Clearly this is positive news for Bank of America. Or, so at least that seems to be the market reaction in Bank of America stock. Course, a month ago, these type of announcements caused Citigroup, UBS, and Merrill to soar.
F. Frederson - Thanks for the reply. Didn't think they did. At least know I know just how unfair it all is. Work = Bad, Wealth = Good according to our tax code.
"...(Mentor) management noted a weakening in demand during the last month of the second quarter, as plastic surgeons reported a drop-off in patient consultations (for breast implants), which could potentially signal fewer surgical procedures..."
I don't know about Goldman. Somebody has to be on the other side of these, don't they? Blankfein is betting his job saying "We're confident we have a grip" and "We continue to be short." I mean, taking a $3 billion hit, if announced today would just make them like everyone else. The idea that they are not doing that is a pretty big statement. As always, we'll see.
"Bank of America, Wells Fargo, Lehman Brothers and other financial powerhouses are threatening to pull out of the wholesale mortgage-lending market in Massachusetts because of Attorney General Martha Coakleys proposed new mortgage-broker regulations, the Herald has learned."
Does it matter really? BA just off loads the paper to Fannie, isn't that the only lending model available ? Maybe Fannie will be the gov't version of FDIC for the mortgage business. All loans need a gov't warranty or no investor interest in the paper. Given the so called 21 trillion dollar value of the US real estate, I have to wonder what percentage Fannie or the US Gov't is willing to put on the books in the coming years to defend various price points around the country.
Bet he'll be called "Low Price" in future. But isn't "additional diminution" dandy - I'd have said "further fall", but then English is my mother tongue.
Banker said: "...Somebody has to be on the other side of these, don't they?"
Indeed. I don't know where the idea came from that money somehow disappears from the system. If you sell me your toxic waste at par, and I have to write it down by half, that's my loss and the gain is in your pocket to squander (thus stimulating the economy) as you see fit.
WSJ - Who's Watching the Big Banks? By Henry Kaufman (in other words current regulators are not doing their oversight job) Who's Watching the Big Banks? - WSJ.com
I don't think that's quite right. If I'm the sellerin your scenario, I don't have more cash, though if security prices fall around me I do have more buying power within that system. Value can certainly escape the system.
I'd love it if somebody made a WriteDownmeter site that kept a running total of all the writedowns so far. Have we made it into nine figures yet, or do we still have a way to go?
More evidence of a slow-down in California and amongst 'The OC' crowd...
"...(Mentor) management noted a weakening in demand during the last month of the second quarter, as plastic surgeons reported a drop-off in patient consultations (for breast implants)..."
Regarding the Mentor article... was that OC as in 'Orange County'crowd or OC as in 'Over Collateralized' crowd? Just makin' sure I understand.
The transactional players will have winners and losers on trades, but the bankruptcies that flow into the underlying debt doesn't get recovered by anyone. That's the fire part of the fire sale.
The transactional players will have winners and losers on trades, but the bankruptcies that flow into the underlying debt doesn't get recovered by anyone. That's the fire part of the fire sale. - lama
Especially in a fractional reserve system where the losses can go all the way back up to the banks originally making the loan. Once there its backed against a small part reserves and a large part 'money creation'.
At that point Ben & company have skin in the game too - they don't want it to get anywhere near that backed up... so it probably won't, if you catch my drift.
Sarbanes 404 indicates that managerial bonuses will be repaid to the company for any periods where there is a negative restatement. Keep that one in mind when you hear exec. statements about how "shocked someone is about all these unforseeable events that were out of their control, or everything suddenly changed just today or what have you."
Banker said: "I don't think that's quite right. If I'm the seller in your scenario, I don't have more cash, though if security prices fall around me I do have more buying power within that system. Value can certainly escape the system."
I take your point, but we may have to look into metaphysics for the "truth" of what actually happened. For example, if you shrewdly sold me an overvalued asset that I naively bought, did value leave the system or was that value never really there?
Or, if your buying-power is greater as a result of the fallen asset-price, is there a practical difference between that and having more cash? If you can buy back the same asset at a discount, you can spend your "savings" on other things, since that part of your cash isn't tied-up in owning the security.
Not arguing, just saying that "the" answer might depend on the perspective.
dryfly, I wrote 'The OC' as in Orange County, when I should have written the other plastic surgery hotspot, Santa Barbara (where Mentor is headquartered). Mentor's prime competitor, Allergan, is located in 'The OC.'
'Over collateralized' is a good one, sir. 'Overly Coiffed' and 'Overtly Changed' are potential alternatives, too.
The likes of Lehman and Goldman have huge balance sheets and very little capital. They have hedged that small capital base by laying off the risk to others. What is the capital base of those counterparties?
Who buys subprime CDS during a brief respite from a meltdown? Hedge funds. How much capital do they have to absorb losses?
did value leave the system or was that value never really there?
Well said Seb. The point a lot of us here believe is that the wealth was never there... but a whole lotta market participants believed the opposite and made additional down stream decisions predicated on the assumption it was there... maybe even still IS there.
The market is sorting all that out now - who knows what the final score will be.
Sarbanes 404 indicates that managerial bonuses will be repaid to the company for any periods where there is a negative restatement. Keep that one in mind when you hear exec. statements about how "shocked someone is about all these unforseeable events that were out of their control, or everything suddenly changed just today or what have you."
lama |
Would love to see it happen, make a great xmas story.
As others have said, this is the sticky part. If the other side of the hedge transaction can't cover their obligations, you don't have a hedge. Your counterparty could have hedged with a third entity. It's like that safe sex ad; When you expose yourself to counterparty risk with a company, you're also exposing yourself to every other company that they have counterparty risk with.
dryfly said: "Well said Seb. The point a lot of us here believe is that the wealth was never there... but a whole lotta market participants believed the opposite and made additional down stream decisions predicated on the assumption it was there... maybe even still IS there."
Oh, I get that, in fact I always have. I'm just here to represent the point of view of the rapacious capitalists with their jack-boots on the throats of the workingman, who recognized the "windfall" for the illusion that it was, and behaved more responsibly toward it.
I'm just here to represent the point of view of the rapacious capitalists with their jack-boots on the throats of the workingman, who recognized the "windfall" for the illusion that it was, and behaved more responsibly toward it.
{Scratches head}
I'm not sure what the was supposed to mean or whether it was sarcasm or an editing error?
The beginning sounds like sarcasm, the end like humility, together they form a confusion.
First, but so what?
Clearly this is positive news for Bank of America. Or, so at least that seems to be the market reaction in Bank of America stock. Course, a month ago, these type of announcements caused Citigroup, UBS, and Merrill to soar.
And the beat goes o
What a lovely time to have a CFO named Price.
...only slashing estimated Q4 '07 EPS in half.
But, the quarter is young. C'mon, more writedowns!
And, I look forward to seeing Blankfein eat crow when he gets to announce his forthcoming writedown (actually, first in a series).
OT - does anyone know if these hedge fund managers pay FICA or Medicare taxes on their "Carried Interest" salary?
What "diminution in value"? The stock is UP today. All news on Wall Street is good news. You can't keep a bull market down, for long.
does anyone know if these hedge fund managers pay FICA or Medicare taxes on their "Carried Interest" salary?
It's not wages & salary, so no, and even if it was, the cap (for SS, at least) is around $98K - meaning SS is taken out on W&S up to that amount.
F. Frederson - Thanks for the reply. Didn't think they did. At least know I know just how unfair it all is. Work = Bad, Wealth = Good according to our tax code.
More evidence of a slow-down in California and amongst 'The OC' crowd:
Expired
"...(Mentor) management noted a weakening in demand during the last month of the second quarter, as plastic surgeons reported a drop-off in patient consultations (for breast implants), which could potentially signal fewer surgical procedures..."
Is BOA still willing to court CFC?
jg,
I don't know about Goldman. Somebody has to be on the other side of these, don't they? Blankfein is betting his job saying "We're confident we have a grip" and "We continue to be short." I mean, taking a $3 billion hit, if announced today would just make them like everyone else. The idea that they are not doing that is a pretty big statement. As always, we'll see.
"Bank of America, Wells Fargo, Lehman Brothers and other financial powerhouses are threatening to pull out of the wholesale mortgage-lending market in Massachusetts because of Attorney General Martha Coakleys proposed new mortgage-broker regulations, the Herald has learned."
Does it matter really? BA just off loads the paper to Fannie, isn't that the only lending model available ? Maybe Fannie will be the gov't version of FDIC for the mortgage business. All loans need a gov't warranty or no investor interest in the paper. Given the so called 21 trillion dollar value of the US real estate, I have to wonder what percentage Fannie or the US Gov't is willing to put on the books in the coming years to defend various price points around the country.
Work = Bad, Wealth = Good according to our tax code.
Bingo.
Bet he'll be called "Low Price" in future. But isn't "additional diminution" dandy - I'd have said "further fall", but then English is my mother tongue.
Banker said: "...Somebody has to be on the other side of these, don't they?"
Indeed. I don't know where the idea came from that money somehow disappears from the system.
If you sell me your toxic waste at par, and I have to write it down by half, that's my loss and the gain is in your pocket to squander (thus stimulating the economy) as you see fit.
S.
WSJ - Who's Watching the Big Banks? By Henry Kaufman (in other words current regulators are not doing their oversight job)
Who's Watching the Big Banks? - WSJ.com
Sebastian,
I don't think that's quite right. If I'm the sellerin your scenario, I don't have more cash, though if security prices fall around me I do have more buying power within that system. Value can certainly escape the system.
I'd love it if somebody made a WriteDownmeter site that kept a running total of all the writedowns so far. Have we made it into nine figures yet, or do we still have a way to go?
Sebastian "you sell me your toxic waste at par, and I have to write it down by half, that's my loss and the gain is in your pocket to squander "
Right! Same as when I sold YOUR NEW shares. Your loss = my gain.
"Blankfein is betting his job saying "We're confident we have a grip" and "We continue to be short.""
Just as long as they aren't too short and get hit by negative convexity, like Morgan Stanley...or get hit by counterparty risk.
rcryan,
Ain't that the truth.
More evidence of a slow-down in California and amongst 'The OC' crowd...
"...(Mentor) management noted a weakening in demand during the last month of the second quarter, as plastic surgeons reported a drop-off in patient consultations (for breast implants)..."
Regarding the Mentor article... was that OC as in 'Orange County'crowd or OC as in 'Over Collateralized' crowd? Just makin' sure I understand.
The transactional players will have winners and losers on trades, but the bankruptcies that flow into the underlying debt doesn't get recovered by anyone. That's the fire part of the fire sale.
Value can certainly escape the system. - banker
The transactional players will have winners and losers on trades, but the bankruptcies that flow into the underlying debt doesn't get recovered by anyone. That's the fire part of the fire sale. - lama
Especially in a fractional reserve system where the losses can go all the way back up to the banks originally making the loan. Once there its backed against a small part reserves and a large part 'money creation'.
At that point Ben & company have skin in the game too - they don't want it to get anywhere near that backed up... so it probably won't, if you catch my drift.
Sarbanes 404 indicates that managerial bonuses will be repaid to the company for any periods where there is a negative restatement. Keep that one in mind when you hear exec. statements about how "shocked someone is about all these unforseeable events that were out of their control, or everything suddenly changed just today or what have you."
Banker said: "I don't think that's quite right. If I'm the seller in your scenario, I don't have more cash, though if security prices fall around me I do have more buying power within that system. Value can certainly escape the system."
I take your point, but we may have to look into metaphysics for the "truth" of what actually happened.
For example, if you shrewdly sold me an overvalued asset that I naively bought, did value leave the system or was that value never really there?
Or, if your buying-power is greater as a result of the fallen asset-price, is there a practical difference between that and having more cash? If you can buy back the same asset at a discount, you can spend your "savings" on other things, since that part of your cash isn't tied-up in owning the security.
Not arguing, just saying that "the" answer might depend on the perspective.
S.
dryfly, I wrote 'The OC' as in Orange County, when I should have written the other plastic surgery hotspot, Santa Barbara (where Mentor is headquartered). Mentor's prime competitor, Allergan, is located in 'The OC.'
'Over collateralized' is a good one, sir. 'Overly Coiffed' and 'Overtly Changed' are potential alternatives, too.
barely said: "Right! Same as when I sold YOUR NEW shares. Your loss = my gain."
Yes, exactly, LOL! Nothing like a practical example to illustrate the truth.
S.
Banker,
The counterparty question is key, IMO.
The likes of Lehman and Goldman have huge balance sheets and very little capital. They have hedged that small capital base by laying off the risk to others. What is the capital base of those counterparties?
Who buys subprime CDS during a brief respite from a meltdown? Hedge funds. How much capital do they have to absorb losses?
did value leave the system or was that value never really there?
Well said Seb. The point a lot of us here believe is that the wealth was never there... but a whole lotta market participants believed the opposite and made additional down stream decisions predicated on the assumption it was there... maybe even still IS there.
The market is sorting all that out now - who knows what the final score will be.
Sarbanes 404 indicates that managerial bonuses will be repaid to the company for any periods where there is a negative restatement. Keep that one in mind when you hear exec. statements about how "shocked someone is about all these unforseeable events that were out of their control, or everything suddenly changed just today or what have you."
lama |
Would love to see it happen, make a great xmas story.
...or get hit by counterparty risk.
As others have said, this is the sticky part. If the other side of the hedge transaction can't cover their obligations, you don't have a hedge. Your counterparty could have hedged with a third entity. It's like that safe sex ad; When you expose yourself to counterparty risk with a company, you're also exposing yourself to every other company that they have counterparty risk with.
A giant game of kerplunk.
dryfly said: "Well said Seb. The point a lot of us here believe is that the wealth was never there... but a whole lotta market participants believed the opposite and made additional down stream decisions predicated on the assumption it was there... maybe even still IS there."
Oh, I get that, in fact I always have. I'm just here to represent the point of view of the rapacious capitalists with their jack-boots on the throats of the workingman, who recognized the "windfall" for the illusion that it was, and behaved more responsibly toward it.
S.
the markdown will covered more than 5 times over by a huge ($ 16 billion)mark to market gain in the 4th quarter
I'm just here to represent the point of view of the rapacious capitalists with their jack-boots on the throats of the workingman, who recognized the "windfall" for the illusion that it was, and behaved more responsibly toward it.
{Scratches head}
I'm not sure what the was supposed to mean or whether it was sarcasm or an editing error?
The beginning sounds like sarcasm, the end like humility, together they form a confusion.