southbeach

Betting on the Big Banks

agree completely with your sentiments. it's a white knuckle ride in the big financials though, and the 'we changed the rules again' factor hardly helps. we're talking opportunist trades rather than line by line fundamentals analysis. I can't believe we won't crater again though given the rotten assets tucked out of sight - resi and commercial real estate need time to bottom and then stabilize. the relaxing of accounting rules and taxpayer intervention just slows this process. Still, i don't agree with those famous 'let em fail' guys either - too much 'innocent bystander' damage despite the costs of the bailout.

Want to Reform Wall St.? Bring Back Partnership Investment Banks

I agree. The asymmetric returns issue was critical what's happened in the last 18 months. Also, let's not pretend what happened was unforeseen. Many people made a ton of money shorting the banks, the real estate players and the home builders. Goldman dumped partnership in favor of cheaper and more efficient capital raising. Also, to compete, all banks had to take more and more risk, and lever up increasingly to generate the right deal and return profile. The US government and financial regulators have been deemed to be asleep at the wheel here, but they were wide awake - just too close to the money and their buddies at the I banks.