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Wells' Imploding Loan Portfolio
The fine folks over at WLMLab Bank Loan Performance have done a great job at updating FDIC loan data by various banks. Some of their conclusions:
- Total US Loans outstanding have dropped by another $110 billion QoQ
- Yet, there is an ever increasing mountain of charge offs coming in 1-4 Family First Liens
- At the same time CRE early stage delinquencies have dropped from 1.37% to 1.17%
Yet the most significant observations is the ticking time bomb that is Wells Fargo's 1-4 Family 90+ past due loans.
WFC's Construction & Development portfolio is also on the verge of implosion.
Conveniently, these loans are low on Non-Accrual rates, meaning that net interest income is not currently affected (and leading to a falsely high EPS number), yet once everything hits the fan, the bank will be forced to charge off a staggering amount of debt at much higher principal amounts. Perhaps any and all rumors about WFC's viability should be evaluated very carefully going forward.
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Was this due to them taking on all of Wachovia's trash?
They were compensated for taking that trash.
Less than 15% delinquent? Wake me when it gets to 60%.
I'm sure that added to the onslaught but if you look at the quarter by quarter analysis it doesn't really indicate anything extraordinary in terms of % change, obviously 08Q3 was bad. I think that universally it was bad and it would be hard to draw a direct line..... obviously the number of loans increases (because of the takeover) but the percent change isn't significantly higher.
Of material interest is the things that aren't being shown like the low delinquency rates for the Commercial loans and Home Equity loans (as an example of items we aren't seeing yet). I would think that with such a high rate of delinquency you would have correspondingly higher delinquency rates in HELOC's or CRE.
IIRC, didn't Wells re-define their delinquent loans as well? I think a few months back to make things appear "not as bad" they re-defined a delinquent loan from one that was 90 days past due to one that was 180 past due. As if re-defining the term is going to solve the problem.
So, let's say Wells implodes. What happens to those people living in their homes who have defaulted. My BIL has been living in his AZ for 9 months (after he stopped paying his home mortgage). If the mortgage is will Wells, what's the chance they just "write off" these mortgages and the BIL gets to live there forever, for free? Kind of like a Kato in OJ's guest house.
If the (politically) impossible happens and WFC goes BK, then eventually someone would buy the rights to that mortgage, but who knows how long it could take to get the rights all sorted out. Bottom line is the lender has the right to possess your BIL's house, so someone at some point would buy that right, even if it's for 50 cents on the dollar or less.
Silly wabbit, tricks are for banks.
Thought i just read a judge in Fla is allowing mbs holders to foreclose. Anyone?
I belive no stats to back it up but great info there are over 10000 homes in vegas where he people have been living in homes without sending a payment for 6 months or more. This housing crisis is only just getting started!
Tell your BIL that Arizona HR 1271, which goes into effect Sept 30th, empowers the lender to send a T-1000 Terminator to collect. No more "toss the house keys to Ken Lewis and walk."
http://www.azleg.state.az.us/FormatDocument.asp?inDoc=/ars/33/00814.htm&Title=33&DocType=ARS
http://www.housingwire.com/2009/07/27/lenders-realtors-divided-on-arizona-foreclosure-law/
Well that would depend on if they even know that a person quit paying their loans. I have heard stories of people trying to buy a forclosed home and the bank or investment company that supposedly owns the bank cannot even find any documentation that they are the owner. This is after the potential buyer has already done the leg work in trying to find the owner.
STATE OF MINNESOTA
COUNTY OF SCOTT
TOWNSHIP OF CREDIT RIVER
JUSTICE MARTIN V. MAHONEY
First National Bank of Montgomery, Plaintiff vs Jerome Daly, DefendantJUDGMENT AND DECREE
The above entitled action came on before the Court and a Jury of 12 on December 7, 1968 at 10:00 am. Plaintiff appeared by its President Lawrence V. Morgan and was represented by its Counsel, R. Mellby. Defendant appeared on his own behalf.
A Jury of Talesmen were called, impaneled and sworn to try the issues in the Case. Lawrence V. Morgan was the only witness called for Plaintiff and Defendant testified as the only witness in his own behalf.
Plaintiff brought this as a Common Law action for the recovery of the possession of Lot 19 Fairview Beach, Scott County, Minn. Plaintiff claimed title to the Real Property in question by foreclosure of a Note and Mortgage Deed dated May 8, 1964 which Plaintiff claimed was in default at the time foreclosure proceedings were started.
Defendant appeared and answered that the Plaintiff created the money and credit upon its own books by bookkeeping entry as the consideration for the Note and Mortgage of May 8, 1964 and alleged failure of the consideration for the Mortgage Deed and alleged that the Sheriff's sale passed no title to plaintiff.
The issues tried to the Jury were whether there was a lawful consideration and whether Defendant had waived his rights to complain about the consideration having paid on the Note for almost 3 years.
Mr. Morgan admitted that all of the money or credit which was used as a consideration was created upon their books, that this was standard banking practice exercised by their bank in combination with the Federal Reserve Bank of Minneapolis, another private Bank, further that he knew of no United States Statute or Law that gave the Plaintiff the authority to do this. Plaintiff further claimed that Defendant by using the ledger book created credit and by paying on the Note and Mortgage waived any right to complain about the Consideration and that the Defendant was estopped from doing so.
At 12:15 on December 7, 1968 the Jury returned a unanimous verdict for the Defendant.
Now therefore, by virtue of the authority vested in me pursuant to the Declaration of Independence, the Northwest Ordinance of 1787, the Constitution of United States and the Constitution and the laws of the State of Minnesota not inconsistent therewith ;
IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1.That the Plaintiff is not entitled to recover the possession of Lot 19, Fairview Beach, Scott County, Minnesota according to the Plat thereof on file in the Register of Deeds office.
2.That because of failure of a lawful consideration the Note and Mortgage dated May 8, 1964 are null and void.
3.That the Sheriff's sale of the above described premises held on June 26, 1967 is null and void, of no effect.
4.That the Plaintiff has no right title or interest in said premises or lien thereon as is above described.
5.That any provision in the Minnesota Constitution and any Minnesota Statute binding the jurisdiction of this Court is repugnant to the Constitution of the United States and to the Bill of Rights of the Minnesota Constitution and is null and void and that this Court has jurisdiction to render complete Justice in this Cause.
The following memorandum and any supplementary memorandum made and filed by this Court in support of this Judgment is hereby made a part hereof by reference.
BY THE COURT
Dated December 9, 1968
Justice MARTIN V. MAHONEY
Credit River Township
Scott County, Minnesota
MEMORANDUM
The issues in this case were simple. There was no material dispute of the facts for the Jury to resolve.
Plaintiff admitted that it, in combination with the Federal Reserve Bank of Minneapolis, which are for all practical purposes, because of their interlocking activity and practices, and both being Banking Institutions Incorporated under the Laws of the United States, are in the Law to be treated as one and the same Bank, did create the entire $14,000.00 in money or credit upon its own books by bookkeeping entry. That this was the Consideration used to support the Note dated May 8, 1964 and the Mortgage of the same date. The money and credit first came into existence when they created it. Mr. Morgan admitted that no United States Law Statute existed which gave him the right to do this. A lawful consideration must exist and be tendered to support the Note. See Ansheuser-Busch Brewing Company v. Emma Mason, 44 Minn. 318, 46 N.W. 558. The Jury found that there was no consideration and I agree. Only God can create something of value out of nothing.
Even if Defendant could be charged with waiver or estoppel as a matter of Law this is no defense to the Plaintiff. The Law leaves wrongdoers where it finds them. See sections 50, 51 and 52 of Am Jur 2nd "Actions" on page 584 – "no action will lie to recover on a claim based upon, or in any manner depending upon, a fraudulent, illegal, or immoral transaction or contract to which Plaintiff was a party."
Plaintiff's act of creating credit is not authorized by the Constitution and Laws of the United States, is unconstitutional and void, and is not a lawful consideration in the eyes of the Law to support any thing or upon which any lawful right can be built.
Nothing in the Constitution of the United States limits the jurisdiction of this Court, which is one of original Jurisdiction with right of trial by Jury guaranteed. This is a Common Law action. Minnesota cannot limit or impair the power of this Court to render Complete Justice between the parties. Any provisions in the Constitution and laws of Minnesota which attempt to do so is repugnant to the Constitution of the United States and void. No question as to the Jurisdiction of this Court was raised by either party at the trial. Both parties were given complete liberty to submit any and all facts to the Jury, at least in so far as they saw fit.
No complaint was made by Plaintiff that Plaintiff did not receive a fair trial. From the admissions made by Mr. Morgan the path of duty was direct and clear for the Jury. Their Verdict could not reasonably been otherwise. Justice was rendered completely and without denial, promptly and without delay, freely and without purchase, conformable to the laws in this Court of December 7, 1968.
BY THE COURT
December 9, 1968
Justice Martin V. Mahoney
Credit River Township
Scott County, Minnesota.
Kato is STILL there?
who knew...
If he didn't have to pay you would start the whole contactual obligation collapse. Human society is based on contactual obligations. ei. Marriage, divorce, social contracts and of course your financial obligation. In other words, another lender would take over your friends loan so that he can continue to honor his obligations and society can continue and the whole world rotates another day.
No chance of a write-off. The loans go to the estate of the bank in foreclosure. The creditors will forclose on him
Your point is as short-sighted as a Geithner solution. There will be liens that will be saisfied or sued for and a successor creditor if need be will pick up that property at a discount and get clean title. Kato ain't living in OJ's for years. He had all the staying power of a pet whose master has departed.
I don't know. Sure, he's not living there forever. But every month that passes, the BIL should be saving the amount that he'd otherwise be paying on his mortgage. 9 months so far, hell, that'd be a nice chunk of change. If he has the discipline to save it (and probably not if he got into that situation in the first place), he could conceivably save enough to buy a decent new place in cash before the banks get their act together.
Moral? Maybe, maybe not. I wouldn't do it, but maybe others could make it fit with their moral code. Regardless, I don't think the point was really about staying put forever.
What will force these guys to take the writeoff? It seems like accounting does not exist any more and all they get to put on their quarterly reports are checking account fees accrued.
I have heard that year-end auditors will not accept this under reserved capital position on these "held to maturity" mortgages and loans. Do you have any insight whether we will finally see some real accounting at year end because these auditors do not want to go to jail for fraud like the CEOs of these banks?
as I understand it, the amendments earlier this year in re FASB FAS 157 ("mark to market") gave accounting firms significantly more protection in covering their asses when reviewing what a bank says its assets are worth. Frankly, you will not see "real accounting" prior to the end of this year.
See my note below - they already did write a lot of this off with a purchase adjustment. JPM did the same thing with the WM portfolio.
Same shit different day. Those dumb fucks (TurboTax Timmy, Heli Ben, Neck Fat Summers, and the Messiah), could have paid off every mortgage in America. . .
Amen. I junk whoever junked you.
Let me play devil's advocate.
Wouldn't that just be rewarding failure? It's bad enough that we had to bail out failed banks; do we really have to bail out failed homeowners too?
Why bail out the Jamaican immigrant who was in the middle of flipping 5 condos in NYC when the subprime collapse happened?
I bought a home well within my budget. Why should my tax dollars pay for those who didn't?
Should not have "bailed" anyone out, but instead given a 5-10 year guarantee on 20% of the value of the loan. Kind of like a parent co-signing on a loan, but with very strict conditions to be met. The point would be to weed out those who could NEVER make the payments anyway (your Jamaican friend ;-)) and help ONLY those who legitimately bought a house to live in, and can make the payments as long as the rates are low (which they are now.) So govt gives security for 20% of loan value, bank EATS 20% of loan value and homeowner continues to make payments and live in house responsibly. This would have saved the homeowners who deserved ANY help at all, and banks that deserved ANY help at all, and wiped out the irresponsible and the frauds.
Then in 5-10 yrs if the economy can recover decently enough the homes might return to near the loan value. If that happens, the homeowner can sell, repay the govt its 20%, the bank whatever they wrote off and then keep whatever proceeds remain. Bear in mind "government" = taxpayers, we are the ones who are cosigning the loan, and we get first dibs on any money from the proceeds. This would have helped Main Street, and Wall Street and kept moral hazard at a minimum. One way or another moral hazard was a risk given what had happened, but by taking this action we would have minimized it. And you tax dollars would have helped stabilize the economy, just as they would have been used to help victims of a hurricane or earthquake, and in this case in addition to the economic stability and goodwill, the US taxpayers might also have got some return on investment at some point.
um, because one way or another you're going to pay. Sure it sucks, but yay, it's part of our "civilized society" (read: the super happy fun place where J6P gets ass-raped on a regular basis).
gooooood times
YES. NONE of them deserve a bailout. N-O-N-E.
I've lived within my means and have not only followed the law but also personal morality. I own a house I can afford, and while market conditions have probably wiped out all my equity, I am and will keep paying on the mortgage. For all this, I get screwed in the nastiest ways every which way I turn. Why should I put up with this? I can tell you in the future I will follow the bare minimum to stay legal and have no compunctions about doing anything that is technically legal. This, of course, is midway into the collapse of trust and the basic requirements of a stable society. Get where this is heading? Compare us to Rome in 300 AD or 1989 Soviet Union, we don't have a bright future either way.
Hi There Devil's Advocate,
I hear you loud and clear. Because of my awareness of peak oil, starting in 2004, I focused and worked and paid off student loans (9% holy fuck), credit cards, and finally my home. Pulled out of the stock market in 06 because I "did not like what my money was supporting." Saved me the 40% haircut everyone else took. So yeah, every other day I feel like a moron for cleaning up my act and I wanna just get all my credit cards together and do something rash and stick it to them. Moral Hazard is like that.
However, lets go back to that post.
Same shit different day. Amen, I am so tired of this crap and I am amazed at how long it has gone on.
Those dumb fucks (TurboTax Timmy, Heli Ben, Neck Fat Summers, and the Messiah), could have paid off every mortgage in America. . . I'd resent this, but out of solutions a)dumb and b)dumber, at least printing money to pay those mortgages would have made everyone whole... EVEN THE DERRIVATIVES MARKET. I am open to debate that I am wrong on this. But we would not be perched on the precipice of the margin call from hell, just now. We would not be losing as many jobs and deflating, just now. You get the idea.
Now, demon attourney, regarding etiquette, I'd only junk things that are like spam, stuff unrelated to the thread at all that is fucktarded, kill it before it grows, kinda weird. This post did not strike me as something to flag as garbage, based on those criteria.
In sum, I agree that our tax dollars should not go to those mortgages, however, given that they have gone to banksters, I think it would have been an improvemnent to go to home owners.
The really great thing would be for Sarbanes-Oxley to be used to throw in jail the heads of the TBTF since they signed off and made fortunes off of getting their crimes legalized, then pushing the limit, sold crap that they called AAA, then sold credit default swaps on top of it all...
1) Dedicate half of one of the least populated states for a new penitentiary to house the thousands of crooks that brought us the nuclear winter we are living though.
2)...ABOLISH THE FED MACHINE.
3) Use anti-trust laws to break up the "toobigtofail" ...
[and believe me, Goldman Sachs and Morgan would have been OUT if they didn't win the Lehman bet, get free money through AIG's backdoor, a ban on short selling, and bank holding status to keep them afloat til the "secret Sat. meeting" where Paulson passed out money to his friends. (ALL THE WHILE, BOTH FIRMS HAD THEIR PR PEOPLE OUT IN FULL FORCE CLAIMING THAT THEY DIDNT NEED THE MONEY...HAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAH)]
4) HELP of some sort for all US citizens and many countries around the world since every citizen is effected by this fraud...
BOTTOM LINE WE MIGHT HAVE BEEN ALMOST IN THE HOLE AS MUCH AS WE ARE NOW, BUT IT WOULD HAVE BEEN FOR RIGHTEOUS REASONS INSTEAD OF THIEVERY--THE WHOLE WORLD KNOWS WHAT CRIME IS GOING ON HERE IN AMERICA, AND IT IS HIGH TIME WE CALL BACK THE STOLEN MONEY, TAKE APART THE TOOBIGTOFAIL, ABOLISH THE FED, AND SEND IN A NEW FRESH GROUP OF UNPURCHASED ELECTED OFFICIALS TO WASHINGTON WHO WILL LEGISLATE ON BEHALF OF THE PEOPLE INSTEAD OF ON BEHALF OF THE FED MACHINE.
It is truly amazing that this FRAUD and COVER UP by some of the highest elected officials in our land goes ON day by DAY, virtually unquestioned !!!
WHERE are the Town Hall CRIERS when you need them??!!
WHERE are the journalists in this country and
WHY are every one of our elected leaders working for the Wall Street cartels????
This is "CHANGE"?!!!!!!
LOL..S&P offices looks like the set of Mad Men..lol
you are a very rare human species that can think and differentiate..very nice post. Lets end the fed machine.
I have been wondering about that. What would be the down side of paying off every mortgage? Would it have been cheaper?
Would it have been cheaper to pay off every mortgage?
Too big to fail. unfortunately, they will continue to get bailed out
Wells Fargo's Tight Lips Drag on Shares
http://online.wsj.com/article/SB125191978384280681.html
Whether one agrees with her or not, Meredith W. answered a Maria Bartoromo question many months ago (last spring I think) about which bank she would most avoid...answer was WFC.
Yes, but, most of these loans came from WB, and didn't they take some sort of accounting charge when they booked them? They are not non-accrual, they took a charge to face value. JPM did the same thing with WM's loans.
Maybe an accountant can explain it better. All I remember is WFC took a charge for these loans that makes them not show up as non-accruals, but they are effectively reserved for. Some kind of purchase accounting adjustment.
ghost....I can't provide specifics nor do I understand all of the accounting, but what you say squares up directly with what I have read.
This is from the annual report below. So for the 93.9B of "high risk" loans (mostly option arms), they took a write down of $37.2B. So basically they reduced the basis of their WB purchase. If 37.2B of these loans are non-collectible, it doesn't matter, they are already written off. Likewise, they don't show up as non-accruals, since they are already written off.
Not to defend WFC's balance sheet, as others pointed out, I think they are a bit light on the HELOC charge offs, but on the WB stuff, the writeoffs they took at purchase were in line with what JPM took on WM (which, btw, were about 2X what WM had reserved for).
" We have significantly strengthened the balance sheet and future earnings stream of the new Wells Fargo. This included the following actions:
• $37.2 billion of credit write-downs taken at December 31, 2008, through purchase accounting adjustments on $93.9 billion of high-risk loans in Wachovia’s loan portfolio •Reduced the cost basis of the Wachovia securities portfolio by $9.6 billion, reflecting $2.4 billion of recognized losses in the fourth quarter and write-off of $7.2 billion of unrealized losses previously reflected in negative cumulative other comprehensive income"
thanks ghost....most of what i have read is that wfc has not even come close to reserving properly for losses. that said, their cfo responded to this approx 6 weeks ago and insisted their loan loss reserves were appropriate.
No doubt. As other posters have noted, where they are really going to get hit is their HELOCs. Last I checked, those were grossly underreserved. My point is just that the post misses the mark, concentrating on the first lien portfolio (not doubt the construction portfolio sucks - whose doesn't?).
I seem to remember WFC changing their methodology for HELOC charge-offs, pushing them out a month. nice trick. like someone 90 down is going to cure. not likely. but hey, push it out to 120, why not?
They pushed their "delinquent" status from 120 days up to 180. They are the #1 HELOC lender in Calif. Those 2 sentences alone are enough to tell you they are in deep kimchi.
i think this provides a potent corrective to
the henny penny analysis....yes wells has problems
but they are not of the magnitude suggested
here...
this is all a replay of the dollar slide
last week and i stated that the dollar would
recover from 77.xx which it has now done...not
sure how long it will last but folks need to
dismiss outliers and calm the fuck down....at
least get all the facts first....
If the charge was mostly option arms then it does not cover waht was in the original post. The charts are for 1-4 family buildings and construction and development.
It seems like it was Bloomberg taht had an article talking about a FASB change for banks taht would require them to at least state how large their hold to maturity stuff was. It was not going to take effect until 2011 if memory serves. So if it is adopted then we have another year of ghosts on the balance sheets
Option ARMs are 1-4 family first liens.
The did write these down at purchase but I believe they are carrying them on their books at roughly 81 cents on the dollar. That means on a 100K loan they have a discount account for 19K and for all purposes own the loan at 81K. these Option Arm loans are trading for roughly 25 to 30 cents on the dollar in the market place. The current market assumption is that roughly 85 to 90% of these default (all are severly underwater) and that expected losses are roughly 60-65% - due to all the cost - deferred interest write-offs, legal fees, disposition of property at a loss. anyways - wells is not reserved enough for this scenario
The real killer for Wells is their HELOC exposure on the west coast. They made aprox 80 billion in HELOC and MEWs out there, those are second lien loans, and they're worth absolutely nothing IMO.
I'd say thats pretty spot on. Wells is heavy in Cal RE, the heady days of the HomeATM are long behind us and most of those 3 and 5 year ARMs from the peak are about to adjust which should cause a good number of those clowns to default (well maybe after 18 months of free rent).
I live in CA in a pretty quiet beach town, and my place "doubled" in value during the peak of the bubble but I was smart enough not to touch any of that "equity". My neighbor on the other hand somehow picked up a Porsche, an RV, and a cabin up at Big Bear on a regional pilots salary. The RV recently "disappeard" and I saw a Prius in the driveway the other day (talk about a downgrade). Also after 6 months on the market his house didn't sell either. I wonder if he would let me snag that cabin for .20 cents on the dollar.
Better hurry before it burns down
haha...nice
haha...nice
haha...nice
wink wink
Part of the reason "paying off everyone's mortgage" was a non-starter. Many toys were bought with straight cash out re-fis at the peak, not HELOCs. They need the haircut as well.
At the time WFC took on WB the WB book was marked at a 23% total RE market loss for modeling. Cannot speak to how WFC marked this book when it did take it on, however we are now at what 33% +/- with an easy 10 to go with the bulk of the book, CA, AZ, NV & FL now around 50%...
I remember specifically when Wachovia FAILED and then had it "taken over" on the same press release. They were given a 10B credit for the acqu. That is why they took it...in other words (like many other IB) they are now given Loss Carry Forwards that could probably last another 5-7 years.....I am sure treasury has allocated for the shortfall in their budget....
This is actually a key point. IRS changed the tax law to allow no limitation on use of net unrealized built in losses (NUBIL) on bank acquisitions, effectivly voiding the rules under sec 382 for NOL usage.
I am not sure I agree here. Wells has always has a lot of crap on their books that has appeared under reserved. There is an impression that they are above it all and didn't do those sorts of loans, however, that is simply misguided. They did do something to account for a bunch of the crap that they acquired with Wachovia, however, not sure it covers the full extent here. Will have to do some additional research on that. The bottom line is Wells should be choking under then weight of their own HELOC portfolio let alone all their other stuff.
My point is, the guy who runs these numbers is some ex-tech guy who doesn't know how to read a bank's balance sheet. he pulls these numbers from the FDIC, compares them to reserves, and says they are under-reserved. I am saying that loan loss reserves are not the only accounting for delinquent loans.
WFC took a SOP 03-3 charge when they acquired WB. On a book with UPB of 93.9B, they took a charge of 37.2B for principal write downs, 2.3B of pre-acquisition charge offs, and 2.5B of future interest they don't expect to collect. That is 42B of future losses they have charged off, for loans that will show up as delinquent in the FDIC data, but for which a loss reserve will be not be established.
As part of the purchase accounting, if wfc had revalued the loans (i.e., as a result of not planning to hold to the loans to maturity, whereas WB had, or vice versa), wfc would have recorded the net amount of the new loan value, as oppposed to the gross loan amount + a reserve. As a result, your comment on under-reserving in paragraph 1 above is not entirely accurate.
in another era this could have been the stuff long weekends are made of - those heady days watching the Asian markets open on a Sunday night and futures tank - instead this is rally material
Uh, dude..... didn't you get the Green Shoots memo?
Never forget.
It could happen ANY weekend and the warnings may not come from Asia this time.
If liquidity is the issue and T auctions are doomed to fail, expect another major multi billion dollar withdrawal. The same kind that nobody saw coming, nobody investigates and nobody dares to ask where the money went. It was that event that took the breath out of the markets last year and caused the crash.
Liquidity, liquidity, liquidity...
Exactly, liquidity.
Did the markets tank after Lehman failed? Not immediately.
Sept 15 - Lehman filed BK, S&P at 1192.
Sept 19 - S&P at 1255.
Sept 30 - S&P at 1166.
Oct 10 - S&P at 899.
So did Lehman cause the market to crash? That is some delayed reaction, especially for a market that is supposedly "efficient".
Or maybe someone pulled some liquidity?
did someone pull liquidity? of course they did. all the funds that primed or had prime brokerage relations lost their margined porfolio. it was locked up! then everything got sold out over the following weeks. that's why there was a delayed reaction.
I thought it was due to raising cash to honor CDS payments in the wake of Lehman? Remember the auction of Lehman debt was in mid Oct which pretty much coincides with steep drop of S&P.
here is the link to the man who saw it happening real time, and reported it to Washington...but they didn't care:
http://market-ticker.org/archives/590-FLASH-Fed-Speaking-Out-Both-Sides-Of-Mouth.html
Karl Denninger reported exactly what you said...someone pulled liquidity on September 24, 2009. He said, over a four day period, a 125billion dollar decrease in free cash slosh to float in the system...
meanwhile, hank and ben were busy lobbying so they could save all of us by taking every last shred of goodwill and credit left in our country's name , and give it to failed entities (C, MER, MS, GS...remember Lehman was a sacrificial lamb, and AIG was the spit on which to cook the CDS's on Lehman to pass out the back door--free money for the mobsters)
I've got to ask this question. Is there a connection between these two events?
http://zerohedge.blogspot.com/2009/02/how-world-almost-came-to-end-at-2p...
and your link? Fed sees money pulling out on Sept. 18th and Fed removes liquidity on the 24th. Fed announces problem solved by increasing FDIC limit. Someone make sense of this for me. I'm too stuuuppppiiiiiddddd. Who pulled the money on the 18th?
I think you might be right Marley. but it was the cry that the end of the world was coming on behalf of the fed and treas leaders that lead to the run on the MMfunds.......
The money went down the Madoff worm-hole to the other side, the dark side where democracy lives and the non-Arab crude oil profits are laundered...he took a bullet for the tribe in December..."remember, we chose this life...", said Hyman Roth.
The same kind that nobody saw coming, nobody investigates and nobody dares to ask where the money went.
Denninger has postulated that the Fed sucked it out via a reduction in slosh.
memories....
a full year ago this weekend, is when FNM and FRE began their conservatorship. as it turned out subprime was not as contained as bernanke had led us all to believe.
i enjoyed the days before every entity became tbtf. and every fricking day was a victory for the bulls.
According to Fortune mag, MS got a nominal $95K to be the folks who decided the fate of Fannie n Freddie. What sucks so hard here (notwithstanding an IB dictating the fate of $5 trillion) is that for as long as fan/fred have sucked there was no plan whatsoever to deal with them. As far as I can tell from the article the MS team was calling the shots n gubment was flat footed.
"Porat and Scully and their crew of three dozen worked virtually full-time on the project–often 7 a.m. to 11 p.m. in New York and Washington. They spent Labor Day at the Treasury Department offices–with lots of diet Cokes, and Paulson himself popping in at all hours. As the teams realized that the easiest option–Freddie and Fannie raising more capital on their own—was untenable, they considered three others: an equity investment by the government, conservatorship, or receivership, which would likely have lead to Freddie and Fannie’s liquidation."
http://postcards.blogs.fortune.cnn.com/2008/09/08/morgan-stanley-behind-the-fannie-freddie-bailout/
good thing Wells fought for, and won the battle oe, ahem, right, the takeover ; - |)
for wachovia,
there was so much dung piled to the rafters there, I 'm surprised anybody made it out alive.
Doesn't Warren Buffet still hold lots of WF ?
I think Buffet has lost his mind, all that Keynesian BS coming from his mouth; and this is the guy that helped write "The Intelligent Investor" by Ben Graham.
I think he owns preferred shares.
I don't follow Buffet's ownership interests, but Yahoo finance shows this ownership of common as of Q2 end...
BERKSHIRE HATHAWAY, INC 302,609,212 6.48 $7,341,299,483 30-Jun-09andy....got any thoughts, speculations, etc on whether or not Paulson started dumping bac or rf shares?
No such thing as a perfect investor. Wally is going to wish he got out while the going was good. No one lives forever. No one wins forever. All these pensionable "gurus" will blow up because they didnt know when to walk.
Pick-a-pay loans.
https://www.wachovia.com/file/0612_Mortgage_Call.pdf
I have recently read several foreclosure horror stories about banks not knowing who owns the property or who has the note! With all the slicing and dicing of correlated mortages, Judges are ruling in favor or home owners...Free house, fuck you very much Bank.
I think that is becoming more common.
Not a horror story if you get a free house.
True, but major moral hazard for those of us who pay our mortgage? From what I understand, its a big secret, the paperwork went into the Abyss...
http://www.youtube.com/watch?v=LO2eh6f5Go0
Too much hazard for fraud look c's so the shredder option is a distinct possibility. Hell, prof Black said that the ratings agencies couldn't even see the loan origination docs before giving their blessing.
Just to fill out all the possibilities, if I just got laid off in a deal that I thought sucked big ones, I just might want to fuck with the new overlords and do some:
1. Random shredding, just for the fuck of it. Fun and easy.
2. Targeted shredding, where I deliberately make it look like it is owned by someone who it is not owned by.
3. Robbing Hood shredding, where I decide that I am Santa and I may be getting screwed, but some people who I know got fucked are going to get my help. It is all the power I have left.
Absolutely. I would add the good old knew that what was going on is fucked up and have been doing a lift and shred for a long while. What goes, comes and there are some that would love to do it. Just like to good old actuary standby of adding an account or two to a companies retirement plan...
I like the way you think
Resistance is not futile.
Gotta come clean. Mish Shedlock talked about too big to survive on his blog today so I was able to handily elaborate on some of the thoughts commenters there have had on the topic.
today. http://globaleconomicanalysis.blogspot.com/2009/09/too-big-to-survive.html
My dog ate the mortgage bills. I swear it.
the paperwork trail is a genuine mess.
i can tell you that the public records where mortgages (deeds of trust in some states) are filed is a horrific mess in various locations around the country. there are tons of refinanced mortgages wherein the discharges on the original mortgage(s) were never filed and tons of new mortgages that never got put on record.
this has huge ramifications.
The biggest issue is when the mortages are securitized over and over again.
If a clear lien cannot be proved all else follows DH.
It is going to be very tough in some parts to prove or "cure" as they say clear liens. The title companies are going to be much more conservative in their underwriting on these matters going forward and have started the process some time ago by dumping hordes or title agents, who tended to insure just about anything.
but what happens when you try to sell ? without a title ?
when you try to sell and you have title problems, it is a clusterfuck. the degree of the clusterfuck depends on several variables, all of which are very time consuming, quite expensive if one has to go to court to seek clear title. if you currently own a home and have been doing the serial refinancing thing, i would suggest you have your title searched to see if you have any problems now.
It's a pain in the ass, but if the bank can't prove you owe the debt, you can get your title cleared by filing an action to clear title. Bank will never reply, default judgement, you win, order signed, hand over to title company, game over. 60-90 days. Easy as pi.
You could always let your taxes go intentionally to have a trusted third party pick up the lien on it, only to turn around and foreclose to receive a Treasurer's Deed. Only issue you have to get a sellable title I'd highly suggest you get a litigation guarantee policy - it's paid off for our firm in spades when it came down.
Sqworl: "I have recently read several foreclosure horror stories about banks not knowing who owns the property or who has the note! "
Would you have links to any of those articles?
I saw something on that on TV a few months back. The gist of the story was that by law the debtor has a legal right to know who it is that they are paying off.
NY Post, apparently a Judge in Brooklyn has a major hard on for the Banks..."no paper work" no foreclosure! I guess they did not get the memo...it was lost in the shuffle..lol
http://livinglies.wordpress.com/
In other news, China may want to screw a few international banks dealing in commodity futures by voiding contracts. From The Economist:
http://www.economist.com/businessfinance/displaystory.cfm?story_id=14365060
Can you spell Goldman Sachs, Morgan Stanley, ...
Fascinating speculation.
Expect China to get nuked any minute. Nobody fucks with Goldman Sachs and gets away with it.
I got news for ya peaches. Nuclear weapons are made of a material known as uranium 235. If you take uranium 235 and sit it on a bench. It decays. If you encase it in a 20,000 lb steel warhead. It decays. If you throw it in space. It decays. If you dump it in the ocean it decays. If you bury it in the ground it decays.
Rapidly.
So were not really talking about rifles that get packed in plastic and grease and get sold off as ww1 surplus 70 years later. Everything radioactive and heavier than lead doesn't like being radioactive. It wants to be lead. So being blustery about nuclear weapons is stupid. This isn't 1945 and and we aren't dropping freshly made bombs. Nuclear weapons are stupid and a waste of time. But that didn't stop reagan building hundreds and hundreds of them which are probably all trash right now. Good way to build up debt. I'm sure the central bankers would love for everyone to keep building them and building them and building them especially without the money to do it.
The half life of uranium-235 is about 704 MILLION years. It's not the uranium that's the problem, it's the missile.
Way to pick a durable sounding point on an exponential curve.
Someone tell Dr. Strangelove to take his chill pill.
If you take uranium 235 and sit it on a bench. It decays. If you encase it in a 20,000 lb steel warhead. It decays. If you throw it in space. It decays. If you dump it in the ocean it decays. If you bury it in the ground it decays.
sounds like a leveraged etf. sorry, could not resist.
Best leveraged ETF joke EVER!
Agreed. Damn funny.
LOL
Don't need nukes, when you've got a haarp.
http://www.youtube.com/watch?v=y2W7nGWOSu8
Thank you; forgot I have that show DVRd and never watched it.
Ever noticed that when bunk is being discussed, the guy always has a British accent? Just sayin.
Story came out over the weekend and was rumored to have led the Monday Shanghai Surprise, and US aftereffect. MS was down considerably more than peers that day and next. Goldman, not so much.
Pick-a-pay loans.
https://www.wachovia.com/file/0612_Mortgage_Call.pdf
Love the Cautinary Statement (2007), they covered most of it:
...The following factors, among others, could cause Wachovia’s financial performance to differ materially from that expressed in such forward-looking statements:
(1) the risk that the businesses of Wachovia and/or Golden West in connection with the Golden West Merger or the businesses of Wachovia, Westcorp and WFS Financial in connection with the Westcorp Transaction will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected;
(2) expected revenue synergies and cost savings from the Golden West Merger or the Westcorp Transaction may not be fully realized or realized within the expected time frame;
(3) revenues following the Golden West Merger or the Westcorp Transaction may be lower than expected;
(4) deposit attrition, operating costs, customer loss and business disruption following the Golden West Merger or the Westcorp Transaction, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected;
(5) the strength of the United States economy in general and the strength of the local economies in which Wachovia conducts operations may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on Wachovia’s loan portfolio and allowance for loan losses;
(6) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Board of Governors of the Federal Reserve System;
(7) inflation, interest rate, market and monetary fluctuations;
(8) adverse conditions in the stock market, the public debt market and other capital markets (including changes in interest rate conditions) and the impact of such conditions on Wachovia’s capital markets and capital management activities, including, without limitation, Wachovia’s mergers and acquisition advisory business, equity and debt underwriting activities, private equity investment activities, derivative securities activities, investment and wealth management advisory businesses, and brokerage activities;
(9) the impact of changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance);
(10) unanticipated regulatory or judicial proceedings or rulings;
(11) adverse changes in financial performance and/or condition of Wachovia’s borrowers which could impact repayment of such borrowers’ outstanding loans.
Additional factors that could cause Wachovia’s results to differ materially from those described in the forward-looking statements can be found in Wachovia’s Annual reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the SEC. All subsequent written and oral forward-looking statements concerning Wachovia, the Golden West Merger, the Westcorp Transaction or other matters and attributable to Wachovia or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Wachovia does not undertake any obligation to update any forward-looking statement, whether written or oral, relating to the matters discussed in this investor presentation.
I just got a flyer from WF. $50.00 to open a checking account.
Washington Mutual offered $100.00 before hmmm..
I guess the Riverboaters didn't get the WFC Delinquency Memo.
They are all lining up to buy the "Fab Five" and other assorted junk tomorrow....
Last Change Change % Volume C Citigroup Inc 4.79 +0.02 +0.42% 11,208,470 SPY SPDR S&P 500 ETF 100.70 +0.05 +0.05% 8,835,512 FNM Fannie Mae 1.74 +0.10 +6.10% 7,111,667 QQQQ PowerShares QQQ 39.54 +0.03 +0.08% 6,886,531 EEM iShares MSCI Emerging ... 35.72 +0.01 +0.03% 5,399,092 XRT SPDR S&P Retail ETF 32.02 +0.07 +0.22% 4,212,200 BAC Bank Of America Corpor ... 16.91 +0.07 +0.42% 4,165,281 XLF Financial Select Secto ... 14.11 +0.05 +0.36% 3,066,311 EMC EMC Corp 15.82 +0.01 +0.06% 2,561,482 FRE Freddie Mac 1.97 +0.10 +5.35% 2,375,175 WFC Wells Fargo & Co 26.92 +0.01 +0.04% 1,739,267 JPM JPMorgan Chase & Co 42.18 +0.07 +0.17% 1,415,504 IWM iShares Russell 2000 I ... 56.20 -0.06 -0.11% 902,267 AIG American Intl Group Inc 43.23 +1.48 +3.54% 862,437 CIT CIT Group Inc 1.53 +0.03 +2.00% 854,934Gold hit an all-time high in Pakistan today
http://c.moreover.com/click/here.pl?x2183799365&f=1774
also Denninger has a great rant up in response to CNBS..he really nails it in my opinion... a must-watch...
http://market-ticker.denninger.net/archives/1406-Kneale-Abuse.html
and Jim Willie has a new article out
http://financialsense.com/fsu/editorials/willie/2009/0903.html
PM, I luv ya man, but damn you just made me listen to DK. What a knob. he equates believing in the stock market with patriotism, or even the value of the economy?
Stock values should represent the residual cash flows available to company owners. They have nothing to do with if you believe in the USA or not.
Man that guy is a dope.
You are unpatriotic if you have a logical opinion on the economy based on facts the media doesn't show. Maybe even a potential terrorist. LOL
New post today come over and leave a comment! Appreciate it. Are YOU Ready for World Economic Collapse?
haha sorry ghostface next time i will post a big fat FAIL warning for dennis kneal
"Patriotism's the last refuge of scoundrels"... You know the idiots are desperate when they start playin' the patriotism card.
Karl has a penchant for putting it bluntly. He's heavy handed with the TinFoil™ crowd too, taking Willie to task. Occam's razor baby.
i disagree with denninger about wtc7 , but that's fine, it would be boring if everyone agreed on everything.
i read both jim willie and denninger to get two different perspectives. jim seems to think this is the beginning of the 'real' move in gold. wouldn't that be nice...
True, true. I don't agree with either of them all the time, even less with Doug Casey. All make fine reads; I treat it like a buffet taking what I like and leaving the rest.
... and yes, a 'real' move in Gold is almost a surreal novelty that I think even KD could appreciate. Nah. I will appreciate it though.
the unfortunate aspect is that denninger and
willie fundamentally agree on the very big
issues....
they both agree that financial conditions are
vastly misrepresented, that economic fundamentals
are very poor, and potentially huge time bombs
are ticking away....
they take different slants and have different
analytical tools....denninger is very hard
numbers oriented
and can slice through a balance sheet fairly
easily....willie relies more on contacts
and internationalist macro issues for information
but has a phd in statistics so i am sure that he
can whirl the numbers too....but he is is very
sinocentric and probably too much so...
denninger is a complete windbag and could easily
have been a nazi in a previous life but he
still produces valuable material....willie
is much more astute about gold but has been
beating that drum for a long time as have many
so-called gold bugs of whom i count myself as
one that you want to say either shit or get off
the can....no one factors in manipulation into
ta....
i am sure denninger would have a major stroke
with my adamant belief about nanothermite bringing
down the world trade centers but there comes a
point at which you must take your forensic evidence
of which denniger cites much financially and
realize that the cat did not type war and peace
on a selectric in the middle of the night...if
that is the case you have to make sense of the
evidence....life is full of conspiracies....denying
because you want to appear reasonable is bullshit...
it is a materstroke of genius to suggest that
conspiracies are impossible when the evidence
contradicts such notions....the probabilities
of poor judgment and accidents occuring to produce
a disasterous result are statistically highly
improbable if not impossible...the math is against
it....
Pay no attention to the man behind the curtain or the men on the grassy knoll.
Yeah but he didn't have to be a blunt dick about it and not tke any cooments from "troofers" on his response page. Oh, It's okay for him to rant on and on about how Golden Slacks rules the world, along with Paulson in cahoots and all kinds of other "theories."
Telling me that my opinion is not even going to be considered because it is tin-foil material is just absurd.
I absolutely will not take these kinds of blanket statement from anyone who has not even listened to the facts (obviously...) about the WTC but finds there are conspiracies in every OTHER government agency we have.
It just doesn't make any sense.
I am now of the opinjion that, yeah, the fucker's a knob and I have removed his site from my favorites list.
Well watch Fabled Enemies. It has some good stuff on that. I can't buy building 7 just falling down. I could buy ONE of the towers having enough combustible materials to create enough heat to turn the structure cherry red and allow plastic deformation. But BOTH. The smoke in fires is combustible material and so much smoke was pouring out. There just wasnt enough heat in building 7 to do that. Maybe some of the facade falling off. Not enough radiant heat from the towers even though all that thermite pouring out of them is pretty hot stuff. Theres just too much distance.
The clincher is the missing 2.3 trillion and destruction of the ACCOUNTING wing of pentagon. You'll either go all in or not on that one.
Real market moves don't begin with the ads, headlines and masses on board.
Head fakes do.
Old timer...
Dennis the menace never has nor would wear the uniform of our great nation. His asinine ravings disparaging those of us who happen to believe in the foundational principles of our nation and have & will stand up for them speaks louder than any words he could ever utter.
Thanks PM for posting this.
Let's all remember who Dennis is. He is the guy(forbes editor etc) who has put the headline on the business magazine. The exact opposite headline of what happens in the next six months more often than you can count. He is a contrary indicator. HE BELIEVES. He doesn't believe anything. He hopes. As does every agency of gov't right now. They are crapping their pants, because its all starting to unwind and they are running out of ammo.
True enough.
We realize they are looking at the avalanche that has started from an entirely different perspective. hehhe After all, we are far from running out of ammo since the rounds we are lobing at the unstable hillside continue to score with great effect. Dennis can wish that his view of patriotism will save him from being engulfed. After all, all that he has left is hopium, denial and a paycheck for being such a hack and once he is engulfed he will have nothing.
They are crapping their pants, because its all starting to unwind and they are running out of ammo.
Wasn't that the plan all along. Drive our entire financial system into the ground so that the World Bank and IMF would become the new financial system. China is first in line:
http://ca.news.yahoo.com/s/afp/090902/business/finance_economy_imf_china_bonds
That is why our regulators are paper tigers, the laws were changed in recent years to make the transition possible. That is why Obama has left all the key players in place from the previous administration and he added more financial sith lords. That does not even include the 30 unconstitutional czars reporting to him!
Jim Willie r0cks.
CNBC man always reminds me of something, but I can't quite place it. From childhood, with bright colours. Nevermind, it will come to me eventually...
http://asset1.pnn.com/graphics/show/1879/600/image.jpg
rofl. brilliant,sir.
Dennis Kneale, CNBC anchor, Ph.D. in Clueless --^
PowerLunch was actually watchable when he was gone for the past month. I thought maybe CNBC got wise to the fact that some short bus moron was masquerading as a journalist. No luck with that. Back again, and just as loud and stupid as ever.
I feel the need to do this again with DK. Video of him on 'hiatus.'
http://www.youtube.com/watch?v=3KANI2dpXLw
When he is not pretending to be a journalist and he is hanging out with his Muppet friends, you would never know what a scumbag boldface liar he is proving himself to be...how tragic.
Two of my friends perform at the circus daily. They Don't believe a word they speak. Its scripted!! Its paycheck until it ends or they get a better gig and book deal..That's the truth!
Is Karl finally starting to see the problem with Fractional Reserve Banking?
Edit: Fraudulent Reserve Banking
karl's point was - last i knew - that fractional
reserve banking is not a problem if the banks
and loan standards are properly managed and
regulated...to
which i would add that ratiios need to be much lower
than the 33-50x at which they currently stand...
i agree...attacking fractional reserve banking
is hitting the wrong target entirely and will
discredit folks very quickly....i say that as
a strong anti-fed, hard money advocate...
It's all very simple, actually.
All the bank debt Mr. Denninger refers to is worth exactly 5,327 quatloos.
Now we just need to figure out how much a quatloo is worth and we'll be set.
DK thinks that Barney Frank threatening to obliterate FASB unless they let banks lie to us for a few years is the best regulatory system in the world?
That's basically how we've avoided armageddon. It really isn't that hard Dennis. It is why the GE stock in your 401K isn't worth ZERO Dennis. Your daddy company is a TARP baby, allowed to mark to myth.
Here's a good one about CNBC's TARPED up daddy, GE. The guy says GE is a $2 stock wating to happen.
http://finance.yahoo.com/techticker/article/316847/Avoid-
Thanks -- that is a must watch
Too bad it's a $2 stock that will never be allowed to get there (zero, really, with GECC). GE is a key Too Important Media To Fail. I'd be all over puts on it at this price if they weren't one of the most-connected, useful companies of you-know-who. We need to lend some tinfoil to guys like that on the video.
If CIT had a media division, they would have gotten as much of the Acronym Soup bailout money & programs as needed - like GE did/does/will.
KD: the anti-DK.
Agreed. I was about to recommend the Denninger video too.
beLIEve
JW and the GATA crowd have been promising the COMEX
will soon suffer naked short squeeze defaults for years.
Are they forgetting emergency deliveries can be settled in dollars, IOUs or spittoons if necessary at the discretion
of the Board of directors?
So here's the real $64 T question -
why are Central Banks now buying gold?.
Those that do not understand deflation are condemned to lose by it...
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3251493