Bank of America completes Merrill Lynch investment bank purchase

January 2, 2009 by · Leave a Comment
Filed under: Industry News 

Just what we need is more super-sized banks.  Now when BofA gets into trouble we will be talking about how they are “too big to fail”.  I thought we passed an act in the 90s that prevented investment and commercial banks to be under one roof?  How soon we forget.   

News:

Bank of America Corp completed its purchase of Merrill Lynch & Co on Thursday, creating the largest U.S. bank and perhaps one of the biggest challenges yet for longtime Chief Executive Kenneth Lewis.

The closing allows Bank of America to bypass JPMorgan Chase & Co and Citigroup Inc in size, giving it about $2.7 trillion of assets.

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Goldman Sachs and JPMorgan to Become Commercial Bank Holding Companies

September 21, 2008 by · 1 Comment
Filed under: Industry News 

It is true when they say this changes the face of Wall Street. In the NY Times article they mentioned the leverage both banks carry is twice what the major commercial banks are, it will be interesting to see what they do to bring this down and what regulation is in place for this and how it will affect their compliance or if the New York regulators even care? What I do love is the mention that with access to the Fed’s discount window, they will now have “permanent liquidity”. I guess it really does not matter if you make bad decisions in the U.S. financial sector, you are now basically rewarded by getting whatever capital is needed to stay afloat.

News Piece:

Goldman Sachs and Morgan Stanley, the last two independent investment banks, will become bank holding companies, the Federal Reserve said Sunday night, a move that will fundamentally alter the landscape of Wall Street.

The move alters one of the models of modern Wall Street, the independent investment bank, soon after the federal government unveiled the biggest market intervention since the New Deal. It heralds new regulations and supervision of previously lightly regulated investment banks, as well as an end to the outsize paychecks that helped shape the image of the chest-thumping Wall Street banker.

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Lehman Brothers Said to Prepare Bankruptcy as Buyers Withdraw

September 14, 2008 by · Leave a Comment
Filed under: Industry News 

Tomorrow morning (Monday) will be very telling on is to come. This announcement could have major implications going forward. The first thing that comes to mind is what exposure is our their for CDS against Lehman debt or how much of this paper are they the counter-party and if there is major exposure on either or both, what position does that put in companies in when they file bankruptcy protection?

My gut feeling is this is going to send shock-waves throughout the markets. Gold has already jumped 2 1/2% in the Asian market at the time of this writing on a Sunday night.

Release:

Lehman Brothers Holdings Inc. prepared to file for bankruptcy after Barclays Plc and Bank of America Corp. abandoned talks to buy the U.S. securities firm and Wall Street prepared for its possible liquidation.

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Lehman Brothers shares dive after Korean bank talks end

September 9, 2008 by · Leave a Comment
Filed under: Industry News 

Another nail in the coffin for Lehman Brothers, it will be a sad day to see another great independent investment bank go down in flames or gobbled up by the J.P. Morgan Trust.  The stock dropped 45% on the news with over 90% of the value lost this year.  I will note that the report of the talks is be disputed but the truth will be out by end of day.

I wonder if Lehman is too big to fail as well?  It must depend on their counter-party exposure to credit-default swaps or CDS.  With the BIS reporting on the $1.44 Quadrillion dollars of this toxic stuff floating around, bankruptcy is one of the biggest risk during this trying time for the financial sector.

Release:

Lehman Brothers Holdings Inc. shares plunged to a new low Tuesday on a report that talks with state-owned Korea Development Bank ended without any deal for a badly needed capital injection.

The nation’s fourth-largest investment bank had hoped to secure a deal with the Korean fund before announcing third-quarter earnings on Sept. 18. Lehman is facing billions of dollars in losses from wrong-way bets on mortgage securities, and had hoped another round of capital raising would encourage investors.

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Fewest U.S Treasury Traders Since 1960

August 3, 2008 by · Leave a Comment
Filed under: Industry News 

Bloomberg reported that we have the fewest primary government securities dealers since 1960. I wonder what kind of added volatility this will bring as we do our open market operations of selling U.S. government securities?

This also could just be because of consolidation of the years, maybe once the investment banks gets more concentrated we will see a time when different acquisitions will be spun off and we will see more primary dealers? Time will tell what this is an indication of. Here is some of the article.

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