UK
Lunchtime(ish) Links: Are banks buying MBS to boost bonuses?
3 July 2009
Heidi Moore has got an interesting article in the BigMoney on the possibility that banks will indeed pay pleasing bonuses this year. According to Moore, banks may be reverting to their old addiction to mortgage backed securities to boost profitablity.
By way of evidence, she points to Bloomberg figures suggesting banks are hoarding $154.6bn in mortgage securities on their balance sheets, up 5.6% from April. The rationale for this behaviour is apparently the (increasingly remote) possibility of selling MBS on under the PPIP scheme, and the (more reasonable) chance of mark-ups under new accounting rules.
Profits made as a result of accounting rules changes might not stand up to scrutiny, but Moore says this doesn’t matter; bonuses generated as a result won’t either. She says most bonuses this year will be paid in stock: “Fake bonuses, then, for fake profits.”
Don’t expect write-ups. (Breaking Views)
“There are people who are too complacent in my view. They need to be brought back to earth." (Independent)
New international division and other changes at the FSA. (FSA)
Calyon hires new head of credit trading, formerly of ABN AMRO. (Financial News)
HSBC hires Deutsche FX 'guru.' (Financial News)
Owners of banks should be very cautious indeed about rewarding bankers for the returns they generate on equity, and should focus rather more on the returns earned on gross assets. (Pestowire)
How Goldman Sachs is like the delivery guy from Empire Szechuan. (Wilmott via Felix Salmon)
“We’re in the middle of a crash…it’s going to get worse not better.” (CNBC)
Macho is very yesterday. (Foreignpolicy)
There are two reasons why people get into banking. One, you get access to some really excellent pens, and two, the absolutely enormous amounts of money. (TheDailyMash)
Buying crappy MBS means they get the CDS payments from AIG. I await the 2Q counterparty list with glee. Bad investments chasing out the goood.
Davros 03 Jul 2009
RECOMMEND
Recommended 1 time | Alert Moderator