Loans

India’s bad loans get halfway house to bankruptcy

15 Jun 2016

The country’s central bank is giving lenders more flexibility to restructure troubled credits. Swapping some debt for equity gives them a better chance of rescuing viable businesses. The stop-gap is necessary because it will be several years until a new bankruptcy law kicks in.

Lending Club sale makes sense – to someone else

8 Jun 2016

Renaud Laplanche is considering a bid for the $1.5 bln marketplace lender he founded. Going private or being absorbed into a bigger company may be the best way forward at this point for embattled Lending Club. The man who caused the crisis, however, probably isn’t the one to fix it.

Senator’s Fannie Mae short tip had better pay off

8 Oct 2015

Bob Corker, a critic of the mortgage finance firm and its sibling, offered the highly unusual investment advice in a TV interview. Hedge funds want to keep Fannie and Freddie Mac alive, while Corker wants Congress to enact belated reforms. Sadly, his proposed bet is no certainty.

One of America’s best-run banks curiously kowtows

11 Jun 2015

U.S. Bancorp, the nation’s fifth-largest lender, is cranking up in big mortgages. CEO Richard Davis admits it’s merely to please shareholders hungry for loan growth, even if it’ll fall short of the bank’s 15 pct return of equity. Though small, such pandering can presage a crisis.

Trust Citi to win from losing most profitable unit

3 Mar 2015

The U.S. mega-bank has at last offloaded OneMain to rival Springleaf for $4.25 bln. The subprime unit’s 6.7 pct return on assets far exceeds anything else at Citi. And yet the deal provides a one-off income boost, frees up capital, accesses tax breaks and removes a distraction.

Bakries down but not out in $3.6 bln debt rejig

17 Dec 2014

The Indonesian family can no longer ignore the debt problem at Bumi Resources. Weak coal prices make the equity look almost worthless and creditors, including China’s CIC, face a big haircut. However, the powerful Bakries may still emerge on top – as they have before.

Ivory tower beats market to U.S. mortgage fix

17 Sep 2014

Academics at the AEI, a free-market think tank, have hit on what may be a simple solution to the nation’s home-loan morass: replace the 30-year mortgage with a 15-year product that quickly gets borrowers’ skin in the game. Even BofA and an affordable housing advocate support it.

Value of college in U.S. is far from a no-brainer

16 Sep 2014

Despite higher university enrollment, wages are falling for young Americans. Research from the New York Fed shows higher education isn’t always a good investment. Some degree programs aren’t paying off. Loading up on debt to pay soaring tuition fees is riskier than it seems.

LendingClub IPO mixes disruption with confusion

4 Sep 2014

The peer-to-peer lender is growing fast, with fans ranging from John Mack to Larry Summers to Google. But it’s struggling to turn a profit, lacks some advantages of traditional banks and has yet to be tested by an economic slump. Investors need to know whether it’s fish or fowl.

U.S. banks face lurch from recovery to recession

22 Jul 2014

Lending at the likes of PNC and U.S. Bancorp is up, and less cash is needed against bad loans. But low interest rates are keeping returns tepid. That raises the risk some may cut corners. It also means there may be no big earnings boom before the economy slows again.

Buyout barons make a tricky target for Carney

8 Jul 2014

The Bank of England governor could follow U.S. authorities in limiting the debt ratios for loans backing leveraged buyouts. The sentiment is noble, and the American model could be adapted. But taming animal spirits is hard when markets are global and banks’ influence is waning.

Edward Hadas: The stupidity of student debt

2 Jul 2014

Education loans keep growing in the U.S. and the UK. The new reliance on debt is financially dangerous and shows weak economic thinking. The sensible way to fund the social good of higher education is pay-as-you-go: with affordable tuition, donations and government money.

Obama student loan fix spares rod, spoils borrower

9 Jun 2014

Extending repayment caps and debt forgiveness to older graduates gives too many high earners a break. Making everyone pay a flat percentage of income would be simpler, fairer – and cheaper for taxpayers. It could also deliver a valuable lesson in financial responsibility.

Playing nice starts to pay off for Argentina

29 May 2014

The country has added a deal with some creditors from its 2002 default to its recent settlement with Repsol. Its export credit market can now reopen, raising much-needed cash. Selling international debt would raise more – but requires resolving its remaining bondholder lawsuit.

Fannie, Freddie overlord sets back mortgage reform

13 May 2014

New housing finance watchdog Mel Watt is reversing his predecessor’s plans to shrink the U.S. government giants. That means Uncle Sam will probably stay on the hook for 90 pct of new home loans. Profits will remain high as a result, complicating Congress’ efforts for reform.

Fannie investors may be using magic calculators

12 Mar 2014

 The latest plan to wind down the U.S. mortgage giant tanked its volatile stock. Some hedge funds still want to revitalize the business. Trouble is, even kind assumptions suggest Fannie isn’t worth enough for shareholders to get anything back – unless Uncle Sam is crazy generous.

Securitisation muzzling does more harm than good

17 Feb 2014

Over-egging the practice of repackaging loans as bonds helped cause the 2008 crisis. Yet supervisors keen to avoid a repeat are loading investors in asset-backed debt with excessive capital charges. Smart firms may find workarounds, but the reforms hamper a key source of credit.

New U.S. mortgage bubble index is worth watching

19 Dec 2013

Many people thought the last U.S. housing boom was unsustainable – but couldn’t prove it. Metrics created by a Washington think tank could help spot the next round of home loan excesses as they emerge. It may repay investors and regulators to keep the new data on their checklists.

Pain of China’s rising rates is well hidden

12 Dec 2013

Banks are paying more for their funding; so are borrowers in the bond market. Yet that’s not stopping credit from growing twice as fast as GDP. It shows how far China still is from having a properly market-driven monetary system.

New U.S. mortgage supremo set to be step backwards

26 Nov 2013

Congressman Mel Watt is President Barack Obama’s pick to be Fannie Mae and Freddie Mac’s new regulatory overlord. Last week’s Senate rule change makes him a shoo-in. But with no experience, clear political bias and campaign cash from both companies, he’s a bad choice all round.