JIG meets Monday at my house. Usual time. See you there.
Betsy
NOTICE: Unless restricted by law, email correspondence to and from Anoka
County government offices may be public data subject to the Minnesota
Data Practices Act and/or may be disclosed to third parties.
October 24, 2008
Greenspan Concedes Error in Regulatory View
By THE ASSOCIATED PRESS
WASHINGTON (AP) . Alan Greenspan, the former Federal Reserve chairman, said Thursday that the current financial crisis had uncovered a flaw in how the free market system works that had shocked him.
Mr. Greenspan told the House Oversight Committee on Thursday that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had proved to be wrong.
Mr. Greenspan said he had made a .mistake. in believing that banks operating in their self-interest would be enough to protect their shareholders and the equity in their institutions.
Mr. Greenspan said that he had found .a flaw in the model that I perceived is the critical functioning structure that defines how the world works..
Mr. Greenspan, who headed the nation.s central bank for 18.5 years, said that he and others who believed lending institutions would do a good job of protecting their shareholders are in a .state of shocked disbelief..
He said that the current crisis had .turned out to be much broader than anything that I could have imagined..
The committee called Mr. Greenspan to testify along with former Treasury Secretary John W. Snow and the Securities and Exchange Commission chairman, Christopher Cox, as lawmakers sought to discover if regulatory failings had contributed to the crisis.
The committee chairman, Henry A. Waxman, said he believed that the Federal Reserve, which regulates banks, the S.E.C. and the Treasury had all played a role in contributing to the mistakes.
.The list of mistakes is long and the cost to taxpayers is staggering,. Mr. Waxman, a California Democrat, told the three men. .Our regulators became enablers rather than enforcers. Their trust in the wisdom of the markets was infinite. The mantra became that government regulation is wrong. The market is infallible..
In his testimony, Mr. Greenspan blamed the problems on heavy demand for securities backed by subprime mortgages by investors who did not worry that the boom in home prices might come to a crashing halt.
.Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,. Mr. Greenspan said. .Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity..
Mr. Greenspan said that a necessary condition for the crisis to end would be a stabilization in home prices but he said that was not likely to occur for .many months in the future..
When home prices finally stabilize, Mr. Greenspan said, then .the market freeze should begin to measurably thaw and frightened investors will take tentative steps towards re-engagement with risk..
Mr. Greenspan said until that occurred, the government was correct to move forward aggressively with efforts to support the financial sector. He called the $700 billion rescue package passed by Congress on Oct. 10 .adequate to serve the need. and said that its impact was already being felt in markets.
Mr. Greenspan did not specifically address the criticism he is receiving now as being partly to blame for the current crisis.
Mr. Greenspan.s critics charge that he left interest rates too low in the early part of this decade, spurring an unsustainable housing boom, while also refusing to exercise the Fed.s powers to impose greater regulations on the issuance of new types of mortgages, including subprime loans. It was the collapse of these mortgages and rising defaults a year ago that led to the current crisis.
In his testimony, Mr. Greenspan put the blame for the subprime collapse on overeager investors who did not properly take into account the threats that would be posed once home prices stopped surging upward.
.It was the failure to properly price such risky assets that precipitated the crisis,. Mr. Greenspan said.
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* Dr. James Ellingson, jellings(a)me.umn.edu *
* University of Minnesota, mobile : 651/645-0753 *
* Great Lakes Brewing News, 1569 Laurel Ave., St. Paul, MN 55104 *
We bought:
200 shares of GE @ 20.03 for a total of $4,015.99
100 shares of Dawson Geophysical (DWSN) @ 24.84 for a total of
$2,493.99
Betsy
NOTICE: Unless restricted by law, email correspondence to and from Anoka
County government offices may be public data subject to the Minnesota
Data Practices Act and/or may be disclosed to third parties.
JIG meets Monday at 6:30 p.m. at my house.
Betsy
NOTICE: Unless restricted by law, email correspondence to and from Anoka
County government offices may be public data subject to the Minnesota
Data Practices Act and/or may be disclosed to third parties.
There is a meeting tonight. How about if we call you if we need to talk
with you? On your cell phone?
>>> "Jim L. Ellingson" <jellings(a)me.umn.edu> 09/15/08 6:10 PM >>>
I think there's a meeting tonight.
I won't be there... here's my proxy.
I could call in if that helps.
On Sat, Aug 16, 2008 at 10:03:14AM -0500, Betsy Kremser wrote:
> JIG meets Monday at my house. See you there.
> Betsy
>
> NOTICE: Unless restricted by law, email correspondence to and from
Anoka
> County government offices may be public data subject to the Minnesota
> Data Practices Act and/or may be disclosed to third parties.
>
>
--
------------------------------
* Dr. James Ellingson, jellings(a)me.umn.edu *
* University of Minnesota, mobile : 651/645-0753 *
* Great Lakes Brewing News, 1569 Laurel Ave., St. Paul, MN 55104 *
NOTICE: Unless restricted by law, email correspondence to and from Anoka
County government offices may be public data subject to the Minnesota
Data Practices Act and/or may be disclosed to third parties.
JIG meets Monday at my house. See you there.
Betsy
NOTICE: Unless restricted by law, email correspondence to and from Anoka
County government offices may be public data subject to the Minnesota
Data Practices Act and/or may be disclosed to third parties.
Takes bath in Fannie Mae fiasco...
http://www.bloomberg.com/apps/news?pid=20601087&sid=aAeJaFNNHEBM&refer=home
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FYI
His opinion is banks stocks may be underpriced, time to buy,
not sell... he predicted the crash.
August 4, 2008
An Acid-Tongued Maverick Keeps Bankers on the Edge of Their Seats
By LOUISE STORY
Lutz, Fla., is on no one.s list of world financial capitals. But from his home there on Tiffany Lane, 1,100 miles from Wall Street, Richard X. Bove can rattle the mighty of American banking.
Lately some of his pronouncements have caused a few headaches for the nation.s banks . and for Mr. Bove, one of the most outspoken stock analysts tracking them.
After a big bank in California collapsed in mid-July, Mr. Bove (pronounced Bo-VAY) rushed out a report with a provocative title: .Who.s Next?. What followed was a list of 107 banks, ranked according to two measures of their financial strength. The share prices of some of the banks promptly collapsed.
But No. 10 on the first list, BankAtlantic Bancorp of Fort Lauderdale, fired back. The bank said Mr. Bove.s numbers were wrong . and sued him and his employer, a small brokerage firm called Ladenburg Thalmann, for defamation. Mr. Bove would not comment on the suit. A lawyer for BankAtlantic said the bank planned to ask the judge to expedite the case.
The dispute over Mr. Bove.s call is a big switch from the usual charge leveled at analysts, which is that most of them are not bearish enough. After the dot-com bubble burst in 2000, Wall Street was criticized for promoting stocks to win lucrative investment-banking work. Even now, amid the housing meltdown and gloomy talk of a recession, .sell. recommendations are relatively rare.
But controversy is nothing new for Mr. Bove, 67, who has analyzed banking stocks for 26 years and become a familiar face on business news television. He has been fired twice during his career, once, from Dean Witter Reynolds, for advising investors to buy every bank stock they could (he was right . after he was fired, bank stocks soared). By his own account, his worst call was telling people to dump banks in the 1990s, during the Bosnian war, only to watch the shares rise.
Since 2005, however, Mr. Bove has gained a certain reputation as one of the few bank analysts to predict the blow-up in the housing market and subsequent problems at many banks. He is also one of the few whose advice, if heeded, would have made money for investors over the past year.
Mr. Bove often berates bank executives . .egomaniacs,. he calls many of them . and the regulators who oversee them. He peppers his down-to-earth reports with phrases like .yee-haw!. and he says he does not care whether the banks like what he has to say.
Even so, after BankAtlantic complained that Mr. Bove based his analysis on incorrect figures . he should have used the capital of the bank.s holding company, rather than of the bank itself, BankAtlantic said . Mr. Bove sent a note to clients explaining BankAtlantic.s view. BankAtlantic is not among the 27 companies that Mr. Bove regularly covers.
Fans of Mr. Bove are stunned by the uproar over his list.
.I.m pretty shocked, actually,. said Doug Kass, president of Seabreeze Partners Management, a hedge fund based in Palm Beach, Fla. .He is amongst the best pure security analysts, quite frankly, that I.ve ever met. He does not mince words, but his comments are founded on strong analysis..
Mr. Bove, for his part, says it is not his job to worry whether banks like his reports.
.I don.t give a damn about what the company thinks,. he said by phone from his home office in Lutz. .It.s my job to think about: is this a good stock to buy or not? It.s the bank.s job to worry about their business..
On a typical day, Mr. Bove starts work at 6 a.m. and keeps at it till 9 or 10 p.m. He turns out 500 to 600 reports a year. He works out of his home because his wife has multiple sclerosis and has lost her eyesight. He calls himself .a total nerd. because all he does is work and spend time with his seven children and 13 grandchildren.
But Mr. Bove is also something of a maverick. In the last few months, he has suggested that Morgan Stanley might have avoided its current problems if the company had not pushed out Philip J. Purcell as chief executive in favor of John J. Mack. He criticized Citigroup.s chief financial officer for disclosing information about write-downs during a conference call. And he accused Merrill Lynch of disclosing inadequate financial information in a recent press release.
Clearly Mr. Bove is not afraid of making enemies. Back in 2005, when he came out with his initial negative outlook on the housing market, a television anchor warned him that he might not have a job much longer. Soon afterward, Mr. Bove began downgrading the banks he covered, eventually putting a sell on 60 percent of them, even as others dismissed his prediction that .this powder keg is going to blow..
.I was convinced that the financial industry was out of control,. Mr. Bove said. .It just smelled, it looked, it felt like this thing was going to crash. And we kept pounding on it..
Mr. Bove grew up in New York City and got his start in finance in 1965, as a salesman for Blyth Eastman Dillon. He jumped to Wertheim & Company in 1972, where he worked as a construction industry analyst, and after a few other jobs in New York, he moved to St. Petersburg, Fla., in 1994, to join Raymond James.
He switched to covering banks in 1982, he says, because construction was in decline. .You.d be sitting around telling folks why things were no good,. he says. .It wouldn.t be any fun..
Mr. Bove thinks he has an edge over most analysts when it comes to speaking the truth. At larger companies, he was pressured to tone down his criticism. Five years ago, he moved to Punk Ziegel & Company, a small firm that Ladenburg Thalmann purchased last spring.
.Here I can say what I want about Citigroup, when I want, and as long as I.m honest, they don.t care,. Mr. Bove says. .I just want to write what I want to write and that.s it..
Sometimes, he mixes in humor. For instance, after Citic Securities, an investment company owned by the Chinese government, bought a stake in Bear Stearns last fall, he wrote: .Jimmy Cayne, Bear.s C.E.O., may start wearing red suspenders and playing Mah Jong instead of bridge..
Mr. Bove remains negative on the prospects for investment banks like Goldman Sachs and Merrill Lynch. But he has upgraded several commercial banks this year. He thinks banks are healthier because of the new capital they have raised and because investors have pushed their stocks too low. But, once again, he is pushing against the grain . and he has yet to be proved right.
.Again, I.m early, and I.m fighting against the trends,. he says. .But the fact is that banks are too cheap..
--
------------------------------
* Dr. James Ellingson, jellings(a)me.umn.edu *
* University of Minnesota, mobile : 651/645-0753 *
* Great Lakes Brewing News, 1569 Laurel Ave., St. Paul, MN 55104 *
See you all (except Betsy) on Monday around 6:30pm. I will be out of town from Friday and will be back before 5:00 on Monday. If you need directions you can call on Monday evening (612/623-7805). We have one proxy to date (Betsy's). See you on Monday. m
Maryellen Skan
skanx001(a)usfamily.net
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July 16, 2008
Wells Fargo Profit Dips, but Dividend Rises
By THE ASSOCIATED PRESS
Filed at 8:41 a.m. ET
NEW YORK (AP) -- Wells Fargo's profit dropped 22 percent in the second quarter as more customers at the nation's fifth-largest bank failed to pay back their loans, the company said Wednesday.
The San Francisco-based bank, however, raised its quarterly stock dividend to 34 cents from 31 cents -- at a time when many other financial institutions are slashing theirs to preserve capital.
Shares soared 13 percent in premarket trading, after tumbling alongside other financial stocks over the last several days on worries about more U.S. mortgage losses and bank failures. Wells Fargo stock is down about 42 percent over the past year.
Wells Fargo & Co. earned $1.75 billion, or 53 cents per share, in the April to June period, down from $2.28 billion, or 67 cents per share, in the same timeframe last year.
The bank took a provision for credit losses of $3 billion. That provision included an increase in reserves for future losses of $1.5 billion.
But revenue soared 16 percent to a record $11.5 billion, on to strength in the bank's deposits, mortgage banking, credit card, and wealth management businesses.
''We were able to lend more to current customers where we believed it was prudent and properly priced,'' said President and Chief Executive John Stumpf in a statement. He added that the company gained more business and customers through acquisitions.
Analysts polled by Thomson Financial had predicted, on average, a profit of 50 cents per share on revenue of $10.65 billion.
--
------------------------------
* Dr. James Ellingson, jellings(a)me.umn.edu *
* University of Minnesota, mobile : 651/645-0753 *
* Great Lakes Brewing News, 1569 Laurel Ave., St. Paul, MN 55104 *
