Regular readers may well have formed the impression that I am not a particular fan of The Suit...Timothy Geither, the Secretary of the Treasury of the United States. I'm not, but not even inmy nightmares could I have dreamed up a more self-serving, nonsensical, historically innacurate and completely partisian piece of rubbish that The Suit served up today on the op ed page of the Wall Street Journal. It is a panderinhg piece for the implementation of possibly the worst piece of legislation in the past 25 years, the Dodd/Frank consumer reform and protection act--and that's saying something. If not implemented he warns we will have learned nothing and forgotten everything relating to our most recent financial crisis caused, when you get right down to the bottom line, a lack of adaquate regulation. Perhaps we should explore The Suits unique positioning over the years that allows him to make this claim.
The Leader and his water carriers love to blame most of what occurred on financial deregulation, implying that it was the Republican Party that pushed for it. True, but what is forgotten that the real champion of deregulation was Mr. Clinton's Treasury Secretary, Robert Rubin and the deregulatory act was signed not by Mr. Bush but by Mr. Clinton on 1999. Central to that effort especially in dealing with the Congress was Mr. Rubin and his off-side? Why, none other than The Suit, who was deregulating every step of the way. In the clubbie little world of Goldman Sachs alumni, it was Mr. Rubin who recommended that The Suit became President of the NY Fed to the then Chairman, a sitting Goldman partner, who steared the nomination through the Board and thereby put The Suit in the chair where he was responsible for the most powerful and important financial oversight institution in the world. In this role he failed miserably, not because of lack of resources or authority, but because of lack of interest, knowledge and leadership. Understand this: the Fed needed no legislation; if you were reviewed and under the control of the Fed and told to jump, the only answer was, "how high?" Oh sure, you could drop a dime or two and maybe get cut a bit of slack but in the end you did as you were told. Problem was no one was told to jump. As an aside, the present President, Billy the Dud is also an alumnus of Goldman but that's another story.
In regard to The Suit, even his admirers...and there are many...will admit that his management approach is bottom up; not one to put himself in a position to take the first bullet is our boy. He is a consenus builder and when his Rabbis like the way things are going he's not going to be the one that points out 40x leverage might not be great for the system. Oh no. In the article he points out that he had no authority over the Bear Sterns and Fanny and Freddies of this world which is true in a strict lega; sense but the appalling exposure of Bear and Lehman was well known and debated within the Fed because of the counterparties who WERE regulated by the Fed...and debated, and debated, and debated. Nothing emerged but silence. He blames the derivative market as well which played little or no role in the events leading to the collapse but were a major cause for concern after the fact. And his claim that Dodd/Frank is not complex? He is made to look the fool by the testimony of Bernanke this week who informed the Congress that after a year there is still no firm timetable for implementation.
Have we ever seen the likes of a Secretary of the Treasury like this one? All one can ask is honesty and competence and in this we have neither. This is a political water-carrier rather than the primus inter pares of financial leadership in the western world. One almost wishes that MF Global never happened; in Corzine one had a real leader: of course he almost caused Goldman to go broke in '97 with his Russian bet, destroyed New Jersey and bankrupted MF Global. He was the replacement: just remember I did say "almost."
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Nothing happened in Euroland today...certainly nothing good. Thursday is the day. Have a great weekend.
Showing posts with label Rubin. Show all posts
Showing posts with label Rubin. Show all posts
Friday, March 2, 2012
Monday, October 3, 2011
SURVIVAL...FOR ME
I'm not sure about the Euros. Things are not looking good at all. Today, what everyone suspected became an open fact: Greece cannot meet it's targets to which they had agreed not only for this year but for next year as well. With the outlook bleak, the Euro crashed to 1.32 handle against the dollar with every indication that the fall will continue. Ordinarily, this would be music to Fritz the Exporter's ears but with economic activity down practically everywhere (not unrelated to the European crisis), there is little joy in Germany as to this event. I am sure Frau Merkel must be furious at the Slovaks and the Austrians for not having their acts together for after expending a ton of political capital to get her gang to agree to the stability the Greeks have just put up the best "good money after bad" argument possible and remember, ALL the Euros have to agree to the funding. My bet the the Greeks would get the next installment is looking far more shaky in light of these events but I'm sticking with it if for no other reason that moe time is needed for the Euros to do the undoable.
The choice is becoming more and more clear: save the banks or save Greece because it is now obvious that both cannot be saved. My bet is on the banks...to repeat the refrain it has ALWAYS been about the baanks. I'm therefore getting REALLY disturbed as to what the market geniuses are doing to the values of the U.S. banking system in liking our system to the European crisis in such a direct manner. If you agree with my view that the Euros will save their systems, we're fine, not rock-solid but fine. Of course the Euro view has nothing to do with the sanctity of banking or the protection of the world's economic order. Nothing so simple. Politics, pure and simple. For all practical purposes banking and the European political systems are one in the same as has been explained on these pages before. And shortly, the games will begin. But, as has also been explained, banking is a business based almost entirely on trust. If it becomes that the views of the stock market jerks are gospel and we lose the overall faith in the system things can become ugly very quickly, and the bankers know it. Why is there no bank lending? Simple, the preservation of every penny of liquidity. If our politicians and elected leaders would like to do something useful for a change they might want to quietly start reassuring folks that the situation is under control. Unfortunately, the immediate reaction of this administration is to announce everything with a Hollywood backdrop which would have the exact opposite effect. If The Leader or The Suit holds a press conference the assumption will be that the crisis is already with us. While hardly a fan of Bob Rubin his finest hour was during the mess in 1995 (or was it 1996?) simply walking down the steps of the Treasury to a small news conference. Everything will be ok children; daddy's home.
And Greece? There's life after a restructuring and a default. They need debt relief and they need it desperately. They had also better decide to do this whilst staying in the Euro zone because outside of it their future is bleak--assuming there is a Euro zone in which to stay inside. And therein is the question. Unless this happens very quickly there will not be one. Today's announcement of the reality of Greece was downplayed in the press because we have assumed and rightfully so that this was always the case. Not so for the Europeans who, while mad as hell at the Greeks, still held out hope that the situation might be resolved. That hope is now gone. Time to get real.
The choice is becoming more and more clear: save the banks or save Greece because it is now obvious that both cannot be saved. My bet is on the banks...to repeat the refrain it has ALWAYS been about the baanks. I'm therefore getting REALLY disturbed as to what the market geniuses are doing to the values of the U.S. banking system in liking our system to the European crisis in such a direct manner. If you agree with my view that the Euros will save their systems, we're fine, not rock-solid but fine. Of course the Euro view has nothing to do with the sanctity of banking or the protection of the world's economic order. Nothing so simple. Politics, pure and simple. For all practical purposes banking and the European political systems are one in the same as has been explained on these pages before. And shortly, the games will begin. But, as has also been explained, banking is a business based almost entirely on trust. If it becomes that the views of the stock market jerks are gospel and we lose the overall faith in the system things can become ugly very quickly, and the bankers know it. Why is there no bank lending? Simple, the preservation of every penny of liquidity. If our politicians and elected leaders would like to do something useful for a change they might want to quietly start reassuring folks that the situation is under control. Unfortunately, the immediate reaction of this administration is to announce everything with a Hollywood backdrop which would have the exact opposite effect. If The Leader or The Suit holds a press conference the assumption will be that the crisis is already with us. While hardly a fan of Bob Rubin his finest hour was during the mess in 1995 (or was it 1996?) simply walking down the steps of the Treasury to a small news conference. Everything will be ok children; daddy's home.
And Greece? There's life after a restructuring and a default. They need debt relief and they need it desperately. They had also better decide to do this whilst staying in the Euro zone because outside of it their future is bleak--assuming there is a Euro zone in which to stay inside. And therein is the question. Unless this happens very quickly there will not be one. Today's announcement of the reality of Greece was downplayed in the press because we have assumed and rightfully so that this was always the case. Not so for the Europeans who, while mad as hell at the Greeks, still held out hope that the situation might be resolved. That hope is now gone. Time to get real.
Friday, April 9, 2010
WALTZ ME AROUND AGAIN PAPPADOPOLUS
...or whatever the name is of the guy running the show. I once heard a sports talk show on the radio while driving that repeated a single piece of advice for athletes who considered themselves a good deal smarter than the rest of the world: JUST SHUT UP!. Great advice for the Greeks. Had they just keep quite and taken their medicine in the markets without complaining about the terrible undeserved interest rates that they were being forced to pay they just might...MIGHT...have gotten through this thing without further embarrassment. But no, they had to keep complaining, and now the whole thing is up in the air again with the IMF pounding at the door, the Germans acting like Germans and everybody mad at everybody else. What everyone is now seeing is what I admitted to miss--the Germans have cast aside any guilt about WW II and are acting like they always have acted,; arrogant and bull-headed--not wrong, mind you--which is why they have always been so loved in Europe.
Now there is no question that the elections in Germany are weighing heavily on Ms Merkel's stance, but come on! The remarkable German export engine is running under full power with record numbers being reported for the quarter benefiting both from the weaker Euro but also within the EU--indeed, mostly within the EU. To believe that Germany would risk the collapse of the Union over a matter of principle is a view hard to come by and indeed even Trichet, no lover of the Hun, dismisses the idea. Yet here we are waiting with baited breath for the coming of Monday to see where this thing is going. I confess to being shocked and incorrect in my assessment of the situation. I still would be long Greek debt, however. Too much is at stake which is not to say that we don't get a rescheduling. Goodness knows EVERYBODY knows how to do those things.
Changing the subject completely, the Prince & Rubin show should be required watching for all of us interested in the financial business. yesterdays event was remarkably enlightening from a number of standpoints. Prince was really good and I think skated through the thing to a point where he's not going to be bothered again. He apologized, admitted he and his management team screwed the pooch, that the entire industry got it wrong and suggested that more regulation might help in preventing a repeat of the same in the future (it will not). Battlin' Bobby, on the other hand, endeared himself to no one. Indeed, he was a disaster and whatever rep he had earned during his stint with the Clintonistas went up in smoke along with focusing a few folks on the fact that he ran Goldman Sachs for a bit, a firm not being viewed as a warm and funny bunch these days..
There's a few things about Bobby that the average Joe may not realize. To begin, he was not a finance guy originally; he was a lawyer. Bob worked at one of the finest firms in NYC, Cleary Gottleib Steen & Hamilton--trust me on this one; i sat on both sides of the table with these guys and I was never anything but impressed. Now Cleary represented Goldman back in the early eighties when the remake of American industry took off during the Reagan administration and Bob was representing Goldie in many transactions. I think he got the idea that the guys he was representing were beginning to make a hell of a lot more money than he was making ; a true whatsupwiththis moment that caused Bob to change shops. Over to Goldie goes Bob; winds up running the Arb business--in which in the eighties you would have to be unable to fog a mirror not to make money--winds up running the whole show and the rest is history. Bob signs on for Clinton, winds up as, "The greatest Secretary of the Treasury since Alexander Hamilton" (a view not universally shared), and parlays that into a "Mr. Fixit" job at Citicorp at $15 mil a year plus stock. While all this was going on, his old shop, Cleary, develops one of the damndest business lines you have ever seen in acting as counsel to deadbeat countries--perhaps that is too harsh--let us refer to them as debtor nations in the emerging world., at which they are very, very good.
I think Bob's greatest personal moment was when, as the world was going to hell in a hand basket, he was filmed walking down the steps of the Treasury directly to a bank of mikes from every news outlet in the world to announce everything was going to be fine, Daddy was on the case. Brilliant theater, and it worked. Of course, the next day he found $25 billion in a foreign exchange stabilization fund to lend to Mexico to bail out their chestnuts for about the third time in 13 years. Times were so simple then. Maybe the Greeks should take a lesson from Bob.
Oh, I forgot. Who was Mexico's general counsel for all things relating to international finance? Why Cleary Gottleib Steen and Hamilton. Funny how these things work out.
Have a great weekend.
Now there is no question that the elections in Germany are weighing heavily on Ms Merkel's stance, but come on! The remarkable German export engine is running under full power with record numbers being reported for the quarter benefiting both from the weaker Euro but also within the EU--indeed, mostly within the EU. To believe that Germany would risk the collapse of the Union over a matter of principle is a view hard to come by and indeed even Trichet, no lover of the Hun, dismisses the idea. Yet here we are waiting with baited breath for the coming of Monday to see where this thing is going. I confess to being shocked and incorrect in my assessment of the situation. I still would be long Greek debt, however. Too much is at stake which is not to say that we don't get a rescheduling. Goodness knows EVERYBODY knows how to do those things.
Changing the subject completely, the Prince & Rubin show should be required watching for all of us interested in the financial business. yesterdays event was remarkably enlightening from a number of standpoints. Prince was really good and I think skated through the thing to a point where he's not going to be bothered again. He apologized, admitted he and his management team screwed the pooch, that the entire industry got it wrong and suggested that more regulation might help in preventing a repeat of the same in the future (it will not). Battlin' Bobby, on the other hand, endeared himself to no one. Indeed, he was a disaster and whatever rep he had earned during his stint with the Clintonistas went up in smoke along with focusing a few folks on the fact that he ran Goldman Sachs for a bit, a firm not being viewed as a warm and funny bunch these days..
There's a few things about Bobby that the average Joe may not realize. To begin, he was not a finance guy originally; he was a lawyer. Bob worked at one of the finest firms in NYC, Cleary Gottleib Steen & Hamilton--trust me on this one; i sat on both sides of the table with these guys and I was never anything but impressed. Now Cleary represented Goldman back in the early eighties when the remake of American industry took off during the Reagan administration and Bob was representing Goldie in many transactions. I think he got the idea that the guys he was representing were beginning to make a hell of a lot more money than he was making ; a true whatsupwiththis moment that caused Bob to change shops. Over to Goldie goes Bob; winds up running the Arb business--in which in the eighties you would have to be unable to fog a mirror not to make money--winds up running the whole show and the rest is history. Bob signs on for Clinton, winds up as, "The greatest Secretary of the Treasury since Alexander Hamilton" (a view not universally shared), and parlays that into a "Mr. Fixit" job at Citicorp at $15 mil a year plus stock. While all this was going on, his old shop, Cleary, develops one of the damndest business lines you have ever seen in acting as counsel to deadbeat countries--perhaps that is too harsh--let us refer to them as debtor nations in the emerging world., at which they are very, very good.
I think Bob's greatest personal moment was when, as the world was going to hell in a hand basket, he was filmed walking down the steps of the Treasury directly to a bank of mikes from every news outlet in the world to announce everything was going to be fine, Daddy was on the case. Brilliant theater, and it worked. Of course, the next day he found $25 billion in a foreign exchange stabilization fund to lend to Mexico to bail out their chestnuts for about the third time in 13 years. Times were so simple then. Maybe the Greeks should take a lesson from Bob.
Oh, I forgot. Who was Mexico's general counsel for all things relating to international finance? Why Cleary Gottleib Steen and Hamilton. Funny how these things work out.
Have a great weekend.
Thursday, September 17, 2009
DO YOU THINK...
Was watching CNBC this afternoon. Steve Liesman, the almost economist, was interviewing the deputy head of the IMF. By the way, do you know the deputy head is always an American while the managing director is always a Frenchman? You didn't? Now see what this blog does for you? Anyway, they were talking great thoughts such as global recovery and new financial regulation. Out of no where Liesman asked whether or not there was an issue as to whether greater financial regulation might interfere with global recovery. Indeed replied the deputy head and the politicians and regulators are aware of the risk. Now you don't think...I mean they couldn't ...would they...I mean is there a chance they read the Blog?Then again, maybe it's just a co-incidence. I wonder what these guys get paid for those great thoughts.
Anyway, M. Le President seems to have backed off a bit in his statement that he was prepared to walk out of the G-20 unless the position of La Republique in regard to compensation is adopted. I suspect that in the next week there is going to be a lot of backing off of previously held "firm positions" and "agreements in principal." After all, these are the least principled humans on the face of the earth save perhaps for the Congress of the United States. But in the end, they have an admittedly hard task. It wasn't made any easier by a speech made by paul Volker yesterday on the Left Coast calling for the prohibition of proprietary trading by commercial banks. He also spoke out in favor of the Fed as the regulator for financial institutions, greater leverage restrictions for non-commercial banks--read Goldman Sachs--higher capital requirements and against the sponsorship of hedge funds and private equity firms by commercial banks.
Over 20 years ago, Sen. Bill Bradley, who is a hell of a smart guy and a guy who loved to get out at the head of a parade, sponsored a very hush, hush meeting in Washington brought on by the Latin American financial crisis and the changes needed in bank regulation. All the major players from both an institutional and individual standpoint were present save one exception: your humble blogger who received an invitation from Sen. Bradley himself as a result of a conversation we had some weeks previous. No other banker agreed to show up. My institution thought me to be harmless I guess. I was was seated next to Alan Greenspan the spanking new Head of the Fed (who has terrible halitosis by the by...most unpleasant and uncomfortable) when his predecessor, Tall Paul launched into the very same speech he gave yesterday save for the hedge fund and private equity remarks there being...by God's good grace...none of them in existence at that time. I remember asking Paul why the hell he was singling out the commercial banks for all this new regulation when there were institutions like the Pru doing the same damn thing. Gruffly; "Yeah, yeah, you"re right." "And try to put a fence around them as well, wouldn't that lead someone else--somewhere else--doing the same thing?" says I? "Yeah, you're right," says my hero. I took a deep breath and turned to look at Greenspan. He never moved but stared silently ahead. Nothing came out of that meeting. 23 years ago.
As you know I feel Mr. Volker was bagged by this administration. He is testifying before Congress next week. Volker has always been the ultimate team player. For once, I hope he is not. He may not have been wrong 23 years ago, but undoing what brothers Rubin, Clinton and Bush did just 10 years ago may not be in the cards.
Have a nice weekend.
Anyway, M. Le President seems to have backed off a bit in his statement that he was prepared to walk out of the G-20 unless the position of La Republique in regard to compensation is adopted. I suspect that in the next week there is going to be a lot of backing off of previously held "firm positions" and "agreements in principal." After all, these are the least principled humans on the face of the earth save perhaps for the Congress of the United States. But in the end, they have an admittedly hard task. It wasn't made any easier by a speech made by paul Volker yesterday on the Left Coast calling for the prohibition of proprietary trading by commercial banks. He also spoke out in favor of the Fed as the regulator for financial institutions, greater leverage restrictions for non-commercial banks--read Goldman Sachs--higher capital requirements and against the sponsorship of hedge funds and private equity firms by commercial banks.
Over 20 years ago, Sen. Bill Bradley, who is a hell of a smart guy and a guy who loved to get out at the head of a parade, sponsored a very hush, hush meeting in Washington brought on by the Latin American financial crisis and the changes needed in bank regulation. All the major players from both an institutional and individual standpoint were present save one exception: your humble blogger who received an invitation from Sen. Bradley himself as a result of a conversation we had some weeks previous. No other banker agreed to show up. My institution thought me to be harmless I guess. I was was seated next to Alan Greenspan the spanking new Head of the Fed (who has terrible halitosis by the by...most unpleasant and uncomfortable) when his predecessor, Tall Paul launched into the very same speech he gave yesterday save for the hedge fund and private equity remarks there being...by God's good grace...none of them in existence at that time. I remember asking Paul why the hell he was singling out the commercial banks for all this new regulation when there were institutions like the Pru doing the same damn thing. Gruffly; "Yeah, yeah, you"re right." "And try to put a fence around them as well, wouldn't that lead someone else--somewhere else--doing the same thing?" says I? "Yeah, you're right," says my hero. I took a deep breath and turned to look at Greenspan. He never moved but stared silently ahead. Nothing came out of that meeting. 23 years ago.
As you know I feel Mr. Volker was bagged by this administration. He is testifying before Congress next week. Volker has always been the ultimate team player. For once, I hope he is not. He may not have been wrong 23 years ago, but undoing what brothers Rubin, Clinton and Bush did just 10 years ago may not be in the cards.
Have a nice weekend.
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