While we wait for details on the president's plan to break up the banks, I wonder why the banks can't decide to break themselves up?

Wouldn't it be so much better to break up themselves than wait for President Obama to do it for them? Investment banks specialize in mergers and acquisitions and the converse spin-offs. Mergers and acquisitions are big business for Wall Street and they happen all the time. In fact, that's how many of the banks got so big.

Continue reading Why Can't the Banks Break Up Themselves?

Why Can't the Banks Break Up Themselves? originally appeared on BloggingStocks on Sat, 23 Jan 2010 14:10:00 EST. Please see our terms for use of feeds.

Nobody expected bonus season to be comfortable, even with the financial crisis more than a year in the rear-view mirror. Yet, Goldman Sachs (GS) is getting sued over its compensation package, under which key executives are only compensated in long-term stock. In the latest development, John Mack, CEO of Morgan Stanley (MS), is skipping his bonus for the third year in a row, according to Reuters.

Mack isn't the first banking CEO to go sans bonus this year. Kenneth Lewis, top dog over at Bank of America (BAC) is getting neither a salary nor a bonus for 2009. Both plan to step down at the end of the year, though Mack will stick around Morgan Stanley as chairman. The last time Mack got a bonus was in 2006: he picked up $36.2 million in restricted shares.

Continue reading Morgan Stanley's CEO skips bonus -- again

Morgan Stanley's CEO skips bonus -- again originally appeared on BloggingStocks on Sat, 19 Dec 2009 13:40:00 EST. Please see our terms for use of feeds.

The housing bubble and subsequent "Great Recession" have tarnished the stars of a good many of the world's financial wizards, such as the former heads at Lehman Bros. and Merrill Lynch. But one respected image remains -- perhaps unsurprisingly -- on top: Warren Buffett, chairman and CEO at Berkshire Hathaway Inc. (NYSE: BRK.A).

That's according to a recent quarterly poll of investors, traders, and analysts who subscribe to Bloomberg terminals, those somewhat cryptic news and data computers that are ubiquitous on Wall Street. Buffett, who received favorable nods from 25% of those participating in the poll, walked away with a plurality of the vote, Bloomberg News reported.

Continue reading Buffett's star shines brightest among world's financial gurus, poll shows

Buffett's star shines brightest among world's financial gurus, poll shows originally appeared on BloggingStocks on Thu, 29 Oct 2009 12:50:00 EST. Please see our terms for use of feeds.

Remember the heyday of the housing boom when investors would "flip" properties? Speculators would put a down payment on a property, usually a new construction, and sell it before it was completed with a fat profit. But the "flippers" got bagged when the price of real estate started dropping. Many just walked away from their deposits and left developers holding the bag.

Why is this idea of flipping real estate important now? Well, it seems that private equity investors buying troubled banks will be prohibited from "flipping" the bank for at least three years. In addition, regulators are requiring purchasers to maintain a capital ratio of 15%, three times the ratio required of other banks.

Continue reading No-flipping, increased-capital rules proposed for buying troubled banks

No-flipping, increased-capital rules proposed for buying troubled banks originally appeared on BloggingStocks on Fri, 03 Jul 2009 13:00:00 EST. Please see our terms for use of feeds.

When Mr. Dimon says, "When I hear the constant vilification of corporate America, I personally don't understand it," he sounds like Greenspan when he said: "there is a flaw in the model -- that defines how the world works."

Both men are going merrily along without a clue about what the American people and their representatives in Congress are up in arms about.

Continue reading Mr. Dimon 'misspoke' when he used the term 'vilification'

Mr. Dimon 'misspoke' when he used the term 'vilification' originally appeared on BloggingStocks on Thu, 12 Mar 2009 06:04:00 EST. Please see our terms for use of feeds.

Continue reading Bank bondholders must share the pain

Bank bondholders must share the pain originally appeared on BloggingStocks on Wed, 11 Mar 2009 14:00:00 EST. Please see our terms for use of feeds.

A source speaking on the condition of anonymity said: "the largest banks are well capitalized for current conditions."

If this is true why doesn't someone tell these bankers to "knock it off" and stop scaring everyone in order to get more free money?

Continue reading Our largest banks are well capitalized for current conditions

Our largest banks are well capitalized for current conditions originally appeared on BloggingStocks on Mon, 23 Feb 2009 14:40:00 EST. Please see our terms for use of feeds.

In the heat of the moment very often bad decisions are made. According to OECD (Organization for Economic Cooperation and Development), the decision by the U.S. Treasury to shift the TARP money away from buying toxic bank assets to simply giving money to the banks was the wrong move.

OECD outlined steps to follow to return the banking industry to a sound footing: First, bank assets must be guaranteed to avoid a run on the banks. Second, toxic assets must be removed from bank balance sheets. This is the step that was not done. According to OECD, the failure to remove toxic assets from bank balance sheets only serves to prolong the problem and make it more dangerous. These toxic assets can get worse through more defaults, thus making it necessary to inject more funds into the banking system. It's like holding a stock that keeps dropping and dropping and your margin calls become larger and larger.

So far the Fed and the U.S. Treasury have failed to clear toxic assets from bank balance sheets. This is an absolute must if our banking system is ever going to return to normal and bring back trust in the system. Just ask yourself, would you want to invest in a business when you don't even know what "bad assets" are being carried on the books? Who knows, maybe the value of the toxic assets are more than the bank is worth, in which case it should be shut down. At some point, someone will have to "bite the bullet" and clean up this mess. Congress, the Fed and the Treasury must put a stop to the practice of allowing banks to keep some of their transactions "off the books." That's what got us into this crisis in the first place. We need full transparency from here on or we will never be able to trust our banks again.

What are your thoughts on this?

Banking crisis: No solution yet! originally appeared on BloggingStocks on Fri, 09 Jan 2009 16:45:00 EST. Please see our terms for use of feeds.

Citigroup (NYSE: C) claims it has gotten a judge to block a potential merger between Wachovia (NYSE: WB) and Wells Fargo (NYSE: WFC). The big New York bank claims it had a deal to snap up WB, and was done wrong.

According to The Wall Street Journal (subscription required), "State Supreme Court Justice Charles Ramos issued the order blocking the sale of Wachovia Corp., which Wells Fargo & Co. had agreed to purchase in a $14.8 billion deal."

The FDIC says it will step in to help resolve the issue. But, the question is "who is served" by the broader implications of the fight. Having three of the nation's largest financial firm in a dispute during the greatest banking crisis in decades would push Wachovia, already troubled, into greater peril while the fight goes on. It could continue for months when fast action may be the only way to keep Wachovia from failing.

The Treasury has already intervened by pushing banks to merge and nationalizing or taking large financial stakes in companies including AIG (NYSE: AIG). It needs to step into the Wachovia situation before the bank gets into such deep trouble that it is not worth buying.

Douglas A. McIntyre is an editor at 245wallst.com.

Citigroup gains a point in Wachovia deal originally appeared on BloggingStocks on Sun, 05 Oct 2008 14:10:00 EST. Please see our terms for use of feeds.