Rick Jones

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It’s still in the early days of 2014.  I think it’s finally stopped snowing in the East, the sun has come out and the stock market is continuing to outperform the woe purveyors.  Republicans and Democrats have gotten something done on the budget; lions have laid down with lambs; geopolitically, the world’s a mess but no one seems to care back home.  The financial crisis of 2007 and 2008 is beginning to fade into history.  Things are pretty good and likely to get better for quite some time.

Isn’t it, therefore, a great time to reset? To reset some of the regulatory and legislative excesses stitched together with little reflection during the crucible of the late, great credit crisis?  What appeared to make sense in the middle of that crisis simply doesn’t make a great deal of sense anymore and it’s time for a reset.   As John Maynard Keynes famously said, when the facts changed, he changed his mind.  Shouldn’t we?  It is the height of hubris and willful incuriousness to ignore four years of data and not recalibrate.

If we were to recalibrate, let’s think of some of the things we might rethink.Continue Reading Time for Regulatory Reset

I have been mulling our 2014 Outlook for some time and decided to wait until after the New Year and CREFC to write.  Just in case we got the whole Mayan calendar end of the world story wrong by a year (hey, it was 5000 years old) which would make the whole prediction thing a bit irrelevant, I elected to wait and possibly save me some work.  But we’re still here and settling into 2014.  It’s time. 
Continue Reading 2014 OUTLOOK

It’s the Christmas season and this week we got the Volcker Rule. How seasonably appropriate! Now, I get the whole Christmas trade. You’re good, you get toys; bad, coal in the stocking. But this is bad in a regifted, four-year-old fruit cake sort of way. My desk now groans under the 1100 pages of Volcker whilst I’m trying to gin up some Christmas cheer – it’s not fair. We at Dechert will be sending out a more thoughtful analysis of the Rule by way of Dechert OnPoints, with more to come as the digesting process continues.Continue Reading Santa-baby: Volcker in the Sack

Dow at 16,000, government up and running and the first Single-Family Rental deal now safely in investors’ hands – we are in pretty good shape. As is our tradition here at Crunchedcredit.com, we present to you our nod to the stories and happenings that struck us as amusing or important. (Or both). (Or neither).Continue Reading CrunchedCredit.com’s 4th Annual Golden Turkey Awards

Well, Halloween has come and gone and with the annual bacchanal of faux frisson over zombies, vampires and the like behind us, can we also put away risk retention anxieties like one of those annoying and morally disturbing Miley Cyrus costumes? Unfortunately not. The industry’s comments have all been neatly bundled and delivered to the multi-headed hydra which is the ad hoc joint rulemaking committee of the Office of the Comptroller of the Currency, HUD, the Board of Governors of the Federal Reserve System, the Federal Housing Finance Agency, the Securities Exchange Commission and the FDIC and the leading lights of the regulatory apparatchik are presumably cuddled up before the fireplace this holiday season with a glass of Bordeaux diligently reading comment letters.Continue Reading Risk Retention Follies – Part Deux

Jens Weidmann, president of Deutsche Bundesbank, recently wrote a terrific piece in the Financial Times, making the point that the Faustian bargain between European sovereigns, their national banks, the ECB and EU policymakers to encourage European banks to gorge on sovereign debt may be politically attractive in the short run while being fundamentally a horrible idea. With a wink and nod, President Draghi of the ECB essentially told the world that the ECB would keep the European banks afloat. With that assurance in their pocket, and the gnomes of Basel III declaring sovereign debt riskless, requiring essentially no capital, the banks continue to buy their sovereign debt – and buy big. By doing so, the banks become enablers of bad fiscal policy, artificially lowering the risk premia on all risk assets (resulting in mispricing), and clogging their balance sheets with government IOUs. The result: The banks are less able to support the real economy.Continue Reading European Sovereign Debt and the Clogging of the Banking System

Writing at the beginning of the week in which the government is supposed to run out of money, it’s worth noting the cognitive dissidence between the political chattering classes who clogged the airways this weekend with threats of doom and other apocalyptic noise and what’s actually happening on my desk. If I wasn’t already numbed by the Giants being 0 and 6, it would have been really distressing. Listening to the doomsayers of the 24 hour news cycle on one hand, and returning to my desk on Monday morning and seeing the business of business humming along nicely with little energy around the ongoing government shutdown and potential debt ceiling break this week was really rather odd.

Continue Reading Budgets and Debt: The Cheshire Cat Apocalypse

The new Risk Retention Rule published jointly by the FDIC, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the Securities Exchange Commission, with a little help from the Federal Housing Finance Agency and HUD slouched into the light of day on August 28, in the lee of the holiday weekend. Reportedly, it’s been locked and loaded for months as the regulatory panjandrums wrestled over the politics of the Qualified Mortgage. Really? The day before the long weekend? Isn’t that a tell that it is less than entirely estimable? Didn’t Nixon resign on a Friday? It’s like maybe no one would notice the delivery of a long-anticipated 550 page opus which has, in its gift, the continued vitality of structured finance at large?Continue Reading Risk Retention Re-proposal: The Good, Bad, Ugly And Unintended

Here at Dechert, we have seen a slow but steady work stream over the past several years in assisting institutions in either buying or selling of pools of financial assets. Just recently, we advised Wells Fargo Bank in connection with its acquisition of a $4.5 billion performing pool of UK loans and the simultaneous financing of Lone Star’s acquisition of $1.5 billion NPL and SPL pool, all acquired from what had been Euro Hypo’s and now – Hypothekenbank Frankfurt. Needless to say, we would certainly love to see more.  Continue Reading The European Bank Loan Trade Is Not Yet Done