GregT

Is Wells Fargo Regretting Its Wachovia Acquisition?

A lot of claims are made in this article without any substantive points to back them up.

Before people like you call for the break up of the large banks by the government, you should consider that the government cannot and should not create rules and procedures for it's own convenience. The government wanted WFC to buy Wachovia so it would not have to absorb the costs of the cleanup. It forced BAC to buy MER to avoid a systemic collapse of our financial system. For the government to now turn around and require a breakup of the very mergers it supported/required would be completely wrongheaded and contradictory.

It becomes quite scary indeed when the government and supporters of heavy handed govnerment regulation like the author base public policy on what is most convenient at the time for the government rather than on fairness and common sense.

Roubini Is Right: Recovery Will Be Slow

Let's not start worshipping at Roubini's alter. He correctly predicted the financial crisis. BUT he was dead wrong in predicted a continued decline and all sorts of doomsday scenarios. So now he has shifted his focus to predicted the type of recovery we will have rather than preaching continued doom.

In my book he got only the initial call right. It is very rare for economists or market analysts to continue to be correct in their prognostications. They tend to stay in whatever "camp" got them the fame and they miss the turn. It happens to both bulls and bears. Remember perenial bull Abby Joseph Cohen.

At this point Roubini is capitalizing on his recent fame, but his predictions at the beginning of this year completely failed to predict where we are right now and chances are that his current predictions will be wrong too.

Big Banks: Still in Charge

The irony in this article suggesting that certain large banks like BofA should be split up to avoid the devastation their failure could cause is that it was the government "made" BofA complete it's takeover of Merrill Lynch in order to prevent a financial meltdown and would now be making BofA split itself up to avoid the potential for financial devastation.

We can't have it both ways. We can't use the healthy banks to buy the troubled banks when it is convenient and then turn around and say that the now combined bank is too large and must be split up.

Bad Bank and Draft Bill Spook CDS Traders and Wall Street

In the very big picture, the purpose of banking and Wall Street is to provide financial instruments and funding to the parts of the economy that need it and deserve it. In providing this funding, our financial industry should make a profit.

What has happened however, is that our financial industry is making profits without actually helping the economy. In fact, many of the financial instruments recently created have hurt the economy. It is one thing for a corporation to use credit default swaps to insure their own risks. It is quite another thing for investment houses to use credit default swaps when they are not insuring any underlying risk. The second use is pure speculation and provides no benefit to the American economy. Furthermore, since this "insurance" is unregulated, there are no requirements that the companies selling CDS's have adequate reserves to pay for defaults as they happen (e.g. AIG).

The net result is that taxpayers have had to fund these losses which never even provided a benefit to the economy to begin with.

Where's the Bottom? Still Anybody's Guess

Great article. It is very easy to see that the US has lots of things out of wack. In fact, many people have been seeing our demise for over a decade. It is easy to agree on the imbalances, yet it is nearly impossible to predict when these will come home to roost.

Where's the Bottom? Still Anybody's Guess

Great article. It is very easy to see that the US has lots of things out of wack. In fact, many people have been seeing our demise for over a decade. It is easy to agree on the imbalances, yet it is nearly impossible to predict when these will come home to roost.