All Articles Finance Modern Money While You Were Working - April 16

While You Were Working – April 16

Trumps taps Clarida, Bowman for Fed, Trouble in the tea leaves, BAML flirts with Collins floor, the Blackstone-BlackRock divide, and logo fun at VW

3 min read

Modern Money

Senator Susan Collins

Sen. Susan Collins of Maine; she of effective financial regulation. (Alex Wong/Getty Images)

Trump tapped Clarida, Bowman for Fed Board of Governors

To the surprise of almost no one, President Trump has nominated PIMCO Managing Director Richard Clarida and Michelle “Miki” Bowman to fill two spots on the Federal Reserve Board of Governors.

Clarida would fill the powerful vice chair spot, while Bowman – who if my inbox is any indication, enjoys the speedy and emphatic support of the Independent Community Bankers of America – would fill a spot that is reserved for someone with experience in … well … community banking.

Trouble in the tea leaves?

As someone literally tracks financial news for a living, I can say with absolute certainty that there is a growing chorus of voices out there warning that the end is nigh for the good times that various corners of the global economy have enjoyed for the last number of years.

Today’s Exhibit A: PIMCO’s Joachim Fels warns that investor need to be preparing for a long period of volatility.

Today’s Exhibit B: This WSJ piece ponders what happens next if the strong tailwinds that have powered banks turn to a gentle breeze or cease entirely.

Buckle up everyone.

On BAML, risk-weighted assets and the Collins floor

This is a great look at the narrowing gap between Bank of America Merrill Lynch’s internal model-calculated risk-weighted assets and the level dictated by the Basel Committee’s standardized approach. The standardized approach levels are the most important element in what is known as the “Collins floor.” If a bank’s own numbers fall below the standardized floor, the bank has to chuck out its own calculations and adhere to the standardized floor.

I am a big fan of the Collins floor because it was added as an amendment to Dodd-Frank (by the eponymous Senator Susan Collins of Maine) to prevent banks from gaming their own calculations so dramatically that they pushed below a reasonable floor of reality. In other words, the Collins floor is an example of a specific financial regulation that is doing exactly what it was supposed to do.

Deep dive on the Larry Fink-Stephen Schwarzman divide

Bloomberg shed some light on the different paths BlackRock boss Larry Fink and Blackstone boss Stephen Schwarzman have taken since the Rock was carved out of the Stone. I gotta admit, the biggest surprise for me in the entire article is that Fink has just recently reached billionaire status. I kinda thought he joined that club long ago.

Yep, because the logo is the problem at VW

Volkswagen is rather keen to get out from under the shadow of its emissions testing scandal. And apparently someone in VW’s marketing department has decided that a new logo must be part of the revamp. I particularly enjoy the timeline of new logos that is captured in the Bloomberg article. Is there really a major difference between the “new” logos of 1996, 2000 and 2012? I don’t think so either.

VW has real problems that demand real change; and the logo isn’t one of them. The sad thing is that silly logo changes like this cost real money. Sometimes costs can stretch into the millions. Perhaps VW should spend its money fixing some of its real problems.

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