Shares of Thornburg plunged $1.45, or 42.6 percent, to $1.95 in after-hours electronic trading.
In a regulatory filing late on Wednesday, Santa Fe, New Mexico-based Thornburg said JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) plans to exercise its rights under an agreement under which it lent $320 million, after Thornburg failed to meet a $28 million margin call.
wow on TMA. that is bad news. that stupid CEO has been in the news numerous times this past yr reassuring everyone TMA was AOK. you can't trust anyone.
These guys specialize in jumbo loans to rich people. New Century they ain't. I really thought they would make it... Whoever is buying their portfolio is getting an absolute steal.
You know, I think we may have a little problem in the housing and credit markets.
NLY is invested in agency paper so in theory there is no credit risk. The only thing in common with Thornburgh Mortgage is that the CEO is a frequent CNBC guest on the Cramer show. Is this a red flag?
I know of (3) 100% LTV loans that First Franklin made within the last 14 months for almost $2.5m in my Seattle neighborhood involving fraud. Two are now in foreclosure. Two of the loans were to the same person on two different houses! There was no due diligence except to see if the name was spelled right.
when glod clears $1000, every Tom, Dick and Harry will sit up and say "damn". this will represent a psychological breakout, much like oil clearing $100. then off to the races as the Fed cuts rates in March .
When Merrill Lynch bought this I was dumbfounded. I said that they were idiots and was met with "I'm sure they know more about it than you do."
So I also recall. Because of this one or another like it around that time I began to wonder how far somebody might go to shill the market: "See, I wouldn't buy this if it weren't ok, would I?"
Idoc,
NLY are the smartest guys in the room. If anything it is a good buy. They also brought public Chimera which I think will be a wonderful income producing vulture fund.
I'd say this is a quarter pounder or maybe even just a Happy Meal. Sure, you could rescue Ambac with $1.3 billion and some fairy dust but losing $1.3 billion....maybe when you grow older we'll let you have a whopper.
And no, you don't get to keep the toys with your Happy Meal.
Ross,
As much respect as I have for NLY management, the Chimera prospectus is wanting. They admit they have no vulture investing experience, just recycled MBS & CMBS people. The stock market seems to agree with my assessment. Let's keep comparing notes on their progress....
Besides Merrill buying First Franklin past the top, the other WTF? moment was Wachovia buying that California POS lender in late '05 or early '06.
Lots of reckless stupidity out there in high places. That's why I'm not for "keeping this system alive". They're just too dumb for their own and OUR own good.
I mean, I'm not even that good at math, but even I could see these were suicidal moves. So what does that say about these bozos? It's too scary to contemplate.
I've been lurking on this site for the past 3 months now, and I can't even begin to tell you how much I've learned about the credit markets from all of you. Keep up the awesome posting, and let me know what you all think I should do with the 5 grand I have sitting in an HSBC online savings account that's currently getting raped by inflation. I'm curious to know...
I'm a Seattle native, and yes, there was a gigantic bubble out there (OK, not gigantic, but my family home was purchased in 1990 for 130k and was valued last summer at 750k with no improvements), and yes, it is currently bursting. Badly.
I can't wait for a nice condo in Queen Anne to open up for me when I graduate...
Cosign on blackivyleaguer's comments about y'all. Tonight's comments have had me laughing out loud, and my wife is looking at me funny when I tell her a financial blog is making me laugh.
And once upon a time I lusted after the notion of buying in Queen Anne.
The place I wanted to buy in Seattle in '97 for 180K was on the market in '04 for 1.2 million. It's a massive bubble down there.
Good luck with your Queen Anne condo. Patience rewards those who wait!
Sorry, no wise words from me as to what to do with the 5K in savings. Am in a quandry right now about my own savings. Thinking of investing a bit of it in canned foods/ Sickening.
Misean writes:
"How to lose $1.3B in 1.5 years.
I wish I could burn $100M a month of OPM."
$1.3B is just Merrill's purchase price. Now add to that the losses associated with First Franklin's trash heap of paper (those already written down by Merrill AND those to be written down) to get the total cost to shareholders.
Again, I am amazed how stupid "people in the know" have been about all this.
No reason to be amazed. When the shakeout comes you find usually that the super-bright people are no brighter, often less bright, than you or me. That's why these shakeouts are useful. They expose the clay feet of the "rulers".
Yet Morgan Stanley continues to have its $706 million purchase of Saxon on its books at cost. Isn't it about time that MS writes this down to its true value which is zero at best and stop moving more and more assets to Level 3. Who do they think they're fooling?
OT: i post the question here because its the newest tread:
I heard a lot of you say it will be like 1973...
Has anyone factored into the 70s crisis the unilateral cancelation of Bretton Woods by the US ?? And could there be somethings similar happen again if it gets really ugly??(like new currency instead of US Dollar)
thanks for Answer )
Chris writes:
Again, I am amazed how stupid "people in the know" have been about all this.
No reason to be amazed. When the shakeout comes you find usually that the super-bright people are no brighter, often less bright, than you or me. That's why these shakeouts are useful. They expose the clay feet of the "rulers".
Funny in the Book "To have or to be" Fromm has a bit to say about authority....
In the past Authority was closely linked to competence ( and Authority was lost ´when competence was not there anymore) but someday it decoupled and nowadays Authority actual hangs on mere Symbols (uniforms, Rank, etc.).
So i guess these "bright" ppl are may bright but clearly incompetend....
TThis is getting potentially very serious for financial institutions without links to a bank or direct access to a central bank willing to accept their assets as collateral for a liquidity line.
It looks as if the IBs may have decided that the impact of even modest falls in the value of CDOs and RMBS on highly leveraged entities holding these (John stark and Galbraith put it well) is going to make their survival impossible. Seems a bit odd that they would risk having to mark their own holdings to prices that could be further distressed by the dumping to meet margin calls but perhaps their auditors are being/will be leaned on by the authorities to allow them to smooth out write-downs. Still not sure how they can hope to get a profit from seizing the securities in the long run unless they think the higher tranches will recover to face value or very near.
OT, FT Woods asked how long I thought it would take for banks to be able to absorb the coming losses from RMBS and thus account fully for them. (sorry for delayed response.) My guess is 1-2 years for those with good earnings streams from portfolios like industrial loans and retail books outside the bubble zone US, UK, Spain etc., a bit longer for banks based mainly in the US & UK. The wide spread of affected institutions should keep the direct credit loss bearable but the problem is that indirect losses from blow-ups at highly leveraged firms could make it more difficult to manage. So its perhaps surprising that BB etc. are not trying to keep more of the system going.
Since Im paid in sterling, its beginning to look as if the US will be more affordable than the Euro-zone this year for a vacation!
With the shrinking of the shadow banking system and banks trying to cnserve cash, will it be possible for US industry to get the funds to take advantage of the weaker $ and boost exports?
o posts about thornburg missing the margin call? TMA
here is the link...
Thornburg suffers 'material' defaults, stock sinks
| Reuters
"Thornburg suffers 'material' defaults, stock sinks"
Shares of Thornburg plunged $1.45, or 42.6 percent, to $1.95 in after-hours electronic trading.
In a regulatory filing late on Wednesday, Santa Fe, New Mexico-based Thornburg said JPMorgan Chase & Co (JPM.N: Quote, Profile, Research) plans to exercise its rights under an agreement under which it lent $320 million, after Thornburg failed to meet a $28 million margin call.
MERde!
O-Joe needs to go to First Franklin and point out all the people that still have jobs.
When Merrill Lynch bought this I was dumbfounded. I said that they were idiots and was met with "I'm sure they know more about it than you do."
I tended to believe them.
I mean...what do I know?
Again, I am amazed how stupid "people in the know" have been about all this.
About 650 people will be affected
Define "affected"?
This is bullish for arms manufacturer's, government welfare employment, and online education companies.
I'll use "affected" in a sentence:
The executive's bonus pay will not be affected by the stupid decision to buy First Franklin.
charts
wow on TMA. that is bad news. that stupid CEO has been in the news numerous times this past yr reassuring everyone TMA was AOK. you can't trust anyone.
any thoughts on NLY's future?
How come no write-down on the $1.3B - is the assumption that the "sale" of Home Loan Services will equal or exceed that amount?
In that case, I refer all to the Felix Unger definition of "assume".
Thornburg news is just astonishing.
These guys specialize in jumbo loans to rich people. New Century they ain't. I really thought they would make it... Whoever is buying their portfolio is getting an absolute steal.
You know, I think we may have a little problem in the housing and credit markets.
Re:NLY's future
NLY is invested in agency paper so in theory there is no credit risk. The only thing in common with Thornburgh Mortgage is that the CEO is a frequent CNBC guest on the Cramer show. Is this a red flag?
FHA Raises Mortgage Limits In High-Cost California Counties - WSJ.com
this should send glod thru $1000
How to lose $1.3B in 1.5 years.
I wish I could burn $100M a month of OPM.
That could be some party.
Wooohooo.
Cheers,
I love this graph:
indexed: Golden parachutes make for wild rides.
Take a look.... Very fitting.....
Misean,
I was just about to write: What do they care isnt it some prince's money anyway?
So true....
I know of (3) 100% LTV loans that First Franklin made within the last 14 months for almost $2.5m in my Seattle neighborhood involving fraud. Two are now in foreclosure. Two of the loans were to the same person on two different houses! There was no due diligence except to see if the name was spelled right.
Misean
go glod
go sliver
go oyl
idoc,
You're right. Glod is smiling.
Cheers,
Damn...forgot link.
24-hour Spot Chart - Gold
Cheers,
The executive's bonus pay will not be affected by the stupid decision to buy First Franklin.
Average Joe
Too funny. But they'll just blame it all on O'Neal. BOD will definitely keep their bonuses.
Mise
NYMEX.com
when glod clears $1000, every Tom, Dick and Harry will sit up and say "damn". this will represent a psychological breakout, much like oil clearing $100. then off to the races as the Fed cuts rates in March .
Bah, they only wasted a billion or so. Who cares about that now?
When Merrill Lynch bought this I was dumbfounded. I said that they were idiots and was met with "I'm sure they know more about it than you do."
So I also recall. Because of this one or another like it around that time I began to wonder how far somebody might go to shill the market: "See, I wouldn't buy this if it weren't ok, would I?"
WSJ Error Page - WSJ.com
looks to me like the IB's have lost their patience with the likes of HF's and TMA.
idoc,
Just a few more bucks baby.
And my silver position addition is completely in the black now.
YES!
Cheers,
idoc,
Gotta post that on the TMA thread.
Race ya.
Cheers,
Idoc,
NLY are the smartest guys in the room. If anything it is a good buy. They also brought public Chimera which I think will be a wonderful income producing vulture fund.
Just a thought
This is good news, right?!?! I mean, now First Franklin can't write any more bad loans. DOW up 100 points by 10:00 tomorrow!
We need some new metrics in Nothing Burgers.
I'd say this is a quarter pounder or maybe even just a Happy Meal. Sure, you could rescue Ambac with $1.3 billion and some fairy dust but losing $1.3 billion....maybe when you grow older we'll let you have a whopper.
And no, you don't get to keep the toys with your Happy Meal.
Ross,
As much respect as I have for NLY management, the Chimera prospectus is wanting. They admit they have no vulture investing experience, just recycled MBS & CMBS people. The stock market seems to agree with my assessment. Let's keep comparing notes on their progress....
Besides Merrill buying First Franklin past the top, the other WTF? moment was Wachovia buying that California POS lender in late '05 or early '06.
Lots of reckless stupidity out there in high places. That's why I'm not for "keeping this system alive". They're just too dumb for their own and OUR own good.
I mean, I'm not even that good at math, but even I could see these were suicidal moves. So what does that say about these bozos? It's too scary to contemplate.
What Seattle neighborhood are you in Roger?
I sent a bid for the business at $2.00, and go a reply asking for my credit card number. Deal done.
About 650 people will be affected
Define "affected"? = lose job.
Top execs no doubt will retain all bonuses and golden parachutes.
Hey all,
I've been lurking on this site for the past 3 months now, and I can't even begin to tell you how much I've learned about the credit markets from all of you. Keep up the awesome posting, and let me know what you all think I should do with the 5 grand I have sitting in an HSBC online savings account that's currently getting raped by inflation. I'm curious to know...
I'm a Seattle native, and yes, there was a gigantic bubble out there (OK, not gigantic, but my family home was purchased in 1990 for 130k and was valued last summer at 750k with no improvements), and yes, it is currently bursting. Badly.
I can't wait for a nice condo in Queen Anne to open up for me when I graduate...
-blackivyleaguer
Cosign on blackivyleaguer's comments about y'all. Tonight's comments have had me laughing out loud, and my wife is looking at me funny when I tell her a financial blog is making me laugh.
And once upon a time I lusted after the notion of buying in Queen Anne.
BlackIvyLeaguer-
The place I wanted to buy in Seattle in '97 for 180K was on the market in '04 for 1.2 million. It's a massive bubble down there.
Good luck with your Queen Anne condo. Patience rewards those who wait!
Sorry, no wise words from me as to what to do with the 5K in savings. Am in a quandry right now about my own savings. Thinking of investing a bit of it in canned foods/ Sickening.
Mish has a nice chart correlating AMBAC rumors and stock price.
Misean writes:
"How to lose $1.3B in 1.5 years.
I wish I could burn $100M a month of OPM."
$1.3B is just Merrill's purchase price. Now add to that the losses associated with First Franklin's trash heap of paper (those already written down by Merrill AND those to be written down) to get the total cost to shareholders.
Again, I am amazed how stupid "people in the know" have been about all this.
No reason to be amazed. When the shakeout comes you find usually that the super-bright people are no brighter, often less bright, than you or me. That's why these shakeouts are useful. They expose the clay feet of the "rulers".
Yet Morgan Stanley continues to have its $706 million purchase of Saxon on its books at cost. Isn't it about time that MS writes this down to its true value which is zero at best and stop moving more and more assets to Level 3. Who do they think they're fooling?
OT: i post the question here because its the newest tread:
)
I heard a lot of you say it will be like 1973...
Has anyone factored into the 70s crisis the unilateral cancelation of Bretton Woods by the US ?? And could there be somethings similar happen again if it gets really ugly??(like new currency instead of US Dollar)
thanks for Answer
Chris writes:
Again, I am amazed how stupid "people in the know" have been about all this.
No reason to be amazed. When the shakeout comes you find usually that the super-bright people are no brighter, often less bright, than you or me. That's why these shakeouts are useful. They expose the clay feet of the "rulers".
Funny in the Book "To have or to be" Fromm has a bit to say about authority....
In the past Authority was closely linked to competence ( and Authority was lost ´when competence was not there anymore) but someday it decoupled and nowadays Authority actual hangs on mere Symbols (uniforms, Rank, etc.).
So i guess these "bright" ppl are may bright but clearly incompetend....
if you are interested:
Amazon.com: To Have or to Be? (9780826417381): Erich Fromm: Books
TThis is getting potentially very serious for financial institutions without links to a bank or direct access to a central bank willing to accept their assets as collateral for a liquidity line.
It looks as if the IBs may have decided that the impact of even modest falls in the value of CDOs and RMBS on highly leveraged entities holding these (John stark and Galbraith put it well) is going to make their survival impossible. Seems a bit odd that they would risk having to mark their own holdings to prices that could be further distressed by the dumping to meet margin calls but perhaps their auditors are being/will be leaned on by the authorities to allow them to smooth out write-downs. Still not sure how they can hope to get a profit from seizing the securities in the long run unless they think the higher tranches will recover to face value or very near.
OT, FT Woods asked how long I thought it would take for banks to be able to absorb the coming losses from RMBS and thus account fully for them. (sorry for delayed response.) My guess is 1-2 years for those with good earnings streams from portfolios like industrial loans and retail books outside the bubble zone US, UK, Spain etc., a bit longer for banks based mainly in the US & UK. The wide spread of affected institutions should keep the direct credit loss bearable but the problem is that indirect losses from blow-ups at highly leveraged firms could make it more difficult to manage. So its perhaps surprising that BB etc. are not trying to keep more of the system going.
Since Im paid in sterling, its beginning to look as if the US will be more affordable than the Euro-zone this year for a vacation!
With the shrinking of the shadow banking system and banks trying to cnserve cash, will it be possible for US industry to get the funds to take advantage of the weaker $ and boost exports?
Canary in the UK