The FDIC's Other Friday Gambit

Marla Singer's picture

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Fri, 11/13/2009 - 13:51 | 129883 digalert
digalert's picture

grrrrr restrain grrrrr calm grr, ok, I'm getting used to this stuff.

Fri, 11/13/2009 - 13:58 | 129893 chumbawamba
chumbawamba's picture

"Seems to have become"?  It's been like that for a while, Marla.

I am Chumbawamba.

Fri, 11/13/2009 - 14:04 | 129901 ghostfaceinvestah
ghostfaceinvestah's picture

Good catch.  Lots of regulatory forbearance all over the place.

How much credit for insurance coverage are the banks getting against the insurance they bought from now-single-B-rated mortgage insurers?

Our entire financial system is insolvent but is being given the opportunity to "earn out of it".  Worked so well during the early days of the S&L crisis, why not try it again?

Fri, 11/13/2009 - 14:04 | 129902 economessed
economessed's picture

I'll say it again:  Finance and Accounting is on the verge of being an X-Games event.  In addition to 75 foot tall skateboard ramp tricks, 2,000 foot long snowboard tube acrobatics, and 145 mph dirt bike aerial loops through flaming hoops, CPA's will restructure balance sheets and repackage debt in America's newest extreme sport.

Fri, 11/13/2009 - 14:07 | 129908 Cognitive Dissonance
Cognitive Dissonance's picture

From the sublime to the ridiculous. The many different ways they can cook the books is not limited by their imagination but by our tolerance. Anyone had enough?

I didn't think so.

OK, bank failure Friday is here once again. Let the world continuously refresh the FDIC home page waiting on the magic number for tonight. I guess all that matters is who's taking book and what's the over/under for 11-13-2009?

Fri, 11/13/2009 - 14:12 | 129920 RozzertheDropsky
RozzertheDropsky's picture

Let's set it at 8, just to start the bidding.

Fri, 11/13/2009 - 14:47 | 129959 earnyermoney
earnyermoney's picture

I'll take 9 failures and 2.5 Billion hit to DIF

Fri, 11/13/2009 - 19:26 | 130275 geopol
geopol's picture

I'll take three hundred,, 36 billion to hit the DIF...Can we talk??? Thats conservative...Let's get fucking real here,,, the easier question is,,what banks are not insolvent?


FDIC, You need a loan??? Timmy has a smile on his face..

Fri, 11/13/2009 - 15:09 | 129994 Don Smith
Don Smith's picture

I take the under, but just barely.  I'm guessing 6-7.  No more than 1 with assets over $1B.


Perhaps the over/under should be cumulative impact on DIF?  Shall we set the over/under at $1.5B in DIF losses?

Fri, 11/13/2009 - 15:20 | 130016 Cognitive Dissonance
Cognitive Dissonance's picture

As long as I get to hold the cash, I don't care where or what is set. Considering I'll run off with the money and you guys will get bailed out, what difference does it make? Did I mention I only take cash?

Fri, 11/13/2009 - 14:09 | 129913 RozzertheDropsky
RozzertheDropsky's picture

Shocking, but you seem to be suggesting that banks would play games with mortgage values on their books in order to give the appearance of solvency where none exists. I'm trying to think if there's anything in recent history which is sort of like this. No, can't think of it. This is brand new.

Fri, 11/13/2009 - 14:16 | 129924 kaptainkrunch
kaptainkrunch's picture

ENRON is peanuts to what is now taking place.  damn shame..

Fri, 11/13/2009 - 15:02 | 129980 ghostfaceinvestah
ghostfaceinvestah's picture

yeah, what's going to be really interesting is the extent to which the auditors "play ball" this time on the annual statements.  unaudited quarterlies are easy for fudging numbers, but auditors haven't forgotten the lesson of Andersen.  i expect a few battle royals between CFOs and regulators on one side, and auditors on the other.

Fri, 11/13/2009 - 19:47 | 130294 geopol
geopol's picture

Jeff Skilling, based on what is happening , should be home without monitoring on a $20.00 bond..

Fri, 11/13/2009 - 14:18 | 129927 SDRII
SDRII's picture

harry winston banner ad...a compliment to ZH readers?

Fri, 11/13/2009 - 14:54 | 129967 Anonymous
Anonymous's picture

Well I'm sure this will all end well.

Fri, 11/13/2009 - 15:15 | 130005 Anonymous
Anonymous's picture

The understanding that I got from this memo is that is a bank does a loan mod on a home they get to keep the original value of the asset on their books. Wow, that is an incentive to do a bunch of loan mods.

Fri, 11/13/2009 - 16:07 | 130060 deadhead
deadhead's picture

Thanks for this report Marla....well written and greatly appreciated!


Fri, 11/13/2009 - 18:40 | 130218 Gwynplaine (not verified)
Gwynplaine's picture

Keep up the good work Marla.  I've learned a lot in the past few months.  Thanks.

Fri, 11/13/2009 - 19:50 | 130303 faustian bargain
faustian bargain's picture

cost to DIF:

Orion - $615mil

Century - $344mil

Sat, 11/14/2009 - 02:41 | 130491 faustian bargain
Sat, 11/14/2009 - 09:46 | 130580 torabora
torabora's picture

I can spin up a bank, give myself a fat salary, BK it, and retire happily ever after....right? That's OK?

Sat, 11/14/2009 - 16:21 | 130763 Breaker
Breaker's picture

The FDIC language quoted in the article does not say delinquent loans can be restructured every 90 days and stay at 50% valuation. The relevant provision is " . . . provided the loan, as modified, is not 90 days or more past due."

The language allows repeated restructurings of loans that are NOT delinquent without incurring the 100% valuation.

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