Wednesday on The Takeaway, Wall Street and Finance reporter for The New York Times, Louise Story mentioned the existence of something called a "cat bond." How do catastrophe bonds work? Essentially, these bonds are packages of insurance risks and it's a complex market, says Louise Story. As weather events get worse and more risky, the insurance companies are wiling to pass along this risk to the investors. However, when the market get too big and the risks get too high, will we see something akin to the mortgage market bust?
The crisis in Japan has finally hit home for stock markets around the world. Investors are concerned that electronics manufacturers, who import chips from Japan could be affected by lapses in the supply chain. Two of Japan's top companies, Honda and Toyota have halted production at their Japanese plants and Detroit is highly dependent on parts from Japan. At the same time, the disaster in Japan has raised questions about the energy industry here in the United States.
"The stock markets don't wait very long to react," says The New York Times Wall Street and finance correspondent, Louise Story. And already stock markets are down, following this morning's earthquake and tsunami. Currently, there is much uncertainty surrounding oil prices, following unrest in the Middle East. Japan has its hands in the oil market as well.
The Securities and Exchange Commission has received criticism for its incompetence in catching Bernie Madoff's Ponzi scheme, and now it faces an investigation in Congress. The House Committee on Oversight and Government Reform will be calling in two key SEC players for a thorough grilling. David Becker, former general counsel for the SEC will have to answer questions regarding his involvement with Madoff as an investor, and SEC Chairman Mary Schapiro will have to answer why she allowed Becker to work on Madoff matters. Did the SEC have a conflict of interest in dealing with Madoff?
Debit card "swipe fees" were one way that banks made billions of dollars a year. These fees were paid by retailers every time you used your debit card. In the aftermath of the financial crisis, Congress cut these fees significantly, to the great relief of merchants across the country. The Fed is now facing an April deadline to write the rules for the current lower fees, and banks are waging a war to try to reverse these cuts. Louise Story, Wall Street and finance reporter for The New York Times, explains how new rules could impact you as a consumer.
The dot com bubble of the 1990s was marked by a “growth-over-profits” mentality. During that period, Web entrepreneurs made “free-money” selling popular, but hugely over-valued dot coms in initial public offerings to people who either didn’t understand or didn’t care that these businesses were never going to turn an actual profit. Today, websites like Facebook, Twitter and Pandora are each valued in the billions (and tens of billions), and are expected to go public soon. Is history repeating itself; and if so, should we be worried about a second (or is it third?) dot com bubble?
For the first time in 15 years, more banks closed than opened in 2010. Looking closer into the numbers shows that the majority of banks that closed were located in poor areas, whereas, most new banks opened in wealthier areas. The New York Times Wall Street and finance reporter Louise Story has the details.
The political turmoil in Libya has led to a spike in oil prices and jittery markets. So far American investors have not been affected by the tumult, but if oil becomes limited, this could change. Libya exports 1.5 million barrels of oil a day and there has been concern as international companies have begun evacuating employees. There is fear that if oil prices continue to rise, Americans will feel it at the gas pump. Louise Story, Wall Street and finance reporter for The New York Times explains how the markets may react.
How much is a human life worth? Could you hazard a guess at the federal government's answer? Try $8 million, give or take a couple, depending on the agency that's coming up with the figure. An article published by The New York Times about the process of setting the value of a human life caught our interest. The government must have a system in place to come up with this number, so it can set safety regulations for businesses. But each agency seems to have a different formula for coming up with the figure.
In his first interview from prison, Bernie Madoff insisted that banks and hedgefunds were complicit in actions leading up to his arrest and that his family didn't know anything about his crimes. Madoff's ponzi scheme spanned 16 years and cost investors $20 billion in cash and over $60 billion in paper losses. He spoke to Diana Henriques of The New York Times. He looked "noticeably thinner and rumpled in khaki prison garb," she writes.
Wall Street bankers allegedly profited from the many mortgage loans that began to sour back in 2008, in some cases possibly pocketing money that was collected on the mortgages. Louise Story, Wall Street and finance reporter for The New York Times, examines this theory, which surfaced in a recently unsealed lawsuit against a mortgage unit at Bear Stearns. She follows a money trail that seems to lead back to some shady action on Wall Street.
The death of Fannie Mae and Freddie Mac has been a long time in the making. For the past four decades the way homes have been financed in this country has been dictated by a kind of public-private partnership. Fannie and Freddie bought mortgages from banks and sold them to investors in the form of securities. The system worked because the government implied that if homeowners defaulted, the government would be there to bail those loans out. In 2008 the government essentially did that during the housing crisis. But now the two companies are political untouchable.
Lawmakers affiliated with the Tea Party joined with Democrats to block the passage of an extension of the U.S.A. Patriot Act. The bill extended three key parts of the Patriot Act: authorizing "roving wiretaps"; allowing agencies to collect "tangible intelligence" domestically; and the ability to surveil individuas not necessarily affiliated with a known terrorist organization.
Americans have started buying again; this past December, they pulled out their credit cards, and charged their holiday gifts. There's currently $800 billion on credit cards. This may be good for the economy, but it is it good for your wallet?
New data this week from the analysis group Hedgeye shows that some of our favorite breakfast items like orange juice and coffee are rising in cost so much that they could be considered “luxury items.” Some are blaming U.S. monetary policy for this inflation, but our guest Louise Story from our partner The New York Times says it’s more complicated than that. This story, she says, is a little bit global warming, a little bit economic recovery, a little bit politics.
Oil prices have been floating around $90 a barrel for weeks, but now, the turmoil in Egypt has pushed the price up. Crude oil jumped close to 4% on Friday and then 3.2% yesterday to settle at $92.19 a barrel. However, the output of crude hasn’t changed in the region, so what exactly explains the sharp rise in prices?
Credit rating agencies took some bold steps on Thursday, downgrading growth forecasts and cutting debt ratings both in the U.S. and abroad. Moody's Investors Service announced Thursday they will begin to take unfunded pension debt into account when formulating states' credit ratings — a move that could have a debilitating affect on struggling states. On the same day, Fitch Ratings cut their growth forecast for Tunisia by two percent in light of domestic political upheaval that has swept across the Middle East, and Standard and Poor's downgraded Japan's long-term government debt for the first time since 2002. What does this mean for countries, states, and the international economy?
We’ve talked a lot about states’ budget crises on The Takeaway. Yesterday we discussed legislation that would allow states to declare bankruptcy. Many state policymakers blame their financial woes on public employees and their expensive pension plans. Utah was in the same boat — until the state legislature enacted sweeping reforms, changing public pensions to private 401(k)s. Will this become law in other states? How will privatizing pensions affect state employees and taxpayers?
A dip in housing prices is causing concerns that we might be headed for a double-dip in the market this spring. Louise Story, Wall Street and Finance Reporter for The New York Times, says the latest housing numbers out by the Case-Shiller Index raises more questions than answers about the housing market in the near term.
The Obama administration is weighing a decision that could fundamentally change the way Americans buy houses. Wells Fargo, JPMorgan Chase and other large banks are pressing the Treasury Department to allow private companies to bundle individual mortgages into securities, which the government would guarantee. Should this very public role be given to big banks? Should tax-payers be on the hook for guaranteeing mortgages?