Countrywide

On a day full of exultation for The Oracle of Omaha, we could not help but see the irony of Warren Buffett losing yet another bet and not paying up...

If you thought Santander Consumer was bad, meet Skopos Financial, an Austin-based subprime auto lender that specializes in loans to "car buyers with no credit, low FICO scores, or a previous bankruptcy, repossession or foreclosure." With Skopos, "the best part is speed."  

As Ronald Reagan said, trust, but verify!

• Yellen faces Senate grilling on Fed rate policy, transparency (Reuters)
• Big Banks Face Scrutiny Over Pricing of Metals (WSJ)
• Greece makes more concessions to euro zone, Germany sets vote (Reuters)
• Time for another executive order: Longer Lives Hit Companies With Pension Plans Hard (WSJ)
• The Syria invasion "false flag" approaches: Islamic State in Syria abducts at least 90 from Christian villages (Reuters)
• Why Lenders Love the $2.5 Million Home Loan (BBG)
• Reuters journalist Maria Golovnina dies in Pakistan aged 34 (Reuters)
• Qatar’s Ties to Militants Strain Alliance (WSJ)

Following yesterday's shocking murder of 12 people at the Charlie Hebdo headquarters, there has been much confusion and many rapidly moving parts in the hours that followed as authorities try to catch the two remaining killers, the 32 and 34-year old Kouachi brothers, after earlier the youngest of three French suspects turned himself in to police after, as BFM TV reported, he saw his in social media. The arrest was confirmed by an official at the Paris prosecutor's office said. Several people linked to two other suspected attackers were also in custody, the news agency AFP reported. The manhunt for the two remaining suspects goes on.

• Swiss National Bank Starts Negative Interest Rate of 0.25% to Stave Off Inflows (BBG)
• Putin Strikes Uncompromising Stance Over Crisis Gripping Russia (BBG)
• Sony cancels North Korea movie in apparent win for Pyongyang hackers (Reuters)
• U.S. Said Set to Blame North Korea for Sony Cyber Attack (BBG)
• China’s Short-Term Borrowing Costs Surge as Demand for Money Grows (WSJ)
• Russia Currency Market Bends But Doesn’t Break (BBG)
• Jeb Bush Puts Pressure on Chris Christie for 2016 (WSJ)
• From joy to outrage, Florida's Cuban-Americans greet new U.S. policy (Reuters)
• Russians Quit London Luxury Homes as Only Super-Rich Stay (BBG)

The myth of harsh lending conditions in the US is probably only matched in its disconnect from reality by the just as entertaining narrative of the "one-time, non-recurring" harsh winter crushing Q1 GDP. A narrative which even needed support from none other than former Fed Chairman Bernanke who allegedly was denied a mortgage refinancing on the $672K loan he still owes for his 3-bedroom, 2100 square foot home (a story which is about as credible as 17 year olds making $72 million by cornering the penny-stock market). For the truth we go to the Office Of the Comptroller of the Currency, which just reported in its annual survey that for the third year in a row, U.S. banks relaxed loan underwriting standards, "a trend mirroring the lax lending just before the financial crisis." To wit: "This year's survey showed a continued easing in underwriting standards, with trends very similar to those seen from 2004 through 2006," said Jennifer Kelly, senior deputy comptroller for bank supervision.

Suddenly the countrywide Ferguson protests, which had progressed peacefully at least until now, took a turn for the ugly, when as the Star Tribune reported moments ago, A vehicle plowed through a group of demonstrators in Minneapolis several hours ago during a march and rally in the wake of last night's grand jury decision.

• Japan Prime Minister Shinzo Abe Calls Snap Election (WSJ) - as repeatedly priced in...
• Flash Boys Raising Volatility in Wild New Treasury Market (BBG)
• Not Greece again: Greek Bailout Review Stalls as Troika Demands Final Steps (BBG)
• Iran uses China bank to transfer funds to Quds-linked companies (Reuters)
• Porn Mags With Free Madrid Theater Tickets in Tax Protest (BBG)
• Hong Kong, China stocks ease on profit-taking after stock connect launch (Reuters) - Hang Seng down 500 points in past 2 days
• Halliburton Mega-Deal Sealed by CEOs Over Coke and Coffee (BBG)
• Wall Street to Reap $316 Million From Day of Mega Deals (BBG)
• Mass murderer Charles Manson gets marriage license, state says (Reuters)

Central banks are printing rules almost as fast as they’re printing money. The consequences of these fast-multiplying directives — complicated, long-winded, and sometimes self-contradictory — is one topic at hand. Manipulated interest rates is a second. Distortion and mispricing of stocks, bonds, and currencies is a third. Skipping to the conclusion of this essay, Jim Grant is worried: "The more they tried, the less they succeeded. The less they succeeded, the more they tried. There is no 'exit.'"

The last time the stock market reached a fevered peak and began to wobble unexpectedly was August 2007. Markets were most definitely not in the classic “price discovery” business. Instead, the stock market had discovered the “goldilocks economy." But what is profoundly different this time is that the Fed is out of dry powder. Its can’t slash the discount rate as Bernanke did in August 2007 or continuously reduce it federal funds target on a trip from 6% all the way down to zero. Nor can it resort to massive balance sheet expansion. That card has been played and a replay would only spook the market even more. So this time is different.  The gamblers are scampering around the casino fixing to buy the dip as soon as white smoke wafts from the Eccles Building.  But none is coming. For the first time in 25- years, the Wall Street gamblers are home alone.

• -0.07%: Germany Secures Record Low Funding Cost at Bond Auction (WSJ)
• Pentagon Sees Possible Role for U.S. Ground Forces Against Islamic State Militants (WSJ)
• China Joins ECB in Adding Stimulus as Fed Scales Back (BBG)
• Stealthy or Normal? Analysts Diverge on PBOC’s Action (BBG)
• Sony Forecasts Massive $2B Loss as Smartphones Lag (AP)
• Islamic State campaign tests Obama's commitment to Mideast allies (Reuters)
• Brent Crude Rebounds as Libya’s Sharara Oilfield Shut (BBG)
• Market calm over Scottish vote at odds with disaster warnings (Reuters)

Here are some of the choice excerpts from the man who is baffled by a new effort to punish him, proud of past triumphs and incensed by criticism: “You’ll have to ask those people, ‘What do you have against Mozilo, what did he do?’” he said in a 30-minute call with Bloomberg News before Labor Day, one of his few interviews since the firm’s downfall. “Countrywide didn’t change. I didn’t change. The world changed.”  Mozilo doesn’t understand why he and his firm, blamed by lawmakers and authorities for lax underwriting and predatory lending, have been seen as villains. “No, no, no, we didn’t do anything wrong,” he said, adding that a real estate collapse was the root of the crisis. “Countrywide or Mozilo didn’t cause any of that.” Yes, the Moz talks about himself in the third person.

• Ukraine Shifts to Defense Against Russian Incursion (WSJ)
• U.S. forces carry out operation against al-Shabaab in Somalia (Reuters)
• Bond Markets Tilt Toward Frankfurt as Draghi Negates Fed (BBG)
• Another "unexpectedly" - Swiss Economy Unexpectedly Stalls as Euro Area Takes Toll (BBG)
• Japan's 'Abenomics' feared in trouble as challenges build (Reuters)
• Germany Imposes Nationwide Ban on Uber's Cab-Hailing Service (WSJ)
• Japan's 'forward guidance', the GPIF, has "already begun a highly anticipated portfolio reshuffle" (WSJ)
• Detroit Brings Bankruptcy Plan to Court With Billionaires (BBG)
• Burger King has maneuvered to cut U.S. tax bill for years (Reuters)