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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

Tyler Durden's picture


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
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
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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Fri, 09/24/2010 - 17:59 | 603548 Boilermaker
Boilermaker's picture

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.

Fri, 09/24/2010 - 18:28 | 603622 unununium
unununium's picture

Guess who the Fed did NOT buy any of the $1.5T in mortgage-backed securities from.

Fri, 09/24/2010 - 18:44 | 603657 Cognitive Dissonance
Cognitive Dissonance's picture

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.

Fri, 09/24/2010 - 19:11 | 603697 Rainman
Rainman's picture unions go to great lengths to explain they are not banks. So 1 little bank is great news. No wonder equities soaaaaared !!

Fri, 09/24/2010 - 22:51 | 603954 Fish Gone Bad
Fish Gone Bad's picture

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.


Sat, 09/25/2010 - 10:31 | 604219 Widowmaker
Widowmaker's picture

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!

Sat, 09/25/2010 - 13:05 | 604321 RockyRacoon
RockyRacoon's picture

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.

Sat, 09/25/2010 - 17:40 | 604673 Conrad Murray
Conrad Murray's picture

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:

Sat, 09/25/2010 - 00:13 | 604027 TheGoodDoctor
TheGoodDoctor's picture

There's two now CD.

Sat, 09/25/2010 - 06:22 | 604129 Cognitive Dissonance
Cognitive Dissonance's picture

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.

Sat, 09/25/2010 - 03:21 | 604097 Pondmaster
Pondmaster's picture

Actually two banks .... but who keeps tabs anymore  ?

Fri, 09/24/2010 - 18:28 | 603624 Sudden Debt
Sudden Debt's picture

at least it won't cost the taxpayers money. Only paper with a green print on it.


Fri, 09/24/2010 - 20:38 | 603787 mynhair
Sat, 09/25/2010 - 00:38 | 604064 carbonmutant
carbonmutant's picture

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...

Fri, 09/24/2010 - 19:40 | 603736 midtowng
midtowng's picture

The markets will forget this by Monday.

Fri, 09/24/2010 - 21:11 | 603834 RichyRoo
RichyRoo's picture

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.

Fri, 09/24/2010 - 22:13 | 603904 New_Meat
New_Meat's picture

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

Fri, 09/24/2010 - 22:59 | 603959 Fish Gone Bad
Fish Gone Bad's picture

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.

Sat, 09/25/2010 - 10:59 | 604225 Widowmaker
Widowmaker's picture

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!

Sat, 09/25/2010 - 15:07 | 604491 Haywood Jablowme
Haywood Jablowme's picture

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'...



Sat, 09/25/2010 - 16:52 | 604627 GoinFawr
GoinFawr's picture

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...


Fri, 09/24/2010 - 21:34 | 603868 makeyoumiss
makeyoumiss's picture

Ha! Perfect!!!

Sat, 09/25/2010 - 23:41 | 605072 ajax
ajax's picture

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...

Fri, 09/24/2010 - 18:01 | 603553 docj
docj's picture

I'm seeing some more range time in my immediate future.

Fri, 09/24/2010 - 18:26 | 603619 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Golf driving range?

Fri, 09/24/2010 - 22:41 | 603939 Mad Max
Mad Max's picture

Enjoy your golf game!

And I don't think he means Range Rover time either...

Fri, 09/24/2010 - 18:42 | 603653 Cognitive Dissonance
Cognitive Dissonance's picture

Free range chicken time? Hey, they're free. :>)

Sat, 09/25/2010 - 15:47 | 604534 kathy.chamberli...'s picture

free range eggs.

Fri, 09/24/2010 - 22:41 | 603940 DoChenRollingBearing
DoChenRollingBearing's picture

@ docj

My time on the range is spent with 7.62 x 39 and 9 mm Luger.

Sat, 09/25/2010 - 09:42 | 604196 grunion
grunion's picture

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

Sat, 09/25/2010 - 11:14 | 604255 FEDbuster
FEDbuster's picture

"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.

Fri, 09/24/2010 - 18:02 | 603554 RobotTrader
RobotTrader's picture

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.

Fri, 09/24/2010 - 18:05 | 603567 Hephasteus
Hephasteus's picture

Simple way to audit the fed. Don't give them anything. Then you'll know exactly what they have.

Fri, 09/24/2010 - 18:15 | 603595 rocker
rocker's picture

Even under the Freedom of Information act, which many have tried, Nobody.   We are not Free while we have a FED.

Fri, 09/24/2010 - 21:14 | 603840 RichyRoo
RichyRoo's picture

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.

Fri, 09/24/2010 - 18:21 | 603601 kengland
kengland's picture


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?

Fri, 09/24/2010 - 20:39 | 603797 mynhair
mynhair's picture

Almost naked ladies, or begone!

Not pics of my Wif.

Fri, 09/24/2010 - 22:15 | 603906 New_Meat
New_Meat's picture

Robo, not as attractive as some of your earlier efforts--and they say the girls always look purtier at closing time.  Who knew?

- Ned

Fri, 09/24/2010 - 23:54 | 604012 StychoKiller
StychoKiller's picture

That's no girl!  It's a trap!

Sat, 09/25/2010 - 10:58 | 604243 Dagny Taggart
Dagny Taggart's picture

Do you work at one of the Fed's prop desks?

Sat, 09/25/2010 - 11:18 | 604252 Widowmaker
Widowmaker's picture

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.

Sat, 09/25/2010 - 15:55 | 604547 kathy.chamberli...'s picture

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.

Fri, 09/24/2010 - 18:02 | 603557 Nolsgrad
Nolsgrad's picture

This is getting beyond ridiculous.

Fri, 09/24/2010 - 19:36 | 603729 Nathan Muir
Nathan Muir's picture

+trillion FRN's.  I'm going to get drunk on scotch and try to forget all I know.  Good weekend all.

Fri, 09/24/2010 - 18:07 | 603558 clotario
clotario's picture

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.


Fri, 09/24/2010 - 18:30 | 603627 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Cancer treatment is free, now that Obama has that covered.  What a good guy he is.

Fri, 09/24/2010 - 20:49 | 603809 mynhair
mynhair's picture

So, why haven't you been excised?

(Not my junk)

Fri, 09/24/2010 - 20:06 | 603762 pan-the-ist
pan-the-ist's picture

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.

Sat, 09/25/2010 - 05:42 | 604118 The Rock
The Rock's picture

Only roosters?

How about roosters AND foxes? >>> fucked AND eaten!

Sun, 09/26/2010 - 01:56 | 605161 spdrdr
spdrdr's picture

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!"


Fri, 09/24/2010 - 18:04 | 603562 Hephasteus
Hephasteus's picture

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.

Fri, 09/24/2010 - 19:32 | 603724 jomama
jomama's picture

something strange was afoot at the circle k

Fri, 09/24/2010 - 23:41 | 604001 MmeBovary
MmeBovary's picture

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.


Best. Football. Movie. Ever.


Fri, 09/24/2010 - 18:06 | 603568 CheapKUNGFU
CheapKUNGFU's picture

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!



Sat, 09/25/2010 - 04:24 | 604110 tip e. canoe
tip e. canoe's picture

inertia keeps movin up slowly

Fri, 09/24/2010 - 18:07 | 603573 B9K9
B9K9's picture

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

Fri, 09/24/2010 - 18:09 | 603580 clotario
clotario's picture

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.

Fri, 09/24/2010 - 18:22 | 603611 Duuude
Duuude's picture



"One Currency To Rule Them All"



Sat, 09/25/2010 - 01:01 | 604070 AccreditedEYE
AccreditedEYE's picture


Fri, 09/24/2010 - 19:05 | 603689 Caviar Emptor
Caviar Emptor's picture

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 getting our fiscal system back to the point where people judge it as sustainable over time."

Prophetic, or merely letting your slip show?

Fri, 09/24/2010 - 22:12 | 603902 Cathartes Aura
Cathartes Aura's picture

dog whistle to those who own him.

Fri, 09/24/2010 - 22:17 | 603913 New_Meat
New_Meat's picture

sustainable--one of their key words. hating it. - Ned

Sat, 09/25/2010 - 06:10 | 604125 Bringin It
Bringin It's picture

B9 - succinct.  It like when Ray Liotta and Tony Peschy couldn't get anymore out of the night club.

Sat, 09/25/2010 - 16:37 | 604611 IBelieveInMagic
IBelieveInMagic's picture

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.

Fri, 09/24/2010 - 18:10 | 603583 doolittlegeorge
doolittlegeorge's picture

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....

Fri, 09/24/2010 - 18:28 | 603623 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

I think you mean a meth addict?

Fri, 09/24/2010 - 18:51 | 603668 Cognitive Dissonance
Cognitive Dissonance's picture

One with no teeth so she can give you a really know.

Fri, 09/24/2010 - 21:23 | 603852 tomdub_1024
tomdub_1024's picture

oh, just thanks CD, that mental picture is ruining what might have been a "Frisky Friday Nite" with the wife...:)

Fri, 09/24/2010 - 22:17 | 603914 New_Meat
New_Meat's picture

"I'll keep an eye out for your, sonny."

Sat, 09/25/2010 - 05:55 | 604120 The Rock
The Rock's picture

Chickenheadz bitchez!

Sat, 09/25/2010 - 08:46 | 604167 Freewheelin Franklin
Freewheelin Franklin's picture

And a flat head, to rest your beer on?

Fri, 09/24/2010 - 22:49 | 603952 Village Idiot
Village Idiot's picture

"I think you mean a meth addict?"

The best, but you gotta catch 'em early.

Sat, 09/25/2010 - 00:04 | 604020 merehuman
merehuman's picture

get 2 wigs. put one wig on each hand. Alternate hands.  Scullcaps wont do. You should be able to outperform any professional.

Sat, 09/25/2010 - 06:02 | 604122 The Rock
The Rock's picture


Sat, 09/25/2010 - 10:40 | 604232 Widowmaker
Widowmaker's picture

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.

Fri, 09/24/2010 - 18:10 | 603584 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fed throwing hail Marys on a dark field.  Time to go home, kids.

Fri, 09/24/2010 - 18:12 | 603589 Miss Expectations
Miss Expectations's picture

The tally should include control of residential real estate vis a vis Fannie and Freddie.

Fri, 09/24/2010 - 18:12 | 603590 Gordon Freeman
Gordon Freeman's picture

This is just more of Obama's stated goal of, you know, "spreading the wealth around"...

Fri, 09/24/2010 - 21:40 | 603874 1100-TACTICAL-12
1100-TACTICAL-12's picture

Don't say that here, you will be quickly pounced upon....

Sat, 09/25/2010 - 09:52 | 604199 grunion
grunion's picture

Pounce, pounce, pounce...970 tactical uses better steel. Lasts longer which could feasibly be an issue in the not too distant future.

Fri, 09/24/2010 - 18:13 | 603591 Goldenballs
Goldenballs's picture

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.

Fri, 09/24/2010 - 19:23 | 603711 Thunder Dome
Thunder Dome's picture

I'm buying TBT next week.

Fri, 09/24/2010 - 21:27 | 603856 mynhair
mynhair's picture

2 late.

Fri, 09/24/2010 - 22:20 | 603917 New_Meat
New_Meat's picture

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

Fri, 09/24/2010 - 18:14 | 603593 JW n FL
JW n FL's picture

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.


Fri, 09/24/2010 - 18:36 | 603642 bada boom
bada boom's picture

Yeah, you know what they say, "Americans are self-absorbed."

Fri, 09/24/2010 - 19:20 | 603704 Caviar Emptor
Caviar Emptor's picture

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.



Sat, 09/25/2010 - 03:31 | 604100 Pondmaster
Pondmaster's picture

The 57% whom believe in the dream must be the welfare crowd . The percent of believers will increase in 2011.

Fri, 09/24/2010 - 18:15 | 603596 Rainman
Rainman's picture

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 > !!!

Fri, 09/24/2010 - 18:16 | 603599 Hype Alert
Hype Alert's picture

Well this should add another couple hundred points to the open on Monday.  More problems solved every day...

Fri, 09/24/2010 - 18:20 | 603608 rocker
rocker's picture

Dam, I just put my shorts back on.  Have to get naked again.

Fri, 09/24/2010 - 18:23 | 603612 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

How can one not simply laugh at the continued lies and crimes that occur each and every day

I am laughing -- so much that it hurts.  Stop it...You're @#$%^& killin' me!

Fri, 09/24/2010 - 18:23 | 603613 buzlightening
buzlightening's picture

Looks like the goonzi paper ponzi scheme is vaporizing faster than an ice cube hurled into the suns center!!  

Fri, 09/24/2010 - 19:24 | 603713 GoinFawr
GoinFawr's picture

Looks like this paper ponzi scheme is sublimating faster than a 400g gold bar hit with a nuclear missle!

Fri, 09/24/2010 - 21:28 | 603854 RichyRoo
RichyRoo's picture

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!

Fri, 09/24/2010 - 23:31 | 603970 GoinFawr
GoinFawr's picture

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?"

Sat, 09/25/2010 - 02:28 | 604089 Arkadaba
Arkadaba's picture


Sat, 09/25/2010 - 00:09 | 604024 merehuman
merehuman's picture

Fri, 09/24/2010 - 23:03 | 603626 Goldenballs
Goldenballs's picture

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" 

Sat, 09/25/2010 - 13:32 | 604347 RockyRacoon
RockyRacoon's picture

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.

Fri, 09/24/2010 - 18:33 | 603635 old_turk
old_turk's picture

"the very few remaining players terminally cannibalize each other"


That's going to get messy because I don't think there's an HFT algo that id's the 'greater fool' is there?

Fri, 09/24/2010 - 18:36 | 603643 Catullus
Catullus's picture

Hard 8s and 6s.

Fri, 09/24/2010 - 21:33 | 603866 tom a taxpayer
tom a taxpayer's picture

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.

Fri, 09/24/2010 - 18:39 | 603644 geopol
geopol's picture

Creeping coup...Downward mobility with the meandering expertise of an Olympic skier...See you at the bottom if you make it...


I found this imperative,,,,do not skateboard..inner ear problem..Do you have firewood??

Fri, 09/24/2010 - 18:55 | 603676 Cognitive Dissonance
Cognitive Dissonance's picture

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. :>)

Fri, 09/24/2010 - 19:40 | 603735 geopol
geopol's picture

Plus heat,,,the essential..

Fri, 09/24/2010 - 21:26 | 603855 tomdub_1024
tomdub_1024's picture

make sure you have OSHA approved ventilation, you don't know what the Chinese used to "varnish" the maple to that wonderful woody-glow....:)


Sat, 09/25/2010 - 06:11 | 604128 The Rock
The Rock's picture

Don't forget the asbestos (made in usa).

Fri, 09/24/2010 - 18:40 | 603648 wswarrior
wswarrior's picture

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.

Fri, 09/24/2010 - 18:44 | 603658 geopol
geopol's picture

Dollar under pressure because of Bernanke's  deep teachings on the depression escape...

Fri, 09/24/2010 - 19:38 | 603718 GoinFawr
GoinFawr's picture

that, and maybe a few of the Chinese working the Holiday to buy up some Japanese bonds with... nm, you guessed it.


Fri, 09/24/2010 - 18:45 | 603659 tom
tom's picture

So "taxpayers" (read: Treasuries buyers) won't be billed, but the (customers of) 7445 other credit unions will. Oh that's fair.

Fri, 09/24/2010 - 20:24 | 603784 Freebird
Freebird's picture

Impeachment time no? Forget November. Martial law anyone?


Sat, 09/25/2010 - 10:01 | 604203 grunion
grunion's picture

I'll make a gentleman's wager we see martial law before the next presidential election.

Sat, 09/25/2010 - 10:02 | 604205 New_Meat
New_Meat's picture

"marshalls" might not be who would normally be in that role. - Ned

Sat, 09/25/2010 - 12:37 | 604287 doolittlegeorge
doolittlegeorge's picture

dollar heavy=heavy metal.  and they called him General Betrayus.

Fri, 09/24/2010 - 23:25 | 603981 GoinFawr
Fri, 09/24/2010 - 18:49 | 603666 michael.suede
michael.suede's picture


Fri, 09/24/2010 - 18:50 | 603667 MarkTwainsMustache
MarkTwainsMustache's picture

These mother f**** 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!!?? 

Fri, 09/24/2010 - 20:01 | 603755 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Hehe....He said "private sector."  I think I remember what that was...

Fri, 09/24/2010 - 21:28 | 603857 tomdub_1024
tomdub_1024's picture you threaten me?....heheheheh

Fri, 09/24/2010 - 18:57 | 603678 no life
no life's picture

But they said subprime was contained..  ?

Fri, 09/24/2010 - 19:07 | 603692 AUD
AUD's picture

"Under federal rules, wholesale credit unions were supposed to invest only in safe, liquid assets"

What, government bonds?

Fri, 09/24/2010 - 19:15 | 603701 geopol
Sat, 09/25/2010 - 00:28 | 604047 Milestones
Milestones's picture

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   

Sat, 09/25/2010 - 16:11 | 604572 kathy.chamberli...'s picture

that's the only reason i voted for clinton, cause he could blow a sax fairly well. wrong †

Fri, 09/24/2010 - 19:19 | 603708 RobotTrader
RobotTrader's picture

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.

Fri, 09/24/2010 - 19:32 | 603722 GoinFawr
GoinFawr's picture

Jim Sinclair called Robo: He wants his cartoons back.


Fri, 09/24/2010 - 21:30 | 603859 mynhair
mynhair's picture

So what?  Do you not know the stupid trade?

Refer LDK.


Sat, 09/25/2010 - 03:31 | 604101 EscapeKey
EscapeKey's picture

WTF? You actually post bearish news, which shows how borderline crazy the capital markets behave?

Have we broken Robo?

Sat, 09/25/2010 - 17:58 | 604684 Conrad Murray
Conrad Murray's picture

Nah. This is the classic Robo, rediscovered.

Sat, 09/25/2010 - 12:42 | 604294 doolittlegeorge
doolittlegeorge's picture

what i'm talking about.  FANDANGO baby.  Just don't get caught with your pants down when the music stops playing.

Fri, 09/24/2010 - 19:24 | 603712 MiguelitoRaton
MiguelitoRaton's picture

The prudent shall pay for the reckless, that is the way our system works now. All bow down to the alter of Moral Hazard!

Fri, 09/24/2010 - 20:03 | 603757 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Alter 'alter' to 'altar'.  Sorry, I had to say it.

Fri, 09/24/2010 - 20:22 | 603781 LeBalance
LeBalance's picture

the alter (ego) of Moral Hazard....


Fri, 09/24/2010 - 19:30 | 603720 Blano
Blano's picture

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.

Fri, 09/24/2010 - 20:39 | 603794 tom
tom's picture

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.

Fri, 09/24/2010 - 22:36 | 603936 Blano
Blano's picture

I think you make more sense.

Sat, 09/25/2010 - 12:45 | 604298 doolittlegeorge
doolittlegeorge's picture

you mean "i say, i say..iii think you make sense.."

Fri, 09/24/2010 - 23:03 | 603963 traderjoe
traderjoe's picture

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.

Sat, 09/25/2010 - 12:47 | 604301 doolittlegeorge
doolittlegeorge's picture

what exactly is being "extended"?  nothing but pinochio's nose from what i can tell.  stop making it seem like something productive.

Fri, 09/24/2010 - 19:34 | 603723 Caviar Emptor
Caviar Emptor's picture

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.

Fri, 09/24/2010 - 19:47 | 603743 Nikki
Nikki's picture

Yes. Sadly yes.

Fri, 09/24/2010 - 23:09 | 603968 UncleFester
UncleFester's picture

Does that mean we can finally stop financing the War on Poverty and the Great Society?

Sat, 09/25/2010 - 10:06 | 604206 grunion
grunion's picture

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!!!

Fri, 09/24/2010 - 19:39 | 603727 gs_runsthiscountry
gs_runsthiscountry's picture

Credit Unions - this is only the beginning.

by gs_runsthiscountry
on Wed, 08/11/2010 - 00:13


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......

Fri, 09/24/2010 - 20:07 | 603767 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

...if we could just think of a way to create a strong emotional association between Credit Unions and terrorism...


We could blame STUXNET on the Credit Unions?!?!?



Fri, 09/24/2010 - 23:05 | 603966 traderjoe
traderjoe's picture

I don't think the system has two years...

Sat, 09/25/2010 - 00:19 | 604034 merehuman
merehuman's picture

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.

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