Peeking Behind JPM's Voodoo Numbers, As Jamie Dimon Confirms Borrowers Live Mortgage Free For 14 Months Before ForeclosureSubmitted by Tyler Durden on 10/13/2010 - 08:16
Some accounting voodoo to start off the day. In a nutshell - the bank which missed total revenue expectations of $24.28 billion by almost half a billion at $23.824 (which you may find unadjusted on one place somewhere in the attached presentation but most likely not), and which is entering Q4 with the foreclosure fraud crisis chip on its shoulder, and halted mortgages, somehow is lowering its net charge-off provisions estimate by over a billion. Which is why, hey presto, earnings of $1.01 "beat" expectations of $0.88, and the robotic headline scanners go nuts over the stock. More importantly, in discussing fraudclosure, JPM admits that by the time there is a foreclosure sale, borrowers are on average 14 months delinquent. In other words, all those who end up being "thrown out" on the street, live mortgage-free for over a year! And one wonders where all the excess marginal money to buy worthless trinkets comes from...
- Asian stocks advance as Japan Machinery orders, Intel sales beat estimates.
- China has $16.9B trade surplus after exports rise 25% in September.
- FDIC floats rules on closing firms; proposals require creditors to take hit.
- Fed tilts to more monetary easing; Minutes show likelihood of QE2 in November.
- Finland to raise $2B from sale of five-year bonds.
- Foreclosure delays may cost US banks up to $6B, FBR's Miller says.
- Hong Kong to temporarily restrict immigration to the city based on real-estate investments.
Something odd happened today when the ECB disclosed the number of banks using the Fed's USD swap facility - it increased by 100%. And granted it was an increase from one bank to two banks, but still. As we have been highlighting for over a month, one bank had for five weeks in a row been responsible for borrowing $60 million from the Fed using the ECB as an intermediary, paying roughly 1.19% for the privilege, implying it had been constantly locked out of the USD interbank market. Today, bank #2 joins in, this time for a much more substantial amount of half a billion dollars. The most likely reason for this (absent some major behind the scenes front-end deterioration in a PIIGS bank, which in Europe tends to be given), is that as we highlighted yesterday, European liquidity conditions have recently gotten far more tight, courtesy of the massive liquidity extraction following the latest LTRO expiration. And whether one looks at it as a 100% increase in the number of banks, or almost 1,000% increase in the amount of borrowings, the development is certainly not good. Which, the cynics out there may say, is why stocks are up: it is most certainly not due to JPM missing revenues estimates, and booking and projecting a hilarious drop in charge-offs in light of the foreclosure freeze which will do precisely the opposite. But who cares about reality.
RANsquawk European Morning Briefing - Stocks, Bonds, FX etc. – 13/10/10
A quick look at gold price action demonstrates that someone somewhere is actively debasing currencies. An even quicker scan of headlines confirms this to be the case: per Reuters "Bank of Japan Governor Masaaki Shirakawa said on Wednesday the central bank will consider expanding a new scheme for buying assets ranging from government bonds to exchange-traded funds when deemed necessary." Harakiri Shirakawa continued: "We have taken a very bold measure ... If the need arises in the future, making further use of the new fund as part of monetary policy is one of our strongest policy options." Judging by the chart below, either gold has a tent in its pocket or was really happy to hear this announcement.
Park Avenue Bank CEO Charles Antonucci Admits To Stealing $11 Million From TARP, And To Being Too Small Too SucceedSubmitted by Tyler Durden on 10/12/2010 - 22:30
The saga of Park Avenue Bank's Charles Antonucci is over. The bank president who on March 15 was arrested on charges of engaging in a broad range of illegal conduct that
contributed, in part, to the bank's demise, but most importantly to stealing $11 million from TARP. Well, tonight the FBI has just announced that Antonucci has formally admitted to and pled guilty to securities fraud relating
to his attempt to fraudulently obtain more than $11
million worth of taxpayer rescue funds from the Troubled Asset
Relief Program ("TARP"), bank bribery, embezzlement of bank
funds, and participating in a $37.5 million scheme that left an
Oklahoma insurance company in receivership. Then again, this is what every other CEO in America is guilty of every single day. Which means that only thing Antonucci really pled guilty to was being a stupid enough to keep Park Avenue Bank Too Small To Succeed. As we all know the TBTF curtain is the only alibi all the other criminals in the industry resort to when the congressional theater convenes. Moral of the story: unless you can threaten the world with collapse, you will go to jail. And the penalty for this magnitude of stupidity is death: "Antonucci, 59, faces a maximum sentence of 135 years in
prison on the charges to which he pled guilty. He is scheduled
to be sentenced by the U.S. District Judge Naomi Buchwald on
April 8, 2011." So one down, and only about a million more to go... But not before they all collect the $144 billion in bonuses they have worked so to destroy shareholder value for this entire year (or so we can dream).
The first thing to know about junior resource exploration stocks is that they are volatile. You can make 50% in a day, and you can lose 50% in a day. This is due largely to the fact that they tend to be thinly traded. Thus, a whiff of good news, or bad, can overwhelm opposing trades. In the absence of a countervailing bid, the stock can move sharply until it reaches the point that someone is willing to step up and take the other side of the trade. If the news is bad and there’s no bid, things get ugly really quickly. Conversely, if the news is good – for example, the recent case of the AuEx buy-out – the volume of buyers rushing to get a hold of stock can blow the proverbial doors off.
Yesterday, Citigroup's homebuilding team hosted a call with investors in which the guest speaker was Adam Levitin, an associate professor of law at Georgetown University. Far from providing the "all green" call participants had desired, Levitin said that what we have recently seen and heard in the news is “just the tip of the iceberg” and that the foreclosure halt may well cause a "systemic problem", as was suggested on Zero Hedge when the news of the Florida's court involvement was first made public (here and here) a month ago. And since by now everyone knows what the key tension points in this potentially massive development are, we will cut straight to Levitin's somewhat unpleasant conclusions: "Our speaker predicted that more and more lenders are likely to stop their foreclosure processes in both judicial and non-judicial states. He also expects more states’ attorney generals to get involved. At the federal level, it is possible than banking regulators might step in as there is legal and reputational risk for the banks involved. Ultimately, if these issues do in fact escalate, the Administration may try to broker some sort of settlement. If such deal brokering does take place, Levitin believes that “some payment” will be exacted from the lenders and servicers. The Administration could bargain for more mortgage principal write downs." In other words, the endgame will likely end up being the extraction of material concession from the banking syndicate, in the form of systemic mortgage writedowns, with Obama's blessing, which will likely put the 25% of homeowners who are underwater on equal footing with the other 75%. It may turn out that this was the plan all along. And people naively wonder why banks have hundreds of billions in cash stashed on the sidelines...
Has the foreclosure scandal taken its first commercial real estate casualty: tomorrow's foreclosure auction of bankrupt Stuyvesant Town (which will sell for less than half its cost) has been postponed, without any specific reason, leading some to believe that the residential title scandal may have spilled over into CMBS land. From Reuters: "A foreclosure auction of Stuyvesant Town/Peter Cooper Village, the massive Manhattan apartment complex that may be worth less than half what it was just three years ago, was postponed on Tuesday for the second time this month. CWCapital Asset Management, which represents the bondholders who own the $3 billion mortgage on the property, declined to say why the auction had been delayed until Oct. 22 from Oct. 13. It was originally scheduled for Oct. 4." To be sure, this is the second time the auction has been delayed so it may be completely unrelated to what is currently the main topic in the mainstream media, although god's propensity to play dice has been previously characterized best by one Albert Einstein.
Wondering if you are one of those suckers paying a mortgage in limbo, with all the payments due to some non-existent mortgage noteholder getting retained at the servicer banks? Well, if you can spare 3 minutes then "Where's the Note" is for you. The website, which is on the verge of a viral break out, has a simple message: "Whether you are facing foreclosure, have an underwater mortgage,
or are just a concerned homeowner, it’s important that you contact your
bank and demand to see the original note on your mortgage. It only takes a few minutes using our free online tool." Quick, simple and easy. And in a few days your mortgage bank will have no choice but to tell you if they do in fact have your original mortgage note. And if not - welcome to cost-free living, courtesy of MERS and millions of rushed and fraudulent mortgage note assignments. Yes, it will mean the end of the GSEs, but it will also mean the accelerated write downs on thousands of MBS tranches which will rapidly collapse into insolvency (there is only so much Mark to Unicorn can cover up) and eventually take the insolvent TBTFs banks with them.
Look inside for details.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 12/10/10
The fed is probably the most morally "flexible" central bank ever, I will leave it there and that is about the most polite statement one can make. After serving us last winter concerns about asset bubble creation, dangers of building up expectations when it comes to rates policy, and the need to keep the market on its toes, we have now entered a phase when the Fed instead alley-oops every batch of bond purchases to the market in advance to make sure it doesn't dip while they reload. It's plain pathetic. - Nic Lenoir
Goldman Sachs' response to the FOMC: "Minutes of Sep 21 meeting confirm that FOMC was dissatisfied with the performance of the US economy even though most did not expect either renewed recession or deflation. The committee considered a range of options, focusing on Treasury purchases but including the possibility of adopting target paths for either prices or nominal GDP. Most participants appear to have thought that the status quo would justify renewed easing relatively soon, but a few thought more weakening would be required." Spot on Jan - now please ask the Spear Leeds boys if they can please invert every single input function in REDI, so that Buy is Sell, and people can at least pretend they are Selling on bad news, and vice versa...
3.5 Million On The Streets And Rising: As French Strikes Escalate, Just How Serious Is The Situation?Submitted by Tyler Durden on 10/12/2010 - 15:18
Even as everyone in America seems to have anywhere between 2 and 4 opinions on Fraudclosure now that the topic is firmly planted in the MSM newsflow, things in Europe are not looking any better, even though most people there shun McMansions for their grandmothers' houses. Enter France, where an ongoing national strike (into its fourth day) was just extended by another 24 hours, and 3,500,000 people seem to have no interest in returning to work with any sense of urgency. Apparently the severity and penetration of the strike is much greater than (under)reported on US media, as seen by the following email from Goldman's Natacha Valla to clients, which explains why things may soon turn much worse.