If he acknowledges that housing has along way to go before it finishes its re-valuation, then how the hell can he answer that from an IB standpoint, they're in the last innings. Is he ignorant of the relationship of real estate values to this whole debacle in the credit markets and in the financial cos.. Could he really be that stupid or is he just another BS con artist.
i was playing golf with an accountant this weekend who has worked for a few public companies. told me his former CEO told him that he was there to "make him look good".
I do hearby nominate BOA as the bank most likely to not make it to 2010. They have always been the top candidate in my book o fools. Liars do not make leaders, even if they can make whole sentances.
Anyway, Alt-A and Option ARM problems are just getting started. Those will snowball right into 2011, and could end up being significantly worse than subprime.
Their report is a ray of sunshine compared to some companies I have lost on lately shorting. Mohawk with sales revenue down 28% yoy up 5% on Friday. Who could have known crappy earnings could be so good for stock prices. Wait till these companies really start losing money or go BK then they will really soar.
Carlyle Group, the world's second largest private-equity firm, is raising a $500 million collateralized loan obligation to buy high-risk, high-yield debt being sold by banks at discounted prices, according to people with knowledge of the plan.
The CLO is being arranged by Deutsche Bank AG, said the people, who declined to be identified because the terms aren't public. The fund follows a similar $450 million CLO that Carlyle and JPMorgan Chase & Co. closed this month.
compared with $165 billion in the same period a year earlier. Blackstone Group LP's GSO Capital Partners is creating a $381 million fund named Tribeca Park CLO
more future landfill matierial...appropriatley named.
"... they make it sound as if things were not so badare no so bad. I am a bit puzzled.
Octavio Richetta | 04.21.08 - 11:55 am | #
You shouldn't be surprised, he was one of those goldilocks fellows who didn't anticipate a recession. He does after all have a reputation to protect...
"3-November-2007... Looking ahead, we're facing a broad based slowdown in economic growth, but have plenty of room to slow without slipping into recession. Most importantly, the objective ECRI leading indexes that correctly forecast past recessions - in real-time and without false alarms - remain above past recessionary readings. ..."
i was playing golf with an accountant this weekend who has worked for a few public companies. told me his former CEO told him that he was there to "make him look good".
idoc,
It depends on what kind of accountant.
Internal auditors are there to make CEOs look good.
CPAs who do attest work are there to tell the truth.
The irony being, not to say they have excessive integrity, but as a corporation they have pretty good ethic. They also have handled things much better than the likes of JP Morgan, Citi, and others.
I dread the day that BofA would go under... that would be a really bad sign...
But I digress, would I expect something different?
They are all scum...some just a little less than others.
Hmmmm... I'm guessing we'll all be connoisseurs of scum soon. For example, the 2008 BOA early year varietals have an earthy aroma... like decomposing paper. Nice wallet feel, goes in easy but a rather biter after taste.
If I were BofA, I'd still be betting the farm on housing recovery, as long as it was in off balance sheet derivatives. Countrywide was deemed too big to fail, and who did the Fed turn to for absorbing them? BofA will be twice the size of Countrywide after the merger; they could practically write their own check drawn from the taxpayer savings account.
Betting on housing recovery might be a super long-shot, but it could be really profitable if they are the only ones doing it. If it fails, they can just have Benny pay the tab. Win/win.
I honestly don't think these guys are all that corrupt. All the theories about the evil manifestations of corporate bankers are totally overblown.
This is nothing more than flat out incompetance. Conspiracy theories of corruption imply a level of planning, intelligence, and forethought that these guys clearly have not demonstrated. It's easy ( and more entertaining! ) to contemplate stories of evil backroom scheming. But I think the simplest and most likely explanation is that these clowns just suck at their jobs.
sure, incompetence is part of it. But do you honestly believe that most of these players didn't see disaster coming, but IGNORED it because the risk was spread elsewhere?
who cared about losses, when those losses would be shoveled elsewhere?
a: nobody.
it's like a mugging. Is it ok to stand idly by and watch a mugging and don't even try to call the police or anything? sure, you didn't mastermind the mugging, but you certainly could have helped without putting yourself in harm's way.
Yearning to Learn --- yep, I really do believe that alot of these guys didn't see it coming. If the risk was assigned elsewhere then they wouldn't have to writedown all these loans. To me, these huge writedowns mean that the banks weren't hedged or didn't assign away their liabilities. If they did see it coming, or even thought there was a possibility the market might implode, then they would have hedged themselves. They didn't, so I have to conclude they're idiots.
Don't get me wrong, I'm sure there are some evildoers out there. But I think the failures we're seeing now are largely due to stupidity rather than malfeasance.
"...In the wake of the decision this week by Kazakhstan, the world's fifth biggest wheat exporter, to join Russia, Ukraine and Argentina in stopping exports to satisfy domestic demand..."
Actually, I'd like to think they were evil, at least that would mean they had some brains.
Once the loans were packaged, sliced and diced and sold, I'm sure that that they were wiped off the memory banks of the seller.
I saw an S & L up close and personal during the 80s. The people at the low end to the middle knew what they were doing. The ones at the top, hadn't a clue. And they had money and weren't interested in exerting themselves any more. True, there were from a super regulated and cossetted industry, but still.
As to servicing, here's another stupidity. You can't make money on the amounts charged for servicing any more. Why hasn't Bof A figured that out? Servicing is easy when everybody is making their payments. Well, guess what, that isn't true any more. Servicing is a money loser, unless you charge, say, another whole point for it.
This has been discussed on this blog before, so why haven't the great minds at B of A figured it out? Because they don't know what they are doing!!
The evil manifestation is when they are still in denial about the floodwater up to there necks.
The incompetent part at the start of the cycle is spot on.........and even in the "late stages" of decline they are grossly incompetent.
but they seem to strike a chord with the lack of financial acumen in this country. That is , IMO, totally staged and does require some competence to pull off.
Wow only if they directed that effort towards really fixing (instead of 'feexing' as my mexican friend calls it)
the system they effed up to begin with
LOL! Now there's an entertaining thought. i.e. there is no way anyone can possibly be this stupid. Therefore, they are simply acting dumb and must be evil.
I find it somewhat telling that he chose Happy Days Are Here Again for the band, given its history (written in 1929, theme song for FDR's early-depression campaign in '32)
Even if they're not saying depression, they're thinking in terms of it.
"...In the wake of the decision this week by Kazakhstan, the world's fifth biggest wheat exporter, to join Russia, Ukraine and Argentina in stopping exports to satisfy domestic demand..."
Today, Karl Denninger says that it's mathematically impossible for real estate to come back:
"The 'wish and dream' that these 'assets' will magically go from declining in value to rising in value, recovering the entirety of the currently-unrecognized loss, is pure delusion when we are talking about houses.
"The 'bubble' values are at least 20 years in the future before wage inflation rates catch up with them, and yet the carrying costs over those 20 years exceed their net present value."
Just to fit in, I will ask the rhetorical question, if they are forecasting future writedowns and since their loan loss provisions are accruals, why don't they just book them today? Assuming the additional write downs are their best estimate and all. Shouldn't they at least have to hedge their comments to emphasize that the current provision is plausible and future deterioration is a possibility if the economy deteriorates.? Anyway, obviously that's the way things are done in banking and and no one would believe them if they didn't discuss future losses, but as least defend the current provision as sufficient and future writedowns as possible instead of probable.
Having said that, the likelihood of them being able to get through the year without significantly diluting equity, and the uniformly negative sentiment on cr comments makes it a buy at today's price. They have over a 10% market share and are being given time to earn their way out of their balance sheet problems.
Greenspan's motives for promoting ARM and ZIRP were:
1) Forestall Deflation to:
2) Transfer Interest Rate Risk off bank books (which relative to the size of the market they have accomplished)
3) Finance the acquisition/development of all things tangible and intangible around the world
A small powerful group can promote their agenda because of the incentive to corporate executives for towing the low...bonuses. Greenspan and Bernanke represent the small and powerful and likely won't be the last either.
One thing that's clear from this post, is that some of the people who work in mortgage finance have real problems with grammar and syntax. They're even worse than George Bush. The lousy job they did in mortgage finance gave rise to real doubts about their intelligence, but the problems they have putting a sentence together makes you wonder if they ever got through high school.
$775M after tax on Visa. The mnore interesting point is one brought up in Heard on the street regarding available for sale securities and the fantasy profitys booked for credit spread widening by LEH, MER, C, etc...BAC has a $1.2T balance sheet with about $15B of cdo and leveraged loans still on the books, net. Who know what the assets look like at the ibank. That 1.2T compares to 600M in interest earning deposits. NPA total $8B and the reserve stands at 19B. Even if the hom eequity and resdiential and commerical seriously degraded, there is an incremental $12B/yr in cash flow pus there was heafty demand for the $12B of preferred done in Jan. Expect more dilution, but not out of business is a stetch. With a $6B provision they were break even ex visa approx. Even with $3B in incremental provisioning for rest of year and similiar amount in 2009, they will earn $18B. Barring a run on deposits, their spread income should be enough with capital to weathewr the storm.
Just wait until the small business loans start to go bad.
And the construction loans.
Latest from ECRI guys.
Choosing Recession - Forbes.com
they make it sound as if things were not so badare no so bad. I am a bit puzzled.
So sorry that the home equity loans are coming back to bite them on the ass. That was unforseeable.
If he acknowledges that housing has along way to go before it finishes its re-valuation, then how the hell can he answer that from an IB standpoint, they're in the last innings. Is he ignorant of the relationship of real estate values to this whole debacle in the credit markets and in the financial cos.. Could he really be that stupid or is he just another BS con artist.
con artist is to nice a term
I see layoffs coming in the band industry.
i was playing golf with an accountant this weekend who has worked for a few public companies. told me his former CEO told him that he was there to "make him look good".
small anecdote but telling about todays markets.
douchebag would be too kind....
Ciao
MS
can anybody post links re: Estimated bank losses with RE in Ireland, Spain, UK, etc ?
I'm up to my eyeballs in a mega-index mega-short...
this can mean only one thing...
"dribble out reporting" - AKA incontinent reporting
So fitting.
Was the transcription done by a chimp?
I know this is a rhetorical question, but if it's so glum, why is their stock down less than 2% right now? It'll probably be up at the end of the day.
Maybe it's time to just drag the dartboard out and invest full steam ahead.
Just wait until the small business loans start to go bad.
And the construction loans.
And further worsening in mortgages and home equity loans, auto loans, credit card loans, and commercial real estate loans.
Other than that, its all hunky dory.
I do hearby nominate BOA as the bank most likely to not make it to 2010. They have always been the top candidate in my book o fools. Liars do not make leaders, even if they can make whole sentances.
A lot of gobbledy gook.
Anyway, Alt-A and Option ARM problems are just getting started. Those will snowball right into 2011, and could end up being significantly worse than subprime.
Their report is a ray of sunshine compared to some companies I have lost on lately shorting. Mohawk with sales revenue down 28% yoy up 5% on Friday. Who could have known crappy earnings could be so good for stock prices. Wait till these companies really start losing money or go BK then they will really soar.
The market is gonna end up GREEN. I can smell it. Let's call it the "good" news BofA rally. My head hurts!
Carlyle Group, the world's second largest private-equity firm, is raising a $500 million collateralized loan obligation to buy high-risk, high-yield debt being sold by banks at discounted prices, according to people with knowledge of the plan.
The CLO is being arranged by Deutsche Bank AG, said the people, who declined to be identified because the terms aren't public. The fund follows a similar $450 million CLO that Carlyle and JPMorgan Chase & Co. closed this month.
lovely...
Figure skating analogy: We're still in the compulsories.
And this without factoring in an eventual Countrywide absorption? I'm with TulsaTime on this. BAC seems like a great candidate for oblivion by 2010.
That said, there are reports that their 9% stake in the China bank will have gained them more than 10 billion in a few years.
compared with $165 billion in the same period a year earlier. Blackstone Group LP's GSO Capital Partners is creating a $381 million fund named Tribeca Park CLO
more future landfill matierial...appropriatley named.
that's right folks , bbbb... nothing rated lower than bbb. If it does, it gets BBBB
posted a 77% drop in net income, now thats a data point!
"... they make it sound as if things were not so badare no so bad. I am a bit puzzled.
Octavio Richetta | 04.21.08 - 11:55 am | #
You shouldn't be surprised, he was one of those goldilocks fellows who didn't anticipate a recession. He does after all have a reputation to protect...
ECRI | News | Media Coverage
"3-November-2007... Looking ahead, we're facing a broad based slowdown in economic growth, but have plenty of room to slow without slipping into recession. Most importantly, the objective ECRI leading indexes that correctly forecast past recessions - in real-time and without false alarms - remain above past recessionary readings. ..."
idoc,
It depends on what kind of accountant.
Internal auditors are there to make CEOs look good.
CPAs who do attest work are there to tell the truth.
Internal auditors are there to make CEOs look good.
thats exactly what he was.
So, what's B of A's CRE exposure? I think that's where the game goes next, isn't it?
Lots of naysaying about BOA.
The irony being, not to say they have excessive integrity, but as a corporation they have pretty good ethic. They also have handled things much better than the likes of JP Morgan, Citi, and others.
I dread the day that BofA would go under... that would be a really bad sign...
But I digress, would I expect something different?
ethics in the banking system???
HAHAHAHAHAAHAHAHAHAHAHA
I suppose the same people in Europe are under the same spell as the uninformed here were when we started the the socialization process.
They are all scum...some just a little less than others.
Ciao
MS
They are all scum...some just a little less than others.
Hmmmm... I'm guessing we'll all be connoisseurs of scum soon. For example, the 2008 BOA early year varietals have an earthy aroma... like decomposing paper. Nice wallet feel, goes in easy but a rather biter after taste.
Oh and you vomit like a geyser the next morning.
Care to sniff the cork?
If I were BofA, I'd still be betting the farm on housing recovery, as long as it was in off balance sheet derivatives. Countrywide was deemed too big to fail, and who did the Fed turn to for absorbing them? BofA will be twice the size of Countrywide after the merger; they could practically write their own check drawn from the taxpayer savings account.
Betting on housing recovery might be a super long-shot, but it could be really profitable if they are the only ones doing it. If it fails, they can just have Benny pay the tab. Win/win.
Wait for it... wait for it...
http://www.dailyfx.com//export/sites/dailyfx/story-images/2007/10/special_report/Special_Reports/Credit10.25.07img3.gif
(btw: anyone have an updated graph?)
I honestly don't think these guys are all that corrupt. All the theories about the evil manifestations of corporate bankers are totally overblown.
This is nothing more than flat out incompetance. Conspiracy theories of corruption imply a level of planning, intelligence, and forethought that these guys clearly have not demonstrated. It's easy ( and more entertaining! ) to contemplate stories of evil backroom scheming. But I think the simplest and most likely explanation is that these clowns just suck at their jobs.
But I think the simplest and most likely explanation is that these clowns just suck at their jobs.
En Fuego | 04.21.08 - 1:16 pm | #
That too...
En Fuego:
sure, incompetence is part of it. But do you honestly believe that most of these players didn't see disaster coming, but IGNORED it because the risk was spread elsewhere?
who cared about losses, when those losses would be shoveled elsewhere?
a: nobody.
it's like a mugging. Is it ok to stand idly by and watch a mugging and don't even try to call the police or anything? sure, you didn't mastermind the mugging, but you certainly could have helped without putting yourself in harm's way.
and even now, these jackals who have so corrupted the lending industry beg for handouts, and then whine about excessive regulation.
they're the FIRST people to rip into the welfare programs for the poor, and pulling oneself up by the bootstraps.
until it's them.
Itimes:?
wait for the 09-11 reset's?
won't FEDZirp solve this dilemma?
won't FEDZirp solve this dilemma?
confused | 04.21.08 - 1:33 pm | #
Not in all cases I figure...
And can rates really stay this low for another 2 years?
wow.
Wheat on a roller coaster ... down 4% while 3rd world goes hungry.
Yearning to Learn --- yep, I really do believe that alot of these guys didn't see it coming. If the risk was assigned elsewhere then they wouldn't have to writedown all these loans. To me, these huge writedowns mean that the banks weren't hedged or didn't assign away their liabilities. If they did see it coming, or even thought there was a possibility the market might implode, then they would have hedged themselves. They didn't, so I have to conclude they're idiots.
Don't get me wrong, I'm sure there are some evildoers out there. But I think the failures we're seeing now are largely due to stupidity rather than malfeasance.
"...In the wake of the decision this week by Kazakhstan, the world's fifth biggest wheat exporter, to join Russia, Ukraine and Argentina in stopping exports to satisfy domestic demand..."
Interesting times just got bit more interesting
I agree, it's plain old incompetence.
Actually, I'd like to think they were evil, at least that would mean they had some brains.
Once the loans were packaged, sliced and diced and sold, I'm sure that that they were wiped off the memory banks of the seller.
I saw an S & L up close and personal during the 80s. The people at the low end to the middle knew what they were doing. The ones at the top, hadn't a clue. And they had money and weren't interested in exerting themselves any more. True, there were from a super regulated and cossetted industry, but still.
As to servicing, here's another stupidity. You can't make money on the amounts charged for servicing any more. Why hasn't Bof A figured that out? Servicing is easy when everybody is making their payments. Well, guess what, that isn't true any more. Servicing is a money loser, unless you charge, say, another whole point for it.
This has been discussed on this blog before, so why haven't the great minds at B of A figured it out? Because they don't know what they are doing!!
Regulation should be viewed as special ed for guys like Lewis.
Pure Planning: no doubt about it.
Their report is a ray of sunshine compared to some companies I have lost on lately shorting.
Maybe that's the new bubble: making tons of money on people who, in a more sane market, would be accurate short-ers.
By Invitation Only, tho. Sorry.
En Fuego-
The evil manifestation is when they are still in denial about the floodwater up to there necks.
The incompetent part at the start of the cycle is spot on.........and even in the "late stages" of decline they are grossly incompetent.
but they seem to strike a chord with the lack of financial acumen in this country. That is , IMO, totally staged and does require some competence to pull off.
Wow only if they directed that effort towards really fixing (instead of 'feexing' as my mexican friend calls it)
the system they effed up to begin with
Ciao
MS
LOL! Now there's an entertaining thought. i.e. there is no way anyone can possibly be this stupid. Therefore, they are simply acting dumb and must be evil.
You know, maybe that's not such a crazy idea....
I find it somewhat telling that he chose Happy Days Are Here Again for the band, given its history (written in 1929, theme song for FDR's early-depression campaign in '32)
Even if they're not saying depression, they're thinking in terms of it.
cd
"...In the wake of the decision this week by Kazakhstan, the world's fifth biggest wheat exporter, to join Russia, Ukraine and Argentina in stopping exports to satisfy domestic demand..."
Fear of Ug99 in the wind.
Today, Karl Denninger says that it's mathematically impossible for real estate to come back:
"The 'wish and dream' that these 'assets' will magically go from declining in value to rising in value, recovering the entirety of the currently-unrecognized loss, is pure delusion when we are talking about houses.
"The 'bubble' values are at least 20 years in the future before wage inflation rates catch up with them, and yet the carrying costs over those 20 years exceed their net present value."
Ug99
Today, Karl Denninger says that it's mathematically impossible for real estate to come back...
Love it 'impossible'. Makes me almost want to go out and buy a house.
Just to fit in, I will ask the rhetorical question, if they are forecasting future writedowns and since their loan loss provisions are accruals, why don't they just book them today? Assuming the additional write downs are their best estimate and all. Shouldn't they at least have to hedge their comments to emphasize that the current provision is plausible and future deterioration is a possibility if the economy deteriorates.? Anyway, obviously that's the way things are done in banking and and no one would believe them if they didn't discuss future losses, but as least defend the current provision as sufficient and future writedowns as possible instead of probable.
Having said that, the likelihood of them being able to get through the year without significantly diluting equity, and the uniformly negative sentiment on cr comments makes it a buy at today's price. They have over a 10% market share and are being given time to earn their way out of their balance sheet problems.
Greenspan's motives for promoting ARM and ZIRP were:
1) Forestall Deflation to:
2) Transfer Interest Rate Risk off bank books (which relative to the size of the market they have accomplished)
3) Finance the acquisition/development of all things tangible and intangible around the world
A small powerful group can promote their agenda because of the incentive to corporate executives for towing the low...bonuses. Greenspan and Bernanke represent the small and powerful and likely won't be the last either.
One thing that's clear from this post, is that some of the people who work in mortgage finance have real problems with grammar and syntax. They're even worse than George Bush. The lousy job they did in mortgage finance gave rise to real doubts about their intelligence, but the problems they have putting a sentence together makes you wonder if they ever got through high school.
In reading their 8-K, they mention Visa dually as in profits from IPO and also ending costs related to litigation.
It is hard for me to get a clear sense just how much money they and all the other financials made on the Visa IPO.
$775M after tax on Visa. The mnore interesting point is one brought up in Heard on the street regarding available for sale securities and the fantasy profitys booked for credit spread widening by LEH, MER, C, etc...BAC has a $1.2T balance sheet with about $15B of cdo and leveraged loans still on the books, net. Who know what the assets look like at the ibank. That 1.2T compares to 600M in interest earning deposits. NPA total $8B and the reserve stands at 19B. Even if the hom eequity and resdiential and commerical seriously degraded, there is an incremental $12B/yr in cash flow pus there was heafty demand for the $12B of preferred done in Jan. Expect more dilution, but not out of business is a stetch. With a $6B provision they were break even ex visa approx. Even with $3B in incremental provisioning for rest of year and similiar amount in 2009, they will earn $18B. Barring a run on deposits, their spread income should be enough with capital to weathewr the storm.
Ug99 maybe more important than any financial story here.
I do think we're in the last innings or last quarter whatever sports a analogy you wanted to use...
I think we're not in the last inning or the last few innings...
Which is it? Last innings or not?
WTF?