Angry Banker

Bank Charge Off Rate Now Worse than During the Depression

Seriously, measuring charge-off statistics 70+ years apart is really meaningless. There were different lending laws, different loan products, different interest rates and numerous other differences which contribute to the varying charge-off rates between these two periods. Tell me, what was the credit card charge-off rate during the Depression? Oh yeah, can't be done because credit cards didn't exist....

More Goldman Outrage

No one is forcing you to live in America. There's no investment banks in North Korea.


On Oct 26 10:17 PM imapopulistnow wrote:

> I would like to live in a nation that does not have to worry about
> the corruption of investment banks. Lets abolish these parasites.

On 'Banksters': Don't Hate the Player, Hate the Game

Thanks for the reasonable article. In fact, labeling everyone who works at a bank as a "bankster" is the same as saying that line workers at GM were responsible for its bankruptcy. It just ain't so. 98% of the folks at these companies (whether they be banks, manufacturers or almost any other major corporation) are just trying to do their job and have very little say in how the company is run or what its profit motives are.

Congress Still Looking at a Stock Trading Tax

A nominal tax of 0.1%~0.25% per trade (depending on size) would be absolutely immaterial and meaningless for any investor. But the upside for the government (and therefore the average taxpayer) would be HUGE. Even though an ardent capitalist, I still say go for it.

Thoughts on Executive Pay Restrictions

Punishing the employees that have stayed loyal and are doing their best to save these companies (and repay TARP in the process) is the wrong approach. Getting rid of the guys who caused the problems in the first place is the right approach. Oh wait, that's already happened at most of these firms....

Where's the Outrage at the Banks?

Banks do not make more money through foreclosure than through people repaying their loans. If they did, then the banks would not have lost so much money the last two years.

Banks make money by taking prudent risks and receiving fair compensation (e.g., interest and fees) in exchange for taking those risks. Unfortunately they did not take prudent risks and lent money that they should not have lent, because the borrowers did not have the ability to repay. And then their second line of defense, foreclosure, also failed because the underlying assets collateralizing the mortgages were not worth what as much as when they made the loans.

Geithner to Blame for Outrageous Goldman Bonuses

People should quit whining about Goldman's bonuses. GS is profitable, meaning its shareholders have made money, so GS is just doing its job as a corporation. And 35% of those huge bonuses will end up in the U.S. Treasury's coffers as tax receipts.

Hands Off Goldman Bonuses

Apparently I will be the lone voice of opposition to this article, even though I know it may earn me dozens of thumbs down.

Sure Goldman was a beneficiary of the bailout. But they also paid back their funds quickly and according to the terms of TARP. That means they get to run their business again without government interference in how they pay their employees.

But grudgingly I agree that the government gets to have a say on pay for firms still using TARP funds. Although I still say that in many cases, damage is in fact being done by capping compensation, because good employees (and in the case of Andrew Hall, profitable divisions) are leaving, meaning the future profitability of the very firms that TARP is intended to help is being threatened by the TARP rules. That's BAD for taxpayers because it reduces the likelihood that TARP will get repaid.

And don't give me this garbage about how we should be prosecuting the executives as criminals because they are being awarded large bonuses. Most of the executives in charge of the firms that are still on TARP are NOT the executives who were in charge when their firms were taking the big risks that got them in trouble. In reality most of the old management teams were swept out during the early days of the crisis and have been replaced with new management who are doing their best to fix the problems created by their predecessors. Some of these current executives however continue to be ostracized and vilified publicly as if THEY were the people who caused their banks to fail (which isn't true) and then to add insult to injury we tell them we're not going to pay them either.

Personally I think anyone who has the courage and willpower to run one of the TARP banks today should be receiving extra "combat pay" just for dealing with all the crap he has to put up with from politicians, regulators and opinionated bloggers every day.

Spinning Off Banamex

For once I agree with you. Citi should look to offload Banamex and use the cash to repurchase $20B of shares owned by Uncle Sam. This would make repayment of the rest of TARP a lot more realistic, which would be good for shareholders.

Why I'm Shorting Moody's

And the most compelling reason to short Moody's.... Warren Buffett has been selling his stake, meaning the company has no future (just take a look at the current state of most other companies that Berkshire has bailed on in the past....)

Citigroup's Dark Arts

Morgan is a weak JV partner? This is the same Morgan that was the #1 M&A adviser globally in Q3? (yes they beat Goldman)

On Oct 15 11:09 PM Fourpenny Guy wrote:

> Citi is a joke. While JP Morgan and Goldman actually make money,
> Citi manages to lose money despite the coveted foreign operations
> it has in 160 countries. However, look at a few issues: their inexperienced
> CEO lost Wachovia, turned down Goldman, then sold half of Smith Barney
> to most backward firm on Wall Street. Then, he sold Phibro. Both
> profits and client service seem optional at this stage. Vikram's
> job should be optional, too.
>
> I'll also mention that CITI HAS NO VALUE-BOOK OR OTHERWISE. Their
> offbalance sheet items dwarf assets, and they are selling proitable
> divisions, with no clear future plans. The joint venture with Morgan
> Stanley would be better served if a third partner, namely Deutsche
> Bank, were to fund Morgan Stanley's ability to manage the brokerage
> operations they will fully inherit in 5 years. The fact is, Morgan
> is too small to manage an Arby's, let alone a complex 18,500 broker
> operation. I would say that clients deserve better than a two-bit
> investment bank with backward technology. If only Citi and Morgan
> had failed.

7 Things Goldman Can Do with Its Money Instead of Fat Bonuses

As a GS shareholder, I want GS to continue to perform, which means I want its employees to continue to be happy, which means I want GS to pay its employees the big bonuses.

People forget that the primary responsibility of a corporation is to "maximise shareholder wealth". Shareholders of GS will continue to benefit by the company treating its employees right. Besides, most of GS's employees are also huge shareholders.

Lastly, people should quit excoriating GS (and all the other current and former TARP banks) for their duty to "repay the taxpayers." Remember, before the crisis when these banks were hugely profitable, they were paying billions in taxes every year. Further, when they pay huge bonuses, the government again collects taxes from the employees.

For example, try this on for size - suppose a company makes $100 after tax. That means pre-tax they made about $150. So the government has already made $50 from that $150 in earnings. Then if the company pays out $50 in bonuses, the government collects another $15~$20 from the employees who received the bonuses. So the government has now received $65~$70 from the company's original $150 in pre-tax earnings, meaning the government has taken almost 50% of the company's earnings in taxes. Now extrapolate these figures to the earnings that companies like GS have put up over the years and the government (meaning you and me) has benefited HUGELY. So I don't think it's totally unfair that the taxpayer helps to prop up some of these institutions every couple of decades, especially considering most of the taxpayers' investment will be repaid handsomely anyway.

Diana Farrell And The White House Theory Of Bank Size

Nice idea, but with a law like that, none of our Congressmen would have anything to talk about.


On Oct 13 09:21 AM Ferdinand E. Banks wrote:

> Interesting, very interesting, but I know one thing about so-called
> "big banks". That expression will never be mentioned in a classroom
> of mine by anyone who desires a passing grade - although instead
> of failing them I might just tell them a few things that they don't
> want to hear. Even so, I think that Michael Clark has a good idea
> when he says that some new laws are needed. The first new law should
> be one designed to stop people from talking about things that they
> know absolutely nothing about.

Financial Industry Demonstrates Nothing Much Has Changed

Amazingly insightful article. This really added tremendous value to the discussion of whether investors should put money into the financial sector. By the way, how does this anecdote demonstrate that nothing much has changed in the financial industry?

Why Is Citi Selling Phibro for Less Than One Year's Net Earnings?

Formyx has nailed the key question. While Phibro may have produced megabucks in profits, if it tied up many multiples of those amounts in capital, then the capital costs may not have been acceptable for Citigroup in the new reality of high priced capital.


On Oct 13 08:44 AM Formyx wrote:

> The question is what OXY really buys. If they simply takeover a proprietary
> trading team then a valuation of 10% of assets is not cheap. Therefore,
> the crux is of whether there are any hard assets or otherwise that
> they buy. All the numbers sloshing in the press fail to provide this
> information as well as of how much capital they tied up to produce
> the profits. In typical Salomon fashion their trading desks always
> advertised profits than returns. has anyone seen the details of the
> assets to be transferred?