Posts filed under “M&A”
Joshua Rosner is a managing director at the independent research consultancy Graham Fisher & Co., where he advises regulators and institutional investors on housing and mortgage finance issues. Rosner has provided advice on monetary, fiscal, regulatory, and political developments to many of the world’s leading banks, mutual funds, hedge funds, and other institutional investors. Mr. Rosner was among the first analysts to identify operational and accounting problems in the government-sponsored enterprises (GSEs), the peak in the housing market, the likelihood of contagion in credit markets, and the weaknesses in the credit rating agencies’ collateralized debt obligation (CDO) assumptions.
What follows is his most recent commentary on Bank of America:
Ken Lewis must not have listened if his parents told him what mine told me:
-”Don’t buy something you can’t afford”;”
- “Chew before you swallow”;
- “You just got a new toy (Countrywide), you don’t need another now (Merrill)”.
These are lessons our grandparents learned, our parents preached and we forgot. Now, unfortunately, our children will learn it too. Perhaps, for the good of the Republic, the Treasury and our nation’s bankers will as well.
Back stopping Countrywide was premature, buying it was ego driven and, even at the time, buying Merrill seemed plain dumb.
The whole Treasury approach is as dumb as taking equity warrants in a company you may decide is better off in reorganization. How can you teach market participants the lessons of the importance of risk assessment and responsibility if every time a banker blows up his firm you bail him out and then finance his next trade.
Worse yet, Treasury bail’s him out and allows him, without restriction, to use the money to play CDS, not to hedge and put risk back into the market but to speculate.
We need to take large and aggressive action to stop a deflation but the crisis has moved to main street and we can’t keep pretending that bank losses, which will begin to accelerate again (with rising unemployment and commercial losses) can reverse if only we use money to hide them.
We keep hearing DC talk about “when we restructure we must better regulate the large banks”. Hello!?, it has been 18 months since I began loudly calling for the SEC to require more detailed disclosures about the structured holdings of banks and warning of risks for the failure to disclose (see link at bottom). Disclosure is better than regulation and easy to achieve yet we talk as though the Fed and SEC need new powers to achieve these confidence inspiring and risk assessing disclosures.
Step right up to the bar here in Bailout Nation, 2009 version. Open 24 hours, we never close. No bailout too big, no investment/money pit too dumb. Yes folks, we can handle your bad assets, recapitalize your bank, no muss, no fuss. Yes, here in America, we cannot be bothered with things like plans and…Read More
via NYT via WSJ > Sources: Citigroup Plans to Split Itself Up, Taking Apart the Financial Supermarket ERIC DASH NYT, January 13, 2009 http://www.nytimes.com/2009/01/14/business/14citi.html Citigroup Ready to Shrink Itself by a Third DAVID ENRICH WSJ, JANUARY 14, 2009 http://online.wsj.com/article/SB123185686674677225.html
If they are too big to fail, make them smaller.” -Nixon Treasury Secretary George Shultz about Fannie Mae and Freddie Mac > The operative expression about many of the bailouts we have seen — AIG, JP Morgan (via Bear Stearns), Goldman Sachs, Fannie/Freddie and of course Citibank — is “Too Big To Fail.” Perhaps the…Read More
Every year, Doug Kass creates a list of forecasts. But these are not straight predictions; the basis of Kass’ column is that these are ideas that most people think are very unlikely, which that Doug believes has a better chance of occurring than the crowd does. Call them “Possible Improbables” Here’s the list: 1. The…Read More
Consider that one year ago Royal Bank of Scotland paid US$100 billion for ABN Amro. That seemingly impossible amount would now buy: Citibank $22,5 billion (74% down) Morgan Stanley $10,5 billion (-72%) Goldman Sachs $21 billion (-67%) Merril Lynch $12,3 billion (-77%) Deutsche Bank $13 billion (-71%) Barclays $12,7 billion (-71%) And still leave $8…Read More