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Three Wholesale Credit Unions Nationalized As US Securitizes $50 Billion In Legacy Toxic Assets; Failure "Sweep Under The Rug" Friday Just Got Real
It is Friday afternoon, and of course the most troubling news come out. Last week it was that the idiots in charge are raising their stake in Ally to 80%; this week also did not disappoint: the WSJ reports what can arguably be the most important story of the week - to wit: the government just seized three wholesale credit unions and has launched an "unusual plan" to manage $50 billion of troubled assets inherited from failed
institutions. The unions taken into conservatorship include Members United Corporate Federal Credit Union in Warrenville, Ill.,
Southwest Corporate Federal Credit Union of Plano, Texas, and
Constitution Corporate Federal Credit Union, Wallingford, Conn., which
had a total of $19.67 billion in assets as of July. As for the funding of the new bailout program: "To help fund the rescue, the National Credit Union Administration plans
to issue $30 billion to $35 billion in government-guaranteed bonds,
backed by the shaky mortgage-related assets." Once again, uncle Sam bails out those who have committed federal crime and sticks Joe Sixpack with the bill. How is it a crime? "Under federal rules, wholesale credit unions were supposed to invest
only in safe, liquid assets. But some institutions chased higher returns
by loading up on securities backed by subprime mortgages or other risky
loans. Their portfolios were decimated by the mortgage meltdown."And here is the punchline: "Officials said the plan won't cost taxpayers any money." How can one not simply laugh at the continued lies and crimes that occur each and every day, and are perpetrated by every single person in charge of this collapsing country?
And this kind of shit continues to this day, as the morons at the pension and mutual funds are now loading up on high yield debt and stocks trading at thousands of forward PEs, which will be decimated the second rates start turning up. And guess who will pay for that next rescue, which will come just as "free" as this one, save for the several hundred billion of new bonds that will have to be issued again... and again... and again.
More from the WSJ:
[This intervention] marks the latest aggressive intervention by U.S. government officials
into a corner of the financial system threatened by losses. Bad bets on
mortgage-backed securities have killed five of the nation's 27
wholesale credit unions since March 2009. The federal government, which
now controls about 70% of the total assets at such credit unions, also
said the surviving institutions will be reined in so that they take
fewer risks with their investments.
And some more:
Losses on the mortgage-backed securities held by the five seized credit unions are expected by regulators to total about $15 billion. Wiping out the capital of the failed institutions will cover a chunk of those losses, but the remaining $7 billion to $9.2 billion eventually will be passed along to the nation's 7,445 federally insured credit unions in the form of future assessments.
Bert Ely, a longtime financial-industry consultant in Alexandria, Va., said regulators share some of the blame for the resulting mess because wholesale credit unions were allowed to pursue a strategy that was "viable only because of what clearly has turned out to be excessive risk-taking."
Ms. Matz, the nation's top credit-union regulator, said the investment losses reflect "unprecedented economic times" and "bad decisions" by regulators, credit-union managers and board members "by heavily over-concentrating in mortgage-backed securities."
New regulations issued by the NCUA on Friday will make oversight of wholesale credit unions much tougher and are meant to fix any regulatory shortcomings, she said.
As part of the plan announced Friday, regulators will eventually wind down the operations of the five failed credit unions, which together had about $50 billion in shaky mortgage-backed securities on their books, according to Larry Fazio, NCUA's deputy executive director. Based on current market values, those securities are worth roughly half of their face value, representing a potential loss of $25 billion.
And oddly enough, this whole "viable only because of what clearly has turned out to be excessive risk-taking" strategy continues, and now has focused on pension funds like the Illinois TRS which is counting down the days to its own "conservatorship." Only now it is occurring in broad daylight, with blogs like Zero Hedge discussing it all day, yet nobody taking any action.... Much like nothing would have ever been done on HFT if the criminal practices of the cabal had not been exposed for all to see.
As for the tally, as another reader so well recaps it, here is the tally so far:
The federal government now runs the student loan business, has
controlling interest in the American auto industry, and controls the
wholesale credit industry, which essentially gives them control of
retail credit unions via control of their investment assets. They want
control of the health insurance industry and will take control by
running the private insurance companies out of business. They want
control of individual medical decisions, with veto authority.
We would add that the government also controls the stock market, the bond market, and the FX market.
Can the farce of the US "democratic" experiment just accelerate?
On second thought, the only way things will unravel is not for stock and bonds to gradually go to their fair values around 95% lower, but for everything to burst in a meltup of unprecedented historic proportions, as the very few remaining players terminally cannibalize each other. Perhaps it is time that those hoping for a fresh start start cheering every single uptick in the Dow Jones (the government still doesn't realize the S&P index exists), as all that does is bring us one step closer to the final disequilibrium.
Frankly, we have had enough of this farce.
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Too Small To Survive (TSTS).
God forbid this actually happen to stinkiest a-holes, BAC, C, JPM, etc.
Good thing this is announced, as usual, on Friday after 4pm or the market would have jacked another 200 points for good measure.
Guess who the Fed did NOT buy any of the $1.5T in mortgage-backed securities from.
Bank Failure Friday. So far just one.
Haven Trust Bank Florida, Ponte Vedra Beach, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Southern Bank, Boca Raton, Florida, to assume all of the deposits of Haven Trust Bank Florida.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $31.9 million.
....credit unions go to great lengths to explain they are not banks. So 1 little bank is great news. No wonder equities soaaaaared !!
You know, as bad as this is, things will still get worse. Things just are not fucked up enough. Yes, things look bad, and things look fucked up, but states have not declared bankruptcy yet and unions have not been kicked to the curb. Only after that happens will things be really fucked up enough.
FGB, I don't know why you get junked - you are right.!
Failure = Success and a branch out of W-Buttfuck's family tree, "no bank left behind."
Anyone a suspect yet? NOPE! Laws for the rich? NOPE!
As for the junking, I think someone's sensibilities were offended because they dislike the word FUCK. Which we all are to some extent or another. Junk that you wuss.
I think the junks came from suggesting chaos will ensue from kicking unions to the curb. But, there are some word pussies out there.
Here's a short, must watch video on the word FUCK: http://www.youtube.com/watch?v=26UA578yQ5g
There's two now CD.
Saw it this morning. Thanks.
North County Bank, Arlington, Washington, was closed today by the Washington Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Whidbey Island Bank, Coupeville, Washington, to assume all of the deposits of North County Bank.
The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $72.8 million.
http://bailoutsleuth.com/news/2010/09/regulators-close-one-florida-bank-...
Actually two banks .... but who keeps tabs anymore ?
at least it won't cost the taxpayers money. Only paper with a green print on it.
Wrong.
http://www.ncua.gov/
Wait, Wait, this was all part of the plan....
I 'm actually lying on the floor staring at the ceiling...
I have a theory banks fail when you fdrink margaritas...
The markets will forget this by Monday.
No citizen, the markets always perfectly price in all information. This will simply be priced in by Monday, and discovered by those qualified by the proper institutions to have no material impact. You are free to choose between a 6 month government sponsored re-education treatment or 6 months prison. Patriotism is freedom, freedom is service and service is citizenship.
Borders is having these amazing sales on books, some of them that I'd read many years ago. So last weekend, with a 40% off coupon, well, I bought a copy of 1984 (OK, it has the bigger print, OK?) to start reading this weekend.
I'm really excited to see how Our Dear President is doing vs. a 10% playbook.
- Ned
In the book, there is a guy who turns off the Big Brother television. There is a really nice quote that goes something like, "To break the really big rules you first have to obey all the small ones..." Whenever an institution fails I am reminded of 1984.
Unfortunately your quote has little merit when there are no rules to begin with.
Tell me what president got rid of the regulators. Who thinks this was an accident -- really.
If Im a citizen and the sheriff says all his staff can go home who really thinks this was a fucking accident when the mafia "accidently" takes over...
George W Bush is the biggest enabler of fraud and corruption of the modern era. WAKE UP PEOPLE, WAKE THE FUCK UP!
Please. We haven't had a real president looking for the country's best interest since JFK. Reagan could of been up there, but after taking that first bullet and surviving, he sold out just like the rest of em'...
Interesting about Reagan... did his policies really change much after that incident? I confess, I've never looked at his Presidency in a before/after light...
Regards
Ha! Perfect!!!
Makeyoumiss, Holy
Goldberg Variations
!!!!!!!!!!!!! You're a
Glenn Gould fan! Oh
that's marvelous! He would have been
78 years old on
September 25th.
The 6 Partitas are
to die for...
I'm seeing some more range time in my immediate future.
Golf driving range?
Enjoy your golf game!
And I don't think he means Range Rover time either...
Free range chicken time? Hey, they're free. :>)
free range eggs.
@ docj
My time on the range is spent with 7.62 x 39 and 9 mm Luger.
Keep the luger for nostalgia and pick up an accurate, reliable handgun in a calibre not less than .40 and at least 10 rnd. cap magazine
"Owning a handgun doesn't make you armed any more than owning a guitar makes you a musician." Col. Jeff Cooper, Gunsite
"A handgun is for fighting your way to your rifle which you shouldn't have put down in the first place" Clint Smith, Thunder Ranch
"Those who hammer their guns into plows will plow for those who do not." Thomas Jefferson
"Practice and proficiency, not caliber, will win a gun fight." Me
Keep your 9mm, and practice as much as you can.
I'll take Todd Jarrett with a .22lr over someone with a .44 magnum who never practices. Todd would have three bullets through your left eyeball bouncing around in your skull before you even pull the trigger.
With a virtual panic to own Treasuries of any stripe, race, or color...
I don't know why the Fed just doesn't outright nationalize the entire credit union sector.
Heh, the worst thing that could happen is that Treasury yields plunge again when this news hits the tape on Monday.
Then Uncle Gorilla can float off billions in freshly-flung 5-years, 10-years, and 30-years at practically zero cost.
After all, the Fed balance sheet can explode to infinity and it won't matter.
Who is going to "audit" the Fed?
No one.
Simple way to audit the fed. Don't give them anything. Then you'll know exactly what they have.
Even under the Freedom of Information act, which many have tried, Nobody. We are not Free while we have a FED.
No citizen, the FED protects your freedom by removing the responsibility for your destiny to their decree, this freedom from responsibility is true freedom. You may choose between a 6 month government sponsored re-education treatment or 6 months prison. Freedom is patriotism, truth is loyalty, loyalty is patriotism.
"
Heh, the worst thing that could happen is that Treasury yields plunge again when this news hits the tape on Monday."
You are joking right? Plunge? Over news like this? The fed just added almost 100 bill in leveraged money to the system. Billions can be found in the lobby cushions of any PD.
When you start talking trillions or quads, I'll start listening. Let keep focused on snp 1160-1180 n-kay?
Almost naked ladies, or begone!
Not pics of my Wif.
Robo, not as attractive as some of your earlier efforts--and they say the girls always look purtier at closing time. Who knew?
- Ned
That's no girl! It's a trap!
Do you work at one of the Fed's prop desks?
Give me a break Robo, the Fed needs destroyed, that is it. The rest is shit under the rug.
So, I have to ask, to what hairy beast is the Fed riding on? That ought to give you clue as to the real perspective of the problem. Kill that thing and the monkey falls off.
did you go see WS2 money never sleeps, robo? well, on bloomberg this AM oliver stone was brilliant. called out everyone, including firing timmy the dweeb. he just keep saying the system is wrecked. very critical. don't think i saw the whole interview. wondering if you can get a tape somewhere? Nouriel Roubini was on as well.
This is getting beyond ridiculous.
+trillion FRN's. I'm going to get drunk on scotch and try to forget all I know. Good weekend all.
Head bangs against wall.
This mortgage backed security nonsense broke YEARS ago. Did these credit unions miss this?
It's like suddenly having to pay for someone's lung cancer treatment because they missed this news that cigarettes are just poison.
Cancer treatment is free, now that Obama has that covered. What a good guy he is.
So, why haven't you been excised?
(Not my junk)
Actually beginning of 2k9 for the general public. Look - the scam was the shysters ability to AAA rate the MBS's to make pensions and the rest of the dumb money buy it (they have to buy AAA rated stuff.) This is what happens when you have the roosters watch the hen house. The CUs probably bought it but weren't fortunate enough to unload it like the TBTFs.
Only roosters?
How about roosters AND foxes? >>> fucked AND eaten!
Farmer Joe brought another young rooster back to the hen-house - the old rooster looks the newcomer up and down, and says "You think you're going to take over MY job here??"
New young rooster: "That's right, Grandad!"
Old rooster: "Look, I'm a bit old to get into a cock fight, and I'll willingly give up - IF you can beat me racing around the hen-house 3 times. All I ask is that I get a half-circle head-start."
Young rooster: "Sounds fine to me, Grandad!"
So they both square off at opposite sides of the hen-house, and it's ON! The old rooster is tearing up the dust, shrieking wildly, but the young Turk is gaining, round once, round twice, when Farmer Joe comes out of the ranch with his Ruger .22, and shoots dead the young rooster.
Farmer Joe: "That's the third fucking gay rooster that I've been sold this month!"
You're playing and things are going well. Then one thing goes wrong. Then another, then another. Then you feel like your suffocating. You know quicksand.
http://www.youtube.com/watch?v=gJXYrx0kEow
something strange was afoot at the circle k
You're playing and things are going well. Then one thing goes wrong. Then another, then another. Then you feel like your suffocating. You know quicksand.
+1000
Best. Football. Movie. Ever.
Jeeze Robo, no charts of 'shit stocks' breaking out to new 52W or All Time HIGHS by selling shit NO ONE should actually be buying right now? J/K but the pretty lady pics are better than a poop flinging gorilla!
Have a good weekend all, I am off to try some mushy this weekend!
Cheers
CKF
http://www.youtube.com/watch?v=1u_d2V_UvkQ
inertia keeps movin up slowly
Why would the owners of a failed business or sub-standard building willingly commit arson by torching their own property?
When you can answer that question, then you might be ready to tackle this conundrum: Why would the owners of the $USD reserve system willingly destroy what has amounted to a license to steal for almost 100 years?
It's dead, Jim. The big four killed the USA: demographics, (lack of) resources, outsourcing and insolvency. The people who know are showing their hand(s). They don't need their $USD reserve system when it no longer provides a means to extract wealth. QED
Right on. The signs that we're had passed the point at which there would be actual growth were picked up by those with real money and capital extraction has follwed since.
B9K9
"One Currency To Rule Them All"
+1
Geithner 3/25/2009: The continued use of the dollar as a reserve currency, he added, "depends..on how effective we are in the United States...at getting our fiscal system back to the point where people judge it as sustainable over time."
Prophetic, or merely letting your slip show?dog whistle to those who own him.
sustainable--one of their key words. hating it. - Ned
B9 - succinct. It like when Ray Liotta and Tony Peschy couldn't get anymore out of the night club.
Not quite -- the petrodollar is still extracting valuable commodities in exchange for electronic bits and green pieces of paper. Only problem is that the societal cost of running the reserve system in the form of tolerating outsourcing is killing our society. But, just as the French President said in the 70s when the reserve system was negotiated, the USD has a position of "exhorbitant privilege" -- net net the US economy got a free ride for a long time with the cost being borne primarily by the lower end of society as their jobs were sacrificed to keep this system going.
I need a professional woman. Not the kind you get on a date. Someone who really can go all night long, into the weekend and just...keep...going....
I think you mean a meth addict?
One with no teeth so she can give you a really good.......you know.
oh, just thanks CD, that mental picture is ruining what might have been a "Frisky Friday Nite" with the wife...:)
"I'll keep an eye out for your, sonny."
Chickenheadz bitchez!
And a flat head, to rest your beer on?
"I think you mean a meth addict?"
The best, but you gotta catch 'em early.
get 2 wigs. put one wig on each hand. Alternate hands. Scullcaps wont do. You should be able to outperform any professional.
LOL
Fudge-packer Frank has exactly what you're looking for. The only catch is you have to be a primary dealer, but then there is no way he will stop giving you everything you want.
Fed throwing hail Marys on a dark field. Time to go home, kids.
The tally should include control of residential real estate vis a vis Fannie and Freddie.
This is just more of Obama's stated goal of, you know, "spreading the wealth around"...
Don't say that here, you will be quickly pounced upon....
Pounce, pounce, pounce...970 tactical uses better steel. Lasts longer which could feasibly be an issue in the not too distant future.
How long can you keep borrowing to keep the house of cards alive.Paying off debt with more debt .How long is a Government Guarantee (I.O.U.) going to be worth anything at all.
I'm buying TBT next week.
2 late.
Check Rosie today, he's of a mind of long bond settling down to ~2.00 over next two years. Comparison to e.g. deflationary '30's where overnight to long bond spread is normally 200 bps. Bullish for Pimco total return (well, if it works out).
- Ned
The new normal takes hold, the shock and awe of QE 1 thru infinity now gone... just another day, just another Government Bailout.
The masses long desensitized, it is not $700b it is only $50b… never mind the fact that all of these QE 2 smaller amounts Will! Surpass the $700b, but not all at once so as not to raise the ire of the sheepeople.
The Dumbing down of America as well the handling / management of the People so as not to cause a ruckus… We all will suffer for allowing the majority to suffer in ignorance. That’s not an easy thing to stomach, but true none the less.
Yeah, you know what they say, "Americans are self-absorbed."
Death of the American Dream Poll.....Grim.....:
So much so that an opinion poll this week showed that 43 percent of those surveyed thought that “the American Dream” is a thing of the past. It “once held true” but no longer does. Only half the country believes the dream “still exists,” according to the poll, commissioned by ABC News and Yahoo against a background of dismal statistics on growing poverty, inequality, unemployment, and Americans without health insurance.
LinkReuters
The 57% whom believe in the dream must be the welfare crowd . The percent of believers will increase in 2011.
The camels die, the dogs howl and the caravan moves on. Next ownership stake will be the public pension funds. That won't cost the taxpayer anything either < snark > !!!
Well this should add another couple hundred points to the open on Monday. More problems solved every day...
Dam, I just put my shorts back on. Have to get naked again.
I am laughing -- so much that it hurts. Stop it...You're @#$%^& killin' me!
Looks like the goonzi paper ponzi scheme is vaporizing faster than an ice cube hurled into the suns center!!
Looks like this paper ponzi scheme is sublimating faster than a 400g gold bar hit with a nuclear missle!
looks like this house of cards is collapsing faster than an fully interconnected self-referential leveraged debt matrix hit by late payments and defaulting NINJA's!
Ben ponders the old question:
"If a quadrillion trees fall in the forest to print fiat currency and nobody sees them, do I have to make a sound?"
+100
.
Only F****n 200,they are really slackin,get that cheque book working overtime,just buy what you want knowing full well that when the balloon goes up you won,t owe a rats arse.Come on tricksters only 200 points thats childs play for these looneys.The new disease down at the docs,
"Well Mr Smith I am afraid you are suffering from a very bad case of Economists Finger " " Whats that Doc ? ","Well in Laymans terms you,ve been writing too many Goddamn Cheques"
Piddly assed bank and S&L closings? Ha!
The things we see are not the things that are happening. It's all sleight of hand.
The real activity will not be revealed until the host (us) is dead.
http://www.youtube.com/watch?v=ydg9r46AbGU&feature=related
That's going to get messy because I don't think there's an HFT algo that id's the 'greater fool' is there?
Hard 8s and 6s.
Gimme the 4, 6, 8 and 10 hardway, $100,000 each.
Press the 4 and 10. Double odds on 6 and 8.
$500,000 field bet.
Gimme 100x odds on the point.
$4,000,000 horn bet.
Gimme $8,000,000 on any craps.
100 billion on the SPY options, 10% margin, 100x leverage
What? Too big a bet? Over the table limit?
Did you hear that fellas. He's says I'm betting over the table limit. Ha! Ha!
Don't joke with me, pal. Do you know who I am?
Do you know what crew I run with? The Liberty Street Crew. The Maiden Lane boys.
My marker, my signature, is better than gold.
Get Ben the pit boss. I want the limit on this table raised, right now.
Creeping coup...Downward mobility with the meandering expertise of an Olympic skier...See you at the bottom if you make it...
CD
I found this imperative,,,,do not skateboard..inner ear problem..Do you have firewood??
My neighbor's house was just foreclosed on and he was kicked to the curb. He says he's willing to help gather firewood from his old place. You game? I hear maple cabinets give off a real nice smell when they burn. :>)
Plus heat,,,the essential..
make sure you have OSHA approved ventilation, you don't know what the Chinese used to "varnish" the maple to that wonderful woody-glow....:)
Don't forget the asbestos (made in usa).
Looks like someone was privy to this news because the equity markets were ridiculously strong today given the data released. You just have to shake your head. May also explain why the dollar was under so much pressure today.
Dollar under pressure because of Bernanke's deep teachings on the depression escape...
that, and maybe a few of the Chinese working the Holiday to buy up some Japanese bonds with... nm, you guessed it.
Regards
So "taxpayers" (read: Treasuries buyers) won't be billed, but the (customers of) 7445 other credit unions will. Oh that's fair.
http://keynesianfailure.wordpress.com/2010/09/24/why-this-time-qe-really-will-spur-inflation/
Impeachment time no? Forget November. Martial law anyone?
I'll make a gentleman's wager we see martial law before the next presidential election.
"marshalls" might not be who would normally be in that role. - Ned
dollar heavy=heavy metal. and they called him General Betrayus.
There's power in a (Credit) Union?
http://www.youtube.com/watch?v=DwbzxemJZIc&feature=related
BOOOOOOOOOOOM
These mother f****ers...how can they look any taxpayer in the eye and say that it won't cost us any money? If this loan is such a good deal why doesn't someone in the private sector make it!!??
Hehe....He said "private sector." I think I remember what that was...
hehhehehehehhehhhehhh...bunghole....hehehehehehhe...cornholio....hehehehehehh...do you threaten me?....heheheheh
But they said subprime was contained.. ?
"Under federal rules, wholesale credit unions were supposed to invest only in safe, liquid assets"
What, government bonds?
The Music.....
http://www.youtube.com/watch?v=RPFUjvgqejg
Geo-Have y ou ever listened to any of the stuff of Gil Evans; Sketches of Spain, Porky n' Bess with Miles; done in the late 50's. just asking because of the orchestial jazz selections who play. Milestones
that's the only reason i voted for clinton, cause he could blow a sax fairly well. wrong †
California is flat broke.
Yet there continues to be a mad rush to buy muni bonds here.
Why not start a new ETF called the "Powershares Credit Union Trust Bailout Portfolio."
Nah, forget that idea.
Better off floating a new IPO instead with the ticker CUBT "Credit Union Bailout Trust"
In today's environment, it would be oversubscribed and would probably rocket up 200% in 30 days.
After all, just look at this mania in Jinko Solar.......
A 3 bagger already.
Jim Sinclair called Robo: He wants his cartoons back.
Regards
So what? Do you not know the stupid trade?
Refer LDK.
Leo?
WTF? You actually post bearish news, which shows how borderline crazy the capital markets behave?
Have we broken Robo?
Nah. This is the classic Robo, rediscovered.
what i'm talking about. FANDANGO baby. Just don't get caught with your pants down when the music stops playing.
The prudent shall pay for the reckless, that is the way our system works now. All bow down to the alter of Moral Hazard!
Alter 'alter' to 'altar'. Sorry, I had to say it.
the alter (ego) of Moral Hazard....
SATAN...SATAN...SATAN!
Hold on a second. Let's review the math, or please correct me if I'm reading it wrong.
"Losses on the mortgage-backed securities held by the five seized credit unions are expected by regulators to total about $15 billion."
"which together had about $50 billion in shaky mortgage-backed securities on their books, according to Larry Fazio, NCUA's deputy executive director. Based on current market values, those securities are worth roughly half of their face value, representing a potential loss of $25 billion.
Last time I checked, 50 minus 25 was 25, not 15. Maybe it depends on how you define "expected" and "potential."
"the National Credit Union Administration plans to issue $30 billion to $35 billion in government-guaranteed bonds, backed by the shaky mortgage-related assets."
So the bonds being issued will be backed by assets that, AT BEST, may be worth enough to pay off the bonds. Amazing that someone would actually put their money up for this crap.
My understanding of the math goes like this.
There are $50b face value in bunk assets, optimistically estimated to be worth $25b.
The Feds have liquidated $15b face value at a $9.2b loss and plan to recoup that from credit unions through their federal insurance fees over 10 years.
The remaining $35b face value in bunk assets is being transferred to a "bad bank".
That "bad bank" will sell $35b in bonds, ostensibly backed by the bunk assets, but in reality backed by the federal government.
If magically the bunk assets recover, the bad bank will sell them and be able to pay off its bonds.
If not, the federal government will repay the bonds and still have the bunk assets. Then it will have to decide whether to bail out the loss on the remaining $35b face value of bunk assets (apparently estimated to be at least $16b), or charge it to the credit unions in yet higher insurance fees, or just keep on kicking the can down the road.
Please correct me if I'm wrong.
I think you make more sense.
you mean "i say, i say..iii think you make sense.."
I'm not sure the article has enough information in which to calculate the mechanics, but I don't think any assets are being liquidated:
"Losses on the mortgage-backed securities held by the five seized credit unions are expected by regulators to total about $15 billion. Wiping out the capital of the failed institutions will cover a chunk of those losses, but the remaining $7 billion to $9.2 billion eventually will be passed along to the nation's 7,445 federally insured credit unions in the form of future assessments."
So the expected losses (after the unicorns poop skittles in a rainbow sky) will be $15 billion. Some of these losses will be covered by the forfeiting of capital by the member credit unions. The remaining losses after the capital forfeited is the $7-9.2 billion.
Of course, there will be no liquidations for the foreseeable future. Would hate to actually see what they were worth. Better to e-x-t-e-n-d-a-n-d-p-r-e-t-e-n-d.
what exactly is being "extended"? nothing but pinochio's nose from what i can tell. stop making it seem like something productive.
The level of concern for fake mortgage backed securities tied to falsely appraised real estate sold to compulsive liars with fictitious incomes has never been higher.
Contrast this to the level of concern for 40 million Americans on food stamps (1 out of 8 Americans). It's these kind of figures that are going to finally waken people to the realization that the American Dream has died. For those of us who can remember, there was a time when we thought poverty was licked in America, a thing of the past save for a very few. Gone were starving, hopeless children, early death from poverty-related illness and life hazards, and regions of the country where hopelessness ruled.
But now it's all rolling back in like the ocean tide. A generation will feel lost, as will entire regions like the Northern Midwest.
In the end, the irony was that America's external enemies never did her in. It was the people inside.
Yes. Sadly yes.
Does that mean we can finally stop financing the War on Poverty and the Great Society?
Have you seen what many of the food stamp users buy? Beautiful cuts of meat , fish, the best produce...I can't afford to eat like that!!!
Credit Unions - this is only the beginning.
by gs_runsthiscountryon Wed, 08/11/2010 - 00:13
#514647
Ahhhh, yes, the other battle royal that will happen in congress (not that BHC's haven't been lobbying hard already to do away with CU's). However, as BHC's raise fees enough to push out consumers to CU's. Well, dont think banks will sit idly by and see revenue walk out the door. If the Fed cant force you to spend and CNBC cant get you to buy stock, banks "will" at least force you to have an account with them. The BHC's push against CU's will be bigger than ever now.
I give it 2 years and we see some big slam down of CU's in congress, with some God forsaken bill, written with ink drawn from a cesspool, called campaign finance. Not even the likes of Liz warren will be able to stop it. Although, to some degree its a mute point, as allot of CU activities/clearing has to be done through a major Bank anyway. Those costs to CU's will be going higher in the future.
They (BofA, Citi, Wells, you know the lot) will stop the ever widening CU customer base; and their geographical areas of reach, one way or another. They have been campaigning against it for quiet a few years already. FinReg just made that push harder.
So, enjoy your CU now, cause my guess is they will be legislated out of competitiveness in the not to distant future.
Now, back to our regularly scheduled program “As Credit Derivatives Churn”, followed by the game show, “600 Trillion dollar OTC pyramid”.
That is all......
I don't think the system has two years...
I doubt we last past november going by the information so freely disseminated. Every blog i see has the idea of a major crash, fear is all around the country and surely the unemployed who WANT to work have figured it out by now. There will be no jobs for a long time.