Linus Wilson

With support for Treasury Secretary Tim Geithner waning, JPMorgan (JPM) CEO Jamie Dimon is emerging as a potential successor, sources say. Dimon has recently been making frequent visits to Capitol Hill, and earlier this month published an op-ed that urged the government to allow large institutions that take big risks to collapse. Dimon appears to have an advocate in bank analyst Dick Bove.

Geithner's successors:
a. John Thain
b. Ken Lewis
c. Dick Fuld
d. Jamie Dimon
e. None of the above

We cannot afford to have an ex-CEO of a "too-big-to-fail" Wall Street bank as Treasury Secretary.

Just three months after taking the job, AIG (AIG) CEO Robert Benmosche has told the board he's ready to quit. Insiders say Benmosche feels compensation restrictions imposed by pay czar Kenneth Feinberg have left him in an impossible situation, without the ability to retain talent.

Good riddance. Next time, pay the CEO in preferred stock. The number one common shareholder, U.S. taxpayers, care more about the value of its much larger preferred stock investment than the common stock stake.

Zombies Draining Deposits from Healthy Banks

Kirby, What did you disagree with in particular?

Cash for Trash: Better Never than Late

trekking1999: Those are commercial and residential mortgage REITs. Thus, the price of real estate loans, CMBS, and RMBS affects the valuation of those REITs.

Cash for Trash: Better Never than Late

I forgot the disclosure... I only hold broad-based index funds.

Citigroup (C) shareholder Prince Alwaleed urges the U.S. to sell its stake in the bank ASAP: "We need to give confidence back to the shareholders and investors that these companies are moving along without government support."

I take the urging of the Prince for taxpayers to sell their stake as better news than if the Prince asked taxpayers to buy his stake. Perhaps he would like to buy a large piece of taxpayers' 34 percent stake in Citigroup?

Citigroup Makes a Good Move: Preparing to Buy Out Uncle Sam

tgreen56: A joint stock sale would have no effect on the number of common shares. Thus, it would create no percent ownership dilution. Yet, the transaction costs of selling stock does create some stock price or value dilution because you have to slightly under price the stock and pay your investment bankers for underwriting the issue. Nevertheless, I think those transaction costs are outweighed by reducing potential value destruction that can happen if the government prevents management from picking the most profitable business opportunities. Talented bankers and key clients will also flee the company if their is no plan to reduce the government's stake. The U.S. Treasury has been slow to auction the TARP warrants. I also believe that the U.S. Treasury will be slow to sell their Citi stake unless the managers at Citi come up with a plan to reduce the government's stake.

Citigroup Makes a Good Move: Preparing to Buy Out Uncle Sam

CoverIsBetter: The plan floated is a joint stock sale. Citi raises $5 billion in common stock from private investors and buys back $5 billion from the government. The benefit for Citi's shareholders is less government meddling. It should be promising that Citi's management at least has a plan to shed government ownership. Citi's capital ratios are too low for regulators to allow share buybacks financed with debt. Citi is raising debt right now because they don't want to have to apply for an FDIC debt guarantee extension.

It's good news that Citi wants to buy out Uncle Sam.

I forgot the disclosure... I only own shares in Citigroup as part of broad-based index funds.

When Insolvent Banks Are Worth Billions

Stocks can still have value even if the assets are worth less than the liabilities as long as the assets are volatile. See ssrn.com/abstract=1343625. Regulators have a obligation to shut down banks that have become zombies.

Toxic Assets Are Still a Threat to the Economy

It is not clear that community banks stop lending when they are restructured in receivership. The Congressional Oversight Panel is taking the untenable position that no bank should be restructured. Receivership does not mean that the banking operations stop. In most cases their management is changed, some liabilities to creditors are reduced, an on of their healthy competitors take over the branches.

Congressional Oversight Panel August Report: Small Banks Need to Raise Yet More Capital

My research papers papers, “The Put Problem with Toxic Assets” at ssrn.com/abstract=1343625 and “A Binomial Model of Geithner’s Toxic Asset Plan” at ssrn.com/abstract=1428666, demonstrate that it is a bad idea to buy toxic assets from small banks before they enter receivership. Buying trash assets from small banks are outside of FDIC receivership as advocated by the COP will cost taxpayers dearly and not improve bank lending.

Goldman Sachs, Morgan Stanley: Half Price on TARP Warrants?

I also have a blog on the upcoming TARP warrant hearing and auction bill at the Washington Post site see
voices.washingtonpost....

State Street TARP Warrant Deal: The Costliest So Far

I want to amend my preference for the type of auction. After reading Huang et al. at www.nuffield.ox.ac.uk/... , I think a first price sealed bid auction will generate higher prices for taxpayers.

State Street TARP Warrant Deal: The Costliest So Far

See ssrn.com/abstract=1400995 for my methodology. I used implied, 10-year historic, and 2-year historic volatility, and current dividend yields. Adjustments from basis Black-Scholes were made for dividends and dilution.