Feb. 25 (Bloomberg) -- Wachovia Corp. sued Providence Equity Partners to get out of providing financing for the buyout firm's revised $1.1 billion purchase of television stations from Clear Channel Communications Inc.
If leveraged loans are trading at 85%-90%, as people say, why are the writedowns so small? Shouldn't Goldman be looking at $4bn+? Or have they managed to hedge them?
BTW have we ever seen the amount of losses in the system attributed to such a small number of people.
Get ready for another round of blame the minnow traders..or how one trader convinced all the mucky-mucks that the strategy of collecting fee's was wrong and it needed to short the market.....sorry used that one already!
This article mentions $12 billion of coming writedowns at Citi across arange of real estate related exposures. Citigroup facing $12 billion in new write-downs, Goldman says - MarketWatch
And $1.4 billion of write down at Bear Stearns. Are they still in business ?
Haven't seen much of Bear in the news lately - I thought it must have died by now.
CR, the WSJ article on Golden Schmucks cannot be true. Banker told us that GS is smarter than everyone, which I took to mean that they were clearly above average.
I guess he was right: their loan exposure-to-net worth is above average.
Hey all, I'm back in the US from lovely Nicaragua, seems like I missed some fun.
This just released Press Release from the US T Dept. on SWF's is note worthy. Exec summary -embrace foreign takeover of our assets without regulation.
My favorite quote.
"Some observers have questioned the logic of voluntary best practices. They argue sovereign wealth funds do not have adequate incentives to adopt best practices, and that a tough enforcement mechanism is needed. This misses the point that the intent behind identifying best practices for sovereign wealth funds is to create a dynamic rise to the top that makes such regulation, which could become draconian, unnecessary."
Just when you thought there was nothing left to loot...
"Goldman even recommended that investors short Freddie Mac shares ahead of Thursday mornings expected earnings release, which is expected to show a big quarterly loss."
anonymous at 12:18 was me. And can I just add that after all the fuss that was made after 3:30 on Friday, this Ambac plan had better be something pretty special. And I am getting impatient. It is Monday afternoon already and nothing? Could be because it is doomed like all the other operations / plans. Maybe we could have a little naming contest in advance of the announcement. Like "Hope This One Sticks" or something.
[A]larming news, like the bankruptcy filing of a company overwhelmed by its LBO-related debt, would raise the specter of more steep markdowns.
I think this would be a Chrysler event. Chrysler is well known, has had a historically famous brush with death (the Carter era bailout), auto sales are plummeting, and the capital requirements of the auto industry are large. Could happen sooner than folks think.
They're eking out the writedowns. It is most surely worse than anyone has admitted. A billion here, a billion there - some time in 2012 they will announce the last of the writedowns.
"voluntary best practices" Isn't that what Wall Street does? Everyone does the same thing, and when it doesn't work out, one says, "Who could have known?"
The bottom line: Until this deal gets done and the details are better known, its simply another in a loing string of rumors. Worse yet is what it means: Banks have so much derivative exposure they are willing to throw away $3 billion to prevent the counter-parties from getting a ratings agency downgrade.
Goldman Sachs forgot that they lived in the same financial pond as all of the others. They believed the "contained to subprime" myth, expecting their other lines of business to continue on as usual.
I remember when Drexel Burnham was the smartest. Then LTCM, then Salomon Bros., then First Boston, then Kidder Peabody, then Barings, then Bear Stearns, then Merrill, then Citi, then Morgan Stanley, then Cerberus, then Worldcom, then Level 3, then Quest, then Global Crossing, then AOL, then RCN, then Worldcom, then Enron, then Charter Communications, then Countrywide, then Hovnanian, then WCI, then Levitt, Then TOA, then Beazer, then Dot-bomb (fill in the blank), Then mortgage reit (fill in the blank) then blah, blah, blah!
Anyone notice a pattern? All these "smartest guy" companies enrich a few at the expense of MANY. Wake up America. You're being ripped off!
And can I just add that after all the fuss that was made after 3:30 on Friday, this Ambac plan had better be something pretty special. And I am getting impatient. It is Monday afternoon already and nothing?
charlie Gasparino was on CNBC this am with a lenghth follow up to his Friday announcement... the "C-Bomb with a C-bomb" if you will..
He basically said that the deal is basically done, just trying to tie up a few loose ends. the loose end is more than likely approval by the ratings agencies that Ambac will keep it's AAA after the deal
that's quite a loose end. one of those things that sounds easy... but probably isn't.
that said, a LOT of people want to get this deal done, INCLUDING the banks who were previously against it. This makes it likely IMO.
not that it's going to help. just that it may occur.
I'd guess the timing will be at 3pm EST on a day when the Dow is really down.
We'll see a major spike up in trading at 258pm... but who can say how that happened when the deal was announced at 3?
I just posted this on last night's CRE thread, but likely nobody will see it there, and I think the article linked below is worth a look...
From an interesting article on Prudent Bear (written by John Rubino titled "After Denial Comes Accomodation"). Rubino basically passes along some insights from a CRE entrepreneur named Marcel Arsenault:
Most commercial lenders and property owners dont agree, but commercial real estate is likely headed for a worse downturn than housing. After all, a subprime borrower living a house will typically do whatever she can to keep the house. The scoundrels I know in commercial real estate will send the keys back in a heartbeat. So once the downturn starts, commercial real estate will be marked to market brutally and efficiently. The only winner will be the foreclosure and bankruptcy attorneys.
Stocks Higher on Housing Data Investors, while still wary of recession, grew hopeful after the National Association of Realtors reported existing homes fell less than forecast. Some experts interpreted this as a housing market on the verge of bottoming out with a rebound expected to start toward the end of this year.
Wall Street also found encouragement from Visa's news that it still planned to go ahead with a $19 billion initial public offering this year that could go down as the biggest in U.S. history. Further, investors remained hopeful that troubled bond insurer Ambac Financial Group Inc. would receive a cash injection to help preserve its coveted ''AAA'' rating
shortcourage,
I actually like that about CRE. I wish the residential housing was repoed, auctioned, and marked to market. All the BS lately has been to maintain the illusion of high housing prices.
If your leg has gangreen cut it off before it kills you.
OT, jumbo 30 yr fixed mortgages in NJ are around 6.9% according to Bankrate.com. This is just about the highest level of the last five years. Add to that stricter underwriting and 10% to 20% downpayments and its really hard to argue we're near the bottom.
Now, if we were to see a sudden and large increase in real wages...
You have not seen anything yet..wait till you see the cost of your food bill in the next few months...I hope you enjoy your meal, It is the cheapest one you are going to have for quite a while.
A warning that a strong wave of food inflation is heading towards the world economy was met by nods from agriculture traders, food industry executives and western government officials at the USDAs annual Agricultural Outlook Forum.
FFDIC writes:
FDIC Enforcement Decisions and Orders (January 2008)
I looked at one of these out of curiosity. Some small bank was getting spanked for:
(a) operating with a board of directors (Board) that has failed to provide adequate supervision over and direction to the management of the Bank;
(b) operating with inadequate management;
(c) operating with inadequate equity capital and reserves in relation to the volume and quality of assets held by the Bank;
(d) operating with a large volume of poor quality loans;
(e) operating with an inadequate allowance for loan and lease losses (ALLL);
(f) following hazardous lending and lax collection practices;
(g) operating with inadequate routine and controls policies;
( operating in such a manner as to produce operating losses;
Since all the big banks (C/BOA/CFC/WM/WB/USB/WB/etc) have basically admitted to all the above, can we expect the same kind of enforcement actions against them by the FDIC?
Likewise with the energy bill, the price of natural gas has been on the rise with big drawdowns on storage gas - larger than just weather - but with oil and coal at or near all time highs all the fuel substitution that can be done is being done...recent spike in gasoline prices to boot, though did y'all catch the headlines allowing as the increases probably wouldn't stick...love the MSM.
Let's not forget about the revolver feature on these things... could add another 20% to UPB. And as weakly as these things were drafted, it's not like the bagholders can freeze their "HELOC"s.
I quote from the movie The Color of Money: "It's like a nightmare, ain't it? Just keeps getting worse and worse"
Yup energyecon..wheat prices are through the roof...I am not a tin foil hatter...hmm well maybe..but all kidding aside and for the welfare of my family, I have already set up an area in my basement for shelf life foods such as can goods and what not...not because I believe Armageddon is here no...I just want to make sure I can afford to eat...And yes I am hedged and have cash reserves...but I do not see the food markets excepting silver eagles as payment in the near future.
If you think the leveraged loan writedowns are bad news, and the subprime loans are bad news, just think of what all this will due to the mono (I mean multi)line insurers. Let's now forget that they actually insure leveraged loan and high yield debt CDOs and corporate pools. The banks are merely self insuring by lending them money.
I recently posted the biggest exposures of the banks to MBIA and Ambac on my blog, security by security - complete with ratings, vintages, an CUSIP numbers for anyone who wants to see. Even a homebuilder popped up. With just 8 or so banks we have half a TRILLION dollars of exposure, and this is just RMBS and CMBS, with a few CDOs and consumer finance debt thrown in. I haven't even grazed the surface. For the record, Wachovia is the CMBS is king, and CMBS will take a big, BIG fall, see my GGP and CRE analyses for more info...
When I finished the leveraged loan analysis, it will be an eye opener. I wanted to be the first one to break the news but those damn Wall Street banks have such large budgets...
Don't fret, I have a feeling mine will be a bit more detailed and hard hitting.
So the monolines are actually AAA after all. Phew, I actually thought they might go bankrupt and cause a depression and such. Glad to hear S&P finally uncovered the real truth.
I guess we can all sell our puts and buy calls now that the coast is clear.
NEW YORK, Feb 25 (Reuters) - U.S. government bond prices extended losses on Monday after S&P removed MBIA from negative credit watch and affirmed Ambac's AAA rating.
As the news sent stocks higher, benchmark 10-year notes US10YT=RR were down 26/32 and offering a yield of 3.91 percent, up 10 basis points on the day.
What you need: "And yes I am hedged and have cash reserves...but I do not see the food markets excepting silver eagles as payment in the near future.
borkafatty | 02.25.08 - 2:36 pm |" ...is a big, sturdy wheelbarrow (to carry cash to the market) and a small canvas bag (to carry your purchases home.)
hoocoodanode!
LBO debt is tanking.
Cheers,
Wheels coming off of the Clear Channel deal...
Wachovia Sues Providence Over Buyout of TV Stations (Update1)
By Jef Feeley and Jason Kelly
Feb. 25 (Bloomberg) -- Wachovia Corp. sued Providence Equity Partners to get out of providing financing for the buyout firm's revised $1.1 billion purchase of television stations from Clear Channel Communications Inc.
[snip]
If leveraged loans are trading at 85%-90%, as people say, why are the writedowns so small? Shouldn't Goldman be looking at $4bn+? Or have they managed to hedge them?
Goldman will report whatever it wants whenever it wants...
Sort of makes whatever the real news is an afterthought......
MS
BTW have we ever seen the amount of losses in the system attributed to such a small number of people.
Get ready for another round of blame the minnow traders..or how one trader convinced all the mucky-mucks that the strategy of collecting fee's was wrong and it needed to short the market.....sorry used that one already!
MS
This article mentions $12 billion of coming writedowns at Citi across arange of real estate related exposures.
Citigroup facing $12 billion in new write-downs, Goldman says - MarketWatch
And $1.4 billion of write down at Bear Stearns. Are they still in business ?
Haven't seen much of Bear in the news lately - I thought it must have died by now.
CR, the WSJ article on Golden Schmucks cannot be true. Banker told us that GS is smarter than everyone, which I took to mean that they were clearly above average.
I guess he was right: their loan exposure-to-net worth is above average.
Banker was wrong and right!
Goldman made us poor??
Hey all, I'm back in the US from lovely Nicaragua, seems like I missed some fun.
This just released Press Release from the US T Dept. on SWF's is note worthy. Exec summary -embrace foreign takeover of our assets without regulation.
My favorite quote.
"Some observers have questioned the logic of voluntary best practices. They argue sovereign wealth funds do not have adequate incentives to adopt best practices, and that a tough enforcement mechanism is needed. This misses the point that the intent behind identifying best practices for sovereign wealth funds is to create a dynamic rise to the top that makes such regulation, which could become draconian, unnecessary."
Just when you thought there was nothing left to loot...
hp-836: Remarks by Treasury Assistant Secretary for International Affairs Clay Lowery at Barclays Capital’s 12th Annual Global Inflation-Linked Conference
GS downgrades Fannie,Freddie
CNNMoney.com: 404 Page Not Found
"Goldman even recommended that investors short Freddie Mac shares ahead of Thursday mornings expected earnings release, which is expected to show a big quarterly loss."
anonymous at 12:18 was me. And can I just add that after all the fuss that was made after 3:30 on Friday, this Ambac plan had better be something pretty special. And I am getting impatient. It is Monday afternoon already and nothing? Could be because it is doomed like all the other operations / plans. Maybe we could have a little naming contest in advance of the announcement. Like "Hope This One Sticks" or something.
[A]larming news, like the bankruptcy filing of a company overwhelmed by its LBO-related debt, would raise the specter of more steep markdowns.
I think this would be a Chrysler event. Chrysler is well known, has had a historically famous brush with death (the Carter era bailout), auto sales are plummeting, and the capital requirements of the auto industry are large. Could happen sooner than folks think.
They're eking out the writedowns. It is most surely worse than anyone has admitted. A billion here, a billion there - some time in 2012 they will announce the last of the writedowns.
"voluntary best practices" Isn't that what Wall Street does? Everyone does the same thing, and when it doesn't work out, one says, "Who could have known?"
12 billion here, 2 billion there, pretty soon this containment might get serious.
Glass-Steagall existed for a reason, and I am afraid we might get to find out why in the next few years.
The Big Picture is spot on re: Ambac noise...
Monoline Duoline Rescue Plan: 5th Time the Charm?
[snip]
The bottom line: Until this deal gets done and the details are better known, its simply another in a loing string of rumors. Worse yet is what it means: Banks have so much derivative exposure they are willing to throw away $3 billion to prevent the counter-parties from getting a ratings agency downgrade.
[snip]
Goldman Sachs forgot that they lived in the same financial pond as all of the others. They believed the "contained to subprime" myth, expecting their other lines of business to continue on as usual.
Surprise, surprise...
Who could have known...
Bloomberg - Citigroup May Post First Quarter Loss, Whitney Says...
Citigroup May Post First-Quarter Loss, Whitney Says (Update4) - Bloomberg.com
FDIC Enforcement Decisions and Orders (January 2008)
FDIC: Enforcement Decisions and Orders - Recent Orders and Decisions
Remarks by FDIC Chair Bair to the Global Association of Risk Professionals; New York, NY 2/25/08
FDIC: Error 404 - Page Not Found
I propose we call the Ambac bailout Operation Share the Wealth.
Hey guys, get it right; it is 'Whocoodanode.
Not to be confused with Hu Coodanode, the Chinese Treasury official responsible for $1+ trillion of poor investments in American securities.
He was executed last month.
I remember when Drexel Burnham was the smartest. Then LTCM, then Salomon Bros., then First Boston, then Kidder Peabody, then Barings, then Bear Stearns, then Merrill, then Citi, then Morgan Stanley, then Cerberus, then Worldcom, then Level 3, then Quest, then Global Crossing, then AOL, then RCN, then Worldcom, then Enron, then Charter Communications, then Countrywide, then Hovnanian, then WCI, then Levitt, Then TOA, then Beazer, then Dot-bomb (fill in the blank), Then mortgage reit (fill in the blank) then blah, blah, blah!
Anyone notice a pattern? All these "smartest guy" companies enrich a few at the expense of MANY. Wake up America. You're being ripped off!
And can I just add that after all the fuss that was made after 3:30 on Friday, this Ambac plan had better be something pretty special. And I am getting impatient. It is Monday afternoon already and nothing?
charlie Gasparino was on CNBC this am with a lenghth follow up to his Friday announcement... the "C-Bomb with a C-bomb" if you will..
He basically said that the deal is basically done, just trying to tie up a few loose ends. the loose end is more than likely approval by the ratings agencies that Ambac will keep it's AAA after the deal
that's quite a loose end. one of those things that sounds easy... but probably isn't.
that said, a LOT of people want to get this deal done, INCLUDING the banks who were previously against it. This makes it likely IMO.
not that it's going to help. just that it may occur.
I'd guess the timing will be at 3pm EST on a day when the Dow is really down.
We'll see a major spike up in trading at 258pm... but who can say how that happened when the deal was announced at 3?
I just posted this on last night's CRE thread, but likely nobody will see it there, and I think the article linked below is worth a look...
From an interesting article on Prudent Bear (written by John Rubino titled "After Denial Comes Accomodation"). Rubino basically passes along some insights from a CRE entrepreneur named Marcel Arsenault:
Most commercial lenders and property owners dont agree, but commercial real estate is likely headed for a worse downturn than housing. After all, a subprime borrower living a house will typically do whatever she can to keep the house. The scoundrels I know in commercial real estate will send the keys back in a heartbeat. So once the downturn starts, commercial real estate will be marked to market brutally and efficiently. The only winner will be the foreclosure and bankruptcy attorneys.
Link:
DollarCollapse - Your ringside seat for the global financial crisis
Stocks Higher on Housing Data
Investors, while still wary of recession, grew hopeful after the National Association of Realtors reported existing homes fell less than forecast. Some experts interpreted this as a housing market on the verge of bottoming out with a rebound expected to start toward the end of this year.
Wall Street also found encouragement from Visa's news that it still planned to go ahead with a $19 billion initial public offering this year that could go down as the biggest in U.S. history. Further, investors remained hopeful that troubled bond insurer Ambac Financial Group Inc. would receive a cash injection to help preserve its coveted ''AAA'' rating
it's all hope...
the stock market won't bottom until all hope is destroyed.
shortcourage,
I actually like that about CRE. I wish the residential housing was repoed, auctioned, and marked to market. All the BS lately has been to maintain the illusion of high housing prices.
If your leg has gangreen cut it off before it kills you.
I propose we call the Ambac bailout Operation Share the Wealth.
Peripheral Visionary | 02.25.08 - 1:12 pm | #
More like Scare the Wealth.
Lessee, "apres moi le deluge" or something like that? Coming sooner than you think.
OT, jumbo 30 yr fixed mortgages in NJ are around 6.9% according to Bankrate.com. This is just about the highest level of the last five years. Add to that stricter underwriting and 10% to 20% downpayments and its really hard to argue we're near the bottom.
Now, if we were to see a sudden and large increase in real wages...
You have not seen anything yet..wait till you see the cost of your food bill in the next few months...I hope you enjoy your meal, It is the cheapest one you are going to have for quite a while.
A warning that a strong wave of food inflation is heading towards the world economy was met by nods from agriculture traders, food industry executives and western government officials at the USDAs annual Agricultural Outlook Forum.
Yup,,,things are sure looking up.
FFDIC writes:
FDIC Enforcement Decisions and Orders (January 2008)
I looked at one of these out of curiosity. Some small bank was getting spanked for:
(a) operating with a board of directors (Board) that has failed to provide adequate supervision over and direction to the management of the Bank;
operating in such a manner as to produce operating losses;
(b) operating with inadequate management;
(c) operating with inadequate equity capital and reserves in relation to the volume and quality of assets held by the Bank;
(d) operating with a large volume of poor quality loans;
(e) operating with an inadequate allowance for loan and lease losses (ALLL);
(f) following hazardous lending and lax collection practices;
(g) operating with inadequate routine and controls policies;
(
Since all the big banks (C/BOA/CFC/WM/WB/USB/WB/etc) have basically admitted to all the above, can we expect the same kind of enforcement actions against them by the FDIC?
Didn't think so.
Reminder:
Wall Street Joke of the Year: Goldman Sachs.
Deplorable place.
bork,
Likewise with the energy bill, the price of natural gas has been on the rise with big drawdowns on storage gas - larger than just weather - but with oil and coal at or near all time highs all the fuel substitution that can be done is being done...recent spike in gasoline prices to boot, though did y'all catch the headlines allowing as the increases probably wouldn't stick...love the MSM.
Let's not forget about the revolver feature on these things... could add another 20% to UPB. And as weakly as these things were drafted, it's not like the bagholders can freeze their "HELOC"s.
I quote from the movie The Color of Money: "It's like a nightmare, ain't it? Just keeps getting worse and worse"
Does anyone know why the DOW just spiked up?
Monoline ratings affirmed. Markets rocket up. Bottom is in folks. Party like it's 1929.
did somebody feed the pumpmonkeys lol?
Dollars to donuts it has to do with the bailout plan or monoline ratings.
*MBIA'S AAA FINANCIAL STRENGTH RATING OFF CREDITWATCH BY S&P
thanks dash
we are all AAA!
Yup energyecon..wheat prices are through the roof...I am not a tin foil hatter...hmm well maybe..but all kidding aside and for the welfare of my family, I have already set up an area in my basement for shelf life foods such as can goods and what not...not because I believe Armageddon is here no...I just want to make sure I can afford to eat...And yes I am hedged and have cash reserves...but I do not see the food markets excepting silver eagles as payment in the near future.
"What's good for Goldman Sachs is good for America."
(sic)
If you think the leveraged loan writedowns are bad news, and the subprime loans are bad news, just think of what all this will due to the mono (I mean multi)line insurers. Let's now forget that they actually insure leveraged loan and high yield debt CDOs and corporate pools. The banks are merely self insuring by lending them money.
I recently posted the biggest exposures of the banks to MBIA and Ambac on my blog, security by security - complete with ratings, vintages, an CUSIP numbers for anyone who wants to see. Even a homebuilder popped up. With just 8 or so banks we have half a TRILLION dollars of exposure, and this is just RMBS and CMBS, with a few CDOs and consumer finance debt thrown in. I haven't even grazed the surface. For the record, Wachovia is the CMBS is king, and CMBS will take a big, BIG fall, see my GGP and CRE analyses for more info...
When I finished the leveraged loan analysis, it will be an eye opener. I wanted to be the first one to break the news but those damn Wall Street banks have such large budgets...
Don't fret, I have a feeling mine will be a bit more detailed and hard hitting.
For those who wish to see the bank's exposure, look here and feel free to download the tear sheet for the bank of your choice:
Reggie Middleton says... | Interesting Response to the Government Homebuilder Bailout - This is post is primarily to document my assertions of self insurance by the... | Reggie Middleton's Boom Bust Blog | Banks, Off, Asset, Underwriting
So the monolines are actually AAA after all. Phew, I actually thought they might go bankrupt and cause a depression and such. Glad to hear S&P finally uncovered the real truth.
I guess we can all sell our puts and buy calls now that the coast is clear.
Let's see if that wondrous pronouncement by S&P holds them any better than the last 125 bps...
NEW YORK, Feb 25 (Reuters) - U.S. government bond prices extended losses on Monday after S&P removed MBIA from negative credit watch and affirmed Ambac's AAA rating.
As the news sent stocks higher, benchmark 10-year notes US10YT=RR were down 26/32 and offering a yield of 3.91 percent, up 10 basis points on the day.
Reggie,
Thanks for sharing your work.
Your welcome. I made a boo-boo, that's $120 billion of exposure, not half trillion.
Oil and Food isnt getting more expensive..
)
The Dollar gets cheaper
What you need: "And yes I am hedged and have cash reserves...but I do not see the food markets excepting silver eagles as payment in the near future.
borkafatty | 02.25.08 - 2:36 pm |" ...is a big, sturdy wheelbarrow (to carry cash to the market) and a small canvas bag (to carry your purchases home.)
right.
rc helicopter
Tactical Flashlights
video game