원문 보기
i i was principally a long investor for the first 10 years of my investment career and then in 2002 i came across a company called farmer mac which is a gsc not different from not that different from fannie and freddie but that operates in the agricultural market and uh was recommended to me as a long investment something i should buy and the more i looked the more i concluded that this was a good short and uh without going into too many details i i bought a credit default swap and it turned into a profitable bet i then looked at fannie and freddie and actually in 2002 made short bets through the credit default swap market on fannie and freddie but ultimately gave up because i thought of them as sort of too big to fail but as part of that research i was looking for other companies that had triple a ratings where perhaps they didn't deserve the rating and i came across a company called mbia right which is a bond insurer and it's a company that started out in a very low risk business guaranteeing california bonds for example and uh over time what you see with financial institutions is that as markets become more competitive they're sort of forced to take on more risk to uh make their shareholders happy and the bond insurers were started out as almost cooperatives they weren't for-profit in the conventional sense but in the early 90s most of them went public and they had demands from their shareholders and management was compensated with options and they started to look for other avenues for profit and they had a aaa rating from the rating agencies so wall street sort of got a hold of them and said look you guarantee california bonds you guarantee hospital bonds why not guarantee corporate risk why not guarantee mortgages and over time they started to enter a market they knew less well and they're very leveraged companies they had what struck me when i first opened the annual report of one of these companies is they had a aaa rating he had over a hundred to one uh in leverage and that just didn't i mean didn't compute unbelievable doesn't compute right i mean we think of 30 and 40 to one is high yes and uh but you know the world up until recently was a world that believed you know the the financial markets where does that mean the world i believe um where investors would buy a bond based on its rating they'd buy a cdo they'd buy a complex security it was sort of too difficult for them to analyze and they outsourced the analysis to three companies uh the rating agencies you know moody's s p one person after another has come to this table and and just cast huge criticism at the ratings agencies yes it's all deserved it's deserved how did it come to that you know i think the reading agencies perform what amounts to almost a regulatory function you know determining the credit worthiness of a bond uh is something that the sec uses to determine the capital adequacy of an investment bank and so they got a almost sovereign like status but they were for-profit entities and uh that for-profit nature of what is a quasi-regulatory body caused them i think to push for production and you know the incentives of trying to meet next quarter's earnings can cause someone to in a competitive marketplace perhaps to sign off on a rating that wasn't deserved there was a lot of rating shopping you know an investment bank would walk into moody's and say look you know here is a risk we're looking for a triple a rating and it would be analyzed by moody's and say okay it's triple a and then the investment bank would say well what if i throw this in is it still triple a and they would say looks triple a to us what if i threw in a few more bad mortgages is it still triple a and at some point moody's would say it's no longer triple a and they say okay and then they walk across the street to s p and s p would say they'd take a look at it and if they said yes they get paid a 600 000 fee yes it's triple a if they said no they wouldn't make any money and i think so that raises the big question what's going to happen to ratings agencies i think they become a lot less relevant uh although and people have to do their own credit analysis is there any idea you can't outsource uh credit analysis it's been it's the major i mean the problem with the rating agencies is that these monikers you know the good housekeeping seal of approval of a triple-a rating has lost its value and that was exported around the world so this u.s it's almost like regulators around the world deferred to the rating agencies and that caused securities that probably shouldn't have not have been sold to spread around the world and the crisis that we're in now is largely because people took their if you think about the internet bubble when people lost a lot of money it wasn't as bad because there was no earnings well the internet bubble people were taking not their savings they needed to make mortgage payments they took their highest risk assets they knew they were taking risk when they were buying flus right you know a hundred times so to speak but people who invested in triple a obligations these cdos and asset-backed securities took their lowest risk money it was the money that banks didn't have to hold capital against it was the retiree who said i want to make sure i've got enough for my retirement and the result is you people have lost confidence because they've they took their safest most important nest egg funds they put it in stuff that's supposed to be risk-free and it turned out to be far from risk-free a couple of things one how much redemption is going on with hedge funds well a lot yeah and explain what that means uh hedge funds are not the capital isn't permanent right it's a little more permanent than a mutual fund you could call it fidelity and tomorrow you can liquidate your entire account with a hedge fund you have to give notice and it depends on the fund some funds have five-year lock-ups some have two-year lock-ups some have 90-day lock-ups and as investors have lost as in hedge funds have lost money you know this year perhaps you're right the average hedge fund might be down 20 or 25 percent investors are concerned they're looking for sources of liquidity and they put in a redemption notice to a hedge fund what that means is the manager has less money yeah it means he has to sell what he owns to make good payoff to pay back the guys for the persons which puts pressure on the market which puts pressure on funds which causes more redemptions you know a lot of people that are experiencing terrible mortgage mortgage margin calls no i actually don't hang around with people who use a lot of leverage i mean really i mean it's it's a there has been too much leverage in the system right and that's where they got caught coming out yeah in washington this week i mean i just saw this over the weekend you got four of the giants are going down yes we got from renaissance what's his name james simon simons uh the guy from citadel what's his name uh ken griffin and a couple of others yes and for the majors yes and they're gonna i guarantee you that's gonna be rough sledding for them yeah i'm sure when they get to congress i i don't think they did anything wrong i mean they made a lot of money i don't mean in particular i mean they're the ones who compete there because they they're prominent i mean i think what people what do they what do you think congress is looking for uh they're looking for a scapegoat really um but if you if you think if you look at the average mutual fund as much as the average hedge fund is done poorly uh the average mutual fund has done much worse uh people sort of demonize hedge fund managers because they tend to be well compensated perhaps overly compensated you know you throw that word around well compensated when we read these stories about people making hundreds of millions of dollars a year right i mean i know people you know it's handful that make hundreds of even a country boy like me knows a bunch of people that sure but if you look at any uh line of work the top people in the profession make a lot of money whether it's entertainment or ceos of companies uh you know the occasional author but i know not many ceos are taking a hundred million dollars home and there aren't that many hedge fund managers that take over 100 million dollars but i think the focus should be less on the manager than who they manage money for the investors are you know the carnegie halls of the world the saints luke's hospitals you know exactly the pension state pension funds and so if you i think the sec did a good job destroying most a lot of opportunistic capital by putting in place a short selling ban without notice and it caused a loss of confidence in the u.s securities markets because the rule of law you know why do you invest in the united states markets as opposed to in an emerging market because you because you have confidence the rules won't be changed well the rules were changed it caused hedge funds to lose a lot of money the most opportunistic capital in the country which is hedge fund capital has been damaged and why do you think the market has continued to decline since that point in time it's because the people who are normally be jumping in to take advantage of you know what buffett calls one of the best opportunities to invest in his lifetime is they can't they're on the defense because they're getting redemption yeah i mean this is a time of opportunity for people with money is it not absolutely it's the single best time in my career that i've seen to invest to invest money there's more value out there than you could ever imagine in terms of the spread between price and value is the widest it's been in many years 30 or more years prices are way below value yes no i mean not every case but why do i then why do i hear so many stories i am a baby in the world here about people sitting on cash cash cash cash to just sitting on it now you're saying there's tons of great investments to be made and there's a greater spread between value and price than there's ever been and yet they're sitting on cash yes a couple reasons one if you don't know how much money your investors are going to ask you for you have to put aside money to make take a conservative point of view um very few people have permanent capital mr buffett is about as the most fully invested we've ever seen him right he spent 50 billion in the last uh few months i mean it's hard to keep track right he can do that because his capital is permanent most investors in the marketplace uh mutual funds hedge funds managed account managers i mean his capital comes from money that comes into every law from businesses he owns that's right and that's unusual and so in a marketplace where your capital isn't permanent people have to be on the defensive let's talk about regulation first of all i mean take creative swaps credit default swaps are have historically been a largely unregulated part of the marketplace right and they should be regulated i think so and what else and how should they be regulated well the problem you know what's interesting is it's really the combination of the rating agencies and credit default swaps that got us into trouble the institutions that have the most have created the systemic risk if you think about them it's aig it's fannie mae it's freddie mac it's mbia it's ambac it's the bond insurers collectively what do they have in common they all had triple a ratings why did the ones with triple-a ratings cause systemic risk the answer is unlike the other participants in the market they got a free pass so for example if i buy a credit derivative i have to post collateral to goldman sachs or morgan stanley equal to the what i might have to pay goldman sachs if i had to unwind the position today and that's a very good discipline because goldman sachs is only one day away from what they could get paid if something were to happen to my firm the aaa firms were given a free pass they didn't have to post collateral so at aig they had a subsidiary in london run by a relatively small team that wrote 500 billion of this stuff and they were collecting money every quarter and the ceo was saying this is a great business i put up no capital and money just comes in the door i never pay claims the problem is they're paying a lot of claims and the problem is that now that they've been downgraded they have to post collateral but they didn't have enough money it's almost like someone writing hurricane insurance and the problem is when the hurricane hits they don't have the money okay so we know that aig has come back and asking for more money we know that as of news this week secondly you believe that fannie mae and freddie mac what's happened there yeah well it's like a band-aid yes yes so what should they have done uh i think it's pretty straightforward and i'll try to make it straightforward for your viewers but we have this great thing in america which is we have a system where it's not illegal to run out of money we have a system to reorganize companies it's called the bankruptcy system and in the case of an agency like fannie or freddie it's called conservative ship so i think secretary paulson did the right thing putting them first into conservatorship so he could reorganize the companies but he really stopped there he didn't reorganize fannie and freddie and what he should have done what he did was he said look i'll protect the debt the senior debt and subordinated that of fannie and freddie and i'll commit to fund 100 billion dollars to keep them just above solvency and the problem is he left institutions with a capital structure they couldn't support fannie and freddie have way too much debt versus the value of their assets right and what we do when you uh private business finds itself in that circumstance is the company goes into bankruptcy the equity holders get wiped out the creditors end up owning the business so if a business had a billion dollars of debt and now it can support only 500 million it comes out of bankruptcy with 500 million the creditors give up their 500 million of debt and they end up owning the company the company emerges with a balance sheet that can support its business they give equity they typically hire a new management team and they go on with life if you look at what to happen to fannie and freddie they become they became government agencies or government-run companies they're no longer traded on the exchange the equity holders the option plans for management have been wiped out they have too much debt i actually saw a story on the way over here that fannie mae put out a filing at the end of the day saying 100 billion is not going to be enough and we can only sell one-year debt and so what here's what we recommended we said look fannie and freddie have 1.6 trillion of debt outstanding what the government should do is you know number one you might want to combine fannie and freddie because they perform the same function and a lot of efficiencies in the combination so make them as efficient as possible number two take the billion six trillion six of debt and convert twenty percent of it into equity so you'd raise three hundred and twenty billion dollars and then they could re-emerge as listed companies on the stock exchange and they could go back to writing business as strong well-capitalized companies it's fannie and freddie have all the money they need the problem is too much of it is debt and too little of it is equity and you just need to restore the balance and by you wouldn't ever lend money to an insolvent company so it can pay interest to its former creditors what you would do is before you put in new equity or new investment you'd reduce the debt so it could support the debt that's what they should do and did you write a letter to secretary paulson i did more than that what did you do uh i put together a little presentation i sent it uh by email to the uh treasury secretary and the staff and uh i spoke to some officials at the federal reserve bank and at the treasury and i was actually told by one of the members of the staff that it was one of the plans that they considered seriously but ultimately opted to go with theirs so where do you think we are today i think we made progress and let me be complimentary of of the uh of our regulators i think the uh what started out as the regulators or the federal reserve and the secretary of the treasury i'd focus i'll say the federal reserve and secretary of the treasury if i focus on the tarp the 700 billion dollars that uh authorization from congress i think so far has been spent well 250 billion dollars going into some of the best banks in the country so they've got more capital to lend so that there's more confidence in your counterparty is a very important first step so i like that second thing is uh the government taking steps to cause the rate at which companies borrow to decline so the libor rate versus the the interest rates that the fed funds rate has that spread is narrowed which means that the cost of funding for businesses has come down that's a positive um so i think we've taken some positive steps i do have some concern about uh you know what you read about in the newspaper in terms of other things they're thinking about like i'm concerned about gm um and why am i concerned jim the car company yeah well i mean i guess there are reasons to be concerned but this is a very important company for the country it competes on a global marketplace it's been hamstrung for years because it has too much debt and it has contracts that are uneconomic yes it's in the healthcare business that's right and the way to solve that problem is not to lend more money to gm uh that just creates another fannie or freddie problem the way to solve that problem is to use the reorganization system of the country and i don't think okay so reorganize gm4 what should happen is they should do a pre-packaged bankruptcy uh the equity holders have been largely wiped out already uh because the stock is selling what two dollars or something yeah i think what is it it's a five four five dollar stock today it's a maybe a couple billion dollar market cap um the the debt trades at 30 cents on the dollar you could buy all of general motors for two billion dollars and you're overpaying and you're overpaying you're overpaying what they need to do is that's why nobody's bought it right what you need to do is reduce the amount of debt that general motors to a level that the company can support and the debt holders in exchange for giving up their debt claim will end up owning the business what you want is a general motors that can compete you don't want to lend government taxpayer money to an insolvent company so they can pay interest to the people who lent the money five years ago right that's not a solution to the problem i'd rather the government's money be used to retrain employees for other jobs to for infrastructure you know the welders at general motors are going to be can help on the infrastructure of the country uh that's a much better use of taxpayer money than lending money to an insolvent company so we can't be afraid the bankruptcy word scares people it's simply a system yeah and i have no economic interest either way in general motors um but i i guess for the good of the country i have an interest in general motors i'd like to see general motors have a capital structure should it merge with chrysler if that would make the company more efficient it should it's just like fannie and freddie you've got two companies that effectively perform the same function my guess is their significance forward uh you know if it makes sense i think we should we should design a great american auto company we should design an auto company that can compete on a global scale so you buy into the recapitalization program when you think the auto companies ought to be reorganized yes there's a viable business at general motors but it needs a different so it seems like what you basically are saying is that the federal government is making a mistake yes and the congress is making a mistake uh if in fact they think that just pouring money into aig or into general motors will solve the problem aig is a little different from the other two right but you have to start with once you're done with the taxpayer putting in i mean if you look at the bank bailout it was done very well because the government didn't go invest it put preferred stock in only solvent institutions right they they're not they're letting you know 17 18 banks have failed they're letting them fail because they there's no hope of rescuing should lehman brothers have been allowed to fail um it's a complicated question i would say my regret with lehman brothers is if you once bear stearns was saved the message on wall street was we're going to let shareholders die but we're going to protect counterparties as a result when lehman failed and the counterparties lost 90 cents on the dollar more money was lost in my opinion than should have been lost if the government said look we saved bear because we didn't have time to figure it out it was over a weekend they had plenty of time to know that lehman had issues and they should have let the market know this is the last you know we're not going to save every counter my impression is lima went around looking for buyers and in fact there was a south korean buyer that might have been in place for a while et cetera et cetera right apparently buffett made a proposal that was rejected and i think lehman could have been saved but uh you know i think the the management was loved their institution too much to take money on terms that thought was unfair and ultimately it cost the institution
댓글 0