According to the Blueprint for Stronger Regulatory Structure, fresh from the steaming hot presses of the U.S. Treasury, the era of financial market band-aids is over.
On Monday morning, Treasury Secretary Henry Paulson revealed an overarching plan for straightening up mortgage lending, consolidating banking and securities oversight, as well as establishing “optional” federal monitoring of insurance.
So how the hell did we get here?
You’ve got big fancy investment banks hitting the skids, the Federal Reserve running around like a spaz and everyone speaking of the coming Armageddon.
If you want a simple and entertaining way of understanding what has caused all this mess, you could do a lot worse than this crudely-drawn but sophisticatedly simple PowerPoint presentation that came in over the transom. Watch and learn, friends.
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About 8 years ago, a Merrill Lynch broker emailed me and asked if I had anyone managing my money.
The company I worked for, TheStreet.com, had just gone public and I had a slug of stock that I needed to park somewhere. Our lead underwriter, Goldman Sachs, generously offered to handle our personal accounts. All I needed was another, um, several million dollars to meet its $10 million minimum balance requirement.
As I pondered not having the gazillions to join the cool cats, the email arrived from Tim. Fairly bold, I thought, emailing me about my money. No other broker or adviser emailed or contacted me during that time. Their calls didn’t come until several months later, by which time I had already made my decision to work with Tim.
At first blush, this seems like an insane way to choose a financial adviser, right? (more…)
Nothing’s happened to online broker E*Trade. Well, not anything that affects people who keep their money there.
But its stock lost more than half its value yesterday, and rumblings of bigger trouble started coming across the wire (cue sharks, vultures who are eager to steal nervous E*Trade customers; we started hearing from at least one of their public relations representatives yesterday).
All this occurred after a Wall Street analyst said E*Trade could go bankrupt if people withdraw their money from the firm in the shadow of the continuing subprime mortgage crisis. Turns out E*Trade has a lot of money in the subprime business and is likely to take a financial hit, and soon (how big a hit is still in question).
The E*Trade anxiety raises an interesting hypothetical: What happens to investors when their brokerage fails? (more…)
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