Wells Fargo CEO Open to Fed Assisted Acquisition
Submitted by
CalculatedRisk on Mon, 03/24/2008 - 6:44pm (95 comments)
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Does anybody else see all this intervntiion by the Fed to be inflationary beisdes me?
Why not, if the Fed is handing out cash then you've got to get in line.
So where does the Fed get all this money to buy mortgage backed securities, insure JPM's purchase, etc.?
Hey!
I'm open to a little Fed assisted bailout too!
Just credit my account with, I dunno, $25 Billion or so.
I won't be a pig like JP Morgan.
full employment, stable prices, and shotgun weddings
wtf
my sister needs a husband, even a fixer upper will do!
hahaha - As long as they're practically giving banks away, count him in too!
Gives a whole new meaning to the phrase "a run on the banks".
I just read on the last thread that the average CR trader has "only" 15-20 million in their portfolio. And you folks are worried about house prices?
from the article:
Surprisingly, Stumpf said Wells Fargo's top brass is willing to lose the bank's prized triple-A rating from Moody's Investors Service and Standard & Poor's Ratings Services if that's part of the price of an acquisition. It's the nation's only bank to carry those firms' highest ratings, and one of two globally to do so.
"Our triple-A rating is the result of how we run the company," Stumpf said. "We don't run the company to please Moody's and S&P. We do the right thing for the business. If how we run the company doesn't justify the rating, we'll live with that."
we're all triple A
Dear Fed,
I just wanted to let you know that I too would not be averse to a Fed-assisted transaction.
I would be particularly un-averse to a Fed-assisted acquisition of a Lexus (gas budget ate our new car budget,) a new home for my family (fixer-uppers don't bother us, we just can't afford a house within 500 miles of our jobs), and a pony for my daughter.
Best Regards,
Ant
-U.S. Taxpayer
In other news, Wells Fargo CEO says he's open to fascism.
FT - Regional banks targeted in lifting liquidity
"The US government made its latest effort to support the stricken housing market on Monday with a plan to give regional home loan banks authority to boost their holdings of mortgage-backed securities temporarily by more than $100bn."
FT.com / US / Economy & Fed - Regional banks targeted in lifting liquidity
Umm, err... dad? There's this girl see? She's normally a $500 hooker but she's fallen on some hard times. I was wondering fed.. I mean dad if I could borrow $300 and see if she's available.
WaMu?
I just read on the last thread that the average CR trader has "only" 15-20 million in their portfolio. And you folks are worried about house prices?
Sigh....
Average, not median.
Bill Gates and Warren Buffet hang out here. Warren goes by the name of "mp" and Bill's just a lurker.
They bring up the average a bit.
Hanschen klein,
ging alein,
in die weiter Welt hinein.
Well, now we are all subprime. I wonder what Warren B. thinks about this development.
All I can think is this is getting worse and worse.
Wall Street is getting further and further from the real world.
CR, Tanta, would you have believed even two months ago that things would have deteriorated so fast.
Someday this war's gonna end...
...the average CR trader has "only" 15-20 million in their portfolio.
Trading portfolio. There's a difference.
going back several threads, I was thinking about the increase in Feb. used home sales. Fannie and Freddie had substantially increased delivery fees effective March 1. I wonder if the 3% increase wasn't driven in large part by closings being moved up a few days in order to avoid the higher delivery fees? It would only take 1 day's worth of closings moved from March to February to get a 3% bump in February, that would come at the expense of March.
Wells, along with WAMU and ConTanny were the largest issuers of sub-prime mtgs.
Wells is probably directly responsible for 10% or more of the failing sub-primes.
Now, they're back to see where else they can sink their economic shaft. And Bernanke/Paulson will supply the grease.
It's disgusting. These folks should be pilloried, not chosen as a beneficiary bank. If they're chosen, they know they get a free pass against failing. If they're not chosen, their Level 3 assets will appear and they'll be the carrion instead of the pretend vulture.
This is a game of chicken, and the Feds will choose "more training" for their mid-level dorks who wouldn't stop this fiasco without guidance from the same Administration flunkies who watched with open laissez faire arms, and who are now shafting the lower and middle classes dependent on the integrity of the USD.
Instead of a bank, toss them an albatross.
I just read on the last thread that the average CR trader has "only" 15-20 million in their portfolio. And you folks are worried about house prices?
Sigh....
Note that doesn't account for the rally the past couple of trading days.
Probably more like 10-15 million now.
At first I thought you meant that Wells Fargo wouldn't mind being taken over by the Fed.
Chutzpah, no?
Wells Fargo wants to take part in the largest taxpayer fraud in world history. Really? WHo knew?
HAHAHAHAHAHAHA !
You cannot be serious ! The trouble is, he IS serious; worse he's liable to be taken seriously too - I can't wait for CNBC to pick up on this philanthropic effort by Wells Fargo.
Jeez - I should have emailed the Fed last week when I heard about the JPM take over of BSC - telling them - "This way, madness lies" ( or however Shakespeare punctuated it )..
This is truly amusing.
-K
L.A.Times - Houses stolen in mortgage fraud, indictments allege / Fed prosecutors name 19 suspects in a nationwise scam that left strapped homeowners without title to their houses or without the equity they had built up.
Houses stolen in fraud, U.S. says - Los Angeles Times
Who was the $9B bank we were all pondering about a month or two back.. someone in Chicago or Cali ? Might make for a timely transaction if OTS called the Fed and said "help make this happen".
how could they say this while still getting a pay check is unbelievable... we call these people douchebags.
It would only take 1 day's worth of closings moved from March to February to get a 3% bump in February, that would come at the expense of March.
ermm.. February had an extra day this year. Could that account for an extra 3% ?
Stumpf adds insult to injury (BSC/JPM).
Isn't this a trifle premature and ghoulish too ? Neither WaMu nor National City are dead yet, or even in ER for that matter.
Ambulance chaser !
-K
Just what we need, a "central investment bank" backstopped by tax payers (aka the savings of the prudent).
If the head of Wells Fargo said he wouldn't let a downgrade impede doing an acquisition, and I were a bondholder, I would not be happy.
If the Fed doesn't retain its own deal advisors and demand an equity kicker and a higher interest rate for its participation in any future "layup" I would be downright pissed.
Apparently, Stumpf feeds himself only too well!
Gotta hand it to him though...none of the usual..."we're watching the market closely", pablum.
Just straight up..."I'm feelin' a little anxious if you know what I mean!"
-w/ apologies to Beetlejuice
I think I'll just quit paying taxes and let the bastards try and catch me F#ck it!
I would not be adverse to Fed-assisted® new pony.
Or a Desmosecici.
hey..
i can also do w/ 2-3 mil dollars. I am ready to go to discount window (despite what my neighbors say)..
need to save that multi million dollar house i bought on option arm.
After all, it does a broader public good insofar as the neighbothood home prices are not impacted..and the city keep getting taxes.
Desmosedici.
I imagine he would that Goldman for about $15 a share, maybe Big Bone Ben can help him out and get him a discount.
(raises hand)
hey me too I'd be open to a Fed Assisted aquisition as well. Just 2-3 billion that's all I need. I want to buy a pony. 2-3 billion should be plenty. Thanks.
Note that doesn't account for the rally the past couple of trading days.
Probably more like 10-15 million now.
Da Ha hahahhahaa
touche!
...................
All of this talk of deflation is a joke. A red herring to protect the asset values of the wealthy. The only deflation I see is in my purchasing power.
The vast majority are being forced to subsidize asset values via inflation.
Crooks.
Lets make life simple. The congress passes a one-time law, that requires all home loans be refinanced at the current market value. The bank that holds the current mortgage, will carry the refinancing. (There would conditions - live in the home for 5 or more years, no 2nd homes, things like that.) The home owner, bank and investors would all lose out proportional to their investment.
This should create a floor for the housing market. And also allow for the homeowners to stay in their homes.
We also need to go back to the old and wise rules: 20% down, originating mortgage lender holds the loan on their books. (Assuming most people will not be able to supply the 20%, uncle sam will provide a soft down to help out.)
This sounds much more appealing to me as a tax payer, than giving it to the corporations. They already get enough handouts.
Food for thought. Bb
I keep reading people claiming "this is not a bail-out" because the Fed has not actually lost any money on these transactions yet.
What a load of crap. If the Fed is providing something that has value -- like "assisted takeovers" or the TSLF or loans at 2.5% -- does anybody really think the titans of Wall Street will not find some way to package up that value and re-sell it for a profit?
The Fed is now giving away services that the market will not provide, which is almost as disgusting as it is dangerous. There is a reason Bagehot included "at a penalty rate" in his description of a central bank's "lender of last resort" role.
I sure hope these geniuses at our central bank know what they are doing, because from where I am sitting, their moves are looking more and more scary.
I think it comes down to the government lets people lose their a@$ and does nothing or the government does something with the banks and indirectly lets americans lose their a@$....
The final alternative is helping out the upsidedown homeowners and that would never fly publically... Half of america wants blood because they cant afford a house....
The congress passes a one-time law, that requires all home loans be refinanced at the current market value.
Just give me enough warning so that I can push up my mortgage to the requisite high value and o yeah Market value -20% refi, please ? We have to create the homeowner equity haven't we ?
What about the people who own their homes outright or almost outright ? In the immortal words of Jim Cramer: "The (prudent) American public don't know jack !"
-K
Hey, Bb,
I think they should just send us all $100K. That way, the innocent and prudent get a cut, too.
Bb-
It's not that simple. You suggest tightening of lending standards and mandatory(or not?) refinancing.
This would likely actually steepen the decline as many peoples mortgage's would increase as the result of them shifting from a teaser rate to whatever is required for a sane mortgage and the increased risk on those who wouldn't qualify currently for a mortgage would result in even higher rates for many.
If you start trying to directly control rates you open yet another can of worms.
As many people here have mentioned repeatedly, you have to get the fundamentals of supply and demand, and wage to price ratios back to sustainable levels, and since the run-up was so big, the correction is also going to be severe.
WFC feeling slighted and a little jealous. Now that the Fed tipped their hand for everyone to see, it's going to be a mad race to get assets of institutions with all liabilities assumed by the Fed (dupes like all of us). That's the deal on the table from now on.
Sickening. And the shareholders still get a consolaton prize instead of the kick-in-the-ass they deserve. No one goes home empty handed in this joke of a free market.
Big question is what's the look on Ben's face tomorrow when he reads this quote...
Anyone with a question for Chris Thornberg please leave them here:
Money Talks - Bakersfield.com - More than before.
"The vast majority are being forced to subsidize asset values via inflation."
The damage has already been done to our wealth. We have our real savings tied up in items that can never be recovered. The Fed is just trying to slow down the discovery. The marks in the ledger have no basis in reality.
"what's the look on Ben's face tomorrow when he reads this quote..."
Same as a madam at a whore house.
WFC holds way too much CA home equity/mortgage loans. Many of these loans are worthless. Buffett was singing WFC praises last annual letter. This time he glossed over them. WFC screwed up badly. Now they should suffer.
Thread music: Edith Piaf - Non, je ne regrette rien
YouTube
- Edith Piaf - Non, je ne regrette rien (1961)
I don't regret anything until they slapped me in prison with those love starved men -- Angelo and Bob
Let's just cut to the chase here and void all residential mortgages in the USA. The lenders bundle up the paper and send it to the FED and get a check. It is a clean slate for borrowers and all they will need is a wheel barrow to haul their currency to the grocery store. This will work!
Next we'll have BofA asking for retroactive consideration for their buyout of Countryfried.
Or maybe there was a deal done under the tables to get that one done too...
Even better. Let's all trade our dollars for bacon. Then, we can plant the bacon and grow pigs. When the pigs are harvested, we can sell them for dollars. At this point, everything will be fixed.
Elvis is in the building and is right on!
Any truth to the rumor that The Fed will be assisting with a retroactive purchase of New Century, in an effort to make New Century's bondholders and common stock holders whole again?
SweetHomeKilla writes:
Bb-
It's not that simple. You suggest tightening of lending standards and mandatory(or not?) refinancing.
This would likely actually steepen the decline as many peoples mortgage's would increase as the result of them shifting from a teaser rate to whatever is required for a sane mortgage and the increased risk on those who wouldn't qualify currently for a mortgage would result in even higher rates for many.
Thanks for the reply. As to the cost of the mortgage, homes would be re-assessed at current market value (now about a 15-20% decline from the original "purchase price", so the 400k home (before the crash) is now 320-340K. Add to that 20% down, the loan is now 280k +/- 10-20K, manageable for majority.) Banks would be forced to accept the new home values and refinance if the buyer qualifies under the new rules (living in home for 5 yrs+, etc) The buyer, the bank and any "investment bank" that was involved would all lose some money. Better shared loss than only one party get hit (which right now is the homeowner, everyone else seems to be getting a free ride).
This would take many homes destined for FC to be taken off market because the homeowners would stay in their homes. There was an overbuild, and that inventory will have to run it's course, but the current homeowner should be able to stay in their home.
Again, people who speculated, 2nd homes - anybody who was not planning on staying for the long run is out of luck.
Food for thought. Bb
C&C I was about to leave a message and it made me register... Needless to say I'm anti-register...
Tell him:
I too would like to express my gratitude for his straightforwardness and academic honesty. I have been following this for a while and few have been willing to push against the tide. It is refreshing like a cold cape cod swell in the midsummer; painful but true...
All the best...
~nades
Or not...
(good link tho, enjoy seeing academics / theorists getting out there)
Anonymous writes:
I think I'll just quit paying taxes and let the bastards try and catch me F#ck it!
Anonymous
your late to that trade.
NY Times / Paul Krugman: Taming the Beast
"In fact, Id argue that aside from Alan Greenspan, nobody did as much as Mr. [Phil]Gramm to make this crisis possible."
OP-ED COLUMNIST; Taming The Beast - NY Times
Wave of Foreclosures Drives Prices Lower, Lures Buyers - WSJ.com
WSJ
Foreclosures / House Prices
The MSM is pretty much getting it.
Food for thought. Bb...
Re-assess a 35% haircut to take in the further slide in prices from now until the machinery gets into operation. This way the "homeowners" won't already be underwater at closing.
And so, to add to the lies we know so well,
"The check is in the mail."
"This will hurt me more than it will hurt you."
"I **' *** ** **** mouth." (ask a grownup)
we add,
"This is not a bailout."
In other news:
I'll be opening The First National Bank On My Block here at Chateau Bidet.
"A glut of foreclosed homes of historic proportions is starting to drive down U.S. home prices faster as lenders put more properties on the market and buyers show signs of interest.
The ability of America's lenders to manage this fire sale will be crucial to determining how long the housing market stays in the dumps -- and how quickly blighted neighborhoods can heal. The oversupply is severe: In some major markets, including Las Vegas and San Diego, foreclosure-related sales have accounted for more than 40% of all sales in recent months."
Viewing with alarm: "It is a clean slate for borrowers and all they will need is a wheel barrow to haul their currency to the grocery store. This will work!"
That will help me get my milk and eggs, but what do I do with the cash once I've traded in the wheelbarrow for the groceries? Just dump it in the street? Is that legal?
Guardian UK - Crony Capitalism
"The Fed will claim it had to institute these measures to calm Wall Street. That is nonsense. The fair and economically efficient way to deliver emergency liquidity to Wall Street is through an auction facility that is open to all financial firms, and in which participants supply good collateral. Those who need the funds most will bid the highest. That way, taxpayers get properly paid for their support, and the funds go to those who need them most."
Crony capitalism |
Comment is free |
guardian.co.uk
Does the presence of nearby REO drive down prices? (Intuitively, seems like it would.) Any answers?
Does the presence of nearby REO drive down prices?
Yeah, on a sliding scale: unmowed lawn/bando occupied/boarded up/stripped/burned
The WFC response to JPM/Bear is exactly what will happen w/ selective cramdowns...
Wife: "The Burdettes down the street? They got their loans reduced $100k."
Husband: "Yeah?"
W: "Well, I told you they were over their heads."
H: "Uh, huh".
W: "I wonder how much they're saving every month?"
Long pause
H: "I'll call the bank/guvmint guy tomorrow."
I'm not sure what you call this "me-too" pile-on, but, it's fairly pitiful to watch. Whether in corporate suites or your local PUD, it just signals something sad -or perhaps desperate.
Bill Melater writes:
"Does the presence of nearby REO drive down prices? (Intuitively, seems like it would.) Any answers?"
(From my personal experience in SoCal during the early 90's ...) Yes, but only after the banks have become desperate to unload their REO to raise cash. Then they price well under other listings. Soon, buyers are only interested in the lower priced properties and will ignore non-REO listings unless they are very aggressively priced. Non-REO sellers (like me in the 90's) adjust their prices downward but too slowly to get attention -- they continually chase the market down.
Wells Fargo saw the corruption involved with the Bear Stearns, JP Morgan deal. In fact, JPMorgan felt so bad for stealing taxpayer money that they added 400% to their offer. They bid against themselves.
We will look back on these times and wonder how we let a criminal like Bernanke run our currency.
I hope I'm not late to the giveaway, I'm not adverse to a Ferrari dealership if the fed will throw in $120 Mill.
Hell I'll even take the assistance in Euro's
Is The Fed Discount Window a drive up window or what? Maybe you just call, maybe just click a mouse? How do we play?
I thought he was joking at first. Hey I am going to buy some Citibank stock as long as the Fed assists me by guaranteeing that the stock won't go down.
What a great country?
Rumor has it that the Fed is going to provide a guarantee for the Republic of Kazakhstan to buy Citi
See the story in the Kazakhstan Daily called
"Fed Make Benefit for Great Glorious Acquisition of Citibank-America"
Mr. FED, I too would like to acquire a local bank with your assistance. Can you spare a few of those taxpayer dollars you have gathering dust in your computer hard drives??
Excuse me for a question please.
I don't understand most of the arcana bloggers like Tantra and CR and Mish use but is it a correct observation that the tone of their comments and the tone of the follow-on threads are unquestionably different, i.e., the former being more conventional and mainstream and the latter more caustic and alarmist. If this is true what should one make of it? TIA
yyy writes:
Excuse me for a question please.
I don't understand most of the arcana bloggers like Tantra and CR and Mish use but is it a correct observation that the tone of their comments and the tone of the follow-on threads are unquestionably different, i.e., the former being more conventional and mainstream and the latter more caustic and alarmist. If this is true what should one make of it? TIA
yyy | 03.25.08 - 4:45 am | #
When you say 'the tone of their comments', are you referring to the entries by the fore mentioned bloggers? And by 'the follow-on threads', you mean the haloscan comments? If that's right, it may be partly an indicator of sentiment. I have visited this site since about Oct. of '06 and I think a difference is still there. It might even be likely that a greater divergence between the two could be expected in the face of more immediate news of instability or 'crises'. I don't think you can really draw sweeping conclusions from it though.
@ S Pearman Yeah that's right. I've just been confused by the divergence of apocalyptic thread commentators and the more neutral nature of the bloggers' comments themselves. Who's right? Who's wrong? Where we headed? Bang or whimper?
I don't think you can really draw sweeping conclusions from it though.
Oh, I think you can. I don't know about Mish, but obviously CR and Tanta are more intelligent and nicer people than the rest of us.
but obviously CR and Tanta are more intelligent and nicer people than the rest of us.
You're exactly half right. CR is more intelligent and nicer than anyone I know, including y'all.
I draw Pig cartoons and use the term "relitter." Draw some conclusions, peeps.
This kind of makes me nostalgic for the "Bear Cave" days. For you newer readers, that was back when comment threads were reliably filled with boom-boosters telling us we were nothing but pessimistic doomsayers trying to "talk the market down."
Now we're "conventional and mainstream"? That has to be one of the single funniest things I've ever read on this blog.
All I can say is that it's taken a long damned time for the mainstream to catch up with us all.
"Gives a whole new meaning to the phrase "a run on the banks"."
Bank runs are much like uncontrolled bowel discharge.
The shit just flows out.
Hell, I'm open to a Fed assisted acquisition, too. Sign me up for $30 billion in non-recourse debt and show me a target! Whoo-hoo! It's boom-time!
I'd like to participate in the Fed Give Away Sweepstakes!
Let's see... I am sure I have something worthless around here that they would accept in return for lots of cash. Oh, and I'd like them to assist me in several purchases - a Mcmansion (naturally!), maybe a big, stupid, gas-guzzling car with tacky spinners (assuming the gas purchases will also be Fed assisted.) Yep, that's a good start.
This is sickening; we'll get hyperinflation while the Pigs get Fed-funded bailouts and mergers. Right... Was this type of crud going on in the days before the Great Depression, or is this a whole new way to hose the taxpayers and the savers?
I'm sure that there was a sour look on Mr Bernake's face as there was on mine when I read that...along with the thought "I surely hope he was being sarcastic with that comment". Because, as a business person, if I read something like that, he'd be the LAST person I'd now take to the altar, as he just showed that he is nothing but a gold-digger.
And my prediction is the next firm that needs assistance will go down much harder than BSC did. Again, the Fed is only interested in an orderly unwind of assets, not saving anyone. If the market begins to take care of that on its own, then no one will be the beneficiary of Fed largesse.
"I think it would have an ADVERSE impact on the situation."
"I am not AVERSE to having that happen."
(Thank you for your attention to this matter. Class dismissed.)
re: yyy
Tanta and CR are being responsible reporters, if you will. They only try to make predictions on things that are in the sphere of their core competence; they also try to maintain a professional writing style, which means saying exactly what one means, not using exaggerations etc.
The rest of us are a bunch of nobodies with no reputations to maintain and no obligations to uphold. Therefore we can draw far-fetched conclusions and make long-term prediction on a whim
I think the way to read this forum is to mine it for real information (links, numbers, etc), and skip everything that looks like opinion.
And how is this different?
Pearls Before Swine free online comic strip library at comics.com
Pearls Before Swine free online comic strip library at comics.com
Like I said I can't hold a candle to the expertise exhibited in the original posts. No way, shape or form was any critisism intended by the phrase "conventional and mainstream" but what is in the original posts and what ensues is like going from the Disney Channel to some hard core @#$% channel. What's the true wavelength, our real economic zeitgeist? is all I was after and thanks missinfo for some clarity. Real jurnos vs potshotters. I'll take that.
I can haz fed assisted acquisition too?
I would caution WF that the road goes both ways - if you wobble you might be killed w/ the taxes you have paid...oh sorry, the taxes your employees have made.
I am now coining a new term: SLUTT - Secured Lending Under The Table.
Bear Stearns was a vic of a SLUTT transaction.
Is it happy hour yet?
yyy writes:
Like I said I can't hold a candle to the expertise exhibited in the original posts. No way, shape or form was any critisism intended by the phrase "conventional and mainstream" but what is in the original posts and what ensues is like going from the Disney Channel to some hard core @#$% channel. What's the true wavelength, our real economic zeitgeist? is all I was after and thanks missinfo for some clarity. Real jurnos vs potshotters. I'll take that.
yyy | 03.25.08 - 11:16 am | #
I didn't mention because I thought maybe it would be expected, but of course the comment threads are like that, it IS the internet after all.