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’On the flightiness of uninsured deposits
There’s a heated debate going on in the blogosphere between Amar Bhidé, professor at Tufts’s Fletcher School of Law and Diplomacy, and Felix Salmon, Reuters blogger extraordinaire. Reuters’ Peter Thal Larsen has also waded in.
Libor, repressed
From the annals of financial repression, we bring you Libor rates.
It’s a torrid tale of QE2, dollar funding and liquidity — and it’s one we thought we’d mention, given that the Federal Reserve’s second bout of quantitative easing has just come to an end.
Foreign banks are arbitraging the Fed, RBC says
Up until April this year, US banks had a nice little earner.
As Freakonomics explained, big banks were able to borrow cash from the Fed funds or repo market for say, 15 basis points, posting US Treasuries as collateral,
Honey, I broke the repo market
If you’re a money market fund manager, you’ll already be aware (plus possibly extremely concerned about) that general collateral rates are approaching zero. If you’re not, then read on.
As a reminder,
Further further reading
For the commute home, where budget decisions are made for rather than by children,
- Corn goes pop! Reaches a 33-month high.
- “Expendability”: what the Saudi king has learned from Libya.
- Greg Ip on Paul Ryan’s budget proposal.
US covered bond conundrums
Our colleague Jennifer Hughes cites the worries of fund managers over the underlying collateral that backs covered bonds in Europe, which reminds us that we’ve been meaning to write something about another recent proposal meant to jumpstart a covered bond market here in the US.
Solving the second-lien sticking point
Remember this chart? It’s old, but still relevant.
Those are second-lien (or just plain second) mortgages held by US banks — also known as remortgages or home-equity withdrawals in the UK. The top four,
Strange meddling
There’s something odd in this Wall Street Journal article about Tim Geithner’s meddling in the affairs of the independent regulators.
Not the infighting and turf wars within the Financial Stability Oversight Council — that was bound to happen sooner or later.
The FDIC considers safe harbours (again)
On Monday, the FDIC finally approved a new set of rules governing “safe harbour” provisions for ABS, which will be effective starting December 31.
As we’ve noted previously, safe harbour provisions
CRE-failed bank nexus, ongoing…
FT Alphaville has long been chronicling the damage that non-performing CRE loans have done to the balance sheets of small banks — contributing to an increase in bank failures, tighter lending standards,
Finreg, the FDIC and repo markets: a BarCap primer
BarCap produced another solid batch of commentary on the potential implications of US financial reform on Friday*, this time on the topic of repo and short-rate markets.
[For any interested, previous missives covered derivatives/central clearing and the resolution authority]
Here’s the I-want-to-leave-the-office version:
FDIC, problem banks and FAS 166/167
The FDIC released its quarterly banking profile for the first quarter of 2010 on Thursday, and we’ve read the report so you don’t necessarily have to*.
Here are some stats that stood out in the report and the accompanying press release (headers and any emphasis FT Alphavillle’s):
FDIC considers living wills, safe harbours
Two important developments in FDIC world on Tuesday.
First, the failed-bank overlord formally proposed a new rule that would require the largest US banks to prepare ‘how-to’ guides for regulators who might need to dismantle them further down the line.
‘Big bankers stared at one another in anger and astonishment’
From the archives of Time magazine, a worthwhile read on how US bankers reacted to the “monstrous system of guaranteeing bank desposits” – aka, financial regulation, 1933 style:
Through the great banking houses of Manhattan last week ran wild-eyed alarm.
Would you stick with a failed bank?
American Banker on Thursday published a piece on an under-examined phenomenon: how do the consumers of the hundreds of small and regional banks that have failed and subsequently been ‘resurrected’ via FDIC mechanisms react to the process?
Whenever an FDIC-insured bank fails and its assets are transferred to an “acquiring financial institution”,
FDIC’s mark-to-mayhem
File under Good intentions –> Unintended consequences –> FDIC.
The Federal Deposit Insurance Corporation, the body charged with insuring US bank deposits, has taken over about 200 banks since 2007.
How do you say ‘bank bailout’ in Spanish?
Just in case you thought the financial crisis in the US of A was concentrated on the mainland, here’s some food for thought from Dow Jones (emphasis ours):
The Federal Deposit Insurance Corp. is seeking buyers for three banks in Puerto Rico,
Failed-bank assets, in pics
So we knew FDIC — the organisation charged with insuring US bank deposits — has an asset problem.
About 200 banks have failed in the US since 2007, leaving FDIC with a number of often-unenviable loans and other financial assets to sell,
On those ‘epic’ declines in bank lending
Great headline from the Wall Street Journal on Wednesday: ‘Lending falls at epic pace’.
Of course, with a headline like that, one would expect a less-than-uplifting tale:
U.S. banks posted last year their sharpest decline in lending since 1942,
The mother of all bank re-securitisations?
FT Alphaville first mentioned reports that the FDIC, the US body in charge of guaranteeing American bank deposits, was looking at `the mother of all bank securitisations’ back in October.
The Federal Deposit Insurance Corporation has accumulated some $36bn worth of assets from the plethora of failed US banks.
The special (regulatory) relationship
A bit academic perhaps, given the newsflow, but FDIC chairman Sheila Bair and Bank of England governor Mervyn King have been doing the diplomatic shuffle.
In fact they’ve got a memorandum of understanding!
It covers plans for dealing with bust or failing banks with activities in both the US and the UK,
Principals, forgiveness and a reborn Hamp?
Tuesday provided a veritable bonanza of info for any one following the US Treasury’s increasingly curious forays into mortgage modification.
The US House Financial Services Committee met to discuss the government’s response to the mortgage foreclosure crisis,
Tarp setback for Citi
US authorities are split over how much capital Citigroup should raise before it repays $20bn of Tarp bail-out funds – a disagreement that is hampering the bank’s efforts to free itself from the government’s grip.
FDIC’s insurance in the red, ‘problem banks’ hit 16-year high
There are some shocking numbers in Federal Deposit Insurance Corp’s (FDIC) quarterly banking report for the three months to September 30, which the agency released on Tuesday.
Numbers like: -$8.2bn and 552.
The insecurity of the unsecured creditor
How do you solve the problem of excessive risk-taking and systemic risk?
FDIC chairman Sheila Bair had an idea back in October:
ISTANBUL (Reuters) – Ensuring secured creditors face losses when a financial institution fails could help rein in excessive risk-taking and strengthen the financial system,
Blocked Minsheng deal costs $1.7bn
US authorities blocked Minsheng, the Chinese bank, from acquiring a Californian lender in a deal that could have saved almost $300m of taxpayers’ money and $1.4bn from an industry insurance fund, it has emerged.