Market Commentary

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Heads or Tails? Parts 1 & 2 – Combined and Revised

Author: David Kotok, Post Date: March 31, 2009

Dear Reader: Please give me 8 minutes to explain the $1.1 trillion federal government Public-Private Investment Program (PPIP). Start here with this simple example. It’s a coin toss. Heads you win $100; tails you get nothing. How much would you pay to play? You can play as many times as you wish. Answer: not more […]

Systemic Risk Authority

Author: Bob Eisenbeis, Post Date: March 26, 2009

Momentum appears to be gathering to establish a systemic risk authority and grant to it the powers similar to those available to banking regulators to resolve troubled institutions that may pose systemic risks to the financial system and to the economy.  Chairman Bernanke and Secretary Geithner, as well as other banking regulators, have asserted that […]

A Lynch Mob

Author: David Kotok, Post Date: March 21, 2009

“Let’s go hang ‘em.” American history is replete with examples of lynch mobs taking control of a situation and inflicting injustice.  In the end most lynch mobs have dealt harmful blows to society.  Congressional action to punish AIG employees over the bonus issue is already seeding that outcome. Members of the US House of Representatives […]

An Interesting Hearing: AIG – Part One of Three

Author: Bob Eisenbeis, Post Date: March 18, 2009

Introduction Representatives from the Federal Reserve, Office of Thrift Supervision, and New York State Insurance Department testified on March 5th before the Senate Committee on Banking, Housing, and Urban Affairs. They reported on what went wrong in AIG and explained the Federal Reserve and Treasury’s $170 plus billion support of AIG.  The description of the […]

An Interesting Hearing: AIG – Part Two of Three

Author: Bob Eisenbeis, Post Date:

Introduction Representatives from the Federal Reserve, Office of Thrift Supervision, and New York State Insurance Department testified on March 5th before the Senate Committee on Banking, Housing, and Urban Affairs and reported on what went wrong in AIG.  Part I of this commentary explored the nature of AIG’s financial difficulties.  AIG’s problems were much deeper […]

An Interesting Hearing: AIG – Part Three of Three

Author: Bob Eisenbeis, Post Date:

Introduction Representatives from the Federal Reserve, Office of Thrift Supervision, and New York State Insurance Department testified on March 5th before the Senate Committee on Banking, Housing, and Urban Affairs and reported on what went wrong in AIG. Part I of this commentary explored the nature of AIG’s financial difficulties. Part II looked at the […]

The Times, They Are A’Changing

Author: Bill Witherell, Post Date: March 17, 2009

The lead article in the Friday, March 13th Financial Times reported that Wen Jiabao, the Chinese premier, warned the United States to take measures to guarantee its “good credit,” expressing concern about China’s large holdings of US assets.  The White House felt compelled to reply promptly that Mr. Obama intends to return the country to […]

Three Quick Points About the Fed

Author: David Kotok, Post Date:

First:   As the Federal Reserve starts its two day meeting today, Chris Whalen just released his notes regarding an unpublished Fed research work.  The summary is below.   The link to his letter is:  http://us1.institutionalriskanalytics.com/pub/IRAstory.asp?tag=348 . “The following article on fair value accounting ("FVA") was authored in May 2007 by a researcher who at the time […]

Systemic Risk

Author: David Kotok, Post Date: March 16, 2009

“Systemic risk is the risk imposed by inter-linkages and interdependencies in a system or market, which could potentially bankrupt or bring down the entire system or market if one player is eliminated, or a cluster of failures occurs at once. Systemic financial risk occurs when contingency plans that are developed individually to address selected risks […]

Fixing the Banking System

Author: David Kotok, Post Date: March 9, 2009

Kotok introductory note:  During the weekend, we participated in a colloquy with Bill Dunkelberg and Chris Whalen.  Our purpose was to examine the banking crisis, the risk in banking liabilities (deposits and debt), and systemic cures.  The full text of the interview follows. What is the Plan? A Discussion With Bill Dunkelberg and David Kotok […]

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