August 15, 2008 11:17

Jeff Howe will crowdsource for fly fishing

And that's interesting because he's the one who coined the word crowdsourcing in the first place. In Wired magazine two years ago, he described how companies are harnessing big groups of people, like customers or the broader Internet-using public, to come up with marketing campaigns, solve tough R&D; problems, even gin up ideas for new products. Wikipedia is crowdsourcing. So is iStockphoto, where anyone—amateur photographer or professional—can upload pictures to sell to publications.

It's akin to those pervasive twin concepts collective intelligence and wisdom of crowds, but less of an intellectual framework and more of an empirical description of how economic output is created, and money made, by tapping the crowd.

Now, like all great journalists, Howe has turned the concept into a book. He stopped by to chat, and I grabbed a little video. (Thanks, Caitlin, for editing.)

Barbara!

August 14, 2008 3:47

Freddie Mac says no more subprime from New York. New York not surprised

When Freddie Mac said that it would no longer buy subprime loans from New York because of a new homeowner-protection law there, I put in a call to Richard Neiman, superintendent of the New York State Banking Department. I thought to call him because just the week before we'd been talking about all the good things that new law is supposed to do, like getting rid of prepayment penalties and requiring lenders to make sure borrowers have a reasonable shot of paying back their loans.

One of the things we talked about was how, in this sort of environment, regulators and legislators need to balance consumer protection with preserving liquidity in the secondary mortgage market—that thing that helps more people get loans. Freddie Mac, which with Fannie Mae owns or guarantees 42% of the U.S. home loan market, said it would no longer buy subprimes from New York because the new law "creates the potential for heightened legal and business risk exposures for the purchasers or assignees of these loans." I thought Housing Wire did good job capturing how this new law was a missed opportunity for reflection on the trade-off: "Apparently, nobody asked Freddie (and likely Fannie) for their opinion on the new law before it was passed."

Except that they did. Freddie never said explicitly, but New York figured this sort of thing might happen. As more states gear up for legislation, it's an interesting data point on what sorts of decisions might be made. You can listen to my conversation with Richard Neiman by clicking on this icon:

August 13, 2008 2:29

The case against retirement

Christine Fahlund, a senior financial planner at investment manager T. Rowe Price, stopped by and shared a cool chart showing how much more money you get in retirement if you keep working for even just a few more years. It wasn't the first time she's had this conversation, but I still thought it was interesting—perhaps even useful?—enough to post. First I'll give you the chart, and then after the break I'll talk a little more about it (just click on "Read full entry").

August 12, 2008 5:08

Is universal banking over? Should it be?

UBS, which is among the banks most battered by the credit crunch, said today that it would separate its flailing investment bank from its lucrative business of managing money for rich people, and, adding in its asset management arm, now exist as three autonomous divisions. Writing down more than $42 billion in assets over the course of a year and watching $16 billion in client money get yanked in a single quarter are the sorts of things that make you go back and rethink your business model.

In UBS's case that rethink has led to the conclusion that the concept of universal banking—having retail banking, investment banking, wealth management, mortgage lending, and fund management all under one roof—is not such a good idea. "Our review has clearly revealed the weaknesses associated with the integrated 'one firm' business model," UBS chairman Peter Kurer said. Deal Journal, over at WSJ.com, argues that UBS isn't the best test of whether universal banking works; the firm, they write, never fully integrated its divisions. What is happening there says more about its management than its model.

But that doesn't change the fact that the tide seems to be shifting on how big and integrated we want our banks to be. On the surface, it seems like diversification should steady financial institutions in times of tumult, but now, increasingly, it seems that what it actually does is add complexity and confound risk management to the point of some very bad things happening. Not to mention, some would say, stifle profits. For more than a year, critics of Citigroup have pushed for that company to break itself up in order to unlock shareholder value. In the past few weeks, banks like HSBC, Barclays and Societe Generale have felt the need to very loudly defend their own universal-bank models.

Where to look for insight?

August 12, 2008 10:24

Silicon Valley's elite sits in a pink room

This morning The Daily Deal told me that Wallstrip has a little West Coast competition. I don't know if I'd go that far.

Jesse Draper, recent UCLA theater grad, cable TV actress, and, oh yeah, daughter of venture capitalist Tim Draper (see, for context: Hotmail, Skype, Baidu), is Valley Girl (original and timely), a big-smiled, fuzzy-slippered interviewer of Silicon Valley luminaries like Sun Microsystems chairman Scott McNealy, Google CEO Eric Schmidt, and Craigslist founder Craig Newmark. The questions are, um, definitely questions. (To McNealy: "Do you recycle?" "What do you think of recycling?")

It's kind of shocking to me that these people, who have real jobs, have time for this. Still, I couldn't look away.

Barbara!