatory framework today, putting the Federal Reserve front and centre. The big theme is to promote broader control of any institution involved in banking, and to specifically eliminate exemptions such as the Thrift Charter. Draft Fed report on Financial Institution Regulation pdf – 85 pages Continue reading US releases draft regulatory framework for Financial Institutions

EU

Eurozone banks face $283bn writedowns| Report

Colin Henderson

Europe and the ECB are slow with dissemination of analysis and information when compared to the IMF, US and UK.  But when they do, here is 226 pages of analysis that tells us Euro Banks will write off $283 Bn over 2009/ 2010. More to come after I get a chance to digest, but meantime here it is for your reading pleasure.  They key is the general deterioration and reduction in forecasts since last in December 2008. ECB Financial Stability Review pdf The further significant deterioration of global macroeconomic conditions since the finalisation of the December 2008 Financial Stability Review … Continue reading Eurozone banks face $283bn writedowns| Report

Uncategorized

As predicted the consequence of government ownership is significant

Colin Henderson

A US regulator on Friday predicted that chief executives and directors of some of the banks that underwent the stress tests could lose their jobs, Regulator expects bank chiefs to lose jobs | FT By Francesco Guerrera and Nicole Bullock in New York Published: May 16 2009 00:10 | Last updated: May 16 2009 A US regulator on Friday predicted that chief executives and directors of some of the banks that underwent the stress tests could lose their jobs, in another sign of the government’s desire to have a say in the running of bailed-out companies. Sheila Bair, chairman of … Continue reading As predicted the consequence of government ownership is significant

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“A banking system we can trust” | Forbes

Colin Henderson

An interesting proposal outlined in Forbes by Laurence J. Kotlikoff and Edward Leamer. The proposal is to eliminate bank failures by managing lending at banks through funds provided by mutual funds.  This would place all the risk with the holders of the funds (investor customers who lend money) and gain the risk advantages of a Mutual Fund.  Loans would be funded when the Mutual Fund provided the money. I find this particularly intriguing because this is basically the P2P lending model as it is now playing out, with sophisticated investors providing the funding directly to borrowers – P2P Lenders providing … Continue reading “A banking system we can trust” | Forbes

Economy

The power of positive thinking from Deutsche Bank

Colin Henderson

This is a very sensible article by Neil Hume at the FT.  He notes the extraordinary growth in bank stock prices since the infamous CitiBank memo in March, wherein he basically pronounced the worst as over, because he had removed the bad people, was instituting new processes, and working with Government. What struck me is this quote from an analyst at DB (emphasis added) On London: Banks’ rehabilitation could take time Add it all up, and the reason banks have rallied is investors are no longer worried about nationalisation and are prepared to look through two years of rising bad … Continue reading The power of positive thinking from Deutsche Bank

Business Models

What does recovery mean for Banks?

Colin Henderson

Banks are at the centre of the economy.  Business and consumers conduct their day to day business using money and they do this through banks.  Stating the obvious you may say?  This is why I study the economy so closely and try to understand how it will look in the future, because that has a direct relation to how banks will look in that future. We are in a crisis of debt.  It is a debt crisis because consumers and businesses are over-leveraged.  Their debt is too high relative to todays asset values.  Asset values have decreased by 25 – … Continue reading What does recovery mean for Banks?

regulation

U.S. Planning to Reveal Data on Health of Top Banks

Colin Henderson

I saw somewhere earlier that the President was planning a major economic speech tomorrow, and now this below is finally coming after being delayed while some banks announced.  This probably explains the context. U.S. Planning to Reveal Data on Health of Top Banks | NYT WASHINGTON — The Obama administration is drawing up plans to disclose the conditions of the 19 biggest banks in the country, according to senior administration officials, as it tries to restore confidence in the financial system without unnerving investors. Continue reading U.S. Planning to Reveal Data on Health of Top Banks

Uncategorized

“Hold your nose, however. Mr Geithner’s proposal is worth a try” | Geithner

Colin Henderson

This weeks leader in the Economist sums up my perspective well.  Its not great that taxpayers have to include those pesky Wall Street types in the scheme to sort out the Banks, but its better than all the alternatives of  flat out bankruptcy, flat out nationalisation, or doing nothing.  Each of those three alternatives have significant knee jerk ramifications for US and the world economies. Banks, and particularly US banks are perceived to be over-valued on their assets, and no amount of debate can cure that impression now.  With asset values down by 60% (Equities) to 30% (real estate) its … Continue reading “Hold your nose, however. Mr Geithner’s proposal is worth a try” | Geithner

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Bank Nationalisation must follow failure to meet stress test for solvency

Colin Henderson

Bank Nationalisation is finally the topic de jour.  It is an undercurrent in many discussions, and strangely has the Democrats and Republicans in some kind of opposite land debates. I favour the view of Nouriel Roubini who speaks of the current procress as being death by a thousand cuts in this worth watching video.  The governments in UK and US are dribbling money into banks and the auto sector, with no end in sight, and little apparent contrition from management.  A strategy is needed for both those sectors and decisive action taken. However it has to be based on principle … Continue reading Bank Nationalisation must follow failure to meet stress test for solvency

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The flaw in the House Financial Services hearings \ misalignment on the paradigm

Colin Henderson

The hearings are going on this morning in Washington. After my rant about Wells Fargo yesterday, it is clear to me that apparently ill timed newspaper ad on the weekend was in fact timed to coincide with these hearings. I still think it was ill timed though. Listening to the introduction today from Barney Frank, Chairman and the commentary on CNN, the general view is that Banks are receiving money, using it for perks and not working on “getting the economy back to working again”. On the other hand the banks are listing off how they are increasing lending, keeping … Continue reading The flaw in the House Financial Services hearings \ misalignment on the paradigm