Bill Gross of Pimco said back in June on CNBC that U.S. regional banks don't have the benefit of being perceived by investors and regulators as being too big to fail due to housing related losses. The regional banks also don't have the same access to capital as their larger peers, and they are less diversified than the bigger banks. Either way, the citizens/taxpayers have to take on the burden. Gross' comments were a harbinger for what happened with Indy Mac and the two regional banks that were recently shut down by regulators. No one panicked and there was no run until the politicians and general media started talking. They really don't have a grasp of their impact. It's very important that words are chosen carefully by national leaders at this time. At least asset managers have been proactive in reallocating funds in this climate.
- Freddie and Fannie's Healthy Cousin, by Daniel Gross: "The Federal Reserve's extraordinary efforts to help investment banks have effectively put the taxpayer on the hook for enormous potential losses..., we could end up paying tens or hundreds of billions..."Economists View
Click to enlarge. "Standard & Poor’s may soon have to redraw the axes of its chart of US home prices. The S&P/Case-Shiller Home Price Indices for May show annual declines in excess of 15.0%. The 10-City Composite posted a new record low of -16.3%, and the 20-City Composite recorded a record low of -15.3%." Research Recap
Click to enlarge. "Can asset managers balance “innovation” and “simplicity”? A new report says they better hope so. Regular readers may remember a survey we conducted in conjunction with our media partner, Terrapinn, last summer. The survey found that while about 15% of asset managers offered a 130/30 fund at that point, over a third said they planned to offer one in the next 12 months. Apparently, asset managers have been busy. Here we are nearly 12 months later and a new survey by the Economist Intelligence Unit and KPMG finds that “51% of mainstream fund managers run long-short funds of the 130-30 type“. All About Alpha
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