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  • Tue, Sep 16 2008
  • 4:56 AM » Wells Fargo takes Lehman Related Charge
    Published Tue, Sep 16 2008 4:56 AM by Calculated Risk Blog
    From the Wells Fargo 8-K filed with the SEC today: In connection with the filing today by Lehman Brothers Holdings Inc. (Lehman Brothers) of a Chapter 11 bankruptcy petition, Wells Fargo & Company (the Company) will record other-than-temporary impairment and take a non-cash charge to earnings in third quarter 2008 for investments in senior unsecured notes and perpetual preferred securities issued
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:55 AM » S&P Lowers WaMu Credit Rating to Junk
    Published Tue, Sep 16 2008 4:55 AM by Calculated Risk Blog
    From Bloomberg: WaMu Rating Lowered to Junk by S&P on Mortgage Losses (hat tip Justin) Washington Mutual Inc. ... had its credit rating cut to junk by Standard & Poor's because of the deteriorating housing market. ... ``Increasing market turmoil and the related impact from managing its concentrated mortgage franchise in this troubled housing and credit cycle led to the downgrade,'' S&P wrote. And
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:54 AM » Federal Government Asks Banks to Lead AIG Lending Facility
    Published Tue, Sep 16 2008 4:54 AM by Calculated Risk Blog
    From MarketWatch: Feds ask Goldman, JPMorgan Chase to lead AIG lending: report AIG lending facility could be $70 bln-$75 bln: report
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 4:53 AM » Fannie, Freddie CEOs eligible for 401k benefits: report
    Published Tue, Sep 16 2008 4:53 AM by Reuters
    (Reuters) - The recently ousted chief executives of Fannie Mae and Freddie Mac are eligible for the pensions and 401k savings plans they built up while working for the mortgage giants, The Wall Street Journal said, citing a regulatory official.
  • 4:53 AM » Barclays talks to buy Lehman core U.S. unit: sources
    Published Tue, Sep 16 2008 4:53 AM by Reuters
    LONDON (Reuters) - British bank Barclays is in talks with Lehman Brothers to buy its core U.S. broker-dealer businesses, including equity, fixed income, M&A advisory and other parts, people familiar with the matter said.
  • 4:53 AM » Holders of preferred shares to sue Fannie Mae
    Published Tue, Sep 16 2008 4:53 AM by Reuters
    LOS ANGELES (Reuters) - A California law firm will sue Fannie Mae on Tuesday on behalf of holders of the mortgage finance company's preferred shares, a lawyer with the firm said late on Monday.
  • 12:06 AM » A Disasterous Rate Cut ?
    Published Tue, Sep 16 2008 12:06 AM by bigpicture.typepad.com
    Why on earth the FOMC would want to undo any of the work by Treasury with a rate cut? The whole idea of letting Lehman die is to reintroduce the concept of risk and eliminate some of the Moral Hazard fostered by prior bailouts. The current market bet is that a 25 or even 50 basis cut may occur at tomorrow's . That would be ill advised. We have survived the initial impact caused by the collapse of Lehman Brothers (LEH). AIG is certainly in trouble, as are Wachovia (WB) and Washington Mutual (WM) and others. The Fed would be well served, with rates now at 2%, to keep some powder try for the latter innings of this crisis. Unless we are looking to emulate Japan's 15 year recession, a /pushing on a string policy would not be advantageous.
    Click Here to Read the Full Article

    Source: bigpicture.typepad.com
  • 12:06 AM » The Terrible Lessons of Bear Stearns
    Published Tue, Sep 16 2008 12:06 AM by bigpicture.typepad.com
    As Lehman Brothers (LEH) turns into a on its way to zero, as Washington Mutual (WM) works its way towards a buck, as Wachovia (WB) drops more than 80% over a year, as Fannie Mae (FNM) and Freddie Mac (FRE) become divisions of the United States of America, and are now priced in pennies -- we need to reflect upon the ongoing lessons learned from all these interventions by Treasury, Congress and the Federal Reserve. The lesson from the Bear Stearns' bailout -- $29 Billion in Federal Reserve bad paper guarantees -- are quite stark: ? Go Big : Don't just risk your company, risk the entire world of Finance. Modest incompetence is insufficient -- if you merely destroy your own company, you won't get rescued. You have to threaten to bring down the entire global financial system. The fear and disruption caused by a Bear collapse is why it was saved. (AIG has the right idea on this) ? If you cant Go Big, Go First : Had Lehman collapsed before Bear, then the same fear and loathing of the impact to the system might have worked to their advantage. But having been through this once before, the sting is somewhat lessened -- especially for a smaller, lets interconnected firm like LEH. (First mover advantage!) ? Threaten your counter-parties : Bear Stearns had about 9 trillion in its derivatives book, of which 40% was held by JPMorgan (JPM). Some people have argued that the Bear bailout was actually a preventative rescue of JPMorgan. Its a good strategy if your goal is a bailout -- risk bringing down someone much bigger than yourself. ? Risk an important part of the economy : If your book of derivatives is limited to some obscure and irrelevant portion of the economy, you will not get saved. On the other hand, if Mortgages are important, credit cards and auto loans are too. Securitized widget inventory is not. To use a dirty word, Lehman's exposure is "contained." ? Balance Sheets Matter : Focus on the media, complain about short sellers, obsess about PR. These...
    Click Here to Read the Full Article

    Source: bigpicture.typepad.com
  • 12:06 AM » The Fire Sales Begin: Lehman Unloading $852 Million of LBO Loans
    Published Tue, Sep 16 2008 12:06 AM by feeds.feedburner.com
    Ah, now the script that everyone was trying to avoid, that of an institution failing, selling assets in bulk leading to distressed prices, which forces other players to mark their books down to the new market prices, leading to losses and reductions of already-scarce equity, is now playing at your local credit market. Lehman has started selling LBO loans, and unlike many recent sale of this sort of paper, will not be providing financing. Fortunately, this sale, at $852 million, is not at all large, but in this market, even what would have otherwise been a manageable sale may not attract great bids. We'll see soon enough where this trades. From : Lehman Brothers Holdings Inc. is trying to sell $852 million of high-yield, high-risk loans, signaling it's dumping some assets after filing for bankruptcy, according to people familiar with the sale. Bids for the loans, some of which helped finance leveraged buyouts for First Data Corp. and TXU Corp., are due by 2 p.m. tomorrow..... The price of the average actively traded leveraged loan has fallen from above face value in June 2007 to 86.64 cents on the dollar, compared with a low of 86.3 cents reached in February, according to Standard & Poor's LCD, which earlier reported the loan auction. Prices fell 1.64 cent in the past week. ``We're basically at all-time lows for good credits,'' Blackstone President Tony James said in a presentation last week at a New York investor conference sponsored by Lehman. ``Because of capital pressures, and regulatory capital pressures in particular, by the holders of the loans, they are forced sellers at well below intrinsic value.''
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • Mon, Sep 15 2008
  • 11:12 PM » AIG Has Financials Staring into the Abyss
    Published Mon, Sep 15 2008 11:12 PM by feeds.feedburner.com
    Lehman Brothers Holdings Inc. (LEH: 0.21 -94.25%), filing for bankruptcy? Painful for investors and the huge credit default swap market, certainly. But catastrophic? Nope. That honor may instead fall to teetering insurer American Insurance Group (AIG: 4.76 -60.79%) — and it’s why we noted in Sunday coverage at HW that a failure at AIG could [...]
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 10:19 PM » Washington Mutual cut to junk by S&P
    Published Mon, Sep 15 2008 10:19 PM by Reuters
    NEW YORK (Reuters) - Washington Mutual Inc , was downgraded to "junk" status on Monday by Standard & Poor's amid concern about mortgage losses, causing shares of the largest U.S. savings and loan to slide after-hours following a 27 percent plunge in regular trading.
  • 10:18 PM » Holders of preferred shares to sue Fannie Mae
    Published Mon, Sep 15 2008 10:18 PM by Reuters
    LOS ANGELES (Reuters) - A California law firm will sue Fannie Mae on Tuesday on behalf of holders of the mortgage finance company's preferred shares, a lawyer with the firm said late on Monday.
  • 10:17 PM » Wilbur Ross sees about 1,000 bank closures: report
    Published Mon, Sep 15 2008 10:17 PM by Reuters
    (Reuters) - Wilbur Ross, founder of private equity firm WL Ross & Co LLC, expects as many as a thousand U.S. bank closures in the coming months, CNBC said on its website on Monday.
  • 10:16 PM » Paulson's Moment Of Truth
    Published Mon, Sep 15 2008 10:16 PM by Washington Post
    In taking the top job at Treasury two years ago, Hank Paulson said he wouldn't be content to keep the seat warm. He was running Goldman Sachs, the preeminent investment bank, and he had no need to come to Washington if he wasn't going to make an impact. Until Sunday, it was pretty hard to see where Paulson's impact lay. His environmental interests had not caused a sprouting of green policies. His strong contacts in China had fostered a bilateral talkfest but no tangible breakthroughs. And his efforts to manage the financial crisis had been conventional and tentative -- until his bold gamble on Lehman Brothers.
    Click Here to Read the Full Article

    Source: Washington Post
  • 10:16 PM » Seeds of Lehman's Destruction
    Published Mon, Sep 15 2008 10:16 PM by www.portfolio.com
    W hen the Federal Reserve helped push through a deal in March that saved Bear Stearns from filing for bankruptcy, did the central bank also ensure that Lehman Brothers would eventually fail? The Fed's justification for the deal that sent Bear under the protective arms of J.P. Morgan Chase and put $29 billion of Bear's assets on the Fed's balance sheet was that markets were too jittery to handle a failure of the size of Bear. Had the government not intervened, the consequences could have been dire, Fed officials warned. "Our judgment was that, had Bear Stearns been allowed to walk into bankruptcy court, that would have disrupted the financial system and had very serious effects on the economy," Federal Reserve Vice Chairman Donald Kohn testified in June. But critics have accused the Fed of encouraging banks to maintain the status quo and not face up to the fact that their balance sheets were in need of a Clorox treatment. If institutions didn't acknowledge the exposure they had to falling real estate prices, more trouble was surely on the way. Fast-forward six months and that's basically what happened with Lehman Brothers: Shortly after the Bear Stearns rescue, Lehman's chief executive Fuld said that the worst of the credit crunch was over and only last week announced a major restructuring. But it was too little, too late. "When you intervene, you think you're buying time for other firms to adjust, but you may actually only be buying time for management to delay," says Vincent Reinhart of the American Enterprise Institute and a former Fed economist. Writing on the Economist's View blog, the University of Oregon's Tim Duy agrees: "Fed officials likely now understand the can of worms they opened with the Bear Sterns bailout." That can of worms goes by the name of moral hazard, the risk faced by insurers that the protection they offer will lead parties to take on more risk. In the case of Lehman, the hazard...
    Click Here to Read the Full Article

    Source: www.portfolio.com
  • 10:16 PM » Brace for the Tsunami: Fitch, S&P Downgrade AIG (Updated)
    Published Mon, Sep 15 2008 10:16 PM by feeds.feedburner.com
    I have no idea what the morrow will bring, but if it is only as bad as Monday's trading, we should all consider ourselves lucky. Ftich with a negative watch (hat tip reader Steve) S&P downgraded AIG to A-2 with a negative outlook as reported on CNBC (hat tip readers Scott and Michael. I don't see a link to a press release yet on S&P's site). Update 9:15 PM, it's now on . The cut was from AA- to A- on senior debt; the A-2 is the counterparty risk rating. This downgrade triggers the requirement that AIG post more collateral. I am looking for confirmation, but this is what I saw in terms of consequences. From : A ratings cut may have ``a material adverse effect on AIG's liquidity'' and trigger more than $13 billion in collateral calls from debt investors who bought the swaps, the insurer said in an Aug. 6 filing. AIG has already posted $16.5 billion in collateral through July 31. A downgrade could also set off early termination of swaps that may cause $4.6 billion in payments, AIG said. The is going to lead to massive counterparty defaults in the credit default swaps market, an event we and others had warned about for some time. The CDS market was the most likely culprit to cause a systemic unwind. God help us if the authorities are not prepared. I will update this post when news hits the wires. Update 9:30 PM: Moody's has (headline only at WSJ), and reader Scott gives a summary of CNBC: David Faber saying they have to raise $75 billion tomorrow, or the BK on Wednesday. Maria B and Larry Kudlow noting that there’s a ton of private equity money dying to dive in, but terrible regulatory environment doesn’t allow it. I knew there was a reason I never watch this stuff. A tells how rattled the CDS market was before this blow: Alongside the highly complex counterparty issues, Lehman is itself the biggest ever bankruptcy to hit debt markets. This will mean huge payouts on credit default swaps (CDS) bought to protect against losses...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 5:39 PM » After Lehman Collapse, Industry Eyes Shift to Aurora
    Published Mon, Sep 15 2008 5:39 PM by feeds.feedburner.com
    So Lehman is down for the count. The stock market is tanking to the tune of a 500 point drop in the Dow Jones Industrials, when this story was published. But those in the mortgage industry are wondering about the fate of a different company: Littleton, Colo.-based Aurora Loan Services, a Lehman subsidiary and lender/servicer [...]
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 5:10 PM » Mortgage and Title Insurers Suffer from Housing Woes
    Published Mon, Sep 15 2008 5:10 PM by Seeking Alpha
    submits: Continued housing market weakness and the uncertain long-term future of Fannie Mae (FNM) and Freddie Mac (FRE) is putting yet more pressure on the beleaguered mortgage and title insurance industries. A new report from Standard & Poor’s graphically illustrates the declining fortunes of title insurers. Unlike most other insurers who receive regular premiums over the life of the policy, title insurers generally receive one payment and reserve against estimated future losses at that time. If those losses are higher than the title insurers anticipated, their profitability will erode, S& P says.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 4:46 PM » Pimco, Vanguard Are Biggest Bond Fund Losers in Lehman Collapse
    Published Mon, Sep 15 2008 4:46 PM by feeds.feedburner.com
    It's payback time for betting on moral hazards as . Pimco Advisors LP, Vanguard Group Inc. and Franklin Advisers Inc. are among the investment companies that will face losses of at least $86 billion stemming from the collapse of Lehman Brothers Holdings Inc., the biggest bankruptcy in history. Mutual fund companies' filings show they hold more than $143 billion of bonds, led by Newport Beach, California-based Pacific Investment Management Co., manager of the world's biggest bond fund, and Valley Forge, Pennsylvania-based Vanguard, according to data compiled by Bloomberg as of June 30. While bond investors will recover different amounts based on their ranking in Lehman's capital structure, models of credit default swaps assume lenders will recoup 40 percent of their loans overall in a bankruptcy. Investors may receive less than that, based on prices for Lehman's senior bonds of as little as 35 cents on the dollar from market reporting system Trace. Pimco holds Lehman bonds in at least 12 of its funds, including the $134 billion Total Return Fund. Bill Gross, manager of the fund and co-chief investment officer of Pimco, was buying Lehman bonds as recently as June, Bloomberg data show. John Woerth, head of public relations at Vanguard, said the company holds Lehman bonds among the $450 billion of fixed income it manages. New York-based Lehman, which filed for protection from creditors today, owes its 10 largest unsecured creditors more than $157 billion, according to the Chapter 11 filing today in U.S. Bankruptcy Court in New York. The largest single creditor is Aozora Bank Ltd. in Tokyo, with $463 million in a bank loan. Other top creditors include Mizuho Corporate Bank Ltd., owed $382 million, and a Citigroup Inc. unit based in Hong Kong, owed an estimated $275 million, according to the filing. Lehman listed total debts of $613 billion and $639 billion of assets in the filing. Axa SA, Europe's second-biggest insurer, and unnamed affiliates, own...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 4:45 PM » Is Alt-A the New Subprime?, Part 1
    Published Mon, Sep 15 2008 4:45 PM by www.minyanville.com
    This week we look at the housing market in some detail. When can we expect it to turn around? Part of the problem is that a new wave of foreclosures is coming due and this time it’s not subprime. And that means more problems for the large financial companies. Also as predicted here consumer spending is taking a hit since consumers are finding it increasingly difficult to get credit and a deteriorating labor market is dragging down total spending. There are some very interesting details in the data that was released this week and we take a quick peek ...
    Click Here to Read the Full Article

    Source: www.minyanville.com
  • 4:44 PM » A Disasterous Rate Cut ?
    Published Mon, Sep 15 2008 4:44 PM by The Big Picture
    Why on earth the FOMC would want to undo any of the work by Treasury with a rate cut? The whole idea of letting Lehman die is to reintroduce the concept of risk and eliminate some of the Moral Hazard fostered by prior bailouts. The current market bet is that a 25 or even 50 basis cut may occur at tomorrow's . That would be ill advised. We have survived the initial impact caused by the collapse of Lehman Brothers (LEH). AIG is certainly in trouble, as are Wachovia (WB) and Washington Mutual (WM) and others. The Fed would be well served, with rates now at 2%, to keep some powder try for the latter innings of this crisis. Unless we are looking to emulate Japan's 15 year recession, a /pushing on a string policy would not be advantageous.
    Click Here to Read the Full Article

    Source: The Big Picture
  • 4:43 PM » The Terrible Lessons of Bear Stearns
    Published Mon, Sep 15 2008 4:43 PM by The Big Picture
    As Lehman Brothers (LEH) turns into a on its way to zero, as Washington Mutual (WM) works its way towards a buck, as Wachovia (WB) drops more than 80% over a year, as Fannie Mae (FNM) and Freddie Mac (FRE) become divisions of the United States of America, and are now priced in pennies -- we need to reflect upon the ongoing lessons learned from all these interventions by Treasury, Congress and the Federal Reserve. The lesson from the Bear Stearns' bailout -- $29 Billion in Federal Reserve bad paper guarantees -- are quite stark: • Go Big : Don't just risk your company, risk the entire world of Finance. Modest incompetence is insufficient -- if you merely destroy your own company, you won't get rescued. You have to threaten to bring down the entire global financial system. The fear and disruption caused by a Bear collapse is why it was saved. (AIG has the right idea on this) • If you cant Go Big, Go First : Had Lehman collapsed before Bear, then the same fear and loathing of the impact to the system might have worked to their advantage. But having been through this once before, the sting is somewhat lessened -- especially for a smaller, lets interconnected firm like LEH. (First mover advantage!) • Threaten your counter-parties : Bear Stearns had about 9 trillion in its derivatives book, of which 40% was held by JPMorgan (JPM). Some people have argued that the Bear bailout was actually a preventative rescue of JPMorgan. Its a good strategy if your goal is a bailout -- risk bringing down someone much bigger than yourself. • Risk an important part of the economy : If your book of derivatives is limited to some obscure and irrelevant portion of the economy, you will not get saved. On the other hand, if Mortgages are important, credit cards and auto loans are too. Securitized widget inventory is not. To use a dirty word, Lehman's exposure is "contained." • Balance Sheets Matter : Focus on the media, complain about short sellers, obsess about PR. These...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 4:42 PM » Banks Can Now Use Deposits to Fund Investment Banking Operations?
    Published Mon, Sep 15 2008 4:42 PM by feeds.feedburner.com
    Reader Michael M called our attention to this statement in a : The Fed also suspended rules that prohibit banks from using deposits to fund their investment banking subsidiaries. Was this the quid pro quo for Band of America buying Merrill? If so, the repercussions extend beyond BofA. This is a time when the federal authorities need to be vigilant, not lax about banks taking risk with depostors' funds. Note than many banking experts, post the S&L crisis and now, recommend the reverse, "narrow banking", which requires banks to invest depositors' funds only in the very safest assets. This is the exact opposite of the sort of regulatory measures needed to improve the health of the banking system. Expediency trumps soundness. Any reader inputs appreciated.
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 4:41 PM » Shock to the System
    Published Mon, Sep 15 2008 4:41 PM by www.portfolio.com
    O ver the past year, we've seen a number of days when the stock market fell 300 points. We've been there and done that, and we're quite used to it at this point. So were all those end-of-the world headlines overblown? Is this the worst that happens when ? Hard to see what all the fuss is about, really, let alone why the Federal Reserve felt it necessary to put up $29 billion to bail out Bear Stearns. Of course, it's not nearly as simple as that. For one thing, it's not the stock market that everybody was worried about. This is a credit crisis, and American companies (the ones which weren't bought by private equity shops, anyway) tend to have low levels of debt. Some parts of the economy are highly indebted—investment banks and homeowners, above all. Most of the companies listed on the stock market aren't, and they should be able to weather a financial storm with relative ease. On the other hand, that financial storm really does seem to be more of a heavy breeze than a major hurricane. The Standard & Poor’s financial-stock index is down by only 3.5 percent this morning—hardly a bloodbath. And the —a measure of distrustfulness among banks—is up sharply at 192 basis points, but is still below the levels we saw in the summer of 2007, and again in December, and again in March. Indeed, each spike upward in the TED spread seems to be lower than the last, which has to be a positive sign. The big unanswerable question, though, is what happens next. Hurricanes start out as a heavy breeze, and then get worse—and the preconditions for a financial hurricane are very much in place. If a real hurricane needs high ocean surface temperatures and warm humid air, a financial hurricane needs generalized nervousness and a general lack of liquidity. Once those are in place, a few failed trades are all that is necessary to precipitate a very nasty chain reaction. In normal times, failed trades are a regrettable part of doing business in financial markets—they...
    Click Here to Read the Full Article

    Source: www.portfolio.com
  • 4:40 PM » Investment Bank, R.I.P.
    Published Mon, Sep 15 2008 4:40 PM by www.portfolio.com
    A nd then there were two. In just six short months (or long ones, depending on where you sit), the number of major investment banks on Wall Street has . Bear Stearns fell in March. And now, with Lehman Brothers in bankruptcy and Merrill Lynch in the arms of Bank of America, just and are left standing. Regulators have long wondered whether the market is better off with investment banks as independent firms or as divisions of larger commercial banks. That question will undoubtedly continue to be asked as a new administration is ushered into the White House in the coming months. Regardless of what Washington may ultimately decide, the market has made its choice clear this year: The independent investment-banking model is dead. "Without doubt, the investment-banking industry will never be the same," Larry Tabb, founder of the advisory firm Tabb Group wrote in a report today. "The days of the all-in-one global investment bank may be nearing an end. We are seeing a downsizing of industry capacity, and we will absolutely see a movement away from risk toward transparency and liquidity." This is not to say that the Bank of America-Merrill Lynch model will fare much better, but at least it will have size on its side during times of crisis like this one. After all, Citigroup, which became a banking colossus with the merger of Citicorp and Travelers in 1998, . But, painful as its voyage may have been in recent years, there is no evidence that Citigroup will succumb to this credit crisis the way investment banks have. What will this mean for Morgan Stanley and Goldman Sachs? They, too, have had to deal with tarnished mortgage investments and bloated balance sheets during this credit crisis. Morgan Stanley's stock has fallen by more than half in the past year, and Goldman's has dropped by 44 percent. Neither bank is finished delivering bad news to investors, but they will try mightily to cloak that bad news with a positive spin that they are still doing...
    Click Here to Read the Full Article

    Source: www.portfolio.com
  • 4:39 PM » Paulson says prepared to act to ensure stability
    Published Mon, Sep 15 2008 4:39 PM by Reuters
    WASHINGTON (Reuters) - U.S. Treasury Secretary Henry Paulson said on Monday the U.S. financial system remained sound despite current stresses and said he was prepared to take further actions if necessary to maintain stability.
  • 4:39 PM » Hedge funds dealt another blow by Lehman failure
    Published Mon, Sep 15 2008 4:39 PM by Reuters
    LONDON (Reuters) - The bankruptcy filing of Lehman Brothers is another blow for the hedge fund industry, though the writing has been on the wall long enough for many to have reduced their exposure to the U.S. investment bank.
  • 4:39 PM » National City wins OK for $7 billion
    Published Mon, Sep 15 2008 4:39 PM by Reuters
    NEW YORK (Reuters) - National City Corp , a U.S. Midwest regional bank battered by mortgage losses, has won stockholder approval to authorize new shares to allow for a $7 billion capital infusion, the bank said on Monday.
  • 4:18 PM » S&P Downgrades BofA, Cites Mortgages as Problematic
    Published Mon, Sep 15 2008 4:18 PM by feeds.feedburner.com
    Standard & Poor’s Ratings Services said Monday afternoon that it had downgraded its long-term counter party credit rating on Bank of America Corp. (BAC: 26.87 -20.36%) to ‘AA-’ from ‘AA’. The downgrade comes on a formal announcement by both firms of a deal that will send Merrill Lynch & Co. (MER: 17.76 +4.16%) into the [...]
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 4:03 PM » Citi’s Pandit: ‘Turbulent Times’
    Published Mon, Sep 15 2008 4:03 PM by feeds.feedburner.com
    Citigroup Inc. (C: 15.55 -13.42%) CEO Vikram Pandit moved to perhaps instill some confidence in the company’s likely rattled employee base on Monday, and sent out an internal email highlighting the bank’s efforts thus far to weather the storm. It was a message to investors as much as to employees. According to Investment Dealers’ Digest, which [...]
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 2:43 PM » Specialized Loan Servicing Gets New Owner after Terwin Default
    Published Mon, Sep 15 2008 2:43 PM by feeds.feedburner.com
    Do we have the first victim of servicing advances? Highlands Ranch, Colo.-based Specialized Loan Servicing said last week that Lexia LLC, a wholly-owned subsidiary of Tokyo-based Shinsei Bank, Ltd., had acquired an 82.35 percent equity interest in the company on Sept. 8. The bank took over the firm after a unit of former majority holder Terwin [...]
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 12:06 PM » Residential Credit’s Servicing Ops Recognized by S&P
    Published Mon, Sep 15 2008 12:06 PM by feeds.feedburner.com
    Residential Credit Solutions, Inc. said recently that it had been named a “select servicer” by Standard & Poor’s Rating Services, one of only a few residential subprime and special servicers to be added to the rating agency’s list in the past few months. RCS was founded in December 2006, and is is a mortgage investment [...]
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 11:49 AM » Lehman Files for Bankruptcy, BofA Snaps Up Merrill Lynch
    Published Mon, Sep 15 2008 11:49 AM by www.thetruthaboutmortgage.com
    It was a busy Sunday on Wall Street as the mortgage mess forced Lehman Brothers and Merrill Lynch down very different paths. After talks to save storied investment bank Lehman Brothers failed over the weekend, the 158-year old company was forced to file Chapter 11 bankruptcy. Just one week earlier, the company announced its biggest quarterly loss [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 9:36 AM » World's biggest banks join forces
    Published Mon, Sep 15 2008 9:36 AM by www.ft.com
    Ten of the world's biggest banks have agreed to pool $70bn in a giant liquidity fund as part of a dramatic series of private and public sector initiatives intended to mitigate the impact of the expected failure of Lehman Brothers
  • 9:35 AM » Barclays considered Lehman bid
    Published Mon, Sep 15 2008 9:35 AM by www.ft.com
    The UK bank confirmed that it had considered bidding for Lehman but 'did not proceed because it was not possible to conclude a transaction in the best interests of Barclays shareholders'
  • 9:34 AM » AIG May Capture Biggest Red Flag
    Published Mon, Sep 15 2008 9:34 AM by www.minyanville.com
    If there was ever a Monday to skip that morning coffee and run on pure adrenaline this is it.As Lehman Brothers (LEH) and Merrill Lynch (MER) jockey for top placement in this morning’s headlines American International Group (AIG) is dramatically staking a claim for the financial market’s biggest red flag.Lehman and Merrill already collapsed into the hands of bankruptcy courts and Bank of America (BAC) respectively have well-publicized and largely understood troubles. Loaded up with securities tied to US mortgage debt their capital bases have been eroded by losses and writedowns on bad assets. Although losses have been hard ...
    Click Here to Read the Full Article

    Source: www.minyanville.com
  • 9:34 AM » AIG wants $40B from Fed; Market Cap is $32B
    Published Mon, Sep 15 2008 9:34 AM by feeds.feedburner.com
    This post is an update to . We now have the number: . The American International Group is seeking a $40 billion bridge loan from the Federal Reserve, as it faces a potential downgrade from credit ratings agencies that could spell its doom, a person briefed on the matter said Sunday night. Ratings agencies threatened to downgrade the insurance giant’s credit rating by Monday morning, allowing counterparties to withdraw capital from their contracts with the company. One person close to the firm said that if such an event occurred, A.I.G. may survive for only 48 hours to 72 hours. The firm had planned to move $20 billion from its regulated insurance business to its holding company and to sell assets and a stake in the company to private equity firms. But A.I.G. has ruled out the capital shift because of the time and complexity involved. J. C. Flowers & Company, a buyout firm focused on financial services firms, offered $8 billion for a stake in the business that would have given it an option to buy all of A.I.G. down the road. Kohlberg Kravis Roberts and TPG also said they would bid. But all three withdrew at the last minute, citing anxiousness over the company’s precarious financial health. A.I.G.’s extraordinary move of reaching out to the Fed for help may spur other non-investment banks to try a similar move. Companies ranging from General Electric to GMAC have been hurting badly and would desperately love the liquidity that the Fed would provide. Yet it isn’t clear whether the Fed would acquiesce to A.I.G.’s request. is only $32.6 Billion. Barring some miracle, AIG's cap will be worth far less than that at the open. $20 billion would not surprise me, especially since it is holding much of the same garbage Lehman will be forced to dump. AIG should not have turned down the private equity opportunity it did earlier today. The Fed should not provide a penny. I suspect the ratings agencies will be asked to not downgrade AIG. I also suspect the rating agencies will...
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    Source: feeds.feedburner.com
  • 9:34 AM » Where Were You When Lehman Brothers Failed?
    Published Mon, Sep 15 2008 9:34 AM by www.minyanville.com
    There’s a thing about living through historic events those moments when we shudder with the recognition that the world just hopped the tracks and is barreling along in an altogether different direction. For my parents’ generation -- and I’m sure for many Minyans -- that feeling is sparked by the question “Where were you when JFK was shot?” More recently “Where were you on 9/11?” sends similar chills down our collective spines. I don’t wish to compare the collapse of an investment bank -- Lehman Brothers (LEH) -- or the purchase of one financial institution by another -- Merrill Lynch (MER) by Bank of ...
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    Source: www.minyanville.com
  • 8:24 AM » Housing: Bigger Isn't Always Better
    Published Mon, Sep 15 2008 8:24 AM by Seeking Alpha
    submits: The Wilson Quarterly (WQ, Summer 2008, Vol. 32, No. 3) published an article by Witold Rybczynski about affordable homes: What's driving the high cost of houses today is not increased construction costs or higher profits...but the cost of serviced land.
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    Source: Seeking Alpha
  • 5:01 AM » Five Challenges Ahead as the Corporate Soup Lines Grow
    Published Mon, Sep 15 2008 5:01 AM by Seeking Alpha
    submits: Like rescuers rushing to help Darwin-award wannabees who ignored dire warnings to evacuate Galveston in the path of Hurricane Ike, federal officials and Wall Street execs worked feverishly Saturday in an attempt to resolve the financial crisis now facing Lehman (LEH). It is the second ‘big five’ Wall Street brokerage to succumb to the financial tsunami after Bear Stearns, which took $29 billion in federal assistance to make the JP Morgan (JPM) purchase of the company work. But this time officials are doing their level best to convince potential buyers that no bailout should be expected. It remains to be seen if officials can make this condition stick, but if no buyer steps up to the plate, the government will again have to act as buyer of last resort. Chances for a deal devoid of government-backed guarantees dimmed significantly Sunday when Barclays Bank (BCS), the last remaining bidder, increasing the chances of a Lehman bankruptcy.
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    Source: Seeking Alpha
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