There’s no way to understate the enormity of what happened yesterday evening, ladies and gentlemen. Yesterday morning, I wrote in this space that it was the first day of the rest of Wall Street’s life. But then, the Federal Reserve rebooted the financial world. Today is the first day of a brand new life. The events of the past four days have been so momentous | Read More »
Yesterday was the first day of the rest of Wall Street’s life. At the beginning of this year, there were five major broker-dealers. In March, the Bear Stearns Companies were acquired by JP Morgan Chase with a large assist from the Federal Reserve. Yesterday, Lehman Brothers filed for Chapter 11 bankruptcy. On Sunday, Merrill Lynch agreed to be acquired by the Bank of America. As | Read More »
As I described here, this is the weekend that the Treasury and the Federal Reserve decided to stop bailing everyone out. Secretary Paulson has been hinting for weeks now that we have to let capitalism work the way God intended it to. Which means: if you screw up, you die. This is what we free-market conservatives have been saying we wanted all along, folks. We’ll | Read More »
Ladies and Gentlemen, I’ve been faithfully chronicling the global credit and financial crises for you since the first cracks started appearing in early summer of last year. Tonight, with the almost-certain collapse of the investment bank Lehman Brothers, the crisis moves into a new and possibly very dangerous phase. I’m going to keep you up-to-date on the key developments over the next few days, or | Read More »
It’s been widely reported that Timothy Geithner (the President of the New York Fed) summoned a group of Wall St. and banking CEOs to a pow-wow in lower Manhattan on Friday evening, with Treasury Secretary Paulson in attendance. The subject: Lehman Brothers, the 158-year-old investment bank which is in dire need of new capital, partly because of losses in its large portfolio of commercial (not | Read More »
I’m going to get into three things with you this morning. First, I’d like to address the issues raised by many respected people, in regard to the suppression of private interests by an agency of government. To do this, I’m going to fill in some of the history of Fannie and Freddie. Second, I’ll give more detail on the exact terms of the Treasury takeover | Read More »
There are two points I want to make to you this morning, as the impact of yesterday’s nationalization of the mortgage GSEs works its way through the system. Here’s more information. First: while this is most definitely a fundamental change in the structure of the mortgage markets, it is not a change in our government’s existing policy of deep intervention in housing. The people who | Read More »
At 11AM Eastern Time on Sunday, September 07, 2008, the Treasury Department released the text of a joint statement regarding the GSEs, Fannie Mae and Freddie Mac. The statement contains remarks by Treasury Secretary Henry Paulson, and Director James Lockhart of the newly-chartered Federal Housing Finance Agency. (The FHFA now has regulatory oversight over the GSEs.) As expected, the GSEs will enter government conservatorship (which | Read More »
About two weeks ago, I wrote in this space that some very large tectonic plates were starting to move far below sea level in the financial world. That was based on some unusual patterns I was seeing in the overnight repo and money markets. I guessed (but had no information to confirm) that whatever was in the breeze had something to do with Fannie Mae | Read More »
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