Turmoil

Top bank CEOs face big challenges

Tue, 27 May 2008 06:59:57 -0400

Forbes weighs in with an interesting piece about the short-term challenges facing the CEOs of top banks. In many cases, they all are wearing the same shoes. They must reduce costs, shore up capital, rationalize staff levels, and such. But at a slightly deeper level they have individual burdens to bear. Citigroup would seem to be carrying the heaviest load. The article says all Vikram Pandit has to do is "cut out 20 percent of the balance sheet, fire thousands, cut $15 billion in costs. Geez, where to start?" He's announced a plan, but the potential results are uncertain. At the other end of the spectrum: Richard Fuld, of Lehman Brothers, which has fared relatively well, having written down only $3.3 billion. Its main task: shore up confidence. John Thain of Merrill Lynch, similarly, has some "image polishing" to attend to, which may become more urgent after the second quarter, which likely will be rough.

For more:
- here's the Forbes article

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Should Bank of America walk away from Countrywide?

Tue, 06 May 2008 06:59:54 -0400

MarketWatch notes that Countrywide is a bad position. Basically, its debts exceed its assets. Negative equity, of course, doesn't exactly speak well for the mortgage giant's future. Of immediate concern is the deal that Bank of America has struck. As Countrywide's loan problems mount and its stock tumbles, many analysts say the deal will have to be renegotiated. Friedman Billings Ramsey analyst Paul Miller holds that Bank of America should walk away. At a minimum, it may have to make some huge changes, like lower the price and perhaps require Countrywide bondholders to swallow more of the expected losses from loan write downs. This is getting tricky for Ken Lewis, who seemed to have bet the farm on the deal. It may be better for him to take his lumps now by giving up.

For more:
- here's the MarketWatch article

More hedge funds shutting down redemptions

Fri, 07 Mar 2008 06:59:55 -0500

Business Week Online notes an ominous sign: more hedge funds shutting down redemptions. You can sense that the temperature is rising on behalf of investors. The list of funds that have blocked access to funds includes GPS Partners, Pursuit Capital Partners and Alcentra European Credit. Not to mention Peloton (see above item). The hope is, that fund managers can buy some time and avoid a fire sale, which would cascade in a hurry. But what if turmoil doesn't abate, and more funds are forced to shut off redemptions? Wouldn't that merely build up water like a huge damn that eventually will break? Needless to say, the stakes are high here.

For more:
- here's the Business Week Online article

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