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  • Mon, Sep 29 2008
  • 4:48 AM » Payback provision in US bail-out plan
    Published Mon, Sep 29 2008 4:48 AM by www.ft.com
    The US financial services sector could be forced to reimburse the US government for any losses on its $700bn rescue plan under a breakthrough agreement that paves the way for congressional approval as early as Monday
  • 4:47 AM » Goldman seeks to buy up to $50bn in assets
    Published Mon, Sep 29 2008 4:47 AM by www.ft.com
    Goldman Sachs is seeking to acquire up to $50bn in assets from ailing US banks as part of its push into commercial banking, Goldman executives say
  • 4:47 AM » AIG looks to sell 15 units to secure position
    Published Mon, Sep 29 2008 4:47 AM by www.ft.com
    AIG, the stricken US insurer, is considering selling more than 15 businesses, including its aircraft leasing unit, a stake in a large US reinsurer and billions of dollars in properties in an effort to repay a $85bn government loan and secure its future as an independent company
  • 4:47 AM » Report: Citigroup and Wells Fargo Bidding for Wachovia
    Published Mon, Sep 29 2008 4:47 AM by Calculated Risk Blog
    From the NY Times: Citigroup and Wells Fargo Said to Be Bidding for Wachovia Citigroup and Wells Fargo were locked in a bidding war on Sunday over a possible emergency takeover of the Wachovia Corporation ... The government, led by the Federal Reserve and Treasury Department, has been involved in the talks as well ... The government has ... opposed taking over Wachovia the way it did
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • Sun, Sep 28 2008
  • 5:19 PM » Draft: Emergency Economic Stabilization Act of 2008
    Published Sun, Sep 28 2008 5:19 PM by Calculated Risk Blog
    From CNNMoney: Emergency Economic Stabilization Act of 2008 On suspending Mark-to-Market:SEC. 132. SUSPENSION OF MARK-TO-MARKET ACCOUNTING. (a) AUTHORITY.—The Securities and Exchange Commission shall have the authority under securities laws (as such term is defined under section 3(a)(47) of the Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47)) to suspend, by rule, regulation, or oder, the
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 3:54 PM » Breakthrough on $700bn rescue plan
    Published Sun, Sep 28 2008 3:54 PM by www.ft.com
    The US financial services sector could be forced to reimburse the US government for any losses on its $700bn rescue plan under a breakthrough political agreement that paves the way for congressional approval as early as Monday
  • 3:53 PM » Wachovia takeover rests on bail-out
    Published Sun, Sep 28 2008 3:53 PM by www.ft.com
    A takeover of Wachovia, the troubled regional lender, hinges on congressional approval of a proposed $700bn bail-out plan and the government's willingness to extend financial aid to potential bidders, people close to the situation said
  • 3:52 PM » Lehman staff unhappy over carve-up
    Published Sun, Sep 28 2008 3:52 PM by www.ft.com
    The carve-up of Lehman Brothers between the UK's Barclays and Japan's Nomura has not been met with widespread rejoicing by employees of the failed bank
  • 3:51 PM » Wells Fargo: A Growth Stock During the Great Depression?
    Published Sun, Sep 28 2008 3:51 PM by Seeking Alpha
    submits: With all the talk lately of a sharp economic contraction, Wells Fargo (WFC) investors and depositors might find it entertaining to know how their bank, with its famously strong balance sheet (uniquely AAA rated), prospered during the great depression of the 1930s. Specifically, according to "Stagecoach," a history of the bank published by Simon & Schuster in 2002: "From 1929 to 1936, Wells Fargo increased the number of its deposit accounts from about sixty thousand to nearly eighty-five thousand and doubled its deposit base from from $125.6 million to $250.7 million. Customers, especially business customers, were voting their money with their feet and moving to solid ground."
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 3:51 PM » 3 Things America Needs to Do to Get the Economy Back on Track
    Published Sun, Sep 28 2008 3:51 PM by Seeking Alpha
    submits: The US trade deficit has grown to $US700 billion, which of course is money not spent on US goods and services. This has killed off well paying jobs, has slowed the economy and created unemployment. Net imports from China and oil account for a large proportion of the US deficit and it is this that America simply must fix to rev up growth.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 3:51 PM » Citi in Talks With Wachovia as $700B Bailout Plan Moves Forward
    Published Sun, Sep 28 2008 3:51 PM by Seeking Alpha
    submits: that merger talks between Citigroup (C) and Wachovia (WB) have advanced, with a meeting scheduled Sunday for Citi executives. The major deciding factor is the status of $120B in bad debts for Wachovia, with Citi looking for help from the Fed as part of the bailout plan to sell the troubled assets. Wachovia has $400B in deposits, making it the sixth largest bank in the U.S. by assets with a in the East and Southeast regions. Meanwhile, a has been reached for a $700B government fund to purchase bad debts from banks to free up the credit markets and allow banks to begin lending again. The bailout plan would make $250B available immediately upon enactment of the legislation with another $100B available at the discretion of the President. The final $250B will be subject to review by Congress.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Sat, Sep 27 2008
  • 9:29 AM » WaMu Purchase Puts JP Morgan at 15% Share of Bank-Broker Market
    Published Sat, Sep 27 2008 9:29 AM by feeds.feedburner.com
    The statistics on retail brokers at banks are a bit dated, since they don't reflect the fact that Merrill, aka The Thundering Herd, is soon to be part of Bank of America (I am not certain whether the deal has actually closed). Nevertheless, the fact that WaMu has a meaningful broker-dealer operation was seldom mentioned in discussions of the bank's' plight, but I doubt it was lost on JP Morgan. From : Accounting for roughly 10% of the nation’s retail-securities business done at banks, JPMorgan Chase & Co. is set to become even more dominant in that segment once it completes its $1.9 billion takeover of Washington Mutual Inc. WaMu Investments Inc., the Irvine, Calif.-based broker-dealer of the Seattle-based bank holding company, employed 460 Series 7-licensed brokers, 535 Series 6-licensed platform representatives, 207 sales assistants and 36 managers at the end of last year, according to Scott Stathis, managing director at, a research firm based in Windsor, Conn., that specializes in the securities and insurance business of banks. JPMorgan Chase has 2,000 Series 7-licensed reps and 10,000 Series 6 reps, he said. “WaMu accounts for about 5% of bank brokerage,” said Kenneth Kehrer, a principal with Kehrer-LIMRA. “The two banks do comparable kinds of business, mostly mutual funds.”
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:29 AM » Wachovia may be looking to get hitched
    Published Sat, Sep 27 2008 9:29 AM by wallstfolly.typepad.com
    Wachovia says they don't have "liquidity issues" (at least as of today) but they're nonetheless reportedly testing the merger waters. The toxic debt laden bank is reportedly in preliminary merger discussions with Banco Santander, Wells Fargo and Citigroup. The stock...
    Click Here to Read the Full Article

    Source: wallstfolly.typepad.com
  • 9:29 AM » Nouriel Roubini: Paulson Plan is a Disgrace
    Published Sat, Sep 27 2008 9:29 AM by feeds.feedburner.com
    Inquiring minds are interested in Nouriel Roubini's thoughts on the Paulson Plan. Please consider the . The Treasury plan (even in its current version agreed with Congress) is very poorly conceived and does not contain many of the key elements of a sound and efficient and fair rescue plan. Like in my 10 step HOME plan many other economists and commentators (Charles Calomiris, Raghu Rajan, Kotlikoff and Mehrling, Luigi Zingales, Martin Wolf, Barry Ritholtz, Chris Whalen and twenty others whose views have been featured this week in the RGE Monitor group blogs) have presented ideas that would have minimized the cost to the US taxpayer of a resolution of this financial crisis. It is a disgrace that no professional economist was consulted by Congress or invited to present his/her views at the Congressional hearings on the Treasury rescue plan. Specifically, the Treasury plan does not formally provide senior preferred shares for the government in exchange for the government purchase of the toxic/illiquid assets of the financial institutions; so this rescue plan is a huge and massive bailout of the shareholders and the unsecured creditors of the firms; with $700 billion of taxpayer money the pockets of reckless bankers and investors have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession. The Treasury plan is a disgrace: a bailout of reckless bankers, lenders and investors that provides little direct debt relief to borrowers and financially stressed households and that will come at a very high cost to the US taxpayer. And the plan does nothing to resolve the severe stress in money markets and interbank markets that are now close to a systemic meltdown. Former FDIC Chairman Doubts Bailout Plan Will 'Work' in Current Form Bloomberg is reporting . Sept. 25 (Bloomberg) -- William Isaac, former chairman of the Federal Deposit Insurance Corp., talks with Bloomberg's Tom Keene from Sarasota...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:29 AM » Credit Market Is Closed
    Published Sat, Sep 27 2008 9:29 AM by feeds.feedburner.com
    Minyanville is the brightest fixed income mind I know. Inquiring minds are tuning in to see his take on the . Welcome to the credit market, folks, it is officially closed. After Lehman, Fannie Mae (FNM), Freddie Mac(FRE), AIG (AIG) and Washington Mutual (WM) debt and preferred holders have been unmercifully tossed under the bus so Jamie Dimon can be given banks, do you really think many want to get in front of this train wreck. Me thinks not. For what it's worth, I was just offered Wachovia (WB) 5.8% hybrids at $0.10 on the dollar, and I passed. A block of 30-year Wachovia paper just traded at $0.35 on the dollar. This is not preferred stock or hybrid, folks, this is subordinated debt. Washington Mutual sub paper? $0.01 on the dollar. This is what a credit rout looks like. And until this ship is righted, watch out. There are others trading similarly, like Morgan Stanley (MS) and, while I have no positions, it's quite interesting to watch. So the few that can raise capital, like JPMorgan (JPM) and Goldman Sachs (GS) will survive, but many failures lie directly in front of us. Many regional banks are likely next. Washington Mutual Bond Holders Wiped Out The FDIC has this announcement that . JPMorgan Chase acquired the banking operations of Washington Mutual Bank in a transaction facilitated by the Federal Deposit Insurance Corporation. All depositors are fully protected and there will be no cost to the Deposit Insurance Fund. "For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," said FDIC Chairman Sheila C. Bair. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning." JPMorgan Chase acquired the assets, assumed the qualified financial contracts and made a payment of $1.9 billion. Claims by equity, subordinated and senior debt holders were not acquired. I am expecting ramifications...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:29 AM » Forbes.com: $700 Billion Is Just A Start
    Published Sat, Sep 27 2008 9:29 AM by The Big Picture
    I did this non Tuesday: $700 Billion Is Just A Start: Economist Barry Ritholtz sees the Treasury bailout cost doubling and says the plan is rushed. click for video (I call this my "face made for radio" period)
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:29 AM » Dear Washington - A Real Plan For You
    Published Sat, Sep 27 2008 9:29 AM by mrmortgage.ml-implode.com
    Bill King, whose foresight I rely upon for my personal financial well-being, and who I quote in the blog often has put forth a plan worth serious consideration. Please get this to your representative in Washington…they need all the help they can get. -Best Mr Mortgage King Report Bailout Plan Premises: The US credit system is broken. The Paulsen-Bernanke Bailout Plan does not insure that those banks and brokers that receive bailout aid will increase lending. The reality is the market is hoarding liquidity and these banks are likely to do the same. More importantly consumer lending has been a small, often insignificant part of their business. They made money by trading and through securitization of debt. It is necessary to create a new system parallel with the existing dysfunctional system in order to mitigate the inevitable economic and financial damage and to facilitate, as seamless as possible, the transition to a functioning financial system or new model of credit and banking. The Wall Street model, securitization and extreme leverage, is obsolete. US financial institutions need to recapitalize. Hank and Ben assert that it is paramount to keep credit flowing to consumers; the bail out is a necessary adjunct. Paulsen and Hank’s bailout plan is tantamount to bailing out Univac, Digital Equipment, etc, in the eighties, which would’ve retarded the development of Dell, Microsoft, Intel and other nascent technology companies. It’s wasteful & foolish to put more money in an obsolete non-functioning system Big banks and brokers made most of their earnings over the past several years in trading, not consumer lending. And now their derivatives are THE problem If you want to get money to the consumer: the less middlemen, the better. Decentralization of liquidity, lending and risk is necessary to refurbish the financial system. The illiquidity of a few large banks is collapsing the system. Basics of the King Report Bailout Plan Directly recapitalize banks by the US government...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 9:29 AM » Chinese regulator calls US lending 'ridiculous'
    Published Sat, Sep 27 2008 9:29 AM by Washington Post
    TIANJIN, China -- U.S. lending standards before the global credit crisis were "ridiculous," and the world can learn from China's more cautious system as it considers financial reforms, the top Chinese bank regulator said Saturday.
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:29 AM » Fleeing WaMu deposits sent regulators scrambling
    Published Sat, Sep 27 2008 9:29 AM by Washington Post
    WASHINGTON (Reuters) - As depositors lost confidence in Washington Mutual Inc (WM.N), and began emptying their accounts, regulators abandoned hopes of saving the largest U.S. savings bank and conducted a secret auction.
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:13 AM » SEC: Brokerage Collapse Was Our Fault
    Published Sat, Sep 27 2008 9:13 AM by The Big Picture
    “The last six months have made it abundantly clear that voluntary regulation does not work." -Christopher Cox, Chairman Securities and Exchange Commission Excellent timing -- I have an editorial in this weekend's Barron's on exactly this sort of blind deregulation: "The chairman of the Securities and Exchange Commission, a longtime proponent of deregulation, acknowledged on Friday that failures in a voluntary supervision program for Wall Street’s largest investment banks had contributed to the global financial crisis, and he abruptly shut the program down . . . The program Mr. Cox abolished was unanimously approved in 2004 by the commission under his predecessor, William H. Donaldson. Known by the clumsy title of “consolidated supervised entities,” the program allowed the S.E.C. to monitor the parent companies of major Wall Street firms, even though technically the agency had authority over only the firms’ brokerage firm components. The commission created the program after heavy lobbying for the plan from all five big investment banks. At the time, Mr. Paulson was the head of Goldman Sachs . . . The announcement was the latest illustration of how the market turmoil was rapidly changing the regulatory landscape. In the coming months, Congress will consider overhauls to the regulatory structure, but the markets and the regulators are already transforming it in response to events . . . The division’s “failure to carry out the purpose and goals of the broker-dealer risk assessment program hinders the commission’s ability to foresee or respond to weaknesses in the financial markets,” the report said." Scathing stuff . . . > Source: STEPHEN LABATON NYT, September 26, 2008 http://www.nytimes.com/2008/09/27/business/27sec.html
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:13 AM » "Even Hank Paulson's bail-out plan cannot detox global banking"
    Published Sat, Sep 27 2008 9:13 AM by feeds.feedburner.com
    Some readers would have a go at me whenever I'd post articles by the Telegraph's Ambrose Evans-Pritchard. Although he has a tendency to hyperventilate and sometimes oversimplifies, he regularly points to data and research that I haven't seen covered elsewhere. More important, his major calls this year have been correct. He predicted the oil price decline, was vehement that deflation, not inflation was the risk to the global economy, and pointed to evidence of near zero money supply growth in major economies, an early warning that the credit crunch was intensifying. Today, Evans-Pritchard and the Financial Times editorial page are in agreement on the the dangers of the debt crisis and the need for swift action, although Evans-Pritchard spends more time on the long-term outlook. First, from the (boldface ours): Banks are not to be trusted. This is not just the view of the public and policymakers, but that of the banks themselves. Spreads on unsecured inter-bank lending have reached unprecedented levels, particularly in dollars and, to a lesser degree, sterling. Such stresses cannot continue for long, without serious damage to both the financial system and the economy.... This dire situation makes decisive action essential. Beyond doubt, failure by the US Congress to pass a rescue package would court catastrophe. B ut the plan proposed by Hank Paulson, US treasury secretary, is inadequate. This, too, is the banks’ view. They know his plan is likely to pass, in some form, yet seem increasingly nervous. So what is to be done? The response must have three elements. First, in the absence of private funding, central banks must do the intermediation among banks. Moreover, banks cannot fund ongoing operations overnight. So all central banks must shift liquidity provision away from overnight lending, towards much longer maturities. Second, the US Congress must pass a version of the Paulson plan. This must promise to make the distressed securitised mortgage assets now...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • Fri, Sep 26 2008
  • 4:44 PM » Freddie Mac shakes up management
    Published Fri, Sep 26 2008 4:44 PM by CNN
    Read full story for latest details.
  • 4:44 PM » Paulson taps Forst as adviser on plan
    Published Fri, Sep 26 2008 4:44 PM by www.ft.com
    Hank Paulson, Treasury secretary, has called on Edward Forst, a former senior Goldman Sachs executive who recently joined Harvard University, to be a key adviser on the $700bn financial rescue plan
  • 4:44 PM » Real estate insiders see market upheaval into 2010
    Published Fri, Sep 26 2008 4:44 PM by feeds.bizjournals.com
    The majority of real estate execs -- 60 percent -- say the current credit crisis is the event with the single-greatest impact on the commercial real estate industry during the past 20 years, according to a national survey conducted by law firm DLA Piper.
    Click Here to Read the Full Article

    Source: feeds.bizjournals.com
  • 4:40 PM » Wachovia Begins Early Deal Talks with Citi
    Published Fri, Sep 26 2008 4:40 PM by dealbook.blogs.nytimes.com
    Wachovia has begun preliminary talks with Citigroup about a potential merger, people briefed on the matter said Friday afternoon.
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 4:38 PM » WaMu Gives New CEO Mega Payout as Bank Fails
    Published Fri, Sep 26 2008 4:38 PM by www.foxnews.com
    That's right, $20 million for 17 days on the job ... and his company failed.
    Click Here to Read the Full Article

    Source: www.foxnews.com
  • 3:54 PM » The Creation of the Second Great Depression
    Published Fri, Sep 26 2008 3:54 PM by ml-implode.com
    The claim that the market caused all this is so staggeringly foolish that only politicians and the media could pretend to believe it. But that has become the conventional wisdom, with the desired result that those responsible for the credit bubble and its predictable consequences... are being let off the hook. The Federal Reserve System is actually positioning itself as the savior, rather than the culprit, in this mess! Paul is right... it's not a crash that creates an extended Depression; it is how we respond to it. And doubling-down on a debt-based system (merely moving around who holds and who is in charge of the debt) cannot be the answer. Also see this interview which is of a similar gist: no "bailout" of Wall Street is needed. In fact it is precisely in the vein of what we have been doing for the past 30 years, and therefore is exactly the opposite of what should be done. One caveat regarding Hudson: he recommends T-bills as the "only" safe haven for us little guys to protect our wealth. But he ignores gold and silver. The reason is that Hudson still supports an "economist-managed" system; that is to say a centrally-managed economy. His quibble is simply who the managers are. A sound money system is the only one that truly protects the wealth of the people. Even better, such a system without government props for banks is the most optimal. You don't have to wait for such a system to arrive -- you can get the wealth-preservation benefits by buying gold or silver right now. All paper is suspect.
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 3:54 PM » Marc Faber: US Needs as Much as $5 Trillion Financial Rescue
    Published Fri, Sep 26 2008 3:54 PM by feeds.feedburner.com
    Swiss investor Marc Faber, known for a long track record of good calls (he was a commodities bull until late this spring, for instance, when he reversed his view) and a fine grasp of financial markets history, confirms the estimate earlier in the week by Ken Ohmae that the US needs a salvage operation much bigger than the one envisaged by the Treasury plan, and the damage may come to $5 trillion: Marc Faber, managing director of Marc Faber Ltd. in Hong Kong, said the U.S. government's rescue package for the financial system may require as much as $5 trillion, seven times the amount Treasury Secretary Henry Paulson has requested.... ``The $700 billion is really nothing,'' Faber said in a television interview. ``The treasury is just giving out this figure when the end figure may be $5 trillion.''... ``The decline in home prices of 20 percent is a relatively minor decline so far and it has created so many problems,'' Faber added. ``The US is in much worse shape'' than Japan was when its stock market crash ushered in a decade-long slump in 1990. There is other juicy stuff in the . Some of Faber's other comments: The problem is excessive leverage, not housing per se. Stocks may rally once a bailout package is in place, since on a short-term basis stocks are oversold, but a durable bull market for financial is "out of the question." The one bubble that has not been pricked is US Treasuries. Higher interest rates are in the offing. While the dollar may decline sharply in the next few days, Faber regards it as attractive because even though the US is in bad shape, the rest of the world is even worse off.
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 3:54 PM » Credit Markets Predictably Not Happy Right Now
    Published Fri, Sep 26 2008 3:54 PM by feeds.feedburner.com
    As we reported earlier, central banks have been providing emergency liquidity, but it has not coaxed nervous investors off the sidelines. From the: “There is extreme lack of liquidity in the short-term markets,” Kevin Giddis of Morgan Keegan told Dow Jones Newswires, noting he has seen no commercial paper trade so far this morning. “Each moment that the government’s bill gets held up, things will remain like this. They need to calm markets.” The interventions we've had to date have, by any standard, been massive, yet have failed to bring lasting relief. The idea that a $700 baillout bill is a "comprehensive solution" seems more than a tad optimistic. From: In the last two weeks — if I am reading the Federal Reserves’ balance sheet data correctly — the Fed has: Increased “other loans” to the financial system by around $230 billion (from $23.56b to $262.34b); Increased its “other assets” by about $80b (from $98.67b to $183.89b); Increased the securities it lends out to dealers by $60b (from $117.3b to $190.5b); That works out to the provision of something like $370b of credit to the financial system in a two week period. That may be a bit too high: the outstanding stock of repos felll by $40b (from $126b to $ 86b), leaving a $330b net change in these line items. But that is still enormous. The most that the IMF ever lent out to cash strapped emerging economies in a year? $30b, in the four quarters through September 1998 (i.e. the peak of the 97-98 crisis). The most the IMF ever lend out over two years? $40b, in the eight quarters through June 2003 (this covered crises in Argentina, Brazil, Uruguay and Turkey) This is a very real crisis. The Fed’s balance tells a story of extraordinary stress. I never would have expected to see the Fed lend out these kinds of sums over such a short-period. Setser also says there is not sign of foreign creditors abandoning US assets, as custodial holdings at the Fed have increased. FT Alphaville reports that . I couldn't...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 2:49 PM » Mr. Greenspan, please shut up
    Published Fri, Sep 26 2008 2:49 PM by feeds.feedburner.com
    This guest post is from: a veteran business journalist who writes the blog , a humorous look at marketing, business and his dog. If you’d like to submit a guest post . “There’s no question that this is in the process of outstripping anything I’ve seen, and it still is not resolved and it still has a way to go,” Alan Greenspan said last Sunday. This sentence can be applied equally to both the sub-prime/credit-crunch/what-have-you mess and the destruction of Greenspan’s reputation as a financial genius. Each passing bankruptcy makes it clearer that Mr. Irrational Exuberance is responsible for the two things at the heart of this entire thing: Easy credit and minimal oversight. His constant refusal to raise interest rates meant that more money was always available for any thing – whether or not that thing was actually economically sustainable. At the time most said this was “finessing” the problem. Now it is clear to all of us – just as it was to some at the time – that finesse is another word for delay. And with each delay, the size of the problem compounded. To make it worse, Greenspan and the Fed did nothing to see if these loans were actually any good. As : Under the Home Ownership and Equity Protection Act enacted by Congress in 1994, the Fed was given the authority to oversee mortgage loans. But Greenspan kept putting off writing any rules. As late as April 2005, when things were seriously beginning to go wrong, he was saying that subprime lending would work out for the common good—without government interference. As a result the US mortgage industry came to resemble a Ponzi scheme. Mortgage brokers made bad loans because they made money whether or not those loans were paid off. They just passed the risk along to the next company. That company made its little slice of the revenue stream by bundling up a bunch of those bad loans and selling them (and any risk) to the next step in the chain and so on and so on. As long as you weren’t last in the chain it was exactly...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 2:48 PM » Legislative process sometimes not very pretty
    Published Fri, Sep 26 2008 2:48 PM by themessthatgreenspanmade.blogspot.com
    It was short and sweet, but very clear. The silver-tongued leader of the free world has "willed" the much-needed bailout legislation into being and, therefore, it will happen. Good Morning, My administration continues to work with the Congress on a rescue plan. And we need a rescue plan. This is uh... it's hard work. Our proposal is a big proposal. And the reason it's big - and substantial - is 'cause we got a big problem. We also need to uh... move quickly. Now, anytime you have a plan this big, that is moving this quickly, that requires legislative approval, it creates challenges. Members uh... want to be heard, they want to be able to express their opinions, and they should be allowed to express their opinions. There are disagreements over aspects of the rescue plan, but there is no disagreement that something substantial must be done. The legislative process is, sometimes, not very pretty. But, we are going to get a package passed. We will rise to the occasion. Republicans and Democrats will come together and pass a substantial rescue plan. Transcribing the words of our president once again yields a new appreciation for the political leadership in Washington. While some doubters may have had their faith restored in the financial system - the gold market apparently didn't see things that way.
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 2:48 PM » The Mortgage Servicing Sector Has Failed & Is In Complete Chaos
    Published Fri, Sep 26 2008 2:48 PM by loanworkout.org
    The facts remain that without provisions mandating loan workouts and loan modifications, increased regulation on mortgage servicers, servicer accountability and without complete 100% control of these mortgages, themselves, this bailout plan WILL NOT work. Well, at least for the people on Main Street losing their homes. The proposed $700 bailout proposed by U.S. Treasury Secretary Henry Paulson, in [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 2:48 PM » Wachovia Finally Addressing Their Pay Option Portfolio
    Published Fri, Sep 26 2008 2:48 PM by mrmortgage.ml-implode.com
    Wachovia, who at last count owned $122bb of the most toxic loan every created (the Pay Option ARM), has taken on an aggressive initiative with mortgage brokers/bankersto help them refi their way out of their financial troubles. They hope to refi about 30% or 135k loans over the next couple of years. The Pay Option ARM, in part, just took WaMu down and many think Wachovia will be next. Wachovia’s plan is to dole out leads to mortgage brokers/bankers and have them refinance the loans via Fannie/Freddie or FHA. Now that the Government (US taxpayer) is the lender of last resort, why not? They are even talking about carrying back second mortgages for those in a serious negative equity positions. However, I think FanFredFHA and the borrower may frown upon that a bit. In my opinion, this is a great approach but I think they underestimate the severity of the negative equity in states in which they own the most Pay Options and overestimate the quality of their borrowers. Remember, I have told you many times, the nickname in the mortgage industry for World Savings was ‘The Heartbeat Lender’. That’s because anyone with a heartbeat could get a loan there. It was Wachovia’s purchase of World Savings in CA that led to their downfall. I also think they overestimate the borrowers willingness to get out of their ultra-low payment Pay Option ARM into a fixed rate loan without a serious principal balance reduction. It is all about the monthly payment and having equity in the home, right! Lastly, they will be tempted to focus on the worst borrowers first, which could prove to undermine the project. With lending guidelines magnitudes tighter than they were when these loans were originated and values down 30-70% in the hardest in Pay Option regions, I have doubts they will be able to make a meaningful dent. However, for the ones that can’t be helped if Wachovia gets aggressive about proactive loan modifications they may be able to achieve their goal. For those that can’t refi through this...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 2:36 PM » WaMu Failure Puts Renewed Pressure on Nat City, Wachovia
    Published Fri, Sep 26 2008 2:36 PM by www.thetruthaboutmortgage.com
    The government better get moving on the bailout, with renewed pressure on some of the largest U.S. banks poised to wreak even more havoc on the flagging economy. National City saw its share fall as low as $2 in early trading today, a new all-time low for the struggling Cleveland, Ohio-based bank. That led spokesman Kelly Wagner [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 1:17 PM » Washington Mutual Shut Down by OTS
    Published Fri, Sep 26 2008 1:17 PM by www.thetruthaboutmortgage.com
    So much for the merger with Chase; instead the largest bank failure in U.S. history. Late Thursday evening, Washington Mutual was shut down by the Office of Thrift Supervision and the FDIC was named receiver, making it the 13th failure of the year. At the same time, JP Morgan Chase acquired the assets of the failed thrift [...]
    Click Here to Read the Full Article

    Source: www.thetruthaboutmortgage.com
  • 11:27 AM » Wachovia Hit by Concerns
    Published Fri, Sep 26 2008 11:27 AM by feeds.feedburner.com
    In the wake of Washington Mutual’s failure Thursday evening, financial sector stocks are pressured heavily in early trading as investors wonder who is next — Wachovia Corp (WB: 10.7499 -21.53%) in particular.
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 11:06 AM » Cuomo adds the credit default swap market to his short selling probe
    Published Fri, Sep 26 2008 11:06 AM by wallstfolly.typepad.com
    Attorney General Andew Cuomo is expanding his probe of short sellers to also include the credit default swap market. According to the WSJ:Mr. Cuomo's office Thursday morning subpoenaed data from three providers of pricing and trading information that operate in...
    Click Here to Read the Full Article

    Source: wallstfolly.typepad.com
  • 11:05 AM » A History of Hedge Funds
    Published Fri, Sep 26 2008 11:05 AM by www.minyanville.com
    Editor's Note: The following originally appeared on September 29 2003 and in light of current events has been reprinted here for the benefit of the Minyanville community.As the SEC progresses toward rules to regulate hedge funds I thought it a good time to talk about their history and development as well as their current and future role in the investment world. As these funds become a more and more integral part of the investment process it's important to understand where the media and other laypeople are misinformed about how they operate and how they affect the financial system. This ...
    Click Here to Read the Full Article

    Source: www.minyanville.com
  • 11:04 AM » How Does the WaMu Failure Compare?
    Published Fri, Sep 26 2008 11:04 AM by Seeking Alpha
    submits: It was announced Thursday, after-hours, that the FDIC is taking control of Washington Mutual (WM) and selling its deposits as well a number of branches to JP Morgan (JPM) for $1.9 billion.D Losing $6.3 billion in the last three quarters and getting cut to "junk" status didn't give WM many options to choose from. $19 billion in losses is projected through 2011, but some say the number could be as high as $30 billion.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 11:03 AM » Investors Flee Commercial Paper Markets
    Published Fri, Sep 26 2008 11:03 AM by www.minyanville.com
    The bailout of the financial system has officially become a typical Washington dog-and-pony show. Partisan politics it turns out do in fact trump economic expediency and our elected officials' desire to act in the best interests of their constituency. Meanwhile back in reality the short-term money market -- the oil that greases the gears of the financial system -- is coagulating. According to the Wall Street Journal cash is flowing out of the commercial paper market at an alarming rate. In the past two weeks the market contracted by $113 billion the largest amount since last summer when the Federal Reserve was forced ...
    Click Here to Read the Full Article

    Source: www.minyanville.com
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