Make time to read DJN colleague Marshall Eckblad’s latest story, “Widening Commercial Real Estate Crisis Hits U.S. Banks.” It starts this way: “When commercial-real-estate markets went bust two decades ago, bankers said they learned a hard lesson. The latest earnings reports from U.S. banks suggest it didn’t stick. Losses from loans tied to strip malls, office buildings, housing complexes and other properties are hurtling toward levels unseen since the savings-and-loan crisis.” If you read on, you’ll see some stunning nonperforming (read: uncollectible) commercial construction loan levels at regional banks. It’s sobering.
Archive for July 27th, 2009
Consumer electronics, Earnings, Economy, Investing / Comments Off
Corning Inc., the big specialty glass and ceramics maker, reported earnings today, and noted profits were boosted by surprisingly strong global demand for liquid crystal display television sets. One would think that during a worldwide recession, upgrading the TV set might be one of those spend items that gets put to the back burner. Apparently not.
Corning said LCD TV sales globally were up 27% in April and 33% in May. China saw a 77% increase in April, 80% increase in May and a 68% increase in June. European sales were up 22% in both April and May.
Bank Rescue Plan, Banks, Corporate Governance / Comments Off
Sir Win Bischoff, the former Citigroup chairman who was nudged out by an ascendant Richard D. Parsons earlier this year as Citi teetered, has been named chairman of Lloyds Banking Group Plc. There, he’ll attempt to help integrate HBOS, the dysfunctional bank Lloyds, itself 43% government owned, is struggling to salvage. What does Bischoff, 68, bring to the table? Many decades of investment banking experience at the highest levels in the U.K. and U.S. His backers, speaking to The Times recently, said “he is just the type to steer Lloyds through turbulent years” as it grapples with partial government ownership, a CEO (Eric Daniel) under fire for the HBOS deal, antitrust challenges, bad debts and shareholder lawsuits. Critics say he lacks the retail and commercial banking background needed at Lloyds; turned in a lackluster performance as a Prudential board member in 2007; and did very little for Citi when much was in fact needed from its board of directors. As The Times wrote, “during his year as Citi chairman, internecine warfare broke out at the financial behemoth while it almost collapsed.” I’m willing to give him the benefit of the doubt; Lloyds probably does need a seasoned steady hand at the moment. Sir Win sounds steady. Still, the financial crisis really hasn’t altered the-way-things-work atop companies and banks, has it? There’s something a bit deflating about yet another recycled bank exec getting a prized and delicate, albeit very difficult, role. Bischoff’s rather conventional narrative of success goes like this: he sells Schroders Plc to Citi (2000), gets hired by Cit in 2007 as it reels from risky lending; as the global credit crunch sets in, he exits Citi (that is, Parsons ensures his exit), only to get picked up by Lloyds. Tucked in there – around 2007 – is his Pru board stint. When Lloyds is done with him, or he with Lloyds, it’ll be off to the next financial institution. Ho hum. Business as usual.
Credit Crisis, Credit Markets, Federal Reserve, Financial Planners, Politics, United States, Wall Street, Washington / Comments Off
The chairman of the Federal Reserve hosts a town hall meeting. Some in Congress want the ability to analyze interest rate decisions after the fact. More than just central bank scholars are raising questions about regional Fed bank governance in place for nearly 100 years.
All these seemingly disparate events raise one central question: how much democracy is good for the U.S. Federal Reserve?
Fed Chairman Ben Bernanke took a remarkable democratic step over the weekend, sitting down in middle America with reasonably just plain folks, taking their questions and getting out his message.
Miles Shapiro says what I tried to say the other day but does it better – and adds in the Obama factor (I blogged before the Prez spoke out.) Here’s Miles:
“Let’s just short circuit the debate, and imagine instead the exact same situation occurred, but instead of the darker- complected Gates and taxi-driving cohort, they were two white men. First, the white neighbor would have yelled out the window, ‘Is everything ok?’ Why? Because he would have known his immediate neighbor had the neighbor been white. Instead, he did not recognize Gates because he didn’t know him.