The Economist’s Buttonwood Gathering, a conference bringing together global regulators and bankers to discuss and debate new ideas and develop a new set of guidelines moving forward, has just taken place in New York. Michael Panzer, writer of the Financial Armageddon blog and author of “Financial Armageddon: Protect Your Future from Economic Collapse”, was in attendance and has kindly shared some of the more interesting quotes on his blog, as reported below.

Secretary Tim Geithner, United States Department of the Treasury:

“Generally, we did not do enough.” (Referring to the failure to address growing concerns over excessive risk-taking in the period leading up to the financial crisis.) [Editor's note: understatement of the year?]

Stephen Roach, Chairman, Morgan Stanley Asia:

Those who are looking for a “V”-shaped recovery are in for “a rude awakening.”

“The imbalances going into the crisis were large to begin with.

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This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• John Authers (Financial Times): Financialisation genie set loose, October 7, 2009. Not long ago, there were three asset classes: stocks, bonds and cash. Some were not even sure if cash counted as an asset class. The last few decades, however, have seen the “financialization” of swathes of the world economy where prices were not previously set by markets, or at least not by markets led by the same investors who also set the prices of stocks and bonds. But financialization has led to controversy since last year’s crisis.

• Randall Forsyth (Barron’s): Away from Wall Street, credit keeps contracting, October 8, 2009. Financial markets party on Fed largesse, little of which flows to Main Street.

• Eamon Javers

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Irrespective of the fact that the stress tests were not "stressful" enough, one of their achievements was to separate the winners from the losers. Since uniform methodology was applied to all banks, the tests were probably precise on relative assessment, which is further reinforced by the TARP repayment approvals for the stronger banks, including JPMorgan Chase (JPM), Goldman Sachs Group (GS) and Morgan Stanley (MS).  The approvals also show that some other banks like Citigroup (C) and Bank of America (BAC) still need Government crutches. When the TARP was initially implemented, it was "forced" upon all the largest players so that the weakest ones did not have to suffer the bailout stigma. Since then, the markets have absorbed a lot of bad news about the weakest banks and as such the TARP repayment approvals did not ...

This morning, the head of the Congressional Oversight Panel (COP) of the TARP program, Elizabeth Warren, called for a "stress-test do-over." The reason is that the original stress test might have been based on economic assumptions that were too optimistic.This was a point that I and our banking analysts Eric Rothmann and Neena Mishra made repeatedly before the original test results were made public (and Zacks was not alone in that assessment either). I certainly agree, particularly the baseline assumptions. The more adverse scenario is what has been playing out so far, or at least the actual numbers are more in line with it than with the baseline.There were three key sets of economic assumptions that went into each stress test scenario: real GDP, unemployment and housing prices. Relative to the scenarios, the economy has been doing best on the GDP front, with an actual ...

Highlights include Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM), Morgan Stanley (MS), Citigroup Inc. (C) and Goldman Sachs Group Inc.(GS).Many of the banks want to repay the TARP funds. One of the things that the government got for its largess was warrants at each of the banks, in addition to the preferred stock (at a rate well below market -- a sweet deal that meant that we the taxpayers were immediately in the hole to the tune of $76 billion on the first $350 billion doled out, according to Elizabeth Warren, the head of the Congressional oversight panel for TARP). A warrant is like a long-dated option contract. Bloomberg has this little tidbit:"Banks negotiating to reclaim stock warrants they granted in return for Troubled Asset Relief Program (TARP) money may shortchange ...

Highlights include Visa, Inc. (V), MasterCard, Inc. (MA), American Express Co. (AXP), Capital One Financial Corp. (COF) and Bank of America Corp. (BAC).Oh Great -- Potentially Another Government AgencyBased on Treasury Secretary Timothy Geithner's comments that extensive changes are needed to see that the current financial crisis (arguably the worst in past 50 years) never is revisited, it appears that the Obama Administration is considering the concept of creating a new agency to focus on consumer financial products such as credit card, mortgages, mutual funds and 401K programs from such companies as but not limited to Visa, Inc. (V), MasterCard (MA), American Express (AXP), Capital One (COF) and Bank of America (BAC).We have long agreed with Elizabeth Warren, head of the Congressional Oversight Panel (Troubled Asset Relief Program), in her argument that the government ...

A batch of gloomy economic reports during the past few days suggested that recent optimism about a global recovery might have been premature. This caused Doug Kass to warn that “stock prices have moved ahead of fundamentals” and Kenneth Langone to caution that “investors seem to be getting ahead of themselves”, although he maintained that the long-term outlook on the market was positive.

Big banks across the US announced large common stock offerings and plans to repay the government, and the US administration attempted to bring transparency to the credit derivatives markets and also crack down on the credit card industry.

In addition to Kass and Langone, commentators featured on camera in this post include Elizabeth Warren, Meredith Whitney, Alan Greenspan, Peter Boockvar, Giles Keating, Jim Rogers, Barry Ritholtz, Dennis Gartman, Abby Cohen, Peter Eliades and Laszlo Birinyi.

The

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Bank of America Corp. (BAC) and Citigroup Inc. (C) were told by federal regulators to raise more capital after government “stress tests” revealed that the banks were not adequately protected against additional deterioration in the economy, published reports said yesterday.

Officials insist that neither Bank of America nor Citigroup should be viewed as insolvent, but people familiar with the situation told The Wall Street Journal that the capital shortfall amounts to billions of dollars at BofA. It is not clear how much of a shortfall Citigroup faces.

Analysts anticipate that some regional banks also will be required to raise more capital.

Banks that need more capital will have six months to accumulate the additional infusions by selling assets, selling more shares, or converting preferred government shares into common stock. If they are unable to build their capital through public and private sectors, the banks may again dip into taxpayer-funded government coffers.

Bank of America

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The bank stress test of the nation’s 19-largest financial institutions is a flawed exercise that threatens to elevate the very economic-system stress it was designed to relieve. The U.S. Treasury Department isn’t scheduled to release the results of the much-ballyhooed bank stress tests until Monday. Little has been revealed so far, but one fact seems certain: Whatever information is disclosed is likely to be either too much - or even more likely - not enough for analysts, investors and the public to determine the soundness of a banking system upon which the nation’s economic growth is predicated. We’re already starting to see bits and pieces leak into the public domain. And the response hasn’t been positive. Although the tests reportedly concluded that only one of the 19 banks that received a stress test would require additional ...

The video clips below come via my hotel room at Dana Point, California, where I am attending a conference hosted by Rob Arnott’s Research Affiliates. Also present are financial luminaries such as Peter Bernstein, Burton Malkiel, Harry Markowitz and Jack Treynor. It will be fascinating to hear whether these gentlemen see any signs of the economy starting to bottom, and how they are investing at this juncture.

On the video front, the IMF upped its forecast of total global credit crisis-related losses to $4.1 trillion by the end of 2010 and the Congressional Oversight Panel on Tarp conducted a hearing on Capitol Hill, whereas a host of commentators - including Martin Feldstein, Joseph Stiglitz, Nouriel Roubini, Frederic Mishkin, Paul McCulley and John Mauldin - weighed in with a combination of gloomy and “bottom-in-sight” economic forecasts, as well as comments on the imminent results of the

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