Category Archives: Finance

A Waste of TARP

Bank of America is making a $7 billion dollar cash investment into China Construction Bank. Bank of America received $15 billion directly from TARP and will get another $10 billion (when they close the Merrill Lynch acquisition at year end). … Continue reading


What’s Good for General Motors is Good for the Country

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How ironic. Congress is entertaining a $25 billion bailout of the autos. The President and Secretary of the Treasury are OK with this as long as it doesn’t come out of the $700 billion TARP money. To the average person, … Continue reading


Children in the Candy Store

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The bad news keeps piling in: $150 billion commitment to a non-bank, AIG GE Capital (which is not a bank) gets FDIC Insurance backup for $139 billion American Express and CIT Group are now banks – I guess everyone is … Continue reading


The Hurdles the New President Faces

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President-elect Obama wants to avoid the Herbert Hoover scenario. In this scenario, many economic initiatives are tried but fail to bring the U.S. out of recession. The high expectations are not met. The result: a single term. Of course, there … Continue reading


Who deserves to be bailed out?

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I appeared on Business News Network to discuss: the missteps in implementing TARP, who should be bailed out, alternative plans to regenerate credit and the implications for the real economy. View the clip here.


Bank Earnings Are Impossible to Interpret

It is earnings season and many banks will be reporting their earnings. What are we to make of these earnings? In usual circumstances, it is hard to decode earnings. Today, it is next to impossible. By the way, why did … Continue reading


Deconstructing Vol

The VIX is hovering around 70%. This is an annualized volatility. Bringing it to a daily level, volatility would be about 4.5%. Hence, the VIX is telling us that market moves of up to +/- 9% should not be unexpected. … Continue reading


The D-word

The credit crisis is 13-months old. Unfortunately, policy makers have been late to the game. In addition, the game plan has changed so many times that it is not surprising that there is a general lack of confidence that we … Continue reading


Equity injection is not enough to get us out of this mess

The government doled out $125b of equity injection to 9 banks yesterday. It is a dramatic change from the original TARP proposal (to pay a premium price for toxic assets). I have advocated for weeks an equity injection (along with … Continue reading


The Fall of the House of TARP: Time for Plan B

I am not surprised that the Troubled Asset Relief Program (TARP) failed. The paper that I put out on Friday detailed the numerous problems with the TARP.  My paper argued that the TARP had at least three major flaws.