What we’re reading (8/23)
“SEC Takes On Private Equity, Hedge Funds” (Wall Street Journal). “The [new] rules restrict the ability of private-equity and hedge funds to entice large investors by offering them special deals, known as side letters, for better terms than other investors. The SEC will also require private funds to provide their investors quarterly financial statements detailing their performance and expenses, and to undergo annual audits.”
“Corporate America’s Chief Critic, Carl Icahn, Gets His Comeuppance” (New York Times). “[I]n May, Mr. Icahn, 87, found out what it’s like to be on the receiving end when Nathan Anderson, a 39-year-old short seller, published a report questioning the setup at Icahn Enterprises, his publicly traded company. Mr. Anderson suggested that the company was paying shareholders a dividend it could not afford. This month, Icahn Enterprises succumbed to the pressure, slashing its dividend by half. ‘It is very, very embarrassing for Carl because this guy beat him and beat him at his own game,’ said Mark Stevens, the author of a 1993 book titled ‘King Icahn: The Biography of a Renegade Capitalist.’”
“A Deep Crisis In China Would Pose A Choice For Two Leading Powers” (Hank Paulson). “Yet all those who would celebrate China’s daunting challenges should consider the emerging risks that come with them — and be careful what they wish for. A deep crisis in China, should it come, would pose a choice for two leading powers: Can China pivot from the path that has delivered it here? And can the United States remain confident in the things that make it so much more resilient?”
“How Scary Is China’s Crisis?” (Paul Krugman). “I think we can answer a more conditional question: If China does have a 2008-style crisis, will it spill over in a major way to the rest of the world, the United States in particular? And there the answer is pretty clearly no. Big as China’s economy is, America has remarkably little financial or trade exposure to China’s problems.”
“Mark-To-Market Is Not As Simple For Banks As Is Assumed” (RealClear Markets). “Looking back to 2008, it’s no revelation that investors (feverishly trying to mark-to-market) were very skeptical about the mortgages on the books of banks. This is markets at work. Still, marking all 15-year mortgages to market at the time arguably would have been as fraudulent of an exercise as not doing so.”
