Either JPMorgan Chase is honorably managed or incredibly stupid. A review of the top 4 banks use of Nonaccrual on their GNMA loans reveals JPM standing apart in their "strategic" use of Nonaccrual.
- Asian stocks rise on strengthening global economy; Euro declines on Greece.
- Crude oil declines for first day in three on increase in US inventories.
- Euro drops to record versus Franc, 10 month low against Dollar on Greece.
- Fiat seen cutting 5,000 jobs – report
- Japan approves record $1 trillion budget amid debt concerns.
- Japan exports in February increased 45.3%.
- Germany, France agree on IMF role in Greece's budget crisis, Official says.
- Mortgage applications in the US down 4.2%.
I have a strong feeling that if you dig deep enough into the BofA innards, you will find some stinky stuff. Hey, it's just a feelin'.
Moody's Warns Of Upcoming Bank Downgrades If Dodd Bill Passes, BofA, Citi And Wells At Greatest RiskSubmitted by Tyler Durden on 03/22/2010 15:33 -0400
Moody's says that if the Dodd bill passes in the substantially proposed form, the rating agency will likely need to cut various banks due to the elimination of assumptions about systemic support as some from a resolution authority is introduced. The banks that would suffer the most are: Bank of America- 4 notches from the current HoldCo Sr rating of A2, Citigroup and Wells Fargo both at 3, from A3 and A1, respectively, Morgan Stanley two notches lower from A2, and one notch for each of the following: BoNY (Aa2), JPM (Aa3), Goldman (A1), SunTrust (Baa1), and Regions Financial (Baa3).
From Bloomberg: "The Federal Reserve must disclose documents identifying financial firms that might have collapsed without the largest ever U.S. government bailout, a federal appeals court said." Next step for the Fed weasels - petitioning the U.S. Supreme Court in an attempt to completely trample America's constitution. In the meantime, Mark Pittman smiles from above as Satan reevaluates the amend and extend provisions of his affirmative covenants with the Fed.
One of the more vocal economic skeptics (as pertains to the developed world at least, China not so much), CLSA's Chris Wood, chimes in with his latest weekly observations on the economy, which are not for the faint of heart, in the latest edition of GREED and fear. Digging in.
And so the snow scapegoating continues, now in the NAHB/Wells Fargo Builder Confidence index, which blamed the February confidence decline on"unusually poor weather conditions" i.e., snow in the middle of winter . The index, which came out at 15, was a drop from 17 in February, and is now back to June 2009 levels. More ominously the spread between hope and reality, or the 1-family Sale Present Time component and the Next 6 Months components, dropped to 9, matching the tightest level over the past year, even as the Prospective Buyer Traffic component dropped from 12 to 10, or the lowest reading since March of 2009. Do we really need any more confirmation that even with all the governmental stimulus bells and whistles, housing has relapsed into the second leg of the depression.
Let's get something straight right off the bat. We all know there is a certain level of fraud in the financial industry. It is just that now it is endorsed by the government...
Labor Unions Preparing To Take Goldman Sachs To Task, Push For Transaction Tax In Upcoming Widespread RalliesSubmitted by Tyler Durden on 03/11/2010 10:58 -0400
America's labor unions are finally waking up from their deep slumber and noticing the vast schism in American society between the haves and the have nots. The catalyst: Wall Street's $16.2 billion bonus pay day. As a result Richard Trumka, head of the AFL-CIO, the nation's largest union organization, and a firm supporter of the transaction tax which was proposed in late 2009 and then promptly buried after some serious lobbying by Wall Street, will announce today "two weeks of protests aimed at Goldman Sachs Group Inc., the most profitable securities firm in U.S. history, and the country’s five other largest banks. The AFL-CIO says it plans 200 events covering all 50 states, starting March 15." Summarizing the mood of increasing populist aggression across the nation against Wall Street's uber-wealthy is labor professor at UC Berkley Harley Shaiken: “Wall Street has become a symbol of greed run amok, and what labor is doing here is seeking to demonstrate that it is speaking for working families generally, union member or non- union member.” Strikes in Greece have already paralyzed the country. Will America soon follow?
Things are really starting to get wild. CNBC should just eliminate the NYSE trading floor shots and replace them with battle scenes from "Hamburger Hill" or some of the medieval battles in "Lord of the Rings". Basically, everyone is out for blood today as panicked put and call holders are getting barbecued with Goldman's flamethrowers or getting bludgeoned to death by spiked clubs.
A new report by Moody's "U.S. Bank Asset Quality: Negative Trends Slow Down, But The Pain Isn't Over" has some gloomy observations about the asset quality of the US financial system, and its implications for future charge offs and overall profitability. In estimating total loan charge-offs between 2008 and 2011 Moody's predicts that of the total $536 billion (really $633 billion if unadjusted for purchasing accounting marks), which is equal to 9.7% of all loan outstanding at December 31, 2007, only $240 billion has been charged off, leaving $296 billion still to hit the books. Yet banks have taken loan loss allowances of "only" $188 billion, leaving just over $100 billion unaccounted for. And people wonder why banks are unwilling to lend. Moody's conclusion on what happens as reality catches up with charge offs: "Although banks have provisioned for a substantial amount of their remaining charge-offs, the additional provision required will extend the period that many banks will be unprofitable well into 2010, and will reduce capital levels." Obviously, Moody's estimates do not go past 2011 when many anticipate the next major wave of loan impairments to occur in the form of Option ARM resets and Commercial Real Estate maturities. Furthermore, Moody's does not account for securitized credit card losses, which will also be an area of major pain for the banks in the upcoming years. Just how big the impact of all these will be is still to be determined although it is very likely that the overall impact will impair overall bank capital by well over $100 billion over the next several years.
A detailed overview of the current state of charge-offs, delinquencies and (yes) improvements in the mortgage industry - and most importantly what can be discerned from these trends...
Two months ago I pointed out an anomaly in JP Morgan's "blowout" quarterly earnings release. Bloomberg's recent story informs us of how big the problem actually is. Let's reminisce...
Every now and then, you come across a company and wonder, "How the hell are they still in business?" I announced what I believed to be a ponzi scheme, (see Flim, Flam, Scam: Would a PPD Ponzi and Pyramid scheme cause your wealth to Scram?, A Demonstration of How PPD Management is Destroying the Company and Reggie Middleton's Continued Public Service Announcement on the Flim Flam Scam). Since then, the company has announced that it is being investigated by the FTC and the SEC.
Yet another week where stocks defy fundamentals, Wells Fargo running wild, furniture stocks like ETH hitting new 52-week highs. Looks like another resumption of "Dash for Trash" in the making. Perhaps the "Affliction" flatbillers will re-emerge at Starbucks to daytrade single digit midgets.