Wednesday, September 23, 2009

Financial Headlines 9/23/2009

  • Yet another meaningless article about the Fed increasing scrutiny over bank bonuses, this time in the FT. Regulators are asking to look more closely at banks trading positions to see how much of bonuses are based on "real" profits and how much on unrealized gains. The article is asking for a "breakdown of their balance sheets with particular attention to trading books." It's a bit scary that they don't already have a breakdown of the balance sheet, given that they just conducted stress tests and proclaimed our banks to be well capitalized.
  • Funny article in the WSJ about how day traders are mostly responsible for the recent incredible volatility in AIG's stock. They haven't had this much fun since 1999.
  • Very unfunny article in the WSJ about how delays in foreclosures are merely prolonging the crisis by pushing the inevitable into the future. According to one analyst, three to four million foreclosed homes will be put up for sale in the next few years.
  • The FDIC is hoping to dispose of the assets of the failed Corus Bank, one of the largest bank failures this year, which include condo loans and other property. The loans are expected to fetch between 30 cents and 80 cents depending on whether they are performing or not. The FDIC will partner with the winning bidder, owning a 60% stake and providing the financing. About 10 bidders are expected to participate and bids are due Friday.
  • The Cioffi/Tannin Bear Stearns hedge fund trial just gets better and better and it hasn't even started yet. Prosecutors are now asking that Ralph Cioffi's bail be reviewed after he traveled to Florida to get documents related to a condo investment project that went awry. Apparently, Mr. Cioffi pledged his $5.7 million investment in the Bear hedge fund he managed as collateral for an investment in a Sarasota, Fla condo project. More leverage on top of his leveraged hedge fund. I'm starting to think this guy was too stupid to have knowingly deceived his investors. He allegedly went to a bank storage facility and requested that documents be copied and sent to him without being sent to his lawyers. In related news, Mr. Cioffi's lawyers are still attempting to keep evidence related to the mysterious disappearance of his computers and his lifestyle from being submitted as evidence in the case. By lifestyle, I'm referring to the three Ferraris, a $12 million Southampton pad, a $3.5 million house in New Jersey, a $3.25 million house in Vermont and two Florida properties worth $7.1 million and $1.25 million.