Sunday, April 26, 2009

Stress Test Results

Seems that one (unnamed) bank failed the stress test, we'll like discover which one as soon as the market opens on Monday morning. I'm guessing Citigroup or Bank of America, but time will tell. Official results will be released on May 4th.

A few more articles on the stress NY Times and Businessweek.

Friday, April 17, 2009

JPM says 'NO' to PPIP

Found this from What I find interesting is not that JP Morgan has no interest in selling assets into the PPIP, now that M2M has been relaxed there's no advantage for any bank selling their assets. The part I found interesting is Jamie Dimon's comment indicated that they would not participate as a purchaser either.

My thoughts are this...does Dimon fear that participation in the PPIP (as a buyer) would lead to some kind of additional government oversight that would potentially impose unfavorable government involvement in the bank? If that's true I wonder what's going on behind the scene regarding payback of TARP money. It seems obvious to me that if JP Morgan pays back the TARP money it puts incredible pressure on all the other banks.

With that said, I believe Dimon's comments on TARP repayment (see Bloomberg article here) says it all...the government must not want them to pay it back. Lack of participation in PPIP indicates they do not need additional capital, so the only reason they would not be able to pay back the TARP is because they're being told to sit tight. Poor Jamie, do everything right and you still can't shake government intervention.

Sunday, April 12, 2009

Marriage advice via WSJ

Just had to pass this on. Anyone married will see the value and can probably relate to it.

FHA issues

I don't find this to be surprising at all, but it appears that FHA may be in need of a bail-out. Could it be that since FHA's mission to increase access to affordable housing is backfiring? I mean, US home ownership indicates that home ownership reached a high of 69% in 2004, but remains above the historical post-WWII levels. So as the FHA is pushing to expand home ownership into minority and low income populations (see it for yourself on page 8) is it any wonder that they're seeing an increase in delinquencies and foreclosures. There's a direct relationship with the employment (or unemployment) levels for the FHA's target market. Employment statistics for by ethnicity and eduction level (which I associate with income level) would clearly indicate that this is a run-away train.

Check out some additional data on U.S. home ownership here.

I just want to know if Congress will call HUD / FHA leadership to the hill and interrogate their risk management practices. Doubt it.

Saturday, April 11, 2009

Kindle 3 Update...

I'm always excited to see updates on the next generation of the Kindle, so when this hit today's WSJ I have to share it. I'm just hoping this isn't like last year when rumors were floating that the Kindle 2 would be out before the holidays and it didn't hit until the end of February. Rest assured I'll be pre-ordering as soon as it's available.

Don't know if this would be branded as Kindle 3, since it's targeting a slightly different market but if it opens the textbook market I might have to stay in school just because of the Kindle.

Friday, April 10, 2009

Pro-M2M sentiment

I'm seeing more and more articles assaulting the changes in M2M rules. Here's another from the It's going to come down to whether banks are willing to accept the valuation on their toxic assets and sell them as part of the PPIP or whether they will refuse to part with them and instead mark the assets to model (higher than market). Last I heard the PPIP was still weeks away, but it's going to happen eventually. I still say whatever happens the activity validates the clarity provided by M2M, so bring it back!

Thursday, April 9, 2009

Unemployment situation

WSJ's latest survey of economists predicts the recovery in the job market will not happen until the second half of 2010.

I'm still undecided on what I think the recover will be in the job market. I'm obviously not an 'expert' but I think the rapid shedding of jobs has left companies particularly vulnerable when the inevitable recovery does occur. Therefore, what I see is an unexpectedly quick bounce-back in the job market and hopefully one that happens sooner rather than later.

On a side note, I had the experience of a job fair today, with a view from the opposite side of the table (from the hiring company side). It was a unique experience and while most resumes that we saw were from employed individuals looking for an 'upgrade' I felt both a sense of embarrassment and shame when walking into the event. Embarrassment because I am employed when so many are not (even if that's not exactly true in the NoVa job market) and shame because I didn't want people to think I was looking for a job myself. So it was humbling in several ways.

Goldman Sachs' View

I found this to be an interesting and informative read and look forward to the future publications.

I find the piece on the accounting treatment of SIV's interesting, but that's just showing my bias in accounting (and maybe some Enron flashbacks). Sooner or later the whole concept of off-balance sheet entities will be eliminated, since it's hard to argue that there's any long-term benefit to having them. They allow for short-term gains and at best neutral long-term results while at worst they tend to bring companies to their knees.

Tuesday, April 7, 2009

Monday, April 6, 2009

Isn't this the SEC's job?

This is just ridiculous.

Not all shareholder lawsuits are the same

As we begin to see the beginning of an inevitable wave of lawsuits arising from the credit crisis and market meltdown I've come across a couple items that indicate not all lawsuits are equal. Recently one of the first lawsuits from the mortgage meltdown was filed, and I'm sure there will be many to follow. All the large firms will be hit with them and it will take years to resolve, however the ramifications could be significant. Take the E&Y settlement in the case of Healthsouth, as the 8th largest auditor settlements it's stay in the top 10 is likely to be limited.

Obviously I'm biased, but let's be realistic...what moves the market on a day-to-day basis, the accountants or the credit ratings agencies? My vote is the credit rating agencies, and I doubt I'm alone. As accountants we follow specific guidance and yes interpretations may be different and they are subject to bias, however at least we have something to stand on. In addition, it's not like we get paid more for a specific opinion (although recurrence has a value too I suppose). I don't think enough legal heat is being placed on the credit rating agencies, and they play by their own rules.

I can't understand why lawsuits against credit rating agencies are not as successful as they are against the accountants. Apparently it's an uphill battle against the ratings agencies, but a slam dunk against the accountants.

Friday, April 3, 2009

Treasury auction update

Treasury Auctions remain strong.

Another Mark to Market post

Saw this on the mark to market myth through (great blog site).

Also, if you see Tyler's post on Delta Airline...been there done that.