A conversation about the economy with Bill Ackman, major investor and hedge fund manager of Pershing Square Capital Management LP, Kate Kelly, Andrew Ross Sorkin and Joe Stiglitz, economist and a member of Columbia University faculty
Stiglitz has a great line “They’ve (policy makers) confused the notion of too big to fail with too big to financially reorganize”.
Go to the 9 minute mark as Ackman talks about how to fix the bank problem. How many billions have we wasted? How many?
Disclosure (“none” means no position):
One reply on “Bill Ackman on Charlie Rose 4/24 (video)”
I’d make 2 points: 1) It seems incongruent that the panel would recommend banks be restricted to making long-term loans to consumers/businesses and yet at the same time call for the “toxic” loans that are just this kind of long-term, hold to maturity loan, to be marked to market based upon trades that are speculative bets by hedgefunds which are demanding a high expectation of return and therefore, low prices. 2) If the problem with valuing the banks is the difficult task of valuing the “legacy” assets, then isn’t pricing a debt for equity swap just another layer of complexity? I’d suggest that higher capital requirements, especially for the larger sized institutions, by a date of say 2012 would allow these institutions to right-size themselves, and either earn or raise the capital they need.