Bank of America
Fox Biz reports that Ken Feinberg, as one of his last ineffectual actions during his tenure, will announce on Friday the clawback of various bonuses paid during the 2008 year of ubiquitous bail outs. Since every single bank received some form of assistance in 2008, and many still benefit from the ridiculously low rates on the FDIC-backed TLGP debt (which only has 1.5 years before it matures), it is unclear which banks will be the target of this last attempt to recover some taxpayer money out of the TBTF. Also, since these same banks run the country via their Federal Reserve lobby, it is unclear if and to what extent the Goldmans of the world will agree to this action. As Gasparino reports: "In an interview, Feinberg refused to say how much money he’s going to ask for or which banks will be targeted. “I’m aiming for Friday to make an announcement,” he said in an interview. “The banks will be notified shortly.” Feinberg declined to say whether the five remaining banks -- Citigroup, JPMorgan, Goldman Sachs, Morgan Stanley and Bank of America -- would be repaying any of the claw-back money; his mandate covers 418 banks, but people on Wall Street suspect the main focus of his mandate will be the large financial institutions."
- Asian stocks gain on outlook for China's economy; Yen weaken.
- Backed by moderate Republicans, Democrats expect to extend jobless benefits.
- China loosens rule on yuan banking in Hong Kong as it promotes currency.
- China needs higher interest rates or stronger yuan to avoid inflation and 'hard landing'.
- Oil hovers below $77 as mixed signs from economy, stock markets extend malaise.
- Optimistic start for Farnborough Air show fuels hope that worst is past for airlines.
- UK June public sector borrowing $22.1B, slightly less than last June.
- Griffon to buy lawn and garden firm Ames True Temper for $542M
- Emirates orders 30 Boeing 777 planes for $9.1B.
- Abu Dhabi & UTD TECH plans $800M military aircraft repair joint venture
- Asian stock markets were lower Monday, dragged by Wall Street's losses on Friday.
- BOE's Sentance says 'gradual' rate increase in UK would help recovery.
- China Oil Spill pollutes 50 sq km. of sea
- Dollar weakens most in 14 months versus Euro on signs of economic slowdown.
- Housing, Leading Index in US probably slumped in sign recovery slowing.
- IMF says Hungary must do more to boost revenue, reform state enterprises.
One of the longest running Conviction Buy ratings in Goldman history, that of Bank of America, is no more. As of this morning, Richard Ramsden has taken the firm from the coveted position at the top of the ratings pedestal. "BAC results showed many similar operating trends as JPM and C but with the least amount of credit improvement. While we still see significant upside to BAC, in our view JPM is more attractive given the recent convergence in valuation and superior credit trends. Hence we remove BAC from the Conviction list (but retain our Buy rating) and reiterate our CL-Buy on JPM...the current concern is banks are now fighting shrinkage in both trading and net interest income (NII). Given market volatility, the first can be attributed to a weak quarter but net interest income is a function of low rates and weak loan demand. We believe that NII trend is likely to remain a headwind for the coming two quarters, but based on the experience of regional and trust banks, NII should recover in 2011." Look for Bank of America to return the favor soon enough.
Is market volatility forewarning doom? Read on...
It is time for the SEC to slap another token wrist. Now the the "regulator" has made it official that the punishment for fraud is roughly 3% of a firm's annual bonus pool for all godlike corporations, and millions of dollars, bars and jailtime for everyone else, it is time to tickle, pardon, we mean tackle, that other major fraud: Repo 105-type end of quarter window dressing, which we now know has been practiced not only by Lehman but by Bank of America. Because according to the just released primary dealer holdings data by the New York Fed, the end of quarter window dressing continues across all PD asset classes to this day. As the chart below shows, the week following the EOQ asset balance hit a total of $270 billion, which was a $15 drop from the week prior, the subsequent week has surged by $19 billion, and is now back to $289.5 billion. This is a two week swing only matched by... the prior quarter window dressing farce, when the roundtrip amount was $81 billion.
Canada's Public Sector Pension Investment Board has put a large portfolio of private equity commitments up for sale, in the latest evidence that a long-awaited boom in deal flow on the secondary market has arrived.
The good news in America today is that many of lies from our leaders and media no longer seem to be working. Four out of five people view the current proposed financial reform as ineffectual. Many in Congress who voted for socialism for the rich now look like they will be voted out for continuing those giveaways. Now the only way those Banksters can survive is to pretend that their corporate communism is working even in the face of overwhelming evidence to the contrary. Most recently, they decided that instead of taxing complicit financial institutions the cost of their "Financial Reform-In-Name-Only", they will instead use what I call the Big Tarp Lie to pander for the vote of Senator Scott Brown and others. The mainstream media rarely fights back against this lie, either by an inability to understand, a desire to protect their access to these same Politicians and Bankers or an unwillingness to go up against the very same financial institutions that are often the only thing between them and the unemployment line. However, we the people have to fight back against these lies - and thankfully we own the truth.
Spanish Banks Borrow Record €126 Billion From ECB In June As Country's Funding Lock Out Enters Third MonthSubmitted by Tyler Durden on 07/14/2010 09:36 -0500
For all those celebrating that Spain and Greece can peddle a few billion in short-term Bills to the ECB and a few Chinese investors (did SAFE recover yet from the massive drubbing it suffered in its US stock holdings earlier this year when it was begging for more capital?) it may be prudent to consider that, as Bloomberg reports, Spanish banks borrowed a record 126.3 billion euros ($161 billion) from the European Central Bank in June. This represents a 48 percent increase from the €85.6
billion borrowed in May. Which is why we hope that anyone claiming liquidity conditions in Europe are anywhere even close to normal, will be brave enough to lend even one dollar to Spain's Cajas or appropriately tickered bank Santander (NYSE: STD), because nobody else has done so for over two months!
- Kan election loss may impede effort to cut debt (Bloomberg)
- Chinese Dagong credit rater gives China higher credit rating (AA+, stable) than US (AA, neg outlook) (BusinessWeek)
- Staring into the abyss (Economist)
- Bank profits depend on debt-writedown abomination (Bloomberg)
- Niall Ferguson: "A US debt crisis is on its way" (TechTicker)
- If BP asset purchase rumors are true, Apache is about to incur a whole lot of extra debt (Bloomberg, WSJ)
- Housing gets sick on Keynesian rollercoaster (Bloomberg)
Soccer is a beautiful game; unfortunately, World Cup finals usually are not (today’s in particular) and for an obvious reason: the stakes are just too high. And that is the problem with the world of finance.
Last week’s market rally, in which the prior week’s carnage was reversed, occurred without any major economic or market news and blunted talk of a double-dip recession. What will occur over the next several weeks, however, is a string of major earnings releases with little margin of error, owing to a consistent ratcheting up of expectations in 2010.
Bank of America Admits To Repo 105-Like Fraud, Even As End Of Quarter Window Dressing Continues UnabatedSubmitted by Tyler Durden on 07/11/2010 10:52 -0500
In what will come as a complete lack of surprise to everyone, Bank of America has officially confirmed it "mistakenly" used Repo 105-type transactions on $10.7 billion in assets, which had been misclassified as sales rather than borrowings, or repos, in the period between 2007 and 2009. As Bloomberg reports, the bank used the excuse that a $10+ billion fraud is simply an rounding error so you must acquit: "Bank of America said the inaccuracies aren’t material and
“don’t stem from any intentional misstatement of the
Corporation’s financial statements and was not related to any
fraud or deliberate error.” We are sure that late night comedians can come with enough material in which a $10.7 billion "mistake" is not material so we will leave it to them, and instead we will ask another question as pertains to the whole end of quarter window dressing theme: namely - why does it continue to this day? As per the FRBNY's public disclosure of Primary Dealer holdings, the week ended June 30 once again saw the traditional balance sheet collapse, with total PD assets as of June 30 closing once again at the lowest level of the entire quarter. This marks the 7th consecutive quarter in which primary dealer assets finished the quarter at or near the lowest exposure during the quarter, and 9 out of the last 10. But it's all fine - according to the SEC mangled rules of corrupt statistics (soon taught at a Princeton University near you), an event that occurs 90% of the time is not at all significant or notable.
Bank of America, via economist Ethan Harris, has joined the chorus of large banks reducing economic forecasts, and as a result has reduced its GDP projections for 2010 and 2011 to 3.0% and 2.6%, from 3.2% and 3.3% respectively. The inflection in 2011 is notable as now the bank sees a material slow down in the economy where before it saw growth. Also, BofA is now expecting that the Fed will leave the Fed Fund language unchanged unchanged for 18 months, until March 2012. This is not surprising: with QE2.0 around the corner, it means that the Fed will soon be implicitly lowering rates. Of course, should the Fed find some naughty pictures of Barney and Chris, it may soon pass laws that allow negative interest rates for the first time. Of course, nothing at this point would be surprising.
It's hard to ignore the data that is coming out. There is a definite slowing trend in the economy. It supports my forecasts of a slowdown coming in the second half of this year. Expect the data to be its normal uneven trend, but it is clear that the economy is slowing. Here I show you what I'm seeing.