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Corporate & Securities Law

Business Law Prof Blog

Business law resources, information, and news for the academic community

Post Frequency: 11.8/day

Last Entry: April 01, 2011 at 11:04:42

Auto Company Bailouts: How??

Posted on November 10, 2008
The big three American automobile companies are showing substantial operating loses. GM is losing $1 billion or more a month. How does a capital injection help? The companies will just burn through the cash (using it to pay labor or...

The AIG Bailout: A Mess

Posted on November 10, 2008
The AIG bailout is a mess. The government has had to restructure its current outstanding $120 billion loan (extending repayment and lowering the interest rate), to add a $40 billion equity infusion. and to buy around $50 billion of toxic...

Fannie Mae Loses $29 billion in 3rd Quarter

Posted on November 10, 2008
Fannie Mae reported a 3rd quarter loss of $29 billion. The three month loss was larger than the total profits the company had earned from 2002 to 2006. Under fair value accounting, Fannie Mae has a capital deficit (it is...

First Obama Press Conference

Posted on November 07, 2008
President Elect Obama started his press conference at 252 with stock trading over 220 points higher on the DJIA. By the time he was finished the Index has dropped to 110 points or so, the majority of the drop occurring...

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How Taxes Work

Posted on November 06, 2008
Making the rounds of the Internet: "How Taxes Work . . . This is a very simple way to understand the tax laws. Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out...

Democrats Want to Outlaw "Excessive" Risk Taking

Posted on November 06, 2008
Democrats in Congress, Barney Frank, Charles Schumer, Nancy Pelosi and others, want to have an "overarching" regulatory authority to, in essence, regulate "excessive" risk-taking, whatever that is. The authority will tell private actors in the financial industry how much risk...

New York Times Business Section: Written by Trial Lawyers

Posted on November 06, 2008
On Wednesday, B-1 headline "Strongest Election Day Stock Rally in 24 Years." On Tuesday, B-7 headline, "Stock Fall as Service Industries Weaken." 1st paragraph mentions Tuesday's rally. Third to last paragraph, "for those curious" mentions that Wednesday's decline fits within...

A Zany Bailout: Take the Money, on the House, Pleeease ....

Posted on November 03, 2008
I am the only one that thinks the TARP program is zany. Paulson calls in nine major banks and forces them to take bailout money, $25 billion apiece. Some of the banks object: "We do not need it." Paulson pleads...

The Baby Boomers: The Shallowest Generation

Posted on November 03, 2008
See an excellent piece on baby boomers. http://seekingalpha.com/article/103202-the-shallowest-generation?source=article_sb_popular This is my generation and this fellow is largely correct. We spend now and pay later. We are not dead yet (and when we are, books will be written on us that...

Nassim Nicholas Taleb: the Black Swan

Posted on November 03, 2008
You have to love this guy. He writes a book, the Black Swan, that is readable and puts forth a trading market strategy. He also puts his cash in his strategy, managing a hedge fund. His ship has come in....

Private Equity as a Punching Bag

Posted on November 03, 2008
The New York Times as a front page story on private equity buyout deals. Andrew Sorkin and Michael de la Merced, "As Bills from Huge Buyouts Come Due, Economy Faces a Blow." You can almost feel the glee in the...

Kicking a Man When Down: Edward Hadas

Posted on November 03, 2008
Edward Hadas "piles on" in todays New York Times. "Less Finance May Be Just Fine." Finance employees out of work will be thrilled to read that they were social baggage anyway and should take up careers in "industry, education or...

GM Does Not Receive Government Cash for Chrysler Deal

Posted on November 03, 2008
Days after the United States auto makers announced 30 year sales lows for the last quarter, the government refused to give General Motors $10 billion in cash or guarantees to help the company purchase Chrysler. Paulson did not want to...

Lehman Bankruptcy and the Presidential Race

Posted on October 31, 2008
John McCain was up in the most of the polls (and the Intrade markets) the weekend before Lehman declared bankruptcy on Sept. 15, 2008. After the bankruptcy of Lehman, McCain has trailed in every poll ever since. The economy soured...

Bank Bailout Compensation Limit Problems

Posted on October 31, 2008
The bank bailout bill bans severance payments to bank executives over 3 time salary and puts vague limits on salary. Yet the banks covered are under a contractual obligation for "billions" to their executives. See "Banks Owe Billion to Executives,"...

Commerical Paper Market Recovering

Posted on October 30, 2008
The Fed program to guarantee commerical paper, one of the few government programs I support, is having a positive effect.

The Early Results of the Government Bailout: Classic Complaints

Posted on October 30, 2008
An amazing combination of stories today show already show problems with government bailout money that, I suggest, we will see repeated over and over for the next decade. 1) The Cash is Lost. See "Where Did the Cash Go?" by...

3rd Quarter GDP Estimates Slightly Negative

Posted on October 30, 2008
Estimates of the 3rd Quarter GDP figures show a decline of .3%. If 4th Quarter GDP figures are negative were are in a recession, starting at the beginning of the 3rd Quarter (July 1). Estimates change, however. The 1st Quarter...

US Steel??

Posted on October 28, 2008
US Steel (X) announced its 3rd quarter profits tripled from last year. The stock fell to 28 dollars a share, 3 times earnings. It is exhibit A in the case for the total zaniness of the stock market.

Dynegy Agrees to Environmental Disclosures

Posted on October 28, 2008
Dynegy is the second company to negotiate a settlement with the Attorney General of New York, Cuomo, that includes a promise to include environmental disclosures in its Form 10-K filings (annual report). Cuomo issued subpoenas to four companies under a...

Ohio Banks

Posted on October 27, 2008
This morning we learned that two Ohio banks recieved bailout money, Hunnington and Key City, while two others have not, Fifth Third and National City. The refusal drove National City into the arms of PNC. What do not know what...

Avoiding the Compensation Limits in the Bailout Bill

Posted on October 25, 2008
The PNC acquisition of National City provides yet another means of avoiding the prohibition on golden parachute payments to executives in banks that get government bailout money. The National City executives will get healthy golden parachutes because the bailout money...

Government's Role in the National City Deal

Posted on October 25, 2008
We now have discovered that the government, in this case John Dugan in the Office of the Comptroller of the Currency, is forcing bank deals with the selective granting and withholding of promises to get government bailout money. He promised...

Professor Says We Will Have to Close Securities Markets

Posted on October 24, 2008
A professor from New York, Nouriel Roubini, once a senior advisor to Treasury, in a talk in London at a conference on hedge funds has stated that hedge funds will start to crumble as cash-strapped investors demand redemptions. Once the...

PNC to buy National City with Your Money

Posted on October 24, 2008
PNC said it would sell $7.7 billion preferred shares to the government and then announced it would buy National City for $5.2 billion in stock. The acquisition was a "take-under"; the value of the PNC shares exhcanged for National City...

New York Times is Junk

Posted on October 24, 2008
Not the reporting, its debt. S&P downgraded the companies bonds to BB-, junk. The bonds can no longer be held by funds that must hold "investment grade" securities.

Character Comes Out In Times of Trouble

Posted on October 23, 2008
China has started to allow short selling in its markets; the UK has extended the ban on short selling. The leader of Argentina has nationalized all private pension plans. The Democratics want to spend $300 billion, that we must borrow...

Paulson Should Go

Posted on October 23, 2008
Can anyone, after reading the front page story in today's New York Times on Paulson, not believe that Paulson should be fired? He is now spending time, in the middle of a crisis, recasting history to protect his reputation.

Bush's Bailout Justification

Posted on October 21, 2008
President Bush noted, in a speech Monday, that "we would get our money back." True enough. When the government sells bonds at 3.5 percent and buy preferred stock at 5 percent for five years (and then ten percent thereafter), the...

Paulsen's Plans

Posted on October 21, 2008
Paulsen's purpose in giving money to the banks is to encourage banks to lend money to others. The problem? The mechanics of the grant. The government is buying preferred stock and warrants with cash and has no managment authority. Banks...

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