What we’re reading (11/9)
“Randal Quarles To Resign From Fed Board, Expanding Biden’s Options To Shape Agency” (Washington Post). “Quarles served a four-year term as the Fed’s vice chair for supervision that ran through mid-October. He was known for leading the charge to ease restrictions on the banking system put in place after the Great Recession, which was spurred by a financial crisis within the largest Wall Street banks. The banking cop role was created under the 2010 Dodd-Frank overhaul of the regulatory system.”
“CalSTRS Offers Rare Look Into How Much Pensions Pay to Invest” (Institutional Investor). “According to the report, last year CalSTRS paid, excluding incentive fees, 46.7 basis points (on its total assets), while 14 global peers paid 49.2 basis points on average. In addition, 43 pension funds general paid 61.5 basis points on average. The report tracks all expenses the pension paid to have its investments managed, including operational and other charges directly deducted from funds and carried interest — incentive fees.”
“Investors Take Aim At Private Equity’s Use Of Private Jets” (Financial Times). “Investors say they routinely find themselves billed for extra costs, such as the hiring of private jets, in addition to the standard “two and 20” — a 2 per cent annual management fee and 20 per cent performance fee — charged by the managers of private equity groups, known as general partners or GPs.”
“Chinese Junk Bond Yields Top 25% As Property-Market Strains Intensify” (Wall Street Journal). “The biggest selloff that China’s international junk-bond market has ever seen has wiped out around a third of bondholders’ wealth in just six months. The steep and rapid decline shows how regulatory curbs on borrowing, extremely dislocated credit markets, and slowing home sales have combined to pressure more Chinese property developers, which account for most of China’s high-yield issuance.”
“Wonking Out: Is The Great Resignation A Great Rethink?” (Paul Krugman, New York Times). “As [labor economist Arindrajit Dube] says, there’s considerable evidence that ‘workers at low-wage jobs [have] historically underestimated how bad their jobs are.’ When something — like, say, a deadly pandemic — forces them out of their rut, they realize what they’ve been putting up with. And because they can learn from the experience of other workers, there may be a ‘quits multiplier’ in which the decision of some workers to quit ends up inducing other workers to follow suit.
