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HomeLoan Sharks Not Welcome Here
Posted by Larry Doyle on March 5th, 2009 3:49 PM |
In the midst of this economic turmoil in which many people are increasingly cash constrained, a cottage industry has developed which preys on the most vulnerable in our society. This industry facilitates short term loans in exchange for the borrower’s paycheck or tax refund.
The companies that participate in this lending should not only be outed but they should also be prosecuted for this activity.
Bloomberg writes how More Americans Turn to Tax Refund Loans to Pay Monthly Bills. With implied rates of interest on these loans from 50% to 500%, this is loan sharking at its worst!! Where are the Better Business Bureau and Attorney Generals when you really need them? (more…)
Going “All In”
Posted by Larry Doyle on February 26th, 2009 10:59 AM |
The government yesterday released the specifics of the Bank Stress Test to be undertaken by the 19 major banking institutions in our country. Those details in conjunction with the testimony provided this week by Treasury Secretary Geithner and Fed chair Bernanke provide a very clear signal as to the government’s approach to our economic problems. In my estimation they are clearly indicating they are going “all in!”
Before we get to the market reactions, allow me to share insights from a highly regarded bank analyst and then comment myself.
Most analysts and economists view the government’s worst case scenarios under the bank test as not much more severe than what many already expect. I’m an optimist by nature but live by the mantra of hope for the best, prepare for the worst. The market will discount the government’s worst case. (more…)
Looking Back and Looking Forward
Posted by Larry Doyle on February 24th, 2009 2:41 PM |
John Mauldin, one of our Economic All-Stars (see sidebar on left), provides personal insights and perspectives that are truly cutting edge. Additionally, John has relationships that provide real clarity.
John Mauldin recently published commentary from Paul McCulley of Pimco and former Fed chairman Paul Volker. I had the good fortune of working with Mr. McCulley in the late ’90s at Union Bank of Switzerland. He is a true gem. Mr. Volker, like him or not, is regarded as one of the world’s leading central bankers. Their comments are both comprehensive and understandable as we look to navigate the economic landscape!
Mr. McCulley looks backward and reviews the following:
— the basics of our banking system
— a review of the “unregulated” shadow banking system
— the deleveraging process
— questions on the implementation of the government backstops, including the Term Asset-Backed Lending Facility to restart the consumer lending markets, and the public-private partnership. (more…)
Breaking News…Citi “National Bank??”
Posted by Larry Doyle on February 22nd, 2009 10:24 PM |
UPDATED from late last night . . .
I just proposed on LD’s Dollars and Sense the idea that the markets would force Citigroup into the government’s hands. I thought it would occur within a month. In just checking the WSJ newswire it appears that executives from Citi are negotiating with the government as I write this. The fact that Citi is looking to broker a transaction currently is effectively an admisson on their part that they are technically insolvent. While the U.S. Eyes Large Stake in Citi, the common shareholders in Citi would be seriously diluted. How would creditors be treated? At this stage I would guess that creditors will be untouched. I would imagine that if this transaction occurs, other banking shares will trade down in sympathy.
(more…)
