Fitch Downgrades $29.8 Billions of subprime CDOs
Submitted by
CalculatedRisk on Wed, 11/21/2007 - 8:20am (47 comments)
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Anyone seen the detail breakout on the downgrade - how much AAA?
Still no downgrade of ACA? Trading below a $ (peso) now...
Here is a Bloomberg front page ACA story...
ACA Capital May Get `Thrown to Wolves,' JPMorgan Says (Update2)
By Christine Richard and Matt Miller
Nov. 21 (Bloomberg) -- ACA Capital Holdings Inc., the bond insurer under scrutiny by Standard & Poor's, may have its credit rating cut, forcing banks to take on $60 billion of collateralized debt obligations, JPMorgan Chase & Co. analyst Andrew Wessel said.
[snip]
Yahoo main story... Jennie Garth eliminated from 'Dancing with Stars'
I guess this is what's most important to more Americans.
OT,
TIO Pumps out $4 billion in snap auction
Check the links out on the right hand side of the page, looks like a little more holiday cheer (last previous auction was November 15th).
Thrown to the wolves? Bad analogy, since its the wolves who made ACA in the first place, as a sort of mother to their bastard children. Seems a better analogy is wolves need to finally face the music.
Credit Suisse is on the ball.
Their latest research is based on tracking the news stories for stagflation and recession.
We have top men working on it now. - Maj. Eaton, Raiders of the Lost Ark, 1981
The Stagflation Spike
So throwing ACA to the wolves is like throwing brer' rabbit in the briar patch?
Our mother has been absent ever since we founded Rome,
But there's gonna be a party when the wolf comes home.
-Mountain Goats
I meant to add that perhaps Moody's, Fitch, and S&P should try doing some of that news stories research.
Fitch #1: Should we downgrade?
Fitch #2: There are 107 news headlines saying we should.
Fitch #1: Downgrade $15 billion and issue a press release.
Fitch #2: Won't the press write more stories?
Fitch #1: Oh yeah! Let's be proactive. Downgrade $30 billion!
Fitch #2: It won't sound so bad if we make it $29.8 billion.
They need to just dawngrade all of this crap in one fell swoop and get it over with.
CR: credit crunch
Europe Suspends Mortgage Bond Trading Between Banks (Update3) - Bloomberg.com
More detail?
Have at it:
FitchResearch
Yal - I posted this on the last Comments section. I wonder if it will have the desired effect or if it will just make folks more nervous. Thoughts?
Super SIV's?
US Mortgage-Related Losses - CNBC
"The super SIV idea clearly does provide a mechanism that gives 'time' for all the stock adjustment prices to work through," the OECD said in its latest Financial Markets Trends report. "Time ... is key to solving the turmoil."
Oh crap!
From homes to autos:
Fitch Places Wachovia Auto Owner Trust Series 2006-A on Rating Watch Negative
Fitch Ratings places the class A Notes (rated 'AAA') and B notes (rated 'BBB') of the WACHOVIA Auto Owner Trust Series 2006-A (2006-A), on Rating Watch Negative. The class A-1 and A-2 notes are paid in full, while the class A-3, A-4, and B notes remain outstanding. The rating action reflects the weaker than expected Performance of the 2006-A transaction above Fitch's original base case expectations for both delinquencies and cumulative net losses (CNL). The transaction was placed 'Under Analysis' by Fitch in March earlier this year when it breached one of Fitch's surveillance-screener logic metrics.
Through month 17 (the October collection period), total delinquencies stood at 3.58% and CNL were at 1.42%. Fitch has noted that the performance in both delinquency and CNL have exhibited weaker trends in the recent months. Furthermore, a CNL performance-based CNL trigger was breached earlier in the year preventing the transaction's payment waterfall from switching from a sequential payment structure to a pro-rata payment structure.
It seems like everything that was discussed here six to twelve months ago is coming to pass in the "worst case scenario" version so far.
I thought to myself last year that if Fannie and Freddie started hurting that the economy as a whole would be in a very dangerous place.
I hope I am/was wrong.
On the other hand, thanks to this blog and others like it, I have avoided making MASSIVE and potentially DISASTEROUS financial decisions with my and my immediate family's money in real estate and other investments.
For this Thanksgiving holiday, I would like in part to give thanks for people like CR and Tanta, and all of the thoughtful and helpful contributors to this blog, for this, and the levity and wit that brightens nearly every day that I visit here.
-giacutter
I didn't see anyone post on this yet in the last several threads.
Business, financial, personal finance news - CNNMoney.com
"LOS ANGELES (AP) -- Countrywide Financial Corp., the nation's largest mortgage lender, sought to reassure investors Tuesday, declaring it has ample capital, access to cash and is well-positioned to benefit from the financial turmoil rocking the mortgage sector.
The company's statement came amid rumors the Calabasas, Calif.-based company could be looking to seek bankruptcy protection and as its stock tumbled, at one point down more than 15 percent.
Countrywide (Charts, Fortune 500) shares fell 29 cents, or 2.7 percent, to close at $10.28. At one point, the stock had dropped to a low of $8.21. Over the past 52 weeks, the stock price has ranged between $10.25 and $45.26.
"Countrywide Bank ... has sufficient liquidity available to meet its projected operating and growth needs and has accumulated significant contingent liquidity in response to evolving market conditions," the company said.
The lender has shifted the bulk of its loan funding through its banking arm from sales on the secondary market in the wake of the liquidity crisis that rattled financial markets following a spike in home loan defaults this year.
Countrywide also noted it expects its home lending unit to be able to service debt beyond next year without having to purchase additional debt insurance.
The company said it had $35.4 billion in cash available as of Oct. 31, 2007, up from $33.6 billion in the previous month.
..."
"My biggest concern in the establishment of this (trust) is that we have the groundwork or framework in place, if you will, to ensure that we have the proper people in place to make sure we take care of business."
uaw prez
Super SIV = Pig Sty, where by; infected pigs are released to die one at a time vs. slaugtered en masse
The fact that they are infected is not the issue but mortality rate...
Slight of hand used by Farmer Fed????
Reuters Talk about a visit from Captain Obvious:
Nov 21 (Reuters) - Analysts at Goldman Sachs, Credit Suisse and Friedman Billings Ramsey cut their price targets on Freddie Mac ...
Goldman Sachs analyst James Fotheringham, who cut his price target on the stock by two-thirds to $24.
And Fotheringham was where on Monday when his guidance was $72? Oh, that's right. GS is net short this market. Tell your customers to do one thing while doing the opposite for your own accounts.
Webster's Dictionary
Over-reaching(V)
-The key investment priorities for the trust fund will be protecting its solvency and generating cash flow in order to ensure that it can provide health care for at least 80 years for over 700,000 UAW-represented workers and retirees,
Speaking of Captain Obvious, that last post of mine on CFC stating they have ample liquidity probably qualifies. Sigh
Bad analogy, since its the wolves who made ACA in the first place, as a sort of mother to their bastard children.
I prefer the analogy of orphaned wolf cubs sobbing around the body of their dead mother.
CR-
Covered bond market news is really, really serious. You just don't shut trading on a trillion dollar market without something really bad going on in the background.
Credit meltdown has been great fun so far. Not anymore.
Link (repeated from above)http://www.bloomberg.com/apps/news?pid=20601087&sid=a7zhJ1tkFBxI&refer=home
"Over the past 52 weeks, the stock price has ranged between $10.25 and $45.26."
So would it be a good strategy to buy around $10 and wait for it to meander back to the top of this 52 week trading range?
Have a Happy and healthy Thanksgiving all!
Mmmmm Turkey!
Barley-
Requiring banks in the covered bond market to "set prices" but telling the same banks to stop trading the securities is a transparent attempt to prop up prices.
Won't work.
What I think these candidates don't understand is how complex an environment it is inside the Oval Office,'' Bush said.It's impossible for anybody to fully comprehend,especially me'
Mmmmm Turkey!
Banker
Crow?
We are watching a rapidly unfolding disaster on these equities. This is the real thing.
Yal, rcyran, thanks for that European article on covered bonds. I just posted it.
Best to all.
Time is what a thief needs to leave the scene of a crime.
Cheers,
Interesting new post over at Bubble markets inventory tracking. Although the peak of resets on arms is hitting now the REO properties will be hitting in the summer. Kind of sobering.
http://bubbletracking.blogspot.com/
MoM,
I agree! I just wonder if they can hold it together long enough to get their bonus checks? Those come out in December?
Your Athens guy in DC???
have a great T day! Go Dawgs
MoM:
Fil Zucchi on Minyanville sums up my feelings when he says "have you hugged your index puts today?"
MOM - "these equities" ?? can you elaborate please?
"We are in a deteriorating situation," Patrick Amat, chairman of the Brussels-based {European Covered Bond Council] said in a telephone interview. "A single sale can be like a hot potato. If repeated, this can lead to an unacceptable spread widening and you end up with an absurd situation."
"Market prices? We don' got no market prices! We don' need to show you no stinkin' market prices!"
Just call the movie: "Treasure of the Sierra Shitpile"
When ACA is downgraded any day now, I think it will create a sudden flight to quality in munis. Prices of the $7 billion of mostly lower-quality bonds that ACA insures will plummet, maybe by 20-30%. In sympathy, so will many non-insured low-quality munis.
The problem will be deciding what is "quality" worth fleeing into. For example, Florida GO bonds are triple-A, but are they quality? Maybe not. The only true quality is U.S. Treasuries. But the GO bonds of states not in the path of the housing downturn may still be quality.
If you have munis or muni funds, GET OUT NOW unless they are GO and AA or better and you can hold to maturity.
I forgot: get out of any insured muni bonds now. The insurance has become more of a liability than an asset.
hmmm we are spiking up on visitors, over 263 and climbing atm...last I checked 300+ visitor count indicated critical event under way
Is there any way to tell who is holding ACA insured instruments?
Buffett's Berkshire owns 18%+ of Moody's. You would have thought he would have paid attention to the problem. He surely was aware of it.
Anecdotal story. My handyman saw his neighbors making money flipping houses so last year he mortgaged his to purchase two more. Now he can't sell them and has to rent instead and the rent doesn't cover the mortgage payments. Oh, and he used adjustable mortgages to "lower his costs." He seems quite matter of fact about it all; no belly aching.
anonandonandon:
naughty naughty. He is just a good examples of the Peter Principle. He rose to the level of his incompetence in Texas. Then he rose some more, and .....well you know the rest.
(checks calendar)
Hey, it's not even Friday! Oh well, maybe the day before a holiday counts.
"Buffett's Berkshire owns 18%+ of Moody's. You would have thought he would have paid attention to the problem. He surely was aware of it."
He has a basis of about $10/share on MCO. As long as they don't take a fatal hit, they stand a good chance of coming back. Moodys didn't actually buy any of the stuff they rated.