by Kurt Schulzke on October 6, 2008
Under ordinary circumstances, a fight between Citigroup and Wells Fargo over Wachovia would be a good thing, benefiting Wachovia’s shareholders by pitting two prospective buyers against each other in a bidding war. Hence this Sunday statement by Wachovia:
“Wachovia believes its agreement with Wells Fargo is proper, valid and is in the best interest of shareholders, employees and the American taxpayers [however]. . . Citigroup is always free to make a superior offer to Wachovia.” (Courtesy WSJ Law Blog)
But these are no ordinary circumstances. The nation’s banking system would benefit, it seems, from an early resolution of the battle. Against this backdrop . . . [click to continue...]
by Kurt Schulzke on October 5, 2008
Citigroup’s “agreement” with Wachovia appears to be a bust. If the $2.1 billion deal is documented by nothing more than the letter posted at Clusterstock (key excerpt below), Citigroup shareholders should get set for disappointment: the “non-binding” term sheet apparently involved a $42 billion contribution by the federal government. Citi’s reported $60 billion lawsuit against Wells Fargo suggests Wachovia was worth far more than Citi was letting on.
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by Kurt Schulzke on October 2, 2008
If you buy the notion that a bank bailout is necessary — and many of us do not — the bill passed last night by the Senate is seriously deficient in terms of governance and oversight. It should, therefore, be rejected by the House. [click to continue...]
by Kurt Schulzke on October 1, 2008
109 pages were not enough to drown dissent in the U.S. House, but maybe an entire ream will be. The latest Senate bank bailout bill fills 451 pages. Despite its length, it features stunning gaps in logic. What else should we expect from roughly 350 pages of legalese written between Sunday and Wednesday afternoon?
Example: The entire bill is aimed at empowering the Secretary of the Treasury to buy “troubled assets,” defined in the excerpt reproduced below. Included among these poor creatures are things they call “other financial instruments” which the drafters forgot to define. Maybe it was intentional? Observe: [click to continue...]
by Kurt Schulzke on September 25, 2008
The bank bailout “Agreement on Principles” now circulating is, at best, a broad outline. It is easily foreseeable that a final agreement will yet fail over disagreements about detailed implementing language.
For example, the Agreement specifies that the “Treasury Secretary is prohibited from acting in an arbitrary or capricious manner or in any way that is inconsistent with existing law.” This statement is so broad that it could be used to nullify the entire deal since, as we all know, existing law does not allow the Treasury Secretary to do anything that this Agreement purports to allow him to do. [click to continue...]
by Kurt Schulzke on September 24, 2008
“The market is waiting. The time to act is now.” So said Investors Business Daily, yesterday. In support of their call for Congress to just “sign off now” on Secretary Paulson’s plan to rescue U.S. banks, IBD’s editors point to the proposal’s brevity and “focus” and imagine — how is impossible to say — that it doesn’t give too much power to the Treasury: [click to continue...]
by Kurt Schulzke on September 22, 2008
As fur flies in Washington over technicalities of the government’s proposed bank bailout, ordinary mortals may feel left out of the conversation if for no other reason than the rarified vocabulary of the debate. What, for example, is this thing called “fair value accounting”? Why should anyone but accounting geeks care?
One answer comes courtesy of Lynn Turner, former SEC Chief Accountant, who today circulated a message reproduced below with his permission: [click to continue...]
by Kurt Schulzke on September 19, 2008
“Sue them, jail them, make them pay,” cries Ann Woolner. “I’d fire Chris Cox,” shouts John McCain. Floyd Norris chimes in, “Had the S.E.C. gone over the records of Lehman and Bear Stearns with the vigilance it now promises for the shorts, we might not be in this mess.” Steve Covey: “Seek first to understand.” Whoa! How’d Covey get in there?
Too many pundits and politicos over the past couple of days have rushed to condemn what they simply do not understand. Woolner’s piece offers a nice illustration: [click to continue...]
by Kurt Schulzke on September 18, 2008
While I disagree with John McCain that Chris Cox should be “fired” over recent market turbulence, the D.C. Circuit Court of Appeal agrees with McCain that the SEC chair can be dismissed by the President of the United States. An unattributed ABCNews blog is reporting otherwise on the authority of an unnamed source. [click to continue...]
by Kurt Schulzke on September 18, 2008
John McCain has lost his marbles or his principles. The guy who so courageously faced down public criticism of the Iraq War “surge” is now just another member of a pack irresponsibly yammering for some kind of vengeance against someone over the sub-prime mortgage and stock market mess. Simply pathetic. Reuters reports: [click to continue...]
