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A quick note on the ZH story of Wells Fargo accounting shenanigans
The lead story this morning of ZH is "The Only Thing Better Than A Zero Hedge? Wells Fargo's "Never Lose" Economic Hedge", explaining more accounting shenanigans (if you read the links below, you will see that I have caught Wells in a few rather aggressive interpretations) related to MSR's. One thing that was noted was the inputs for valuing MSRs using interest rates as was extolled by management. Well...
The biggest input for MSRs are foreclosures, not interest rates. The interest rate argument is academic (assuming a refinance, that may or may not happen when few can qualify) while the foreclosures are happening at a much more rapid and prevalent clip and are much more likely to happen. The foreclosures are also a guaranteed end to MSR income. You can't service a loan on an REO, now can you? So while interest rates are remaining steady and can be put into an MSR valuation formula for a positive GAAP dollar generating result, foreclosures are on the rise and will continue to be, which will (and rightfully so) drive down the values of MSRs. This is probably why (the more academic) interest rates are used for inputs in lieu of a straight pipe to the foreclosure rates.
For those who haven't read my take on Well's Q4, you can read it here: http://boombustblog.com/Reggie-Middleton/1293-The-Wells-Fargo-4th-Quarter-Review-is-Available-and-Its-a-Doozy.html.
Anybody who is a member of my blog should download the forensic reports from 2009 to remind themselves of the amount of issues that reside within Wells. It is very, very overrated.
Your blog is pretty good and impressed me a lot. This article along with the images is quite in-depth and gives a good overview of the topic.
http://www.logodesignconsultant.com/
reggie, since the govt has devised incentives for wells to do workouts mod's or whatever the next failed 'we are the govt and we are here to help' program....can they also be paying them to 'look' like they're servicing us? i mean msrp's are...until they're not. who says?
reggie, just in case you missed it, check this out, told you buybacks are going to be a HUGE story this year, the opposing armies of auditors are amassing.
http://online.wsj.com/article/SB1000142405274870434310457503354388620094...
Just wait until the FHA gets into the act. The program is full of fraud. I know the liberals will get mad at this but I really believe that lying on legal documents (ie: a mortgage application) became much more acceptable ever since Bill Clinton lied under oath. Heck, if the President can do it why not me? It's only a silly mortgage! Anyway - people who made material misrepresentations on their mortgage application should be blackballed from any modification and/or refi program. Enough is enough already
i recall you saying that ghost....gonna be interesting to watch that battle.
Warren Buffett is a F#%%@ Crook like the rest of Wallstreet along with there rebuplican Politicians who work for them.Republicans Suck plain and simple they care nothing for Mainstreet America.The stupid ass tea partyers are blind and dont see that Conservatives repubs dont give a rats ass about them, just wallstreet and corporations who line there pockets.
The republicans' disingenuity is obvious. The democrats' disingenuity is equally obvious. Just because opportunistic repubs have attempted to step out in front of the tea party movement & and claim it as their own does not negate the validity of it. As an independent conservative, I for one ain't falling for it.
The tea party thing isn't pro-republican or anti-democrat. It's anti-establishment. It's about purging the system of career politicians & voting in some fresh faces that are capable of being concerned with things beside the next election. It's pointless to continue the repub vs dem debate because at this point it has been well established that they all serve the same central banking master (if you were paying attention that is).
Buffett is a big contributor and supporter of the democratic party.
well we could go down the list of economic castrations orchestrated by the Democratic party....
but the argument is too freakin stupid to waste time on...
dude, what are you doing at ZH with that left/right paradigm BS?
and democrats are their mirror image - the same
bunch of wealth worshipping bankster loving crooks
as the republicans....the exact same policies....
blobama was george bush's 3d term.....the
obushma administration is alive and well....
looking for wfc to end up on the squid con list.
These Big Banks have >> 3rd Level Accounts .
not on the books, well hidden , above the IRS.
If the IRS could see what they are doing... They
would all be paying big fines from Jail..
Excellent points, Reggie. Thanks for sharing.
I'd like to conduct an informal poll. Who is slimier, Howard Atkins or Warren Buffett?
Thanks Reggie.
Well Done Reggie I enjoy your insight.
reggie,
you don't think the ever changing government policies effect MSR's? How is it possible to model that?
Thanks Reggie. Your insights are appreciated by many.
Oh yes thank you so so so much Reggie. Your insights are amazing. So wonderful. I've been a member of the boombustblog since 2001 and I've made millions from your predictions. It's almost like you're clairvoyant, able to see what no one else can see. Wow you're the greatest.
What's your myspace?