Wednesday, June 17, 2009

Financial Company Risk Accelerating

Even as the equity market tries to pretend that it can still see one or two glimmers of hope despite the resignation of even CNBC from using the green shoots term, and tries even harder to be excited at the prospect of Larry Summers soon taking over as Worldwide Regulation Czar, financial company CDS have blown out wider (both on an absolute and relative basis) over the past month. Oddly, Wells Fargo, which is facing million in foreclosed units, is considered less risky even than than the government's "most favored market maker" and Sigma X deobfuscator Goldman Sachs. Also, Ken Lewis' BofA somehow just became riskier than the house of John Mack, even with the latter's last minute TARP repayment just barely managing to avoid the PDT (lack of) bonus revolt from tearing apart the firm's prop trading operations.

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