FAS 157 and the significance of distress versus bankruptcy

It wasn’t until I read about a massive writedown by a German bank associated with the bankruptcy of Lehman Brothers that I started to connect the dots. But, there is a hidden flaw in our accounting system which accounts for some of the distress associated with the Lehman bankruptcy. And it all leads back to marking to market

FDIC shuts down Haven Trust and Sanderson State

Another Friday night in America means another bank goes bust. This week, it’s two banks: Haven Trust of Georgia nd Sanderson State of Texas. BB&T is stepping in for the deposits at Haven Trust. And Pecos is taking the deposits at Sanderson. These banks are small, so this is not earth-shattering news.

Below are the pertinent details and links back to the FDIC website

An Icelandic post-mortem

The Economist does a very good post-mortem on Iceland and its spectacular collapse with a number of lessons for other countries, especially those with oversized financial sectors like Ireland, Switzerland and the U.K.  Below is a snippet from their article which I highlight because it also demonstrates the real risk of social unrest due to

The Tribune files for bankruptcy

The Tribune was simply over-leveraged with a balance sheet made for this age of debt, leverage and bubbles. Note the lack of equity and the enormous debt load. Why would anyone, especially someone as savvy as Sam Zell load up a declining business with this much debt? Was it greed, hubris? It seems inexplicable to me

Chicago Tribune near bankruptcy

In a shocking news story, the Wall Street Journal reports that the media company Tribune Company, which publishes the Chicago Tribune, is exploring bankruptcy.  While advertising revenue has contracted significantly, impacting all major media companies, it was not expected that this would lead to bankruptcy.  Below is a snippet of the Journal story. Tribune Co.

The Citigroup Bailout: a blogosphere post-mortem

When a bank with $2.2 trillion in assets is saved from potential ruin, it is big news. So, as you can imagine, every one and his brother has a take on what went wrong at Citigroup and whether the solution to ‘fix’ Citi was the right one. Below are a number of the best links to commentaries around the blogosphere regarding Citi’s demise

The problem with comprehensive banking crisis solutions

I have come down on the side of sweeping change when it comes to the banking system in the United States. Basically, I fear a further downward spiral due to the fear and panic that the banking crisis has unleashed. In my view, this necessitates a comprehensive solution, one which we have yet to see. However, there is one problem with comprehensive solutions I would like to highlight: asset confiscation

Citigroup talks with US Government as bankruptcy looms

Reuters is reporting that persons familiar with the matter have indicated that Citigroup began talks with the U.S. Government as contingency planning. With Citigroup’s share price having plunged dramatically in recent days, rumors have been circulating about the firm. Yesterday, the Board of Directors met to discuss strategic options including a sale of all or part of the firm. It is now evident that the government may need to get involved

GM Board: Bankruptcy is an option we will consider

In direct conflict with the statements in Washington by its Chief Executive Rick Wagoner, the General Motors Board of Directors is willing to consider bankruptcy as one of many options. The Wall Street Journal released a story late last night attesting to this fact. Below is a snippet of that story. Members of General Motors

Bankruptcies: US Bancorp takes over at Downey and PFF

Another Friday and another three FDIC Friday Night Specials. This time, the notables were Downey Savings and Loan Association and PFF Bank & Trust which were seized by the FDIC. Downey is especially notable as it has been in the news a lot recently with many speculating about the demise of the parent company Downey Financial. Earlier this evening, Community Bank of Loganville, Georgia was also declared insolvent and seized by the state regulator

Obama Team considering a pre-pack Auto bankruptcy

Bloomberg is reporting that Obama’s transition team is exploring a pre-packaged bankruptcy filing for the US automakers as a solution to the stand-off in Washington. Apparently, Obama has some pretty savvy people in his transition team because they seem to be much more on the case than the Bush Administration when it comes to a solution for the Big Three Automakers

News round-up: 21 Nov 2008 – Countries, Citigroup, and Corporates

Today’s round-up is going to principally be about the three CCC’s of Countries, Citigroup and Corporates.  But I also have some tidbits on other topics as well.  So let’s jump right in. Yesterday sucked. Markets fell everywhere from Australia to Hong Kong to France to the U.S.  The U.S. fell to a 11-year low (adjusted