The Institutional Risk Analyst

Why is FHFA Director Bill Pulte being excluded from the process of preparing the GSEs for release from conservatorship? Short answer is that Bessent and the professional staff at Treasury don’t think that the very high profile Pulte (aka "Little Trump") should be involved. But this may be a serious error in judgment by Scott Bessent.

If we were to select one characteristic that describes the financial markets today it would be confirmation bias. The human tendency to interpret new evidence as confirmation of one's existing beliefs or theories is among the most powerful and dangerous trends in financial markets, especially when the predominant passive investment strategies favor a net-long position. Nowhere is confirmation bias more apparent than the market for private-equity backed IPOs. 

If the Powell FOMC crashes the short-term markets, again, because the Board staff mismanages the required level of liquidity, Powell will need to resign same day but the real loser will be the Trump Administration.  Neither the public nor members of Congress will understand who caused the latest market upset, but they will be happy to blame Donald Trump and members of his team.

The largest bank loan portfolio increases reported by the FDIC were in loans to non-depository financial institutions and broker-dealer loans to purchase or carry securities, including margin loans. This situation is inherently unstable.

As and when the home price correction finally arrives ~ 2028, many of the conventional loans written since 2020 are likely to be underwater vs the collateral.  The GSEs will be looking for reasons to reject loans. After all, FHFA Director Bill Pulte is in the loan insurance business.

Margin credit in the US reached a new peak last week, FINRA reports. As of the second quarter of 2025, total margin loans in the United States reached a record high of $1.008 trillion vs just $850 billion in April. 

The prospect of Zohran Mamdani becoming Mayor of NYC and the rise of other socialist elements in the Democratic Party means that owners of New York real estate are facing effective expropriation of their property.  And the real losers are New York consumers.

Owners of crypto tokens hold nothing except an option to sell their flutter to a greater fool. The real worry for the future is that another financial debacle — à la FTX — where crypto was revealed to be pure fraud will surprise the markets as burned punters flee their speculations. The fact that crypto prices are increasingly being supported by stock issuance and schemes like perpetual futures contracts (Perps) suggests the end of the game is nigh.

Michael brings a ground level view of the brave world of new media and narrates the slow-motion consolidation of streaming as a business model for large public media companies. Our readers will recall that Michael predicted this very outcome eight years ago -- before COVID in 2017 (“The Economics of Content: Michael Whalen”).

SOFI is up almost 300% while the Bitcoin futures traded on the Chicago Mercantile Exchange are up less than 100%.  Below we provide some thoughts on the banking group as we head into September. 

The $30 billion target for cash raised in a GSE IPO is pathetic and only confirms our view that the Treasury should repurchase the GSE voting common and issue new preferred to raise hundreds of billions in proceeds. If we keep the US Treasury as the majority common shareholder and finance the capital structure with new senior preferred, the Trump Administration could raise $500 billion easily.

Suffice to say that while the economy may be showing signs of growing stress, the bid for risk assets and particularly income-producing assets remains quite brisk. There are literally dozens of nonbank issuers accessing the debt markets well-below double digit yields.

The number of very late people running into Bitcoin and other tokens over the past year only makes us realize that there is nothing new in the world of finance. Had Jim Fisk and Jay Gould traded crypto tokens like Bitcoin over the past decade, they'd have gotten out in 2013.

The public mania around stable coins is the latest evidence that humans are incapable of making rational decisions when they are part of a crowd. Long-term, we should view stable coins as marketing tools for large advertisers to acquire and retain customers.

When Pinnacle Financial Partners, Inc. (PNFP) announced an all-stock transaction last week to acquire Synovus Financial Corp. (SNV), we were unimpressed. The markets sold off on the news and there then followed a series of stock downgrades and credit rating agency actions that were disconcerting to put it mildly. 

In an earlier issue of The IRA, we noted that one reason that the GSE shares may be suffering is that the Trump Administration is apparently wrestling with how to take Fannie Mae and Freddie Mac out of conservatorship.

Whalen Global Advisors LLC (WGA) has published the latest edition of the WGA Top 50 Banks, the fifty top performing large commercial banks in the US. Drawn from the members of Peer Group 1 and other sources, WGA screens the group based upon five proprietary measures of financial and market performance.

Citi has grown corporate loans 10% to $330 million at the end of Q2 2025. In fact, Citi increased its full-year net interest income guidance and raised its revenue forecast to the high end of its previous range. Citi saw assets and NII grow in 2025, but efficiency remained in the low 60s, a tangible indication that Fraser is making progress.

Why is Secretary Bessent talking publicly about Powell or the Fed at all? How does this squawking enhance the credibility of the Trump Administration or the U.S. Treasury?

Smaller issuers of stable coins will soon be competing with Verizon (VZN) and JPMorgan (JPM), while platforms offering turnkey coin solutions will multiply like Lantern Flies.