Tim's Bank Looking at 20% Haircut

The Federal Financing Bank makes loans to Government Agencies. FFB is
owned by Treasury and Tim Geithner is the Chairman of this outfit, As of
the end of August this bank had a balance sheet of $54b of dodgy loans.
A good chunk was out to the Post Office. Another big slug was out to
the National Credit Union Administration. This balance sheet shows it:

Put that together with the news after the close that Tim Geithner has done another bailout. Guess who? The National Credit Union Administration of course. The early terms of the deal from the WSJ. A few highlights:

Friday's
moves include the seizure of three wholesale credit unions and an
unusual plan by government officials to manage $50 billion of troubled
assets inherited from failed institutions.

BK: Should be good news for the boys over at Blackrock.

National
Credit Union Administration plans to issue $30 billion to $35 billion
in government-guaranteed bonds, backed by the shaky mortgage-related
assets.

BK: Why would they secure the new bonds with junk assets? The deal will be “Full Faith and Credit”
paper. The answer is simple. If there are “assets” behind the bonds the
newly issued paper does not have to go on the Federal balance sheet.We
can't admit to taking a loss.

Officials said the plan won't cost taxpayers any money.

BK: Baloney. After the second bailout in so many years some losses HAVE
to be recognized. The loans on FFB’s books are not money good. Tim says, “no losses” on this. He is fibbing.

Comments

[binky]

Rocket ship -- think not. History tells us that every three days one should expect an up or down move of approximately one and three quarter percent. Heavy-handed manipulation has caused volatility to decline rather than increase as reported by the lying media outlets. 

Ship Berstanke off to prison and throw away the key.

[willien1derland]

+1,000 - Bernacke, Geithner should be prosecuted for FRAUD the 'insulation' for 'investors SHOULD NOT INVOKE THE CONTINUED SOCIALIZATION OF LOSSES - debt over savings - But at least the mainstream media is reporting Lindsay Lohan is going back to prison - Ohhhh the Humanity

[Robslob]

I would rather bury Timmy and Ben in a pile of African ants and let them do the work.

Welcome to your new "green" government movement saving the taxpayer money right out of the gate.

Vote for me and I WILL give you change you can believe in...added bonus Pelosi for a goodwill write off. 

[williambanzai7]

ANATOMY OF RISK

http://williambanzai7.blogspot.com/2010/09/anatomy-of-risk.html

[RoRoTrader]

What the fuck banzai........who is your libraian?

[mynhair]

http://www.youtube.com/watch?v=du07ZUsnIcI&feature=channel

[mynhair]

Dupe

[mynhair]

http://www.youtube.com/watch?v=UJkxFhFRFDA

[mynhair]

http://www.youtube.com/watch?v=9F9q_k5TWqo

[mynhair]

http://www.youtube.com/watch?v=L97pXkcMEds

[mynhair]

http://www.youtube.com/watch?v=KmQ_1sXZJxI

Has the bow in it....

[mynhair]

http://www.youtube.com/watch?v=-x1xNphB3uo&NR=1&feature=fvwp

[mynhair]

No Marla spin tonite?

http://www.youtube.com/watch?v=9892Wt1WNZI

[williambanzai7]

LOOKS LIKE THE BOYS ARE BACK

http://williambanzai7.blogspot.com/2009/10/happy-birthday-tarp.html

[mynhair]

Keep clicking on the radio, but nada.

that's a non-joke.  Thanks.

Luv your keyboards. BTW.

[mynhair]

No longer allowed to take the FDIC survey, and ask about "prompt,corrective action".

Must change ISP/URL soonest.

[covert]

the govt is getting desperate and the djia spiked up into a gap on heavy volume. what are the ods of this being a co-incidence? a lot of fishy rotten stuff everywhere these days. I smell a scam brewing.

http://[e-mail]

[mynhair]

No, a scam?  Trying to cover CU losses?  No, not possible.

What is 50 billion amongst scumbags?

[earnyermoney]

Please explain the 4th line item. HOPE for Homewners bonds?

[Bruce Krasting]

I refer to these as "BASURA BONDS". This money was raised back in 08. It was supposed to used for "struggling homeowners". The funny thing is they have not spent much of the money. This was supposed to be the money for debt relief but someone nixed that idea and the money is unspent. Therefore an asset.

Be sure that this money will be spent. There is no value to HOPE bonds.

[mynhair]

Bruce, quit trying to pin the tail on the donkey.

All is well, taxpayer funds are limitless, vote for The One in 2012.

And hope for 12/21/2012 to occur.

[Bruce Krasting]

I neglected to include the link to the FFB. Sorry. Here is the 8/2010 statement.

Go through the list of loans outstanding. Look at the interest rates being charge for this money. There are some complete dogs in this. HOPE looks like a good credit. To me the best part is the loan to the Department of Defence for $500mm. This money is used to finance "Foreign Military Sales". The FFB is lending that half bill at near zero return for guns.To the Saudis. WTF??

http://www.ustreas.gov/ffb/press_releases/2010/08-2010.shtml

[RockyRacoon]

And let's not even go here: Rural Utilities Service

[knukles]

Bruce,

Historically, the funds "loaned" to the DoD were utilized to make low interest housing loans to military personnel which were in turn (post FFB or other FF&C guarantee) weighed, baled and shipped out to GNMA for pooling and resale.

[tom]

So if I get this right what they're doing is kicking the can down the road.

They've got $50b face value in assets, optimistically worth $25b. Normal procedure is to liquidate and spread the losses on remaining credit unions through a hike in their federal insurance rates. They think this loss is too big to spread around. But they don't want to directly bail it out from the general federal revenues because that would be a campaign disaster.

So they liquidate $15b face value, spread $9.2b of losses on that on the credit unions, and create a "bad bank" that holds $35b face value of these assets and sells $35b in bonds, nominally backed by the assets but actually backed by the Federal government. Reminds me of what China did with its banks' bad debts in their last crisis. So I guess Tim's learning from the finance masters.

I think we all know bunk mortgages aren't recovering. No matter how you slice it, no matter where you store it, it's bunk. At the end they have to redeem the $35b in bonds, and will still be sitting on those bunk assets, very optimistically worth $19b. And then somebody will have to finally really make a decision, whether to spread it on the credit unions, or bail it out from the federal budget.

http://keynesianfailure.wordpress.com/2010/09/24/why-this-time-qe-really-will-spur-inflation/

[Rainman]

By this time next year we'll snicker at these piddly CU amounts. Full faith and credit bonding will come to the public pension funds too. They are overjoyed by Timmy's bailout stunt. Encouraged by its unusualness. They know State guarantees ain't worth shit.

[doolittlegeorge]

Short people got...no reason....short people got...no reason...short people got....I love this song and it still sucks.

[buzlightening]

Where's the vote with such funds for turbo tax timmy! Can't let remaining TARP funds we never needed hangin around doin nothin!!  Where's the fiscal 2011 budget? Oh hell just fudge it!!! Crock of ages cleft for us!

[Technichel]

Obama told us there would not be anymore bailouts. Oh, forget it. His lips were moving again and I know what that means.

[Mr Lennon Hendrix]

Timmah is here to take losses, on the behalf of American Taxpayers, enough said.

[RoRoTrader]

You paying taxes?........

[masterinchancery]

Turbo Timmy has admitted that he has never had a real job, but he is a well-qualified financial felon.

[Boilermaker]

But, did you see the 200 point DOW rocket ship today!!!?!??!?

Oh, what were you saying?

Signed,

J Q Public

[Blano]

Go Spartans!!

[masterinchancery]

Hyperinflation is very bullish! well, not yet.

[Mr Lennon Hendrix]

With football back, you think we care?  Jeesh!