this is quite the read...and quite the reality of the situations we face....it is true when you hear ...you have not seen anything yet, as we have not even reached the tip of the iceberg in the coming DEPRESSION!.
So is the strategy of the rating agencies now in order to tuck tail and hide. They side step making a whole downgrade of the insurers, they just downgrade everything they touched.....criminal.
Oh, and when I was looking for myself I stumbled upon this classic jem [or as Tanta would call it; a blast from the past]:
While consensus among SF CDO investors is that U.S. RMBS remains one of the safest collateral asset classes, rising interest rates coupled with a potential slowdown in home price appreciation could put stress on leveraged subprime borrowers. - Business Wire, April 18, 2005
[emphasis added]
This just in from Vegas where the securities dealers are ramping up the next wave of pooled debt:
he nascent market for U.S. covered bonds will complement, not replace, traditional mortgage securities despite the crisis in many off-balance sheet transactions, the biggest U.S. issuer said this week.
Losses in mortgage debt sold by Wall Street issuers and government-sponsored enterprises have put a spotlight on covered bonds, which also are backed by pools of assets but are perceived as less risky because the assets stay on the issuer's balance sheet.
To me the distinguishing feature of the covered market is LTV and over-collateralisation and the way you package or use commingling. You dont just account for the first 60%, which is common practice -- you divide your collateral pool into what is supposed to cover the outstanding bond, and what is in excess of that. We can pool all the subprime crap into covered bonds and make a killing!
The implication is clear, the FDIC has begun the death watch on the many banks which are currently drowning in their own red ink. The problem for the FDIC is that it has never supervised a bank failure which exceeded 175,000 accounts.
According to Annual Report, Corus Bankshares had 200,000 retail accounts as of 12/31/06.
Rich, Which one?
There once was a Chairman named Ben
Who saved whole markets with only his pen
When asked to name his reward
He said "Oh nothing untoward...
Cash, most preferably Yen."
or:
This guy who we all call Benny
Of the dollar he cares not a penny
The banks are his bosses
The rest? We take loses..
His victims? Oh there are many.
[Seriously, I have no idea what you are talking about.]
I will say some of what Mike writes is most likely very extreme....but he does make some very stimulating comments...yet frightening all at the same time...
"French trader was ordered to be jailed Friday while investigations continue into the billions in losses he allegedly caused at Societe Generale bank."
Another Tsunami sighting:The implication is clear, the FDIC has begun the death watch on the many banks which are currently drowning in their own red ink. The problem for the FDIC is that it has never supervised a bank failure which exceeded 175,000 accounts. So the impending financial tsunami is likely to be a crash-course in crisis management. Today some of the larger banks have more than 50 million depositors, which will make the FDIC's job nearly impossible.
One of the biggest heart attack/stroke issues here in vegas is related to the following issues we just discussed:
Eligible assets for a designated mortgage credit institution are fi nancial obligations in respect of
money borrowed or raised that are secured by a mortgage, charge, or other security on residential or
commercial property that is located in any of the eligible jurisdictions.
Substitution assets can also be included in either the mortgage credit cover pool or the public credit
cover pool with a limit of 20% of the total prudent market value of the cover pool. Substitution assets
are deposits with an eligible fi nancial institution and Tier 1 assets.
Legislation directly impacts upon all the above factors. The value of the cover pool will be affected
by requirements which relate to, amongst other matters, (i) asset eligibility criteria, (ii) matching of
assets and liabilities, (iii) bankruptcy-remoteness of the cover pool, (iv) appointment of cover pool
administrator separate from insolvency administrator (appointed to other assets of bankrupt issuer), to
manage the cover pool, (v) priority rights in the cover pool in favour of covered bonds and (vi) rights of
covered bonds to claim against voluntary overcollateralised assets in the cover pool.
Investors should beware that, in the absence of a clearly communicated overcollateralization strategy,
covered bond ratings on a particular issuer could demonstrate a lower long-term rating stability
compared with typical securitizations where possible pool migrations are clearly defi ned in advance.
This is because the overcollateralization necessary to achieve a given target rating is typically over
and above the minimum regulatory overcollateralization requirements. A banks clearly communicated
strategy with regard to expected credit risks, the diversifi cation of the cover pool, tolerance levels for
interest rates, currency rate risks, and liquidity risks, as well as the willingness to provide a cushion
over and above the minimum regulatory requirements, can on the other hand mitigate such risk. A
commitment to the Covered Bond compliance test is regarded as an adequate practical application of
the above.
Maybe we should just have American Idol judges rate the bonds. They'd be just as effective.
Interesting -- a monoline downgrade bricole?
this is quite the read...and quite the reality of the situations we face....it is true when you hear ...you have not seen anything yet, as we have not even reached the tip of the iceberg in the coming DEPRESSION!.
The Bush Bust of '08: “It's all downhill from here, folks”
CR,
UberQuestion: What about a CDO turns it into a SF CDO? Isn't a CDO by definition a structured financial instrument?
Has this been up yet?
"Wall Street Meltdown"
YouTube - Wall Street Meltdown
It's a Wall Street retake on "Here comes another bubble."
So is the strategy of the rating agencies now in order to tuck tail and hide. They side step making a whole downgrade of the insurers, they just downgrade everything they touched.....criminal.
Oh, and when I was looking for myself I stumbled upon this classic jem [or as Tanta would call it; a blast from the past]:
While consensus among SF CDO investors is that U.S. RMBS remains one of the safest collateral asset classes, rising interest rates coupled with a potential slowdown in home price appreciation could put stress on leveraged subprime borrowers. - Business Wire, April 18, 2005
[emphasis added]
Damn, Rob Dawg is getting famous fast.
Say what? I had my 15, must be somebody else.
I'm still waiting to see if they downgrade DeLorean automobiles and Eastern Airlines.
This just in from Vegas where the securities dealers are ramping up the next wave of pooled debt:
he nascent market for U.S. covered bonds will complement, not replace, traditional mortgage securities despite the crisis in many off-balance sheet transactions, the biggest U.S. issuer said this week.
Losses in mortgage debt sold by Wall Street issuers and government-sponsored enterprises have put a spotlight on covered bonds, which also are backed by pools of assets but are perceived as less risky because the assets stay on the issuer's balance sheet.
To me the distinguishing feature of the covered market is LTV and over-collateralisation and the way you package or use commingling. You dont just account for the first 60%, which is common practice -- you divide your collateral pool into what is supposed to cover the outstanding bond, and what is in excess of that. We can pool all the subprime crap into covered bonds and make a killing!
According to Annual Report, Corus Bankshares had 200,000 retail accounts as of 12/31/06.
Every blog on the Net is picking up that Bernanke quote of yours.
I need a quote like that.
Rich, Which one?
There once was a Chairman named Ben
Who saved whole markets with only his pen
When asked to name his reward
He said "Oh nothing untoward...
Cash, most preferably Yen."
or:
This guy who we all call Benny
Of the dollar he cares not a penny
The banks are his bosses
The rest? We take loses..
His victims? Oh there are many.
[Seriously, I have no idea what you are talking about.]
Rob,
It was the link posted above by borkafatty
The Bush Bust of '08: “It's all downhill from here, folks”
They side step making a whole downgrade of the insurers, they just downgrade everything they touched.....criminal.
Stuart | 02.08.08 - 12:51 pm | #
Maybe not 'criminal' but I bet some juries ultimately find it 'civil'.
I will say some of what Mike writes is most likely very extreme....but he does make some very stimulating comments...yet frightening all at the same time...
"French trader was ordered to be jailed Friday while investigations continue into the billions in losses he allegedly caused at Societe Generale bank."
"No more croissants for you!!"
Another Tsunami sighting:The implication is clear, the FDIC has begun the death watch on the many banks which are currently drowning in their own red ink. The problem for the FDIC is that it has never supervised a bank failure which exceeded 175,000 accounts. So the impending financial tsunami is likely to be a crash-course in crisis management. Today some of the larger banks have more than 50 million depositors, which will make the FDIC's job nearly impossible.
CR and Tanta,
Great job on this month's newsletter.
Sorry, Thanks Bork for the link.
Where can you get information on the health of specific banks? Any good, semi-trustworthy sources out there??
PP
Re: the quote attributed to Rob Dawg.
This is a bit like the game of telephone. I believe the original quote was from NSA on a prior MBIA thread started yesterday evening.
One of the biggest heart attack/stroke issues here in vegas is related to the following issues we just discussed:
Eligible assets for a designated mortgage credit institution are fi nancial obligations in respect of
money borrowed or raised that are secured by a mortgage, charge, or other security on residential or
commercial property that is located in any of the eligible jurisdictions.
Substitution assets can also be included in either the mortgage credit cover pool or the public credit
cover pool with a limit of 20% of the total prudent market value of the cover pool. Substitution assets
are deposits with an eligible fi nancial institution and Tier 1 assets.
Legislation directly impacts upon all the above factors. The value of the cover pool will be affected
by requirements which relate to, amongst other matters, (i) asset eligibility criteria, (ii) matching of
assets and liabilities, (iii) bankruptcy-remoteness of the cover pool, (iv) appointment of cover pool
administrator separate from insolvency administrator (appointed to other assets of bankrupt issuer), to
manage the cover pool, (v) priority rights in the cover pool in favour of covered bonds and (vi) rights of
covered bonds to claim against voluntary overcollateralised assets in the cover pool.
Investors should beware that, in the absence of a clearly communicated overcollateralization strategy,
covered bond ratings on a particular issuer could demonstrate a lower long-term rating stability
compared with typical securitizations where possible pool migrations are clearly defi ned in advance.
This is because the overcollateralization necessary to achieve a given target rating is typically over
and above the minimum regulatory overcollateralization requirements. A banks clearly communicated
strategy with regard to expected credit risks, the diversifi cation of the cover pool, tolerance levels for
interest rates, currency rate risks, and liquidity risks, as well as the willingness to provide a cushion
over and above the minimum regulatory requirements, can on the other hand mitigate such risk. A
commitment to the Covered Bond compliance test is regarded as an adequate practical application of
the above.
For those out of the loop, look here:
http://ihfp.wharton.upenn.edu/2007Readings/I-European%20Covered%20Bond%20Factbook.pdf
German bank WestLB getting bailout. I guess the market is fatigued, but this is bad news.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aelT99A7jm.o&refer=worldwide
Where can you get information on the health of specific banks? Any good, semi-trustworthy sources out there??
Maybe here
Search Form
thanks borkafatty....
PP