Wall Street R.I.P

From Tech Ticker more details on the GS and Morgan status change.


  • Their primary regulator will now be the Fed Reserve, not the SEC. This will make them subject to tighter disclosure and regulatory requirements.
  • They will be able to accept bank deposits, which eventually should provide a more stable base of financing (but not "stable").
  • They will have better access to the Fed's lending facilities.
  • They may be able to avoid mark-to-market accounting on some of their assets, instead accounting for them as "held to maturity," the way banks do. This could be huge, as it's the mark to market that has killed the capital ratios of many firms.
  • They will more easily be able to buy or merge with banks, thus rapidly increasing the size of their deposit bases.
  • They will likely decrease their leverage: Morgan Stanley is talking about moving from 20X+ to 10X-15X.


There it is. Funny, there used to be a time where GS wouldn't take your account if you were under $5M. Now you can walk up to a counter? uh... humility?

Second the bit that scares me is the last one with M4 delevering. That is going to hurt but I assume the FED is going to make sure the transition is smooth?

Comments

Tango Juliet said…
Then. what about this: http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/09/taxpayers_recapitalise_banks.html
September 23, 2008 at 12:40:00 PM PDT
Post a Comment

Popular posts from this blog

Thug vs Thug: Porsche 1, Hedge Funds: 0

The latest drama is fun. VW became the largest company in the world, in terms of market cap, ahead of EXXON on a little financial market coup d'etat orchestrated by Porsche. Apparently VW stocks was on the way down, I don't know the details but many Hedge Funds (HF) were short the position. Fine. The price goes down. Porsche starts buying the anonymous float (and probably some private too?), but the point is they build a 73% market share without many people noticing. In the US you would need disclosure after 10% or so. Point is, that many HF wake up and realize that their short position is about to lose a lot of money. So what do they do? those idiots? they short cover all together, which means they buy the stock to cover the short. The stock zooms up, by a full multiplier and overtakes EXXON. Porsche makes A KILLING in the process and has robbed the city robbers to the tune of "potentially $30B". Not bad for a days worth of work. PS: hey, psst Porsche! With t...
Read more

Madrid Blog--We get sued

Image
...for having children If you are a foreigner and move to Madrid, do not, necessarily expect a warm welcome. Yesterday, we, or rather Don Mark Fleury and Dona Natali Manson ***note to Building Association of Serrrano XX, before you lawyer up, do your research. My husband spells his name "Marc" with a "c." and my first name is spelled "Nathalie;" not to mention that my honest English stone mason forbears would cringe at the misspelling of their last name to confound with that of the notorious 20th century serial killer. received an official communication from the Juzgado de Primera Instancia de Madrid, from one Don Ramiro Blah Blah, President of the Building Association of Serrano XX, a building of exactly 12 units, half of which were owned at one time by his father in law, in which it is alleged 1) "Mark Fleury and Natali Manson" have four children 2) these children own bicycles 3)and roller skates 4) and scooters ( Nathalie comment: nope sorry ...
Read more

Houston, We have a central-bank-run!

Judging by the comments, it seems many of you share my interest in understanding the recent economic news, at least Juha does. So I will continue covering that. Yesterday, my brother Carlos, who works for BNP in Europe sent me this story: Apparently we are seeing a dumping of US related assets by what is speculated to be... the Chinese. . Forget the computer attacks, Asia's sovereign funds dumping US assets would have a real impact on the economy. Credit and liquidity crises are not new and, when they turn bad, they turn bad. In 1929, the liquidity scare sparked a bank run. Banks didn't have enough cash and were defaulting, accelerating the mad dash and "bank-run" to get your money out while there was still liquidity. Then, the real economy wound up with no credit, and we all know the sad story from there. 2007 isn't like 1929. It isn't an "end-consumer" bank run. You and I are not going to the corner bank to take our savings out. Our confidence ...
Read more