Third quarter underwriting results for the reinsurance industry exceeded expectations. Unusually low catastrophe losses -- for the quarter that dominates hurricane season -- were largely responsible for this result, according to a report by Aon (AON). Reserve releases from prior accident years helped quite a bit, as well. For the 23 reinsurers that Aon analyzed, net income reached $12.7 billion by the end of September, up almost 200% from $4.3 billion a year earlier.

Jeff Manning, staff writer for The Oregonian newspaper, released a story Thursday, March 27, 2008, that claims the paper has come into possession of a copy of an internal memo from JP Morgan Chase (NYSE: JPM). According to The Oregonian article, which hints at unsavory or even fraudulent mortgage processing practices, the memo indicates that loan processors can (not should) use creative data entry to alter automated underwriting system results. The Oregonian writer entertains the "dark side" scenario in the tone of his article.That's a real convenient, time-tested ploy for selling newspapers. Kudos for his attempt.

However, representatives for Chase mortgage operations have dismissed the memo as nothing more than a strategic angle on automated process. While no one has actually come out to say they created the memo or why, the company allegedly admits that the document is genuine. I get no sense that anyone from the company who commented on the situation has anything to hide. In fact, company reps appear to be quite forthcoming on the matter.

Blame the tight credit markets and fear of recession: IPOs hit a 50-month low in January. According to the Telegraph, "figures showing the extent of the slump come as investment banks across the world are cutting jobs on expectations of a continued lull in activity over the coming year. " M&A activity has also hit its slowest pace since late 2004.

The real damage from the slowdown may be to investment and large money center banks. Now that mortgage-related write-offs have damaged their balance sheets, they might have hoped that earnings from underwriting and M&A divisions could help with earnings in 2008. It looks like that will not happen.

Financial executives will be looking for more lay-offs at their firms to try to offset falling revenue. That means the loss of high-paid jobs in cities like New York, London, Paris, and Zurich.

A depression may be coming to the M&A sector.

Douglas A. McIntyre is an editor at 247wallst.com.

How is so much money made on Wall Street? If you're guessing that a most use a "buy and hold" strategy ala Warren Buffett, you're way off. Just like with any stockbroker, the money is made by revolving stocks (i.e., buy and sell all the time) instead of holding them with a well-researched strategy and hoping for the best. Without transaction fees and commissions, many trading houses would be belly-up. Want $9.99 trades to encourage as many trades as possible in a given month? There are plenty of trading companies that would love to help you.

But the recent mortgage and subprime lending mess is a little different. Very simplistically put, instead of turning around bonds and other holding vehicles, companies like Merrill Lynch and Co., Inc. (NYSE: MER) and Citigroup, Inc. (NYSE: C) were buying up collateralized debt using bonds that were backed by subprime home loans. If those loans went into default, the risk to all that debt to these large financial companies is pretty scary. Err, wait...that is exactly what has happened, and as a result of this risky procedure, both of those finance houses are writing billions down in value and Merrill's O'Neal and Citigroup's Charles Prince have been sacked in the span of a week. Whoa!

Ignoring the fundamentals of finance (as in, risk management) is pretty easy for many of us, but when you lead some of the world's largest financial companies, it's gets a tad bit more thorny. If that risk balloons into a problem, you have a huge thorn in your side. This is precisely what happened to Merrill Lynch, Citigroup and many others reeling under the pressure of writing down assets backed by floppy loan foundations. When will the vision increase from a short-term one to a long-term one? On Wall Street, maybe never unless the market implodes upon itself.