Category: Wall Street

Some clear signals the Prez is crossways with Gene Taylor

Not that such doesn’t help Gene Taylor with the local voters, the majority of which are very conservative and part of the 30 percent of the populace who do not care for Obama’s job performance (and never will). So while the new adminsitration didn’t even bother to meet with Gene on his bill to reform the NFIP before he came out against it, here is Mr Prez cuddling up with big insurance so they can have an advance briefing of what he intends to do along the lines of regulatory reform. Reuter’s reporter and Sen Chris Dodd mouthpiece Kevin Drawbaugh has the III talking points well summerized:

Insurance industry reform will be the chief focus of a briefing scheduled for Thursday evening by Obama administration officials to financial industry lobbyists, said sources familiar with the agenda.

Topics possibly open for discussion include a proposal to establish a U.S. insurance regulator. The nation’s more than 6,000 insurers are now regulated largely by state and territorial governments.

The briefing could range further afield, possibly covering other parts of the administration’s financial reform agenda, such as establishing a systemic risk regulator and writing new rules for derivatives markets, the sources said.

The snubs don’t stop there as Michael Newsome reported today in the Sun Herald: Continue reading “Some clear signals the Prez is crossways with Gene Taylor”

Slabbed Daily June 1, 2009: Hurricane Season / Toxic Paper Edition

Save your life and evacuate. Or stay to make certain your wind insurance pays. Decisions decisions….

Its that time of the year – the beginning of another Hurricane season complete with advance news stories why our insurance rates need to rise yet again. Some evac stories always make it to the mix and it is there we start with this Melissa Scallan Sun Herald story:

Womack and other state officials are encouraging residents to go north, not east or west and to leave by alternate rather than primary routes, such as U.S. 49.

Some of the new and less-traveled routes include Mississippi 605 and Mississippi 67, which tie into each other and lead to U.S. 49. Wayne Brown, Southern District transportation commissioner for the state Department of Transportation, encourages residents to take highways such as Mississippi 15, 57, 63 and 29.

“If people stick to those, in my opinion, they’ll have much less traffic to deal with,” Brown said.

The state has agreed again this year to allow south Louisiana residents to use Mississippi interstates to evacuate.

If asked by Louisiana Gov. Bobby Jindal, Mississippi will contraflow interstates 55 and 59, which means traffic in all lanes will flow north.

On I-55 contraflow will end just south of Brookhaven. On I-59 it will end just south of Hattiesburg.

Some exits will be open so motorists can get gas and food, Brown said, but those could be closed intermittently.

“We’re going to let them get off, but if that stop becomes congested we’ll close the exit,” he said.

Bob Chapman, emergency services manager for MDOT, said contraflow is one reason department officials encourage Mississippi residents to leave as early as they can.

“We can’t contraflow U.S. 49 for our residents because there are too many access points,” he said.

“The main emphasis is to evacuate early and go where you want to go.”

Next up is the obligatory Insurance (Mis) Infortmation Institute’s annual news plant explaining that costly Hurricanes are the reason rates are so expensive. What the story fails to mention is that insurers are paying out less in claims as a percenatge of their revenues than ever thus losses can’t be the true reason rates are sky high, coverage is scarce despite III’s paid shill Robert Hartwig’s protestations to the contrary. We pick up the AP story as published by the Houston Chronicle (h/t Mrs Sop): Continue reading “Slabbed Daily June 1, 2009: Hurricane Season / Toxic Paper Edition”

kudos for Wilson – not yet

Regulate me, please, the opinion column written by Allstate CEO Tom Wilson, appeared in the April 15 NYT in the guise of Wilson’s on-going effort to garner support for national regulation of the insurance industry.

Calling  it his CDS mea culpa, Option ARMageddon gave Wilson “kudos” for coming clean:

My company, Allstate, serves more than 17 million American households.  While we played only a small role in unregulated insurance markets, we have a duty to help stabilize the financial system. It was, after all, an insurance product that contributed to the risk that almost brought down the global economy.

New York State’s Insurance Superintendent, Eric Dinallo, on the other hand, had no kudos to offer:

“While the credit default swap market is not regulated, insurance company use of credit default swaps is,” Mr. Dinallo said in a statement. “In New York, no insurance company can use credit default swaps except under very specific and limited ways and only with approval.”

Was Option ARMageddon spot on or was Wilson’s agenda to set up Dinallo and DOI to the advantage of his efforts to secure national regulation of the insurance industry?  Dinallo’s press release suggests Wilson may have had another agenda – one that would lead to Hank Greenberg, AIG, and, perhaps, other insurers. Continue reading “kudos for Wilson – not yet”

Moody’s Downgrades Berkshire Hathaway

The announcement came late last night. Yahoo finance has the AP story:

Billionaire Warren Buffett’s company lost its pristine triple-A rating from Moody’s on Wednesday because the recession has diminished Berkshire Hathaway Inc.’s financial strength

Ratings agency Moody’s downgraded the credit rating for Berkshire and several of the company’s insurance subsidiaries.

Moody’s says Berkshire and its insurance companies, including National Indemnity and Geico, aren’t as strong financially because the market value of their investments has fallen. Also, Moody’s says the recession hurt Berkshire’s non-insurance businesses. Continue reading “Moody’s Downgrades Berkshire Hathaway”

BREAKING: TARP IG Opens AIG Bank Payments Probe

Zero Hedge  broke the story, we immediately recognized its importance and now the TARP Inspector General wants a looksie. Once again leadership on making certain the taxpayers are protected as much as possible is found in the House of Representatives.  Bloomberg has the story: (h/t Zero Hedge)

The Treasury’s chief watchdog for the U.S. financial rescue program is probing whether American International Group Inc. paid more than necessary to banks including Goldman Sachs Group Inc. after the insurer’s bailout.

Neil Barofsky, special inspector general for the Troubled Asset Relief Program, opened an audit last week into whether there were attempts made by New York-based AIG or the government to reduce the payments, according to an April 3 letter to Representative Elijah Cummings. The Maryland Democrat had requested the probe last month along with 26 other members of Congress.

Lawmakers, frustrated with the cost of an AIG bailout that has expanded three times, have asked why about $50 billion was paid after the initial September rescue to banks that bought credit-default swaps from the firm. The audit will reveal who made “critical decisions” regarding the payments and provide an explanation for the actions, Barofsky said.

“To what extent did AIG pay counterparty claims at 100 percent of face value and was any attempt made to renegotiate and close out these claims with ‘haircuts?’” Barofsky wrote. “Questions concerning whether AIG paid more than necessary to counterparties and whether Treasury adequately monitored such payments are clearly relevant.” Continue reading “BREAKING: TARP IG Opens AIG Bank Payments Probe”

SLABBED Daily – April 6 (blow-out sequel to bail-out)

Congressional Oversight Panel to Call for Wiping Out Shareholders, Ouster of Top Brass at TARP Recipients from naked capitalism is a Monday morning wake-up call:

This is going to get interesting. The head of the Congressional Oversight Panel, Elizabeth Warren, is expected to issue a report this week calling on the Treasury to get much tougher with the big recipients of TARP funds. And if the report in the Guardian is right, the recommendations have been softened a tad so as not to be too hard on Treasury Secretary Timothy Geithner.

Elizabeth Warren, chief watchdog of America’s $700bn (£472bn) bank bailout plan, will this week call for the removal of top executives from Citigroup, AIG and other institutions that have received government funds in a damning report that will question the administration’s approach to saving the financial system from collapse. Continue reading “SLABBED Daily – April 6 (blow-out sequel to bail-out)”

AIG – a Starr in the crown

AIG began life as the humble brainchild of Cornelius Vander Starr who in 1919 formed a simple two clerk insurance agency in Shanghai, China. He named his company the American Asiatic Underwriters.

Though the years the corporate name would evolve and eventually become American International Group or AIG. Starr’s company, from its inception, was unique because it was founded in China by a young (27 year old) American. The underwriters of the day were European with British firms as the dominate player.

When other American-owned companies began establishing a presence in China, Starr saw an opportunity in the propensity of companies to “follow the flag” of their native country in their selection of insurance.

Starr’s strengths were his boldness and keen insight into the changing social dynamics that would lead to less risky insurance products. For example, Continue reading “AIG – a Starr in the crown”

$enator Chri$ Dodd’$ baum is still roasting: Dear Barack I really want to help….

Chri$ Dodd shortly after the "Greenberg Genuflection"
Chri$ Dodd shortly after the "Greenberg Genuflection"

Poor Chri$ Dodd just can’t seem to stay out of the news these days. Not only did Pacman like taking the corporate ca$h from Wall Street stalwarts like AIG it seems the execs at AIG circa 2006 decided he needed their personal help as well so the email blast at AIG financial products went out. The Washington Times has the story:

As Democrats prepared to take control of Congress after the 2006 elections, a top boss at the insurance giant American International Group Inc. told colleagues that Sen. Christopher J. Dodd was seeking re-election donations and he implored company executives and their spouses to give. Continue reading “$enator Chri$ Dodd’$ baum is still roasting: Dear Barack I really want to help….”

Moral Hazard? Slabbed wipes our a$$ with Moral Hazard (Part 1)

Friday afternoon I decided to take on the broad topic of Moral Hazard, the concept for which this blog is unpinned. I collected links and research and then promptly experienced writers block for which even my gratuitous bashing of Rossie could not break. Then as per normal (and in true Talebesque fashion) Russell serendipitously emails me a link that ties things together. This becomes part 1 because there is no way I can tackle the topic in one post and do it justice. The bonus is I get to indulge a personal interest in Game Theory and of course poke some fun at what one observer calls moral hazard lite which represents the intersection of politics with the calamity that has shaken our banking system to its core. Let’s start with a quick definition of Moral Hazard:

Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk. Moral hazard arises because an individual or institution does not bear the full consequences of its actions, and therefore has a tendency to act less carefully than it otherwise would, leaving another party to bear some responsibility for the consequences of those actions.

How does this “different behavior” that results from having no ri$k play out in the financial markets? We have a case study in progress commonly known as the bailout that provides some clues. Russell knows me as an intuitive trader when it comes to individual issues and I’ve been casually telling people this current rally in the financial services sector is an illusion in respects. We’ll have to retest our lows and that could happen as many as three times between now and Q4. Tyler Durden at Zero Hedge gives us a 2009 example to the old Wall Street saying, “Sell in May and go away” as he details why banks as a whole were surprisingly profitable the past two months. Hopefully this will stick with us when the bank execs collect their bonuses from these “results” down the road. Here are some snippets from the Zero Hedge exclusive: AIG was responsible for the bank’s January and February profitability:

Zero Hedge is rarely speechless, but after receiving this email from a correlation desk trader, we simply had to hold a moment of silence for the phenomenal scam that continues unabated in the financial markets, and now has the full oversight and blessing of the U.S. government, which in turns keeps on duping U.S. taxpayers into believing everything is good. Continue reading “Moral Hazard? Slabbed wipes our a$$ with Moral Hazard (Part 1)”