since-the-great

The Most Dangerous Cities In America

by on May 25, 2011

Huffington Post…

Yesterday, the FBI trumpeted the news that violent crime dropped 5.5% in 2010 while reported property crimes fell 2.8% during the depths of the worst economic slowdown since the Great Depression. The news, though, is far from positive.

Continued here:
The Most Dangerous Cities In America

Find our Weekly Commercial Real Estate, Private Equity and Fund Newsletters at www.WeeklyBrief.net

Week Ahead: Housing, Consumer Confidence, GDP

by on May 20, 2011

Data related to housing, consumer confidence and economic growth will all be eyed next week by investors looking for signs that the U.S. economy is strengthening. The housing sector has been especially slow to rebound after the worst financial downturn in the U.S. since the Great Depression. Analysts believe a full-fledged recovery won’t occur until the housing market hits a bottom. All signs seem to indicate that that hasn’t happened yet. Sales of new single-family homes in April will be released on Tuesday. These homes are competing with a surplus of existing homes put on the market due to record foreclosures . Housing experts say buyers are sitting on the sidelines waiting for prices to fall further, which is good for individual buyers but bad for the nation’s housing market. The March S&P/Case-Shiller Home Price Index will be released on Tuesday and HFA House Price Index on Wednesday. Both indexes are expected to show that home values are still falling. The National Association of Realtor’s Pending Home Sales Index for April is due Friday. Economists are expecting slight improvements at best. In the Northeast, rainy and unseasonably cold weather has cut into sales. On Wednesday home builder Toll Brothers (NYSE:TOL) is expected to report its quarterly earnings and those figures will certainly have an impact on the broader markets. Meanwhile, on Tuesday two Congressional committees will hold hearings important to U.S. consumers. A Senate committee will discuss the future of the housing finance system, and a House committee will hold a hearing on domestic oil and gas production. The second estimate of first-quarter GDP is due Thursday. The preliminary report placed growth at 1.8%, but that number is expected to be revised higher as a result of an increase in consumer spending. Consumer spending comprises 70% of the U.S. economy. April personal income and spending reports are due Friday and are expected to show that incomes rose modestly, while spending was slightly higher. Consumer spending rose in no small part due to increased costs tied to soaring food and energy prices. Final readings for consumer confidence in May are due Tuesday from the Conference Board’s Consumer Confidence Index, and on Friday for the Reuters/University of Michigan Consumer Sentiment Index. Earlier readings showed improved confidence as labor markets seemed to be gaining traction earlier this spring. But revisions my inch downward as higher gas and food prices eat into consumers’ pocketbooks. Among the bellwether companies reporting earnings next week are:

‘Squatter Rent’ Savings May Help U.S. Spending

May 6, 2011

Millions of Americans have more money to spend since they fell delinquent on their mortgages amid the worst housing collapse since the Great Depression. They are staying in their homes for free about a year and a half on average, buying time to restructure their finances and providing an unexpected support for consumer spending, which makes up about 70 percent of the economy.

Read the full article →

10 Countries Where Unemployment Has Soared

April 30, 2011

Since the financial crisis first pulled the world into the Great Recession, unemployment has become a global problem. A new report released by the Paris-based Organisation for Economic Co-operation and Development entitled “Society at a Glance 2011 – OECD Social Indicators” includes data on the rising levels of global unemployment between 2007-2009, the years where the recession peaked. Many countries on the list have seen high unemployment rates for years, most notably Spain, whose unemployment rate recently hit a Eurozone record at 21.3 percent, with 4.9 million Spaniards now jobless. Other countries have trended in the opposite direction, however. Germany, for one, has watched its unemployment rate fall to 7.1 percent from 7.8 percent at the time of the report’s publication. The United States has also seen some recent improvement, albeit notably less steep than Germany’s drop. Despite these improvements, the OECD’s report finds that unemployment rates overall have increased across the globe, with the fews exceptions including Israel, Poland and South Africa. Below are the nations whose unemployment rates have risen most since the Great Recession:

Read the full article →

BofA CEO: Some People Shouldn’t Think Of Their Home As An Asset

April 12, 2011

CHARLOTTE, North Carolina (By Joe Rauch) – U.S. homeowners may need to look elsewhere for long-term investment returns as housing prices in some areas may not rebound long-term, Bank of America Corp Chief Executive Officer Brian Moynihan said on Tuesday. Moynihan, CEO of the largest U.S. bank, said at a state attorneys general summit that low population growth in some regions of the country indicated that prices might not rise in the wake of the worst financial crisis since the Great Depression. “It’s sobering to think, but some people shouldn’t be thinking of (their home) as an asset,” Moynihan said at the 2011 National Association of Attorneys General conference. “They should be thinking of it as a great place to live.” Moynihan said the long-term average annual rise in post-war U.S. home prices of 4 percent owed much to the explosion in domestic population and, in more recent times, the relaxation of credit standards across the mortgage industry. “The reality is that the population is not expected to grow the way it did post World War I and World War II,” he said. Moynihan noted an Ohio customers’ complaint that his 100-year-old home was valued at $50,000. The home, Moynihan said, would be valued as “some multiples of that figure” if it were located elsewhere, but stagnant population levels in the state are driving demand and home prices lower. The conference included many of the state attorneys general currently engaged in negotiations with BofA and other lenders about a broad settlement to allegations that the industry cut corners on foreclosures. Moynihan said during his prepared remarks that he had spoken with the attorneys general about industry issues, but declined to comment further about the discussions. (Reporting by Joe Rauch; Editing by Lisa Von Ahn) Copyright 2010 Thomson Reuters. Click for Restrictions .

Read the full article →

Even Jamie Dimon’s Not Immune to Brutal Real Estate Market

April 8, 2011

Among Jamie Dimon ’s many obvious talents, flipping real estate appears not to be one of them. The well-regarded chief executive of banking powerhouse JPMorganChase (NYSE:JPM) received $421,000 in moving expenses in 2010, as part of an overall compensation package of $20.8 million, according to a Securities and Exchange Commission filing. Those moving expenses were apparently tied to the sale of Dimon’s Chicago mansion last September, fully three years after he put the 13,500-square-foot, eight-bedroom, nine-bathroom home on the market and not until the asking price had been slashed by nearly 50%. Originally placed on the market at $13.5 million in April 2007, it sold last fall for $6.95 million. “That was a price point that the buyer found rather attractive,” said Fran Bailey, a Chicago–based real estate broker and blogger, who noted that it didn’t last long on the market at that amount. The four-story home, located on Chicago’s tony Gold Coast a block from Lake Michigan, was built around 1880 but has been renovated over the years to meet the most stringent requirements of a top-tier corporate executive, including a state of the art gym and media center. A slide show put together by selling agent Sudler Sotheby’s International Realty reveals an interior reminiscent of a palace at Versailles. Don’t worry, though. Dimon didn’t lose money on the deal. According to numerous accounts in the Chicago media, he paid $4.68 million for the home in 2000 when he moved his family to the Windy City to take the top job at Bank One Corp. He evidently decided to sell and return to New York City after Bank One merged with JPMorgan in 2004 and he was named CEO of the combined firm. Dimon is credited with guiding JPMorgan relatively unscathed through the worst financial crisis since the Great Depression. After accepting $25 billion in government funds during the worst of the crisis, JPMorgan was one of the first big banks to fully repay its bailout loan. Dimon has often been mentioned as a candidate for a high-level government appointment — possibly Treasury Secretary — but has recently been at odds with the Obama administration over the scope and reach of financial reforms intended to prevent another crisis. In any case, the $20.8 million he made in 2010 was a big jump from the $1.3 million he took home in 2009. He’ll probably want to keep his day job as a banker in lieu of going into real estate full-time.

Read the full article →

SF Fed Blames Business Cycle For High Unemployment

March 21, 2011

(Reuters) – The current high rate of unemployment in the United States is primarily due to cyclical factors, not structural changes in the economy, according to researchers at the San Francisco Federal Reserve Bank. The study runs counter to worries among some top Fed policymakers that undesirable upward pressure on wages, and thus inflation, could kick in even when unemployment remains relatively high — a situation that could have implications for U.S. monetary policy. According to the research, recent college graduates are finding it just as hard to get work as other job seekers. Since college grads are among the best educated and most mobile in the labor force, their difficulty finding jobs suggests that it is labor market weakness as a whole, rather than mismatches between workers’ skills and employees’ needs, that is keeping would-be workers from getting jobs, the researchers said. Recent college grads are also unlikely to be motivated by the extension of unemployment insurance, often cited as a reason for the elevated unemployment rate in the labor force as a whole. “The current unemployment rate trends are reminiscent of the 2001 recession and the subsequent jobless recovery that continued through 2004,” research advisor Bart Hobijn and research associates Colin Gardiner and Theodore Wiles said in the bank’s latest Economic Letter. “This holds for both the overall unemployment rate and for those of recent college graduates, suggesting that structural factors are not quantitatively important in driving the overall unemployment rate, just as they were largely irrelevant after the 2001 recession,” they wrote. Some U.S. central bank officials, including Minneapolis Fed President Narayana Kocherlakota, have suggested that structural shifts in the economy since the Great Recession have pushed up the new “normal” for joblessness. A higher norm for U.S. unemployment means upward pressures on wages could start to build even when the jobless rate is quite high by historical standards. The San Francisco Fed research suggests that such concerns are remote. “Given the current weak labor market, we expect the labor market outcomes of the recent college graduate cohort to remain depressed well into the future,” the researchers said. From the San Francisco Federal Reserve report: (Reporting by Ann Saphir; Editing by Andrew Hay) Copyright 2011 Thomson Reuters. Click for Restrictions .

Read the full article →

‘Buy Everything’ Sentiment Continues On Wall Street

February 19, 2011

Angela Moon, New York – Investors will continue to ride the speediest rally in U.S. stocks since the Great Depression despite growing concerns that the market is overbought and due for a correction. Wall Street posted its third consecutive week of gains with the S&P 500 now up 6.8 percent for the year and more than 20 percent in just six months. “I’ve never seen a market like this,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont, a market watcher for 35 years. “I’m showing, by every technical and quantitative standard I have, this market is at extreme levels. But no matter where we start out in the morning, buyers come in.” The trend of stocks starting off lower in the morning session but ending higher by the afternoon has been ongoing for weeks as investors view the small dips as reasons to buy. But there is a perceptible level of anxiety in the market. Trading volume has been exceptionally low recently and the CBOE Volatility Index .VIX, Wall Street’s so-called fear gauge, is up on the week despite the gains in stocks. The index is usually inversely correlated to the S&P 500, and a rise in the VIX typically means a drop in the stock market. The VIX, which ended at 16.43, up 4.7 percent on the week, is still historically low but substantially higher than in recent months. That suggests investors see more share gyrations ahead. The driving force behind the rally is the money that poured into riskier assets like stocks in the last quarter of 2010 after the U.S. Federal Reserve pledged to keep interest rates low. “With so much momentum in the market, we are likely to see some sideways consolidation next week but nothing more than that,” said Ryan Detrick, technical analyst at Schaeffer’s Investment Research in Cincinnati, Ohio. LOW VOLUME=SIGNS OF FATIGUE About 7.13 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq on Friday, below last year’s estimated daily average of 8.47 billion. Stocks have been struggling to match last year’s trading levels, hovering in the 7 billion range this week. On Thursday, the volume was the second-lowest of the year at 6.7 billion shares, and Monday’s session was the lowest of the year with a mere 6.6 billion shares. “This is a sign that the market is tired, and unless we see an uptick in this volume,” the level of investor anxiety will not retreat, Detrick said. U.S. markets are closed on Monday for the Presidents Day holiday. Copyright 2010 Thomson Reuters. Click for Restrictions .

Read the full article →

CBO: Unemployment Rate Will Stay Above 9 Percent Through 2011

January 26, 2011

The jobs crisis isn’t going anywhere, according to the latest forecast from the nonpartisan Congressional Budget Office, which puts the national unemployment rate above 9 percent through 2011 and 8 percent through 2012. Unemployment will fall to a more “natural rate” only in 2016, when CBO estimates it will reach 5.3 percent — a projection roughly in line with private-sector figures. “The recovery in employment has been slowed not only by the moderate growth in output in the past year and a half but also by structural changes in the labor market, such as a mismatch between the requirements of available jobs and the skills of job seekers, that have hindered the reemployment of workers who have lost their job,” CBO’s report says. The degree to which the unemployment crisis is structural, as opposed to cyclical, is hotly debated by economists, with progressives like Paul Krugman arguing that structural unemployment is a fake problem “which mainly serves as an excuse for not pursuing real solutions.” Many argue that the even drop in employment across industries shows that lack of overall demand is the problem, with stimulus spending the answer. Others have said pay disparities between workers with different levels of education show the problem is at least partly structural . James Galbraith, an economist who teaches at the University of Texas, says CBO’s structural unemployment claim is an after-the-fact rationalization for previous failed forecasts. (CBO’s 2009 forecast predicted 8 percent unemployment in 2011 and 6.8 percent unemployment in 2012. Galbraith’s been beating up on CBO since before then.) “There never was any reason to believe that employment would bounce back, as CBO had previously forecast, in the wake of the financial meltdown, and no reason now to think that the problem lies with deficient skills for any class of workers,” Galbraith told HuffPost. “[The CBO forecast] is a purely mechanical exercise idea based on the fact that in the past we’ve always rebounded to a natural unemployment rate of 5 percent. What that means is you never take into account that the system broke in any serious way.” The most unusual factor of the jobs crisis is how long some people are going without work. Long-term unemployment has surged since the unprecedented mortgage meltdown that clobbered housing prices and launched the Great Recession in December 2007. Some 6.4 million people — 44.3 percent of the 14.5 million unemployed — have been out of work for six months or longer, and 1.4 million have been out of work for two years or longer . This is the worst long-term unemployment situation in the United States since the Great Depression. CBO’s report says the long-term unemployed lose familiarity with developing technologies as their job-finding social networks deteriorate, but it hints at another reason those folks can’t find jobs: Employers don’t want them because nobody else does. The Congressional Research Service says the 1.4 million “very long-term unemployed” hail from all educational backgrounds. “Workers who are unemployed for long periods may face even greater obstacles in finding a new job,” the CBO report says. “Some employers may assume that long-term unemployment is a signal that a worker is not good at his or her job.” Indeed. Just check out this Craigslist ad for a restaurant manager in Salisbury, Md.: “Must be currently employed or recently unemployed.” As HuffPost has reported, this is a common requirement for many jobs, even if it sometimes goes unstated .

Read the full article →

Investors Fell In Love With Bonds Again In 2010

January 12, 2011

BOSTON — Mutual fund investors were buying stock funds at the end of 2010. But they were trying to avoid risk through most of the year, as bond funds took in money at the second-fastest annual rate ever. A tally Wednesday by industry consultant Strategic Insight shows investors added $222 billion more to bond funds than they withdrew. The record for money flowing into bond funds came in 2009, when investors added a net $350 billion. That followed a year when stocks suffered their worst decline since the Great Depression. Investors responded by seeking the relative safety of bonds. But with the economic recovery gaining momentum, fear of rising interest rates has recently cut into bond returns. Two-thirds of the bond fund categories tracked by Lipper Inc. suffered losses in the fourth quarter, as rate fears sent bond prices down and yields up. Investors typically sell off when prices fall, and December was no exception. Investors pulled a net $24 billion from bond funds last month, according to Strategic Insight. It was the biggest monthly movement out of bond funds since the peak of the financial crisis in October 2008. It was also the second consecutive month that more money was pulled out of bond funds than came in. About $1 billion exited in November. But Strategic Insight isn’t ready to declare that investors are ready to give up on bonds. Research Director Avi Nachmany said his New York-based company still expects demand to rebound in the first half of this year. That’s because many categories of bonds offer attractive yields compared with those of bank accounts and money-market funds, which are near record lows. “For some, the focus on income and risk aversion will persist through 2011,” Nachmany said. Many bond investors nevertheless embraced risk last month. Flows were positive for high-yield funds, which hold bonds that typically earn high rates of return, with greater risk of volatility. Those funds returned an average 3.5 percent last quarter, according to Lipper. That compares with an 11.4 percent fourth-quarter gain for the average U.S. stock fund. With such strong returns, flows into stock funds have recently begun to shift. For the full year, investors added a net $23 billion into stock funds. Yet despite an average 17 percent return last year for the average U.S. stock fund, they weren’t attracting money. They saw nearly $49 billion flow out. The overall flow of money was positive for stock funds because investors were putting their money in foreign stock funds, which drew in a net $72 billion. There’s been a flow of money into foreign stock funds for seven straight months. This reflects the stronger economic growth prospects many investors see in the world’s emerging markets, and a desire to diversify portfolios beyond U.S. financial markets. Still, there are signs that U.S. investors are warming up to domestic stocks. Through most of 2010, the rate at which cash was pulled out of U.S. stock funds slowed. For one week in late December, flows into U.S. stock funds even turned positive, according to the Investment Company Institute, an industry association. “It is clear that stock investor sentiment is slowly improving,” Nachmany said.

Read the full article →

Michael Hudson: How Sex, Drugs, and Fraud Drove the Financial Crisis

October 27, 2010

So my new book, The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America–and Spawned a Global Crisis , is now out and about. (Sorry for the long subtitle. Needed to be said.) I wanted share some quotes from the book. They give the flavor, I think, of the corruption that fueled America’s mortgage frenzy and helped produced the greatest financial disaster since the Great Depression. Given the current robosigning, document-backdating foreclosure crisis , it’s worth thinking about what happens when fraud and recklessness go unchecked. Here goes: “I became a thief. And unfortunately, I found I was a very good thief.” “We are all here to make as much fucking money as possible. Bottom line. Nothing else matters.” “Anything that benefited production — that benefited me and benefited my wallet– I’d do it.” “It’s hard to have a guilty conscience if you don’t have a conscience.” “Roland could be the biggest bastard in the world and the most charming guy in the world. And it could be minutes apart.” “He fucked me. But within reason.” “Deep down inside he was a good man. But he had an evil side. When he pulled that out, it was bad. He could be extremely cruel.” “People don’t need access to predatory lenders. That’s like saying people need access to poison, or children need access to mumps.” “If you don’t find the true pain, you won’t write the loan.” “Imagine what happens if the housing bubble bursts.” “These people, you had all the confidence in the world in them.” “Tell him to do what ever it takes to close that loan or it’s his ass.” “Let’s compare W-2s. I made over two million dollars. What did you do?” “There’s nothing in the world more dangerous than a sales presentation in the hands of a salesman.” “Your people find too much fraud!” And, finally, subprime billionaire, mega-political donor and one-time U.S. ambassador Roland Arnall, explaining, in testimony before Congress, why his company, Ameriquest, engaged in widespread predatory lending: “Stuff happens.” Michael Hudson is a staff writer with the Center for Public Integrity and author of The Monster: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America–and Spawned a Global Crisis . An excerpt from The Monster can be found here .

Read the full article →

Obama Weekly Address: GOP Will Try To Repeal Wall Street Reform (VIDEO)

October 23, 2010

WASHINGTON — President Barack Obama is warning voters that Republicans seeking control of Congress would roll back his hard-won Wall Street overhaul bill. He says the GOP’s promised repeal of the new law would be a major setback for consumers and would bring back a financial system whose near-collapse led to the worst recession since the Great Depression. “Without sound oversight and commonsense protections for consumers, the whole economy is put in jeopardy,” Obama said Saturday in his weekly radio and Internet address. “That doesn’t serve Main Street. That doesn’t serve Wall Street. That doesn’t serve anyone.” WATCH: The law, passed despite nearly unanimous Republican opposition, attempts to catch up to a financial system that has sped ahead of outdated regulation and rules that allowed banks, traders and others to take increased risks. “This was a bill designed to rein in the secret deals and reckless gambling that nearly brought down the financial system,” Obama said. “And reform included the strongest consumer protections in history – to put an end to a lot of the hidden fees, deceptive mortgages and other abusive practices.” The measure promises limits on bank overdraft fees and an end to abuses such as retroactive interest rate increases on credit card balances. It came in the wake of a $700 billion bank rescue passed in the final months of George W. Bush’s presidency. While the bailout is credited with providing stability, it’s deeply unpopular with voters angry of taxpayer money being used to help prop up huge banks. Obama promised that the measure ensures that taxpayers will “never again be on the hook for a bailout.” Obama’s address came just 10 days before midterm elections in which Republicans have a good chance of taking over the House, if not the Senate. The financial regulation measure hasn’t been a central campaign issue. House GOP leader John Boehner of Ohio has called for the repeal of the measure, as have top Senate Republicans. But that’s unlikely even if the GOP should take control of Congress since Obama would still wield a veto pen. In the GOP’s weekly message, Sen. John Thune of South Dakota denounced Obama’s economic stimulus bill, overhaul of the U.S. health care system and plans to allow Bush-era tax cuts for wealthier people to expire. “We have learned the lessons not only of what hasn’t worked over the past two years, but what didn’t work the last time Republicans controlled Congress,” Thune said. “We are determined to take this country in the right direction.” Added Thune: “Are you better off today than you were two years ago?”

Read the full article →

Matt Wilson: What Drives America’s Next Generation to Change the World

October 1, 2010

America’s graduating youth are not only faced with more challenges than any generation since the Great Depression, we are also faced with more autonomy and more decisions with what to do with our time since so many of us are not employed at the normal 9-5. In the age of the internet there are more opportunities to do something we are passionate about, connect with other like minded individuals and get behind a cause and innovate . I’ve lived in downtown Manhattan for four months now and it’s been quite an eye opener. For those of you who don’t know I’ve been a lot of things, but most recently a ski bum-entrepreneur . Now I’m in the big city of dreams and I see Lamborghini’s literally everyday. I’m not really that cool with that. I know what I want. I moved to New York City to surround myself with the world’s most amazing people. Everyone is in this city trying to make something of themselves and… I want to be around the people changing the world. But I could care less what type of watch you are wearing. On the same token, I’m meeting world leaders, people who have created ultra wealth for themselves and others, people with ridiculous influence and you have to look the part. Last week at the United Nations Global Assembly I got the chance to hang with Elizabeth Gore, Lupe Fiasco and Craig David — seriously successful young people making their mark on history. I was incredibly fortunate to be able to connect with these guys, hopefully all do followups for Under30CEO and help perpetuate their respective missions with the UN Foundation, clean drinking water and Tuberculosis. And guess what, I don’t think they even cared that I had a watch on. (Yes, I’ve invested in one.) We connected because they wanted to know what I cared about. I pitched Under30CEO to Lupe — I told him our message is to make money but also to do good at the same time. Lupe, who describes himself as a “NPR listening, Volvo driver… but I don’t drive a Volvo (insert charismatic smile here),” retorted “Man, that’s what it’s all about right there. You know what, I like your swag.” That was pretty awesome. I was wearing a tie (had a big meeting afterward) (look forward to a followup on How To Fit in Anywhere and Get to Know Anyone Including Lupe Fiasco ). Lupe called me out on stage for being a “business man”, but again, he told me afterward he was just kidding — he didn’t care what I was wearing. “People don’t care how much you know until they know how much you care.” — John C. Maxwell Lupe could tell I was insanely passionate about what I do and he was down for finding out more. He didn’t care whether we are making money hand over fist or bootstrapping every penny . We connected because we share similar passions. The big city of dreams got even more interesting hanging out with my friend Ankur Jain. The kid is 20 and is tremendously talented through his work creating the Kairos Society , an amazing organization for entrepreneurs at the top institutions in the world. I knew he was awesome, but the 2AM toast to “changing the world” is when it hit me — Ankur is legit. Dad has appeared on Forbes List and Ankur is dedicating his life to social enterprise. Couldn’t be more fun, down to earth or genuine. Our generation is defining success by “doing well by doing good.” Personally, my definition of success is “doing what I want, when I want, how I want.” And I know what I want. I’ll reiterate– I want to help broadcast to the world the message of people doing amazing things and inspire our generation of leaders to follow suit. That’s what Under30CEO.com is all about. And yes, I want to make some serious money along the way too, but I don’t care about sitting next to Lindsay Lohan or Lil’ Wayne at Marquee unless they are 1) interested in contributing positively to society and 2) cool with talking to me because of who I am, not how much money I’m blowing. I want this article to serve as a call to action to stop being impressed by auspicious consumption, to cut through the flashing lights of NYC and surrounding Jersey Shore blowouts and realize that yes, image is everything, but use this sexiness to bring attention to the things that really matter. Please visit Under30CEO to find more stories about Generation Y .

Read the full article →

Lehman Brothers’ London Office Holds Art Auction (PHOTOS)

September 24, 2010

LONDON, AP — For sale: a sign of the times. Christie’s is auctioning off the 10 foot-long (3 meter-long) sign that adorned the European headquarters of Lehman Brothers, along with paintings, furniture and other objects from the offices of the collapsed investment bank. They are among millions of dollars’ (euros’) worth of items being sold to help pay Lehman’s creditors. The bank collapsed in September 2008. It was the largest bankruptcy filing in U.S. history and helped cause one of the worst financial crises since the Great Depression. On Friday Christie’s held a preview of items from the sale, which is expected to raise about 2 million pounds ($3.1 million). The 300 lots include works by modern artists including Gary Hume, Robert Rauschenberg and Lucian Freud, a selection of maritime and sporting paintings and office knickknacks – antique tea caddies, model boats, cigar boxes, bronze animals and Chinese ceramics. Collectors can also bid on the headquarters’ sign, valued at 2,000 pounds to 3,000 pounds, and a plaque commemorating the opening of the building in 2004 by Britain’s then-Treasury chief, Gordon Brown, valued at between 1,000 pounds and 1,500 pounds. The most expensive work, a large photograph by Andreas Gursky of the teeming New York Mercantile Exchange, will be sold separately next month and is valued at between 100,000 pounds and 150,000 pounds. The sale is scheduled for Wednesday in London. More artworks from Lehman Brothers’ collection will be sold by Sotheby’s in New York this Saturday, at an auction expected to raise $10 million – a tiny fraction of the $613 billion in debts held by Lehman when it collapsed. Check out the Lehman Brothers auction items up for sale:

Read the full article →

Green Premium Continues to Justify Implementation Costs for Building Owners

September 22, 2010

The economic payback for building owners from ‘going green’ has been tested in the crucible of the worst economy since the Great Depression, and while the premiums in rental rates, faster lease-up times and lower vacancy associated with green buildings…

Read the full article →

Video: Achutan Calls End to Risk of U.S. Double Dip Premature: Video

September 20, 2010

Sept. 21 (Bloomberg) — Lakshman Achuthan, managing director of the Economic Cycle Research Institute in New York, talks about the outlook for the U.S. economy. The worst U.S. recession since the Great Depression ended in June 2009, the National Bureau of Economic Research said yesterday, as a slowdown in economic growth raises the possibility of another slump. Achuthan talks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Read the full article →

Video: Kantor Expects U.S. Growth of 2.5-3% in Second Half: Video

September 20, 2010

Sept. 21 (Bloomberg) — Larry Kantor, head of research at Barclays Capital in New York, talks about the outlook for the U.S. economy and stocks. The worst U.S. recession since the Great Depression ended in June 2009, the National Bureau of Economic Research said yesterday, as a slowdown in economic growth raises the possibility of another slump. The decision came as Federal Reserve policy makers meet this week to consider whether new measures to boost growth are needed and the Obama administration proposes additional fiscal stimulus. Kantor talks with Susan Li on Bloomberg Television’s “First Up.” (Source: Bloomberg)

Read the full article →

Richard Shelby, GOP Leader, Wants To Overhaul Consumer Agency

September 20, 2010

WASHINGTON (Reuters) — Republicans will reopen the broad Wall Street reform law and overhaul the newly created consumer protection bureau if they regain control of Congress after the November elections, a leading lawmaker said on Monday. Richard Shelby, the top Republican on the powerful Senate Banking Committee, said lawmakers must revisit the legislation enacted this summer, which is the broadest overhaul of financial rules since the Great Depression.

Read the full article →

Robert Reich: Why a Civil Society Extends Unemployment Benefits

August 31, 2010

I have the questionable distinction of appearing on Larry Kudlow’s CNBC program several times a week, arguing with people whose positions under normal circumstances would get no serious attention, and defending policies I would have thought so clearly and obviously defensible they should need no justification. But we are living through strange times. The economy is so bad that the social fabric is coming undone, and what used to be merely weird economic theories have become debatable public policies. Tonight it was Harvard Professor Robert Barro, who opined in today’s Wall Street Journal that America’s high rate of long-term unemployment is the consequence rather than the cause of today’s extended unemployment insurance benefits. In theory, Barro is correct. If people who lose their jobs receive generous unemployment benefits they might stay unemployed longer than if they got nothing. But that’s hardly a reason to jettison unemployment benefits or turn our backs on millions of Americans who through no fault of their own remain jobless in the worst economy since the Great Depression. Yet moral hazard lurks in every conservative brain. It’s also true that if we got rid of lifeguards and let more swimmers drown, fewer people would venture into the water. And if we got rid of fire departments and more houses burnt to the ground, fewer people would use stoves. A civil society is not based on the principle of tough love. In point of fact, most states provide unemployment benefits that are only a fraction of the wages and benefits people lost when their jobs disappeared. Indeed, fewer than 40 percent of the unemployed in most states are even eligible for benefits, because states require applicants have been in full-time jobs for at least three to five years. This often rules out a majority of those who are jobless — because they’ve moved from job to job, or have held a number of part-time jobs. So it’s hard to make the case that many of the unemployed have chosen to remain jobless and collect unemployment benefits rather than work. Anyone who bothered to step into the real world would see the absurdity of Barro’s position. Right now, there are roughly five applicants for every job opening in America. If the job requires relatively few skills, hundreds of applicants line up for it. The Bureau of Labor Statistics says 15 percent of people without college degrees are jobless today; that’s not counting large numbers too discouraged even to look for work. Barro argues the rate of unemployment in this Great Jobs Recession is comparable to what it was in the 1981-82 recession, but the rate of long-term unemployed then was nowhere as high as it is now. He concludes this is because unemployment benefits didn’t last nearly as long in 1981 and 82 as it they do now. He fails to see — or disclose — that the ’81-’82 recession was far more benign than this one, and over far sooner. It was caused by Paul Volcker and the Fed yanking up interest rates to break the back of inflation — and overshooting. When they pulled interest rates down again, the economy shot back to life. The Great Jobs Recession is far more severe. It’s continuing far longer. It was caused by the bursting of a giant housing bubble, abetted by the excesses of Wall Street. Home values are still 20 to 30 percent below where they were in 1997. The Fed is powerless because consumers cannot and will not buy enough to bring the economy back to life. A record number of Americans is unemployed for a record length of time. This is a national tragedy. It is to the nation’s credit that many are receiving unemployment benefits. This is good not only for them and their families but also for the economy as a whole, because it allows them to spend and thereby keep others in jobs. That a noted professor would argue against this is obscene. This post originally appeared at RobertReich.org .

Read the full article →

Glenn Beck On 99ers: ‘Some Of These People, I Bet You’d Be Ashamed To Call Them Americans’ (VIDEO)

August 17, 2010

Unemployed activists have clamored for news attention to the plight of the “99ers,” people who have exhausted the unprecedented 99 weeks of unemployment benefits made available in some states to fight the worst recession since the Great Depression. They got some attention they might not have wanted on Monday, when Fox News host Glenn Beck introduced them to his viewers. “Have you heard of the 99ers?” said Beck, showing video from a New York rally last Thursday. “Some of these people, I bet you’d be ashamed to call them Americans.” Beck had free advice for the jobless activists at the protest: “Don’t spend your remaining money on travel to get to a protest. Go out and get a job. You may not want the job. Work at McDonald’s. Work two jobs. There has been plenty of times in my life I’ve done jobs I hated, but I had no choice. Two years is plenty of time to have lived off your neighbor’s wallet.” It’s an argument that resonates with many members of Congress , especially Republicans. Some long-term jobless, however, might counter that they’ve been turned down for jobs for which they were overqualified because of age discrimination, or because managers don’t want to hire someone who will bolt for a better job as soon as the economy improves. For every story about a business owner complaining that potential workers would rather live on unemployment insurance, there’s another about businesses flat-out refusing to hire the unemployed. After all, there are nearly 15 million unemployed competing for three million jobs. Beck asked an important question: “How many weeks of unemployment are enough? Really. If 99 weeks is not enough, how much is? 100, 200? A lifetime? Or is a job a right?” The government has provided additional weeks of unemployment benefits as a matter of routine during every recession since the great depression, but before the current one, the most help provided was 55 weeks during the early 1980s. Democrats in Congress have proposed giving the unemployed in the hardest-hit states an additional 20 weeks of benefits , but the legislation is not incredibly likely to pass the Senate. Sen. Max Baucus (D-Mont.), chairman of the Senate Finance Committee, which has jurisdiction over unemployment insurance, had an answer for Beck’s question back in April: “I think 99 weeks is sufficient.” WATCH Beck’s segment on 99ers:

Read the full article →

Nouriel Roubini: Why Gordon Gekko Is Back

August 16, 2010

A generation later, the sequel to Wall Street — to be released next month — sees Gekko released from jail and returned to the financial world. His reappearance comes just as the credit bubble fueled by the sub-prime mortgage boom is about to burst, triggering the worst financial and economic crisis since the Great Depression. The “Greed is good” mentality is a regular feature of financial crises. But were the traders and bankers of the sub-prime saga more greedy, arrogant, and immoral than the Gekkos of the 1980′s? Not really, because greed and amorality in financial markets have been common throughout the ages.

Read the full article →

Robert Reich: The Jobs Emergency

August 9, 2010

Washington’s latest answer to the worst jobs crisis since the Great Depression is $26 billion in aid to state and local governments. This still leaves the states and locales more than $62 billion in the hole this fiscal year. And because every state except Vermont has to balance its budget, the likely result is 600,000 to 700,000 more state and local jobs vanishing over the next 12 months (including private contractors and other businesses that depend on state and local governments) according to the Center on Budget and Policy Priorities. Say goodbye to even more of the teachers, firefighters, sanitary workers, and police officers we depend on. In July alone, state and local employment dropped 48,000. Not counting temporary census workers, the federal government shed 11,000. So with private payrolls increasing a paltry 71,000, July’s overall increase in payrolls was just 12,000. 12,000 new jobs in July — when 125,000 are needed monthly just to keep up with population growth, when more than 15 million Americans are out of work, and when more than a half million more state and local jobs are on the chopping block. With the worst jobs crisis since the Great Depression worsening, you might expect emergency action out of Washington. But the biggest upcoming debate there is whether to extend the Bush tax cuts for the richest 2 percent, or for everyone, or for no one. This is like debating whether or not to get a mousetrap when your home is sinking in quicksand. We need a response proportional to the crisis. Obama, Pelosi, and Reid should summon Congress back to Washington for action on the jobs emergency. First item on the agenda: establishing a federal bank that will provide states and locales zero-interest loans, to be repaid when their unemployment rates drop to 5 percent or below. Second item: eliminating payroll taxes on the first $20,000 of all incomes and make up the difference by subjecting all income above $250,000 to the payroll tax. (Remember, the wealthy save most of their after-tax income, lower-income Americans spend it.) Third item: recreating the WPA to hire Americans directly. The Works Progress Administration put Americans back to work during the Depression rebuilding the nation’s infrastructure. The jobs emergency requires no less. This post originally appeared at RobertReich.org .

Read the full article →

Video: Bartlett Says Finance Law Provides Systemic Protection: Video

July 21, 2010

July 22 (Bloomberg) — Steve Bartlett, president of the Financial Services Roundtable, talks with Bloomberg’s Susan Li about the U.S. government’s overhaul of financial regulation. President Barack Obama signed the most sweeping set of financial rules since the Great Depression yesterday, kicking off an election-year fight to define how the law will be put into effect. (Source: Bloomberg)

Read the full article →

Video: Gardner Doubts Warren Nomination to Lead Consumer Agency: Video

July 21, 2010

July 21 (Bloomberg) — Brian Gardner, senior vice president for Washington research at Keefe Bruyette & Woods Inc., discusses the outlook for banking regulation and the prospects of Harvard University professor Elizabeth Warren being nominated to head the new Consumer Financial Protection Bureau. President Barack Obama signs into law today the biggest overhaul of the U.S. financial-regulatory system since the Great Depression. Gardner speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

Read the full article →

Video: Evercore’s Roger Altman Discusses Financial Rules Bill: Video

July 21, 2010

July 21 (Bloomberg) — Roger Altman, co-chairman of Evercore Partners Inc., discusses the potential impact of the financial regulation overhaul bill on the relationship between business leaders and the Obama Administration. ¶ President Obama signs into law today the biggest overhaul of the U.S. financial-regulatory system since the Great Depression, calling it “the strongest consumer financial protections in history.” Altman speaks with Erik Schatzker and Julianna Goldman on Bloomberg Television’s “InsideTrack.” (This is an excerpt of the full interview Source: Bloomberg)¶

Read the full article →

Video: Warner Says Rules Bill Won’t Hurt Bank Competitiveness: Video

July 15, 2010

July 15 (Bloomberg) — U.S. Senator Mark Warner, a Virginia Democrat, talks with Bloomberg’s Peter Cook about the Senate’s passage of the biggest overhaul of financial industry since the Great Depression. Senators voted 60-39 today in favor of the top-to-bottom rewrite of rules governing Wall Street firms, ending a year of partisan wrangling over protections for consumers and investors. (Source: Bloomberg)

Read the full article →

Video: Baily Says Rules Overhaul an `Important Step Forward’: Video

July 15, 2010

July 15 (Bloomberg) — Martin Baily, a senior fellow at the Brookings Institution, talks with Bloomberg’s Mark Crumpton about legislation to overhaul U.S. financial regulation. The Senate voted today to clear the path for final action on the biggest rewrite of Wall Street rules since the Great Depression. (Source: Bloomberg)

Read the full article →

Paul Krugman On Why Republicans Block Unemployment Benefits Extension

July 5, 2010

Today, American workers face the worst job market since the Great Depression, with five job seekers for every job opening, with the average spell of unemployment now at 35 weeks. Yet the Senate went home for the holiday weekend without extending benefits. How was that possible? The answer is that we’re facing a coalition of the heartless, the clueless and the confused.

Read the full article →

Video: House Approves Finance-Rules Bill as Senate Delays Vote: Video

July 1, 2010

July 1 (Bloomberg) — The U.S. House of Representatives approved legislation overhauling financial regulation yesterday, moving a step closer to enacting the broadest rewrite of Wall Street rules since the Great Depression. The House voted 237-192 in favor of the bill. It also will have to be approved by the Senate, which delayed action until after the weeklong July 4 recess, before going to President Barack Obama for him to sign into law. Bloomberg’s Deirdre Bolton reports. (Source: Bloomberg)

Read the full article →

Video: Frank Says Financial Rules Bill `Tougher’ Than He Hoped: Video

June 25, 2010

June 25 (Bloomberg) — U.S. Representative Barney Frank talks with Bloomberg’s Peter Cook about the agreement reached today by members of a House and Senate conference committee on the most sweeping overhaul of U.S. financial regulation since the Great Depression. The legislation shepherded by Senate Banking Committee Chairman Christopher Dodd and Frank places limits on potentially risky activities such as proprietary trading or over-the-counter derivatives and gives regulators new powers to seize and wind down large, complex institutions if needed. (Source: Bloomberg)

Read the full article →

Video: Myrow Says Banks Dented, Not Broken, by Rules Overhaul: Video

June 25, 2010

June 25 (Bloomberg) — Stephen Myrow, chief operating officer of ACG Analytics and a former Treasury official under Hank Paulson, talks about congressional negotiators’ approval today on the most sweeping overhaul of U.S. financial regulation since the Great Depression. Myrow speaks with Margaret Brennan on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

Read the full article →

Video: Lawmakers Agree on Wall Street Overhaul Legislation: Video

June 25, 2010

June 25 (Bloomberg) — Congressional negotiators today approved the most sweeping overhaul of U.S. financial regulation since the Great Depression, reshaping oversight of Wall Street. The legislation still needs to be approved by the full House and Senate. Bloomberg’s Peter Cook reports. (Source: Bloomberg)

Read the full article →

Robert Reich: Why Economic Advisors Are Paid to Be Economic Advisors

June 9, 2010

Say you’re a high government official with some responsibility for advising the president on what he should be doing and saying about the economy. You know the economy is still in a deep hole, the deepest since the Great Depression. The jobs report for May was dismal — a mere 41,000 new private sector jobs, when the economy needs at least 100,000 to keep up with population growth. The Fed projects gross domestic product, the broadest measure of economic activity, to rise about 3.5 percent this year — a pace barely above that needed to keep pace with the growth in the labor force. You also know that consumers don’t have the buying power to get it out of the hole because they can no longer use their homes as collateral for loans, as they could before the crash of 2008, and they also have to get out from under huge debts. The housing market is still awful. You know businesses are reluctant to create new jobs if there are few customers for their goods or services. And you know export markets are drying up because of a high dollar that’s made our exports more expensive, and Europe has embarked on austerity measures to shrink its deficits. You also know state revenues are way down because of the deep economic hole, and they’re forced to raise taxes, cut services, and lay off large numbers of state workers, including teachers. Oh, and one more thing: You know that all the boosters keeping the economy barely going now are coming to an end. The Fed can’t keep interest rates near zero for long because it’s starting to worry about inflation. It’s already stopped buying Treasury securities and mortgage bonds, and its own deficit hawks are squawking. The federal stimulus is 75 percent spent, and the money will be gone in a few months. Census workers will also be gone by the end of the summer. So what do you do? A) Tell the president the economy will either go into a “double-dip” recession or, at best, suffer anemic growth over the next five years — creating enormous pain and suffering for millions of Americans, and imperiling his reelection — unless he immediately champions a $300 billion jobs bill, including zero-interest loans to states and locales to prevent them from having to raise taxes and cut services, public-service jobs (cleaning up the Gulf), and a one-year payroll tax holiday on the first $100,000 of income. To sell this, he’ll need to explain to the American people why larger short-term deficits are necessary now, in order to get jobs back and the economy growing again so that long-term structural deficits (read: health care and Medicare, mostly) can be tackled. B) Tell the president you understand the political pressures for deficit reduction are growing, and Republicans are making headway fooling the public into believing that this terrible recovery is due to to excessive government deficits. So so it’s perfectly fine for the president to bend to those political pressures. Cut the budgets of most federal agencies by 5 percent, enforce “pay-go” rules that don’t allow bigger deficits, build up expectations for the report of his “deficit commission” on December, and tell the American public that we now have to move toward fiscal austerity. If you choose B, you shouldn’t be advising the President. This post originally appeared at RobertReich.org .

Read the full article →

Fed Finding Status Quo In Bank Pay

June 9, 2010

Federal regulators reviewing the compensation policies of major banks are finding that the industry has not adequately adjusted its pay practices to reduce risk-taking. The Federal Reserve, six months into a compensation review of the country’s 28 largest financial companies, has found that many of the bonus and incentive programs that economists say contributed to the worst financial crisis since the Great Depression remain in place, according to people briefed on the examinations.

Read the full article →

States Warn Of Deep Budget Cuts If More Federal Medicaid Funding Isn’t Delivered

June 7, 2010

Having counted on Washington for money that may not be delivered, at least 30 states will have to close larger-than-anticipated shortfalls in the coming fiscal year unless Congress passes a six-month extension of increased federal spending on Medicaid. Governors and state lawmakers, already facing some of the toughest budgets since the Great Depression, said the repercussions would extend far beyond health care, forcing them to make deep cuts to education, social services and public safety.

Read the full article →

States Warn Of Deep Budget Cuts If More Federal Medicaid Funding Isn’t Delivered

June 7, 2010

Having counted on Washington for money that may not be delivered, at least 30 states will have to close larger-than-anticipated shortfalls in the coming fiscal year unless Congress passes a six-month extension of increased federal spending on Medicaid. Governors and state lawmakers, already facing some of the toughest budgets since the Great Depression, said the repercussions would extend far beyond health care, forcing them to make deep cuts to education, social services and public safety.

Read the full article →

Grant Cardone: Job Numbers are Synthetic

June 7, 2010

While the government makes claims of a job recovery the markets don’t agree. The governments hiring of 411,000 temporary census workers made a small dent in our enormous jobs crisis but should those jobs even be counted? These jobs don’t produce revenue, they don’t create new products or services, they can not be sustained and are funded on the shoulders of tax payers. While these jobs make the numbers look like they are improving they will not produce revenue. Why are businesses not yet hiring? Because they are not being rewarded to add jobs and will not do so until they can justify the added expense that comes with an expanded payroll. In the ‘real world’ additional payroll demands additional revenue produced from increases sales. The government’s only revenue is taxes and when they create jobs you get taxed. Those jobs that were used to pump up the jobs numbers are expenses to each of us. I don’t know about you but if I am going to pay for job creation I would like to get something for my money like, roads, bridges and infrastructure. Until businesses are rewarded for adding employment, job numbers will continue to suffer. Add to this, extended unemployment, again funded by the taxpayer- and the situation only worsens. The reality is most businesses are making more money today but the individual worker is not! Fast forward to when the unemployment benefits finally cease, taxes are increased on all of us and watch middle class American continue to suffer despite the recovery. Despite the impact of temporary census jobs more than 29 million Americans are still without work or forced into part-time work — that’s a real jobless rate of 16.6% (BLS U6). (Leo Hindery Jr.’s more precise estimate is 30.16 million for a jobless rate of 18.8 percent.) Nearly 7 million people have been jobless for over 26 weeks (the “long-term unemployed”) — more than at any time since the Great Depression. We still need more than 22 million new jobs to get us anywhere near full-employment. Businesses are making money but not hiring. Why? Because the reward is not there. Until government provides rewards for hiring rather than rewards for unemployment and funding jobs that don’t produce revenue the job numbers will be problematic. In the ideal free market, the price of labor determines the amount of employment, or so the theory goes. The new reality is the ability to added employment to produce new revenue not the price of labor determines the amount of employment. The old formula was if the price of labor goes down, jobs will be increase but who wants to take a lower paying job when they can stay home. Businesses don’t care how inexpensive the employment is but how much revenue additional employment can create! Quick fixes like adding 411,000 non-revenue creating census workers cost 90 million and will not change the economic conditions because nothing new is being created. Health care and unemployment benefits don’t create jobs they just cause us to increase taxes. If you are going to fund activities make sure you are funding activities that actually create products, services, roads, bridges, infrastructure, and new industry. How much infrastructure could 3 trillion build? It’s time to square up to the jobs crisis as it won’t go away by itself. The key to solving the crisis? Move money from handout programs to creation programs. Reward businesses for hiring rather than rewarding people to remain unemployed. If the government is going to spend massive amounts of tax dollars lets make sure it actually creates something and is not just a handout. Grant Cardone, Best Selling Author

Read the full article →

G-20 Nations Split on Increasing Bank Capital Requirements, Official Says

June 3, 2010

By Mark Deen June 4 (Bloomberg) — The Group of 20 nations is split on the scale and timing of increases in bank-capital requirements that have been under discussion since governments were forced to bail out lenders, an official from a G-20 government said. Countries such as the U.S. whose economies are largely financed by markets want banks to be required to hold more assets on their balance sheets to buffer against future crises, said the official, who will attend this weekend’s talks of G-20 finance chiefs in Busan, South Korea. Policy makers in continental Europe, where banks provide more financing, are concerned that too-high reserves risk choking off growth, the official told reporters on condition he not be named. At stake for banks is the potential need to raise as much as $375 billion in fresh capital under the proposals being discussed, according to estimates by UBS AG. U.S. Treasury Secretary Timothy F. Geithner signaled a possible compromise this week, saying banks may be able to put off the step under a transition period. “Anything that impacts banks will have a bigger effect in Europe than the U.S., where capital markets play a bigger role,” said Douglas Elliott , a fellow at the Brookings Institution in Washington and a former managing director at JPMorgan Chase & Co. “There’s quite high agreement that capital rules need to change, but differences on just how to do it.” December Deadline The G-20 countries, which collectively account for about 85 percent of global gross domestic product, have set themselves a December deadline to agree on new rules on capital and liquidity following the worst financial crisis since the Great Depression. The European Central Bank calculates that at the end of 2007, the stock of outstanding bank loans to consumers and companies stood at around 145 percent of GDP in the euro area and 63 percent in the U.S. By contrast, the amount raised from issuing debt in markets totaled 81 percent of GDP in the euro area and 168 percent in the U.S. Geithner told reporters in Washington June 2 that “differences are narrowing” on capital rules, although he didn’t anticipate a deal being struck at the Busan talks. A “common, consistent, cooperative” approach would help strengthen the global economy, he said. ‘Demanding’ Standards “It is perfectly reasonable to use transition periods to make it easier for countries to adjust to what we believe should be a substantially more demanding, more ambitious set of constraints on leverage,” Geithner said before departing for Busan. Both the U.S. and Europe are also advocating regulatory models that build on their own existing rulebooks and so would give their banks a competitive edge if implemented globally, said Elliott. The U.S. favors banks satisfying a higher leverage ratio, which would manage holdings relative to total assets, while Europe fears that would punish its banks which don’t currently face such a requirement and whose balance sheets are large yet contain a lot of low-risk securities, he said. By contrast, Europe’s desire for banks to better account for the risk of the assets they hold is questioned by the U.S. because it would rely on banks’ own computer models, Elliott said. The Basel Committee on Banking Supervision , which sets international banking rules, proposed in December that lenders increase the number and quality of capital buffers, boost liquidity reserves and adhere to stricter leverage ratios. The proposals “will result in more resilient banks and a sounder banking and financial system” Nout Wellink , then- chairman of the 27-nation committee, said at the time in a statement. To contact the reporter on this story: Mark Deen in Busan at markdeen@bloomberg.net

Read the full article →

G-20 Nations Split Over Scale, Timing of Forcing Banks to Increase Capital

June 3, 2010

By Mark Deen June 4 (Bloomberg) — The Group of 20 nations is split on the scale and timing of increases in bank-capital requirements that have been under discussion since governments were forced to bail out lenders, an official from a G-20 government said. Countries such as the U.S. whose economies are largely financed by markets want banks to be required to hold more assets on their balance sheets to buffer against future crises, said the official, who will attend this weekend’s talks of G-20 finance chiefs in Busan, South Korea. Policy makers in continental Europe, where banks provide more financing, are concerned that too-high reserves risk choking off growth, the official told reporters on condition he not be named. At stake for banks is the potential need to raise as much as $375 billion in fresh capital under the proposals being discussed, according to estimates by UBS AG. U.S. Treasury Secretary Timothy F. Geithner signaled a possible compromise this week, saying banks may be able to put off the step under a transition period. “Anything that impacts banks will have a bigger effect in Europe than the U.S., where capital markets play a bigger role,” said Douglas Elliott , a fellow at the Brookings Institution in Washington and a former managing director at JPMorgan Chase & Co. “There’s quite high agreement that capital rules need to change, but differences on just how to do it.” December Deadline The G-20 countries, which collectively account for about 85 percent of global gross domestic product, have set themselves a December deadline to agree on new rules on capital and liquidity following the worst financial crisis since the Great Depression. The European Central Bank calculates that at the end of 2007, the stock of outstanding bank loans to consumers and companies stood at around 145 percent of GDP in the euro area and 63 percent in the U.S. By contrast, the amount raised from issuing debt in markets totaled 81 percent of GDP in the euro area and 168 percent in the U.S. Geithner told reporters in Washington June 2 that “differences are narrowing” on capital rules, although he didn’t anticipate a deal being struck at the Busan talks. A “common, consistent, cooperative” approach would help strengthen the global economy, he said. ‘Demanding’ Standards “It is perfectly reasonable to use transition periods to make it easier for countries to adjust to what we believe should be a substantially more demanding, more ambitious set of constraints on leverage,” Geithner said before departing for Busan. Both the U.S. and Europe are also advocating regulatory models that build on their own existing rulebooks and so would give their banks a competitive edge if implemented globally, said Elliott. The U.S. favors banks satisfying a higher leverage ratio, which would manage holdings relative to total assets, while Europe fears that would punish its banks which don’t currently face such a requirement and whose balance sheets are large yet contain a lot of low-risk securities, he said. By contrast, Europe’s desire for banks to better account for the risk of the assets they hold is questioned by the U.S. because it would rely on banks’ own computer models, Elliott said. The Basel Committee on Banking Supervision , which sets international banking rules, proposed in December that lenders increase the number and quality of capital buffers, boost liquidity reserves and adhere to stricter leverage ratios. The proposals “will result in more resilient banks and a sounder banking and financial system” Nout Wellink , then- chairman of the 27-nation committee, said at the time in a statement. To contact the reporter on this story: Mark Deen in Busan at markdeen@bloomberg.net

Read the full article →

U.S. Thrifts Post Highest Profit Since 2007 as Bad Loans Decline, OTS Says

May 24, 2010

By Phil Mattingly May 24 (Bloomberg) — U.S. savings and loans reported their highest profit since 2007 as lenders recover from the worst economic crisis since the Great Depression, the Office of Thrift Supervision said. Thrifts had total profits of $1.82 billion in the first quarter, improving on a $442 million profit in the preceding three-month period, the OTS said today in its quarterly report on industry performance. The agency included 50 thrifts on its confidential list of so-called problem lenders required to boost capital and liquidity, up from 43 in the fourth quarter of 2009. “The health of the thrift industry is improving, but we cannot say the industry has fully recovered from the financial crisis,” OTS Acting Director John Bowman said today at a news conference in Washington. Savings and loans returned to profitability last year after reporting total losses of $15.9 billion in 2008 as the collapse of the U.S. mortgage market led to the failures of Washington Mutual Inc. and Indymac Bancorp Inc. Today’s OTS report follows a May 20 Federal Deposit Insurance Corp. release showing U.S. banks posted profit of $18 billion in the first quarter. Regulators are closing banks and thrifts at the fastest pace since the end of the savings-and-loan crisis in the 1990s in what FDIC Chairman Sheila Bair has called the clean-up phase after the housing market collapse. Five thrifts have been shuttered this year among the 73 lenders seized. Thrifts set aside $2.7 billion to cover bad loans, representing 1.15 percent of average assets in the quarter, down from 1.65 percent in the fourth quarter. Elimination President Barack Obama has proposed eliminating the OTS, which was faulted for lax oversight before the housing crisis, as part of a broad overhaul of U.S. financial-industry rules. The U.S. House and Senate, in separate bills, have voted to eliminate the agency. The two chambers may meet as soon as this week to reconcile the two versions. “As one door seems destined to close, another will be opening with exciting opportunities and a larger agency that will examine and supervise all federally chartered institutions,” Bowman said. “I’m right now very comfortable that the Hill has it right in terms of protections for employees, and to the extent there are gaps, we will continue to work with them to try and close those gaps.” The OTS, an arm of the Treasury, supervised 757 thrifts with a combined $949.8 billion in assets at the end of the quarter. The largest U.S. thrift is ING Bank FSB, the $91.3 billion-asset institution based in Wilmington, Delaware. To contact the reporter on this story: Phil Mattingly in Washington at pmattingly@bloomberg.net .

Read the full article →

Six Investment Banks Including UBS, Citigroup to Report Dark-Pool Trades

May 24, 2010

By Nandini Sukumar May 24 (Bloomberg) — Six investment banks including UBS AG, Citigroup Inc. and Deutsche Bank AG agreed to report European dark trades executed on their internal systems as the industry comes under closer regulatory scrutiny. Starting today, the banks, which also include Morgan Stanley , JPMorgan Cazenove Ltd. and Credit Suisse AG , will report European equity trades matched in their internal crossing engines to Markit Ltd. At the end of the trading day, Markit will collate, check and validate the data and publish the aggregated trading volume the next afternoon, said the Association for Financial Markets in Europe, which represents the banks. Dark pools, which allow investors to buy and sell securities away from regulated exchanges so they don’t have to disclose positions, are at the center of a regulatory storm as U.S., European and U.K. securities watchdogs scrutinize market structure, responding to the worst financial crisis since the Great Depression. Regulators disagree on how much trading banks carry out in dark pools. The U.K.’s Financial Services Authority says dark pools account for 1.25 percent of trades, whereas the Federation of European Securities Exchanges, which represents exchanges, estimates the figure is closer to 40 percent. The lack of reliable information on volumes and pricing of securities in dark pools has posed a problem for regulators trying to keep pace with market innovation. “This initiative is designed to bring further transparency into this area of OTC trading,” said John Serocold , managing director of AFME. The move provides “verified data where previously there has been only speculation and by giving a clear indication of the actual levels of trading in crossing engines.” To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net .

Read the full article →

Financial Reform Bill A ‘Bonfire Of The Loopholes,’ Will Make Banks Even More Powerful: Michael Hirsh

May 24, 2010

President Obama and leading Democrats are calling the “Restoring American Financial Stability Act of 2010″ the greatest overhaul of Wall Street since the Great Depression. And that may well be true. But judging from the many loopholes in the legislation–with more to come as the banks maneuver stealthily to tweak the final product in conference–the new bill might be better termed “the Accountants’ and Lawyers’ Welfare Act of 2010.” The bottom line is that despite the blizzard of amendments and provisions added–including some very smart changes at the 11th hour, like imposing greater control of ratings agencies–what’s likely to emerge on the other side of this in the years to come is a Wall Street that’s largely unchanged if marginally more regulated.

Read the full article →

Senate Rejects Plan to Shrink U.S.’s Six Biggest Banks in Financial Bill

May 6, 2010

By Alison Vekshin May 6 (Bloomberg) — The Senate rejected a proposal that would have required the nation’s six largest banks, including Citigroup Inc. and Bank of America Corp. , to shrink in size as part of an overhaul of the U.S. financial-regulatory system. The proposal would have turned the banks into “smaller, more manageable” institutions and forced them to maintain enough capital to cover their debts, said Senator Sherrod Brown , the Ohio Democrat who offered the amendment. The Senate voted 61-33 to reject the measure. Lawmakers are debating Senate Banking Committee Chairman Christopher Dodd ’s proposed rules overhaul, designed to prevent a repeat of the 2008 financial crisis that forced the U.S. to extend $700 billion in taxpayer funds to companies including Citigroup and Bank of America. Lawmakers are crafting rules amid voter anger over Wall Street risk-taking blamed for causing the worst economic collapse since the Great Depression. To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net .

Read the full article →

Goldman’s Blankfein Says E-Mail `Callousness’ Doesn’t Represent the Firm

April 30, 2010

By Christine Harper April 30 (Bloomberg) — Lloyd Blankfein , chief executive officer of Goldman Sachs Group Inc. , said that a “callousness” toward clients demonstrated in some e-mails released to the public this week is unacceptable and doesn’t represent the firm. “There were some e-mails where some people were projecting I would say, at best indifference, and at worst a callousness,” Blankfein, 55, said in an interview on the “ Charlie Rose ” television show airing tonight, according to a transcript. While he said those e-mails aren’t representative of the firm as a whole “it’s inexcusable if 10 people think that way or thought that way.” Goldman Sachs, the Wall Street firm that generates more trading revenue than any other, faces a U.S. Securities and Exchange Commission civil-fraud lawsuit over its sale of a mortgage-linked security. It is under criminal investigation by federal prosecutors, said two people familiar with the matter. Blankfein, who has run the company since June 2006, defended the firm’s actions this week under interrogation from a U.S. Senate subcommittee, which released 901 pages of documents including e-mail that showed employees disparaging securities they were offering to clients. Most of the complex derivatives the firm concocted and traded had a social utility, he said, while others may have gone too far. “If the issuants themselves are too complicated, become too illiquid as it turns out that they were, notwithstanding the purpose you may say, ‘Let’s not do those things,’” he said, according to the transcript. “So in hindsight I wish we had not done some of those things.” Stock Decline The stock fell 9.4 percent today to $145.20, in New York trading, its biggest drop since the SEC brought the suit on April 16. The company has slid 21 percent since the case was filed, losing $21 billion in market value. Goldman Sachs must improve communication with the public, Blankfein said, a role he said he finds especially difficult. “That’s a huge challenge, I would just say it’s my deficiency,” he said. “We can’t exist in the current state that we’re in and we understand that,” he said. “So we have a lot of work to do.” Blankfein defended the role that Goldman Sachs , and Wall Street as a whole, plays in making markets. “You could call it a casino, but if it is, it’s a very socially important casino,” he said. Goldman Sachs, which reported record earnings last year even as it repaid $10 billion of taxpayer bailout funds, inadvertently helped cause the worst financial crisis since the Great Depression, Blankfein said in an interview with National Public Radio yesterday. “Some of the things that Goldman Sachs did contributed to the crisis,” Blankfein told NPR, according to a transcript of that interview. “So, for example, Goldman Sachs did transactions for companies that involved lending them a lot of money, maybe too much money. We financed real estate that was probably overleveraged.” To contact the reporter on this story: Christine Harper in New York at charper@bloomberg.net

Read the full article →

Bearish Goldman Sachs Options Soar on Expiration Day SEC Fraud Accusation

April 16, 2010

By [bn:PRSN=1] Jeff Kearns [] April 16 (Bloomberg) – For bearish options traders, the Securities and Exchange Commission couldn’t have picked a better day to charge Goldman Sachs Group Inc. with fraud. Puts giving the right to sell Goldman shares at $175 before today’s close, which were worth 3 cents yesterday, soared to $14.15 for the biggest gain among options on the stock. Goldman shares fell 13 percent to $160.70 in New York. “Everything moves in an exponential manner on expiration day when you have unexpected news like this,” said Steve Quirk , managing director of trading at TD Ameritrade Holding Corp. in Chicago. “This is a very good example of why you cover short options even if they’re worthless and 10 or 20 percent away from the current trading price near expiration.” Goldman Sachs plunged the most in almost three months after the U.S. Securities and Exchange Commission sued the New York- based firm for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. The April $165 puts jumped to $4 from 1 cent yesterday. Those contracts traded more than 29,000 times, almost double the number of outstanding options before today. To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net .

Read the full article →

Video: Rolling Stone’s Taibbi Discusses SEC’s Goldman Suit: Video

April 16, 2010

April 16 (Bloomberg) — Matt Taibbi, a contributing editor at Rolling Stone magazine, talks with Bloomberg’s Carol Massar about the U.S. Securities and Exchange Commission’s lawsuit against Goldman Sachs Group Inc. Goldman Sachs was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (This is an excerpt of the full interview. Source: Bloomberg)

Read the full article →

Video: Herrmann Doubts Goldman Suit Will Spark Stock Sell Off: Video

April 16, 2010

April 16 (Bloomberg) — John Herrmann, a senior strategist at State Street Global Markets, talks with Bloomberg’s Carol Massar about the possible impact of the Securities and Exchange Commission’s suit against Goldman Sachs Inc. on U.S. stocks. Goldman Sachs was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (Source: Bloomberg)

Read the full article →

Video: Ben Stein Discusses SEC’s Lawsuit Against Goldman Sachs: Video

April 16, 2010

April 16 (Bloomberg) — Economist and commentator Ben Stein talks with Bloomberg’s Carol Massar about the U.S. Securities and Exchange Commission’s move to sue Goldman Sachs Group Inc. for fraud tied to packaging and selling collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (This report is an excerpt of the full interview. Source: Bloomberg)

Read the full article →

Video: McCormick Says Goldman Suit `Political Win’ for Obama: Video

April 16, 2010

April 16 (Bloomberg) — Matthew McCormick, a portfolio manager at Bahl & Gaynor Inc., talks with Bloomberg’s Carol Massar about the U.S. Securities and Exchange Commission’s lawsuit against Goldman Sachs Group Inc. Goldman Sachs was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (Source: Bloomberg)

Read the full article →

Video: Portales Partners’ Peabody Discusses SEC, Goldman Sachs: Video

April 16, 2010

April 16 (Bloomberg) — Charles Peabody, a partner and analyst at Portales Partners LLC, talks with Bloomberg’s Lori Rothman about the Securities and Exchange Commission’s lawsuit against Goldman Sachs Group Inc. Goldman Sachs was sued by U.S. regulators for fraud tied to collateralized debt obligations that contributed to the worst financial crisis since the Great Depression. (This report is an excerpt of the full interview. Source: Bloomberg)

Read the full article →

← Previous Entries