Continue reading Today's technical outlook: Wall Street fails Geithner's plan

Today's technical outlook: Wall Street fails Geithner's plan originally appeared on BloggingStocks on Wed, 11 Feb 2009 09:30:00 EST. Please see our terms for use of feeds.

Continue reading Today's technical outlook: Waiting for Geithner

Today's technical outlook: Waiting for Geithner originally appeared on BloggingStocks on Tue, 10 Feb 2009 09:30:00 EST. Please see our terms for use of feeds.

• Does the person have the respect of Wall Street?
• Does the person know the current players and issues well?
• Does the person have the energy to run at full speed in what promises to be a 7-day a week position?

Obama is reportedly considering Timothy Geithner, president of the Federal Reserve Bank of New York, former Treasury Secretary Lawrence Summers and former Federal Reserve Chairman Paul Volcker. Based on the criteria I've listed, the right person for the job is Geithner. Summers is an academic with an abrasive personality who is not steeped in the realities of Wall Street. Volcker is reportedly close to Obama and was widely respected on Wall Street, but at 81 he lacks the energy for the job.

Continue reading Memo to Obama: Pick Geithner for Treasury

Memo to Obama: Pick Geithner for Treasury originally appeared on BloggingStocks on Thu, 06 Nov 2008 12:32:00 EST. Please see our terms for use of feeds.

Our introduction to the Treasury Department official in charge of the $700 billion bailout fund -- Who will spend our $700 billion? Meet 35-year-old Neel Kashkari -- generated a lot of interest and commentary. Many of the comments have been negative and cover a wide range of fear and loathing, from cracks about Goldman Sachs (NYSE: GS) running the country and stealing all the money, to insults directed at Kashkari's lack of hair and ethnic background. (For the record, his family is from India, not Iran, and Neel is apparently a Hindu name, not a Muslim one, although I haven't found any definitive proof of his religious background.)

Looking around the web, I found lots of talk about Kashkari, including one curious comment at Huffington Post that Kashkari has a special arrangement with respect to his salary. Somehow, according to this commentator, Goldman Sachs is paying him billions of dollars to do his job. He will supposedly collect these riches when he steps down, presumably after having rendered super-secret services to the financial oligarchs who apparently own our country.

The writer of the comment offered no proof, and I have to admit that I'm a little skeptical (about the salary, not the oligarchy). But it did get me thinking about how much government officials are being paid to handle all this bailout money.

According to this Bloomberg report, Kashkari earned $738,000 in salary and bonus at Goldman before joining his former boss Hank Paulson at Treasury in July 2006. His title is now Assistant Secretary (Assistant Secretary of the Treasury for Financial Stability and Assistant Secretary of the Treasury for International Economics and Development, to be precise) and he is, obviously, a federal employee now. So he must earn the standard salary for an Assistant Secretary.

Continue reading So how much is bailout czar Neel Kashkari getting paid?

So how much is bailout czar Neel Kashkari getting paid? originally appeared on BloggingStocks on Fri, 31 Oct 2008 11:50:00 EST. Please see our terms for use of feeds.

With reports that the UK will invest $60.5 billion to take control of its four top banks, leading Western finance ministers left Washington with an important unanswered question: "What can we do that will restore confidence to the global financial markets?" I am heartened to learn the U.S. leaders are discarding their reverse auction strategy in favor of a plan to inject capital into our banks. But if that plan is not done the right way, it could be a missed opportunity of colossal proportions.

Here's what worries me about the current vague discussions. If the U.S. invests $700 billion in banks that apply for the investment, then the applications are likely to come from banks that are losing money and have the least amount of capital. If the Treasury invests in these money losing applicants, odds are good that they will keep losing money and the investment will be wasted.

In order to get a return on our investment, Treasury must follow a plan I called cull and capitalize. In this plan, Treasury would analyze our 8,400 banks and pick the winners. To do this, the FDIC could rank banks based on their profitability, their capital levels, and the quality of their assets. The banks that did not make it into the winner's circle would either be encouraged to merge with those winners or close down.

Continue reading A way forward for financial leaders

A way forward for financial leaders originally appeared on BloggingStocks on Sun, 12 Oct 2008 09:04:00 EST. Please see our terms for use of feeds.

Grandstanding: McCain mentions Buffett as pick for treasury secretary originally appeared on BloggingStocks on Fri, 03 Oct 2008 15:17:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• People with the matter said that Ken Wilson, The Goldman Sachs Group Inc's (NYSE: GS) most senior financial-institutions broker, will temporarily exit the firm, the Wall Street Journal reported, in an effort to advise Treasury Secretary Henry Paulson on how to resolve the country's banking crisis.
• The American Federation of State, County, and Municipal Employees, a union with a stake in Citigroup Incorporated (NYSE: C) called for the financial services company to break itself up. The Financial Times reported that the demand will almost definitely be rejected by Citigroup.

• Treasury Secretary Henry Paulson's plan for rescuing Federal National Mortgage Association (NYSE: FNM) -- Fannie Mae -- and Federal Home Loan Mortgage Corporation (NYSE: FRE) -- Freddie Mac -- calls for the creation of a new regulatory agency that would seek to assert more stringent control over the banks and lessen the damage they could cause to the American financial system, the New York Times reported.
• The Daily Telegraph reported that BP Plc (NYSE: BP) blocked a $1.8B dividend payment to its Russian partners in the TNK-BP joint venture.

• According to paidContent.org, now that its cash on hand exceeds its market cap, speculation that Napster Inc (NASDAQ: NAPS) could be a takeover target heated up.

Newspaper wrap-up: Union wants Citigroup to break itself up originally appeared on BloggingStocks on Mon, 21 Jul 2008 08:57:00 EST. Please see our terms for use of feeds.

MAJOR PAPERS:

• Treasury Secretary Henry Paulson will today outline a new plan to better organize the overall bureaucracy that oversees financial markets, the Wall Street Journal reported. Paulson's new proposals include merging or eliminating all together institutions such as the SEC.
• According to people familiar with the matter, the Wall Street Journal also reported that Alphonso Jackson, the Housing and Urban Development secretary, is expected to today announce his resignation, a move which could deal a blow to the Bush administration's efforts to combat the crisis in the housing markets.
• The Financial Times reported that Bank of America Corporation (NYSE: BAC) may take its equity prime brokerage business off the market after receiving weak interest from potential bidders. People close to the situation emphasized that no final decision has been made on the unit.

• Bloomberg reported that Citigroup Incorporated (NYSE: C) will set up an independent credit card unit, according to sources. The rest of the consumer division, mainly bank branches and non-bank lending, will be divided into five regional groups, according to the inside sources.

Newspaper wrap-up: Paulson leads charge over government role in financial markets originally appeared on BloggingStocks on Mon, 31 Mar 2008 07:15:00 EST. Please see our terms for use of feeds.

A Wall Street source has told me that there is a rumor floating around that current Treasury Secretary Hank Paulson is leaving his post to take over Citigroup Inc. (NYSE: C).

Naturally, this rumor interests me because I have posted wistfully about this outcome for the last several months. While Paulson may not be the greatest Treasury secretary in American history, he had an excellent track record at Goldman Sachs Group (NYSE: GS) and he would do his reputation a big favor if he could step into Citigroup and save it from ruin.

Citigroup has been hurting badly all year. In the first part of 2007, it suffered because its costs were growing faster than its revenues. Then it missed its third-quarter earnings numbers and announced a much bigger-than-expected write-down of assets related to subprime mortgage-backed securities. This culminated in the departure of Citigroup's CEO, Chuck Prince on November 4.

Continue reading Wall Street Rumor: Paulson leaving Treasury to run Citigroup

Wall Street Rumor: Paulson leaving Treasury to run Citigroup originally appeared on BloggingStocks on Wed, 28 Nov 2007 12:20:00 EST. Please see our terms for use of feeds.

Bloomberg News reports that Treasury Secretary Hank Paulson keeps trying to cheer lead the dollar back up. His boss was a cheerleader at Andover so Paulson fits right in. Just one little problem -- government economic policies are at odds with the cheer.

This topic is important to everyone, particularly now as Americans climb into their cars for Thanksgiving. That's because oil is denominated in dollars so the weaker the dollar gets, the higher oil climbs. If you've been looking at the gas pumps recently, you know that the price of gas is rising.

Paulson's problem is he seems to think that confidence in the currency comes from repeating the phrase "strong U.S. economy." Or as he put it: "The U.S. has a very competitive, strong economy that's proven itself over many years. The dollar has been the world's reserve currency since World War II and there's a reason."

Continue reading With his strong dollar talk and weak dollar actions, should Hank Paulson go run Citigroup?

With his strong dollar talk and weak dollar actions, should Hank Paulson go run Citigroup? originally appeared on BloggingStocks on Fri, 16 Nov 2007 10:48:00 EST. Please see our terms for use of feeds.

Bloomberg News reports that on August 17th, in the midst of the August credit crunch, Fed Chairman Ben Bernanke sought the advice of Citigroup (NYSE: C) Chairman and Former Treasury Secretary Robert Rubin, mortgage backed securities inventor Lewis Ranieri and hedge fund honcho Ray Dalio of $32.1 billion Bridgewater Associates. Kenneth H. Thomas, a Wharton lecturer, obtained the information on Bernanke's calls and contacts under the Freedom of Information Act.

Although there are no details of what Bernanke discussed with these investment luminaries, I applaud him for making the effort. One of the things that helped Alan Greenspan to make decisions was the network of business and finance leaders which he had created when he headed his own consulting firm prior to his move to Washington. Such real world contacts are particularly important for Bernanke to develop given his academic background.

It would be very helpful for investors to know how Bernanke makes his decisions. But this little glimpse into his schedule reveals an obvious point -- it would be very difficult to believe that anyone Bernanke spoke with would not have obtained very valuable information from which they could profit. And we'll never know whether Rubin, Ranieri, or Dalio did just that.

The rest of us can always eat cake.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

Bernanke seeks street smarts originally appeared on BloggingStocks on Wed, 03 Oct 2007 13:56:00 EST. Please see our terms for use of feeds.

Former Goldman Sachs Group, Inc. (NYSE: GS) CEO and current Treasury Secretary Hank Paulson has staked some of his professional reputation on getting results in trade negotiations with China. According to the New York Times, Paulson's reputation -- as a China hand who gets deals done -- has not been burnished by the latest round of trade talks.

As I posted earlier, our relationship with China is complex. We need China, since it's financing a big chunk of the $8.8 trillion U.S. federal debt -- it owns $350 billion worth of U.S. Treasury securities. But China also accounts for a share of the politically sensitive U.S. trade deficit. And due to what Paulson considers China's artificially low currency, this trade deficit is not going away.

To be fair, there was some good news. The U.S. and China committed themselves to doubling daily passenger flights and granting American carriers "unfettered access" for cargo. The countries also agreed to joint cooperation to develop clean coal-burning technologies and reduce trade barriers to products that help control pollution.

Continue reading Inglorious China talks ding Paulson's reputation

Inglorious China talks ding Paulson's reputation originally appeared on BloggingStocks on Thu, 24 May 2007 15:25:00 EST. Please see our terms for use of feeds.

Henry Paulson, former CEO of Goldman Sachs Group (NYSE: GS) and current Treasury Secretary, has been spouting pablum about how he's never seen such a strong global economy. He's just following in the footsteps of cheerleader-in-chief, George W. Bush.

But Paulson is no dummy. He knows that his words have a tremendous impact on investors around the world who are nervous about the recent rapid market break. The key question is whether he knows enough to keep all the economic imbalances in the global markets from making his optimistic comments look foolish.

I'd like to hear how he would keep the massive debt load which the U.S. economy is carrying from creating a sharp economic reversal. Specifically, if the economy is so strong, I'd like to hear Paulson explain away these questions:

Continue reading Parsing Paulson's pablum

Parsing Paulson's pablum originally appeared on BloggingStocks on Wed, 07 Mar 2007 10:30:00 EST. Please see our terms for use of feeds.

Our latest Treasury Secretary, Henry Paulson, has been a quick study. That is, he knows who to skillfully craft phrases for the media. In a speech today, he talked about overregulation in the financial system - saying we are in "danger of creating a thicket of regulation that impedes competitiveness."

But, hey, he should know. Before this, he ran the venerable Goldman Sachs.

Paulson talked about our arcane system - which often has overlapping jurisdictions. Of course, there is also the big issue of Sarbanes-Oxley, which is particularly scary for public-company CEOs.

However, in light of the power shift in Congress, it is not likely that securities regulations will get much play. Besides, it is probably going to be contentious, anyway.

So, don't expect too much - except more mega going-private transactions and Paulson's Wall Street brethren to continue to get rich from the process.

Tom Taulli is the author of various books, including the Complete M&A Handbook and operates InvestorOffering.com.

Treasury Secretary: On the Perils of Excessive Regulation originally appeared on BloggingStocks on Mon, 20 Nov 2006 16:13:00 EST. Please see our terms for use of feeds.

Paulson almost there as new U.S. Secretary of the Treasury originally appeared on BloggingStocks on Tue, 27 Jun 2006 17:24:00 EST. Please see our terms for use of feeds.