i don't understand roughly 2 million a year to protect 10 million for five years? So the cost of "protection" is equal to the debt? Altho in my scenario the sixth year would be free.
CDS on WaMu are currently trading roughly 13% upfront. That means investors seeking protection on $100 million of debt would need to pay $13 million up front and $5 million a year.
Such spreads imply a roughly 50% chance of default in five years or a 24% chance in one year, according to Credit Derivatives Research.
Does anyone have any thoughts as to what the impact of a WaMu failure (and FDIC conservatorship) would be on the economy? The IndyMac failure hasn't really hurt the California economy that much, or sent real-estate into more of a tail-spin than it already was, so would a WaMu failure just be a non-event?
I'm somewhat amused that WaMu is charging me less on my Providan card than they're paying to raise the money to loan me. That can't be sustainable long term.
just so you know, great insurance corp is in no way affiliated with ssag. although there have been intermarriages over the years, and we share the same 100acre spread on the shore, and the proceeds are held in the same bank, with the same clearing agent, we are seperate , and maintain different quoting matrices.
with that said, my new market is 1.7mm
hurry, this offer is good for only until gic undercuts me.
Bear Stearns credit default swap spreads widened to 730 basis points, or $730,000 per year for five years to insure $10 million in debt, after earlier tightening to 530 basis points (March 14 )
The bank's swaps had earlier rallied to 530 basis points, before blowing out to trade at an upfront cost of 11 percent, plus annual premiums of 500 basis points.
Bear's stock was in a free fall Mar. 14hitting an 11-year lowfollowing the news that JPMorgan Chase (JPM) and the New York Federal Reserve had stepped in with an emergency cash bailout for the New York-based investment firm. The bailout was engineered after days of denials by Bear executives that the firm was facing a liquidity crisis and lacked sufficient funds to continue operating. Bear's stock finished down 47% at 30, on volume that was more than 18 times normal trading. JPMorgan dipped 4% to 36.54.
Fast Eddie
FDIC historically uses rental cars (think white Malibus) from whatever airport they fly into from Dallas/DFW. If the bank is in their territory they drive personal autos and are reimbursed for mileage via expense reports. One van may be used to haul boxes and office supplies but those are typically delivered by a local office supply store. The FDIC also contracts for several photocopiers that are placed around the closed bank in back offices for continuous use by FDIC during the closing function. Expect an AZ closing today which probably will involve one holding company with three separate banks in AZ and possibly NV.
The Dawg barks and poops on the lawn thus: There will be no WaMupalooza today. The FDIC hasn't had enough time to assemble the shock troops. Really that simple. To think the Feds are ready to intercede now is to give them credit that if they had would have never led to this situation in the first place.
This seems to be a pretty high insurance premium, given that we don't yet know how Countrywide bonds will turn out. In other words, even though Countrywide basically failed (or would have failed) on its own, its bonds could yet be made whole or partially whole.
A too-big-to-fail bank can be taken over by the FDIC or forcibly merged in such a way that its bonds don't default. Thus, CDSs don't pay out. Right? So, the odds that WM won't survive as an independent entity would seem pretty low. If I had stock in WM, I'd read this and skeedaddle.
If your bloomberg terminal has stopped working because you can't afford a broadband connection anymore, where do you find the realtime swaps rates? Good source for historical rates?
I'd love to see what the fnma swaps have been doing lately.
Here is my speculation on why the FDIC will not shut WaMu:
The FDIC has total funding of approximately 53 Billion
WaMu has approximately 64 Billion of mortgages pledged to the Federal Home Loan Bank Board
The law requires that, if thee FDIC takes over an institution, it must pay off the FHLB immediately and take back the mortgage collateral.
Since the FDIC has taken over IndyMac, the funding of 53 Billion is reduced by about 10 Billion.
The FDIC could go to the Treasury for more intermediate funding but this would be politically embarrassing.
In September, the FDIC will assess its member banks for the next years budget. It will be a big increase.
After the election, the FDIC will push to change the FDIC-FHLB law.
So what is left , if WaMu continues in troublethe FDIC will force a merger with another institution and guaranty some future losses to that institution. Thus preserving its liquidity for the time being.
Rob Dawg,
FDIC sends employees into failing banks long before it actually closes if it knows the bank is failing. On rare occasions there is no time for the FDIC to do these preliminary bank closing functions. Fed and state regulators are in WAMU preparing contingency plans for more than one outcome. These plans can get speeded up to warp speed if there is a run. The biggest problem for FDIC right now is internal staffing.
WinstonK writes:
Really it depends on if the murmuring on blogs like this translates into a run on WaMu.
I disagree. The blogs (we) have a false sense of how much impact we have. Yes, the powersthatbe are vastly underestimating that power but it is still quite small. Never forget the lessons of "Motley and Iomega."
The biggest problem for FDIC right now is internal staffing. - FFDIC
Exactly. This is why we will also have more warning than is typical not less. The Fed Res will have to paper over any short term emergencies until the FDIC is ready. WaMu is huge. Just physical security and custodial oversight is going to be Herculean.
Uncle Billy Vs. Mt. Pelerin writes:
Rob, if you're willing to relocate, they have a vacancy for and IT manager in Arlington.
Kind of you to offer but fat walruses with 50 inches of cardiac scars aren't a particularly good investment. Besides I've done my time East Coast. I'll keep my season tickets to the Hollywood Bowl thank you. Diana Ross tonight.
If Wamu goes down, it will really empact consumer confidence. Just image a run with lines at thousands of branches. What a impact on the nightly network news. Everyone with deposits over $100 K must be worried.
So, it seems the FDIC has neither the staff nor the cash to close Wamu so Wamu stays open. Wamu got responsible lending religion back in December so no great harm as long as there's no run. BUT -
What the aych-e-double-ell is the FDIC gonna do if, say, Citi goes under? Everybody talks about too big to fail, but has anybody been thinking about too big to save during the merger frenzy of the past 20 years? I don't know the distributions of deposit, but OTTOMH I'll estimate more than half the deposits in this country are in banks too big to save. That is a very bad situation.
The meta-issue that no one wants to ouch is the realization that there isn't enough real money to cover all the fiat electronic stuff that shows up on our bank statements and retirement quarterlies.
I saw a werewolf with a Chinese menu in his hand
walkin through the streets of Soho in the rain.
He was lookin for the place called Lee Ho Fooks, gonna get a big dish of beef chow mein.
Frank: Freeze Foreclosures Until Housing Bill Takes Effect
Now that would be quite an addon. The bank gets to decide whether the foreclosure rescue goes through. So any foreclosure that's going to get rescued will probably be delayed by the bank anyway. That would only affect foreclosures which would not be affected by the housing bill. If they wanted a 2 month foreclosure moratorium (towards the end of an election campaign; how conVEEENient!) they should have put it in the bill.
This is an interesting tie-in to the previous story on Boscov, where one can find greasy hair products, and the debt protection for banks like WaMu (this is several weeks old, but it shows the condition of credit)
CIT's credit default swaps barely budged after the company
said on Tuesday it would sell $10 billion of mortgage assets in
a deal that removes problem loans from its balance sheet. For
details, see [ID:nBNG289741]
The cost to insure its debt with credit default swaps are
little changed at around 742.5 basis points on Wednesday, or
$742,500 per year for five years to insure $10 million in debt,
according to Markit Intraday.
Bear Stearns credit default swap spreads widened to 730 basis points, or $730,000 per year for five years to insure $10 million in debt, after earlier tightening to 530 basis points (March 14 )
The cost of protecting Washington Mutual's debt for five years rose to $1.85 million on an upfront basis, plus $500,00
CIT's spreads soared past 1,000 basis points in March when
it said it drew on its entire $7.3 billion in bank lines after
it was unable to refinance maturing commercial paper.
Meanwhile, market appetite for securitized assets has also
dried up.
I think we all know about Citi, but no one want's to think about the possible repercussions. As someone has said on this board "Mad Max" comes to mind....
July 17 (Bloomberg) -- CIT Group Inc., the century-old commercial lender that raised $7 billion since March, posted its fifth straight quarterly loss after the sale of its mortgage units cost the company $2.1 billion.
The second-quarter loss of $2.07 billion before preferred dividends, or $7.88 a share, compares with a loss of $127 million, or 70 cents, in the same period a year earlier, the New York-based company said in a statement today. Four analysts who included the sale of the mortgage unit expected, on average, a $6.91 per-share loss. The company said it has enough money to meet its obligations through the end of 2009.
Commercial borrowers who were at least 60 days behind on payments rose to 2.43 percent, compared with 1.7 percent in the first quarter, the company said. Such figures are beginning to attract the attention of investors, who are focusing on potential losses after becoming more certain the company will survive, said David Chiaverini, an analyst at BMO Capital Markets in New York.
They've settled investor concerns about whether they'll be around,'' Chiaverini said.Delinquencies and chargeoffs become the new risks.''
CIT, which marked its 100th anniversary in February, fell 87 percent in the 12 months through yesterday in New York trading amid concern the company faced bankruptcy. The stock rose $1.24, or 17 percent, to $8.47 at 4:14 p.m. in New York Stock Exchange composite trading.
Anonymous | 07.25.08 - 1:12 pm | #
CITI 780 basis points writes:
July 17 (Reuters) -Debt protection costs on CIT Group Inc (CIT.N: Quote, Profile, Research) also dropped by 60 basis points to 780 basis points, according to Phoenix Partners Group, as it stock rose more than 7 percent.
The commercial lender, which has been hit hard by the credit crunch and has struggled to raise funds to pay back billions of dollars of maturing debt, said measures it has taken, such as selling assets and borrowing on a secured basis, should allow it to meet its liquidity needs through the end of 2009.
CITI 780 basis points | 07.25.08 - 1:15 pm | #
March 19, 2008
Fitch Ratings said it may downgrade the ratings of CIT Group Inc. (CIT:8.21, +0.15, +1.9%) because the company may have to resort to untraditional funding because of tight credit markets. Fitch has a long-term issuer default and senior debt rating of A, and a short-term IDR of F1 on CIT. "Fitch believes CIT may need to utilize established alternative sources of funding and liquidity, which include unsecured, committed bank lines totaling $7.3 billion,"
That was maybe too much and not organized well, many sorries, focus on this:
CITI 780 basis points writes:
July 17 (Reuters) -Debt protection costs on CIT Group Inc (CIT.N: Quote, Profile, Research) also dropped by 60 basis points to 780 basis points, according to Phoenix Partners Group, as it stock rose more than 7 percent.
The commercial lender, which has been hit hard by the credit crunch and has struggled to raise funds to pay back billions of dollars of maturing debt, said measures it has taken, such as selling assets and borrowing on a secured basis, should allow it to meet its liquidity needs through the end of 2009.
Nancy's friends
Many friends frequently visit the Drew household. The first of these, Helen Corning, appears in the earliest novels, and again in original volumes 8,9, and 20. From volume five, Nancy is accompanied by her two close friends, George Fayne and Bess Marvin. George (short for Georgia in the revised editions, named for her grandfather in the original editions) Fayne, and Bess (short for Elizabeth) Marvin are cousins. George, tall and slim, with short black hair, makes a point of being a tomboy while Bess, slightly plump with luxurious set hair, but not clearly described as blonde until 1936, has the most girlish appearance and attitude of the three. Early in the series, George Fayne is described as bold, slightly clumsy, blunt, and forward, resulting in the nickname "George the Terrible" from series fans. Bess, on the other hand, tries to be proper, and is also easily frightened once wrecking a car simply because she saw something unusual. Nancy Drew - Wikipedia, the free encyclopedia
WaMu doesn't need your stinking money, go away and take your grease gun and shove it!
A WaMu spokesman said the company does not need to rely on funding from outside sources.
"As we stated publicly months ago, Washington Mutual funds all of its business through its banking operations," the spokesman added.
At end of June, WaMu had more than $40 billion in liquidity, or access to cash and other assets that can be easily converted to cash. The thrift stopped using commercial paper, one common source of short-term borrowing for some companies, roughly a year ago.
Basically for WaMu to be bought by JPMorgan, the most likely scenario, you need a bank run, and that's why people who short the stock have a lot of incentives to spread rumors about WaMu's funding. WaMu's deposit base is so enormous, no way it will just go down like IndyMac without being bought out.
On WAMU, the same instinct that leads lenders to slow down on foreclosures while organizing some kind of triage to handle the overload of troubled borrowers leads regulators to slow down on bank closures while organizing some kind of triage to handle the overload of failing institutions.
If you look at the unbelievable growth in the last year in FHLB borrowings (even by 'sound' institutions) you can see that the liquidity that is keeping the system lubed is coming from an arm of the feds.
We are in the very early innings of all this and at the end of the day I think the free market model of limited financial institution regulation in the name of ideology and global competitiveness may end up in what that intellectual loser Karl Marx called the 'dustbin of history' ('ashbin of history'?--Bob in Ma where are you when I need you?)
Anybody else foresee a 'utility model' in the future of the financial services sector? How 'bout 'remutualization'?
Most agree Wamu is too big to allow to fail. But decisive action by the OTS/FDIC is critical now before the situation gets so critical Wamu must fail (lines of depositors withdrawing funds). Three initiatives to begin immediately:
The OTS/FDIC announce high level examiners will be present at all board meetings and executive officer meetings.
KK and the Executive VPs are all dismissed.
Announce Wamu will make no new loans, other than conforming home loans to sell to F&F and/or loans to current customers under extremely conservitive guidelines.
These steps must be taken quickly and decisively, probably this weekend, before it is too late and Wamu is lost.
(blah, blah...) the dip reflected Pimcos decision to avoid sub-prime mortgage-related securities, which depressed its investment performance until the middle of last year, when the bottom fell out of that market. Pimco launched a fund late last year to invest in distressed mortgage securities, and this year launched a bank loan fund, but McDevitt warned: We are cautious. Banks have been in a deleveraging crisis which has caused dislocation in the markets and there will be second-order effects in the real economy, default rates will rise in the corporate sector. The default rate was less than 1% last year, now a default rate of 5% or 6% in junk bonds is not out of the question.
Also see: Errors in Quantitative Models & Forecasting
Alpert quotes hedge fund manager Rick Bookstaber who believes that financial engineers have accelerated crises and systemic risks via the complex dynamics of new futures contracts, exotic options and swaps. These new financial instruments create interlocking markets (capital, commodities, debt, equity, treasuries) which have the second-order effects of larger yield curve spreads and trading volatility. Alpert and Bookstaber's views echo Susan Strange's warnings a decade ago of 'casino capitalism' and 'mad money' as unconstrained forces in the international political economy.
Re "Can Nancy Drew solve the mystery of today's aborted rally"
FOAD, WTF am I to do here other than provide great financialtainment, like, second-order effects of larger yield curve spreads... huh, huh? WTF do you want anyway, I have shit to do!
Just went to my bank, Union bank of ca
right next door is a WaMu, seemed busy for this hour but no lines out the door. The funny thing is I tell the branch mgr that I brought my camera to take a picture if there were lines, she had no idea wamu was in trouble or stock was that beat up...She did say they were reckless in lending...
What happens if these analysts are right and bank managers are wrong? The banks will have to take about another $600 billion of writeoffs on top of the $350+ billion they've already booked. What happens if that happens? Most of the banks will need to raise more capital, not all of them will be able to do so, and many will go bust. Even the ones that are able to raise capital, meanwhile, will dilute the hell out of current shareholders.
"From my experience, as long as I've been in this business, this is the first time I can say that we're absolutely feeling the effects of the economy," says Steve Orenstein, president and founder of Wicked Pictures, and a 29-year veteran of the adult-entertainment industry. "There was a line we used to use about this business being recession proof. When people talked about the economy, we'd say our business is fine. But look, now you'd have to be blind and deaf not to see that there are problems."...
Tanta, go, post the pix, we only hve 339 here, we need to hit 500 before the market in Japan opens!!!
Putin singled out Mechel's raw materials pricing policy as detrimental to the national interest on Thursday, hurting investor sentiment and helping push Russia's benchmark RTS index into bear market territory on Friday.
Mechel's pricing policy is already subject to an investigation by Russian anti-monopoly authorities and the decline in investor confidence threatened to derail a preferred share placement planned for August.
We need more protection, be it either for my brothers and sisters at WaMu, Cit, C, JPM, MS, LEH and many more who are now under the greasy wings of The FDIC -- and my fellow vodka drinking buddies in The Mother Land
I'm going by posts above, and general media comments when saying Wamu cannot be allowed to fail. Not saying a free pass. 1. Fire senior VPs and KK. 2. Put in run off mode (can be reversed later). 3. Put senior examiners on board (this was done with BofA in the 80s).
I'm saying put initiatives in place to stop bleeding now.
After being in the news for her yoga DVD, Bollywood actor Shilpa Shetty was seen endorsing Romanov Vodka. A contradiction even Shetty had a hard time explaining.
Mexico's central bank said on Friday it would suspend a daily sale of foreign reserves after the government bought $8 billion from the bank to cover foreign exchange requirements for the coming months.
The bank said it would end the daily sales on Aug. 1 until further notice, and the peso weakened sharply on the news.
The dollar sale, meant to slow the growth of record foreign reserves from oil sales, has supported the peso's value in recent years.
Thankfully that WaMu CD I own is under $100k. I may not get the principal back on time but it's insured. Why anyone would have more than the FDIC insured amount there is beyond me.
The real plan was directed by, and named after, SS Major (Sturmbannführer) Bernhard Krüger, who set up a team of 142 counterfeiters from among inmates at Sachsenhausen concentration camp at first, and then from others especially Auschwitz. Beginning in 1942, the work of engraving the complex printing plates, developing the appropriate rag-based paper with the correct watermarks, and breaking the code to generate valid serial numbers was extremely difficult, but by the time Sachsenhausen was evacuated in April 1945 the printing press there had produced 8,965,080 banknotes with a total value of £134,610,810. The notes are considered among the most perfect counterfeits ever produced, being extremely difficult although not impossible to distinguish from the real thing.
That reminds me of the following, i.e, not only were nazis counterfeiting they were evading debt in other way -- the nazis were the first hedge fund and obviously, the new funds and managers are of the very same DNA, as is the current American coup!!
:http://en.wikipedia.org/wiki/Mefo_bills
Hjalmar Schacht formed the limited liability company Metallurgische Forschungsgesellschaft, m.b.H., or "MEFO" for short. The company's "mefo bills" served as bills of exchange, convertible into Reichsmark upon demand. MEFO had no actual existence or operations and was solely a balance sheet entity. The bills were mainly issued as payment to armaments manufacturers.
Mefo bills were issued to last for six months initially, but with the provision for indefinite three-month extensions. The total amount of mefo bills issued was kept secret.
Essentially, mefo bills enabled the German Reich to run a greater deficit than it would normally have done. By 1939, there were 12 billion Reichsmark of mefo bills, compared to 19 billion of normal government bonds.
This enabled the government to fund rearmament, and do so in a stealthy manner.
Clearly Russia is determined to take over BP's oil property. If BP sees no hope of anything honest happening (as if it could in the current Russia!), perhaps they should just physically destroy everything they could.
According to Taylor's ORIGINS OF THE SECOND WORLD WAR, Hitler, while finding Schacht useful for the first few years of his regime, found his opposition to expanded arms programs inconvenient, and arranged a (non-lethal) purge of a lot of government officials as a cover-up for Schacht's resignation.
The "death spiral" continues...
Painful to watch a death in slo-mo.
CR,
Still wondering why you didn't post on the jobless claims. Is it because you can't yet chart it?
Those seem to be freaky large numbers!
How do they compare with the past or with other banks?
I actually like the bank, but I didn't determine their fate, they did.
my side biz, other than seaking empty lots to store excess vehicle production, is my llc that takes in premia for bank cds....
i promise promise triple promise to pay if WM defaults... just pay me 1.8 million today, and i swear i'll be around when wamu goes deep six.
send proceeds to
know trust
111 outer reef,
cayman islands 78384
i don't understand roughly 2 million a year to protect 10 million for five years? So the cost of "protection" is equal to the debt? Altho in my scenario the sixth year would be free.
On CNBC, Margaret Brennen, WOW!
Sandystructures Auto Group is quoting $1.8 million, but I am able to insure WM at $1.78 million. Quadruple promise to pay (QPP).
Please send to:
GreatInsuranceCorp
596 Airport Road
Cayman Islands 78384
This was the part I found interesting:
CDS on WaMu are currently trading roughly 13% upfront. That means investors seeking protection on $100 million of debt would need to pay $13 million up front and $5 million a year.
Such spreads imply a roughly 50% chance of default in five years or a 24% chance in one year, according to Credit Derivatives Research.
Other side of the trade is telling us a lot.
Where other CDS trades:
BAC 112/122
JPM 104/114
WB 290/305
WFC 115/125
CITI 140/150
btw, I was quoting: WaMu hit by concerns that creditors are pulling back from thrift - MarketWatch
Anonymous | 07.25.08 - 11:41 am
<a href="http://www.reportercaps.com/Home_CNBC/cnbc_mbrennan.php>here ya go ya horny bastard
My bad, the five year cost is 4.35 million after five years,...I see,...I guess.
Does anyone have any thoughts as to what the impact of a WaMu failure (and FDIC conservatorship) would be on the economy? The IndyMac failure hasn't really hurt the California economy that much, or sent real-estate into more of a tail-spin than it already was, so would a WaMu failure just be a non-event?
I'm somewhat amused that WaMu is charging me less on my Providan card than they're paying to raise the money to loan me. That can't be sustainable long term.
Sniglet,
I think looking for direct correlations between a specific bank and the CA economy may be oversimplifying things a bit.
Does anyone have any thoughts as to what the impact of a WaMu failure (and FDIC conservatorship) would be on the economy?
Ponies. Many many ponies.
dryfly,
Just got to your post on last thread.
Here ya go.
YouTube - Life Of Brian - Ending
So many posts. Too damn busy to keep up today. Lovely Friday here.
Cheers,
WSJ
Nice dereg/rereg article to start the day off...
Amid Turmoil, U.S. Turns Away
From Decades of Deregulation
Amid Turmoil, U.S. Turns Away From Decades of Deregulation - WSJ.com
just so you know, great insurance corp is in no way affiliated with ssag. although there have been intermarriages over the years, and we share the same 100acre spread on the shore, and the proceeds are held in the same bank, with the same clearing agent, we are seperate , and maintain different quoting matrices.
with that said, my new market is 1.7mm
hurry, this offer is good for only until gic undercuts me.
As I recall, debt protection condoms for Bear Stearns were about $850,000 before the ol girl was saved from a fate worse than BK
National City now offering 4% money market and 5.25 CDs.
Bear Stearns credit default swap spreads widened to 730 basis points, or $730,000 per year for five years to insure $10 million in debt, after earlier tightening to 530 basis points (March 14 )
It's Friday. Have the FDIC vans arrived yet?
Fast Eddie:
You have to wait until the market closes for that.
OT-
Good opinion pc in wall street, my bad if repost..
Housing Bill Hammers Taxpayers - WSJ.com
Damn this just gets under my skin...
They should try to buy "protection" from the Mafia. It might be cheaper.
New Name: WaMu Federal Bank?
BTW, so what if Sheila and the FDICers analyze the blogs and realize a potential run on "we are well capitalized" WaMu is happening - what do they do?
Lock the doors to the bank?
The bank's swaps had earlier rallied to 530 basis points, before blowing out to trade at an upfront cost of 11 percent, plus annual premiums of 500 basis points.
UPDATE 4-US broker default swaps up on Bear cash crunch
| Reuters
I thought t was higher than this, oh well, ..
Bear's stock was in a free fall Mar. 14hitting an 11-year lowfollowing the news that JPMorgan Chase (JPM) and the New York Federal Reserve had stepped in with an emergency cash bailout for the New York-based investment firm. The bailout was engineered after days of denials by Bear executives that the firm was facing a liquidity crisis and lacked sufficient funds to continue operating. Bear's stock finished down 47% at 30, on volume that was more than 18 times normal trading. JPMorgan dipped 4% to 36.54.
Fast Eddie
FDIC historically uses rental cars (think white Malibus) from whatever airport they fly into from Dallas/DFW. If the bank is in their territory they drive personal autos and are reimbursed for mileage via expense reports. One van may be used to haul boxes and office supplies but those are typically delivered by a local office supply store. The FDIC also contracts for several photocopiers that are placed around the closed bank in back offices for continuous use by FDIC during the closing function. Expect an AZ closing today which probably will involve one holding company with three separate banks in AZ and possibly NV.
The Dawg barks and poops on the lawn thus: There will be no WaMupalooza today. The FDIC hasn't had enough time to assemble the shock troops. Really that simple. To think the Feds are ready to intercede now is to give them credit that if they had would have never led to this situation in the first place.
This seems to be a pretty high insurance premium, given that we don't yet know how Countrywide bonds will turn out. In other words, even though Countrywide basically failed (or would have failed) on its own, its bonds could yet be made whole or partially whole.
A too-big-to-fail bank can be taken over by the FDIC or forcibly merged in such a way that its bonds don't default. Thus, CDSs don't pay out. Right? So, the odds that WM won't survive as an independent entity would seem pretty low. If I had stock in WM, I'd read this and skeedaddle.
Listen to FFDIC. Black helicopters and white Malibus. Love the imagery.
If your bloomberg terminal has stopped working because you can't afford a broadband connection anymore, where do you find the realtime swaps rates? Good source for historical rates?
I'd love to see what the fnma swaps have been doing lately.
Dawg,
Really it depends on if the murmuring on blogs like this translates into a run on WaMu.
Here is my speculation on why the FDIC will not shut WaMu:
The FDIC has total funding of approximately 53 Billion
WaMu has approximately 64 Billion of mortgages pledged to the Federal Home Loan Bank Board
The law requires that, if thee FDIC takes over an institution, it must pay off the FHLB immediately and take back the mortgage collateral.
Since the FDIC has taken over IndyMac, the funding of 53 Billion is reduced by about 10 Billion.
The FDIC could go to the Treasury for more intermediate funding but this would be politically embarrassing.
In September, the FDIC will assess its member banks for the next years budget. It will be a big increase.
After the election, the FDIC will push to change the FDIC-FHLB law.
So what is left , if WaMu continues in troublethe FDIC will force a merger with another institution and guaranty some future losses to that institution. Thus preserving its liquidity for the time being.
Rob Dawg,
FDIC sends employees into failing banks long before it actually closes if it knows the bank is failing. On rare occasions there is no time for the FDIC to do these preliminary bank closing functions. Fed and state regulators are in WAMU preparing contingency plans for more than one outcome. These plans can get speeded up to warp speed if there is a run. The biggest problem for FDIC right now is internal staffing.
WinstonK writes:
Really it depends on if the murmuring on blogs like this translates into a run on WaMu.
I disagree. The blogs (we) have a false sense of how much impact we have. Yes, the powersthatbe are vastly underestimating that power but it is still quite small. Never forget the lessons of "Motley and Iomega."
Hmmm...
FDIC Careers
Rob, if you're willing to relocate, they have a vacancy for and IT manager in Arlington.
I have been told by a source, which can't be named, that Ms. Bair is like a weird greast hair'd character in Harry Potter, who is named Snape
YouTube - HP meets Snake and gets sorted
The biggest problem for FDIC right now is internal staffing.
And wikileaks.
[nudge nudge to the insiders]
LawyerL,
There is also a least costly test for FDIC to hopefully apply. For example below is the FDIC OIG's report: Least Cost Decision of Superior Bank and Liquidation of Remaining Receivership Assets. I worked the 2001 Superior closing and also was interviewed by OIG later.
FDIC: OIG Audit Report No. 02-002 - Least Cost Decision of Superior Bank and Liquidation of Remaining Receivership Assets, February 8, 2002
We all own Indy Mac, FRE & FNM now. Soon we will be silent partners in many other banks too.
Don't expect to be trated like an owner though.
The biggest problem for FDIC right now is internal staffing. - FFDIC
Exactly. This is why we will also have more warning than is typical not less. The Fed Res will have to paper over any short term emergencies until the FDIC is ready. WaMu is huge. Just physical security and custodial oversight is going to be Herculean.
OT:
Frank: Freeze Foreclosures Until Housing Bill Takes Effect
Frank: Freeze Foreclosures Until Housing Bill Takes Effect : HousingWire || financial news for the mortgage market
Hey UB,
This goes well with your list: National Bank Operating Subsidiary List (A-M)
Uncle Billy Vs. Mt. Pelerin writes:
Rob, if you're willing to relocate, they have a vacancy for and IT manager in Arlington.
Kind of you to offer but fat walruses with 50 inches of cardiac scars aren't a particularly good investment. Besides I've done my time East Coast. I'll keep my season tickets to the Hollywood Bowl thank you. Diana Ross tonight.
Thanks FFDIC,
I will read it and get back questions, if thats OK with you.
If Wamu goes down, it will really empact consumer confidence. Just image a run with lines at thousands of branches. What a impact on the nightly network news. Everyone with deposits over $100 K must be worried.
Hot Greased Pigs: What is that the new implode-o-meter?
Rob: That actually sounds pretty good. Mild weather, hollywood bowl. Much less stress than this blog.
Angry Saver writes:
We all own Indy Mac, FRE & FNM now. Soon we will be silent partners in many other banks too.
Don't expect to be trated like an owner though.
Angry Saver | 07.25.08 - 12:15 pm | #
You mean I won't get big old metal nameplate for my desk?
Everyone with deposits over $100 K must be worried.
Everyone with (unisured) deposits over $100K is not thinking straight.
So, it seems the FDIC has neither the staff nor the cash to close Wamu so Wamu stays open. Wamu got responsible lending religion back in December so no great harm as long as there's no run. BUT -
What the aych-e-double-ell is the FDIC gonna do if, say, Citi goes under? Everybody talks about too big to fail, but has anybody been thinking about too big to save during the merger frenzy of the past 20 years? I don't know the distributions of deposit, but OTTOMH I'll estimate more than half the deposits in this country are in banks too big to save. That is a very bad situation.
The meta-issue that no one wants to ouch is the realization that there isn't enough real money to cover all the fiat electronic stuff that shows up on our bank statements and retirement quarterlies.
"Everyone with deposits over $100 K must be worried."
Most people are clueless as to what is going on.
WaaaMu is circling the drain. When do "they" (the FDIC or whomever) strike? At what point do they step in?
Thanks.
Broker writes:
They should try to buy "protection" from the Mafia. It might be cheaper.
Broker | 07.25.08 - 11:56 am | #
Mafia only wants to back winners - WaMu is no winner. Nothing personal mind you, just business.
I saw a werewolf with a Chinese menu in his hand
walkin through the streets of Soho in the rain.
He was lookin for the place called Lee Ho Fooks, gonna get a big dish of beef chow mein.
Frank: Freeze Foreclosures Until Housing Bill Takes Effect
Now that would be quite an addon. The bank gets to decide whether the foreclosure rescue goes through. So any foreclosure that's going to get rescued will probably be delayed by the bank anyway. That would only affect foreclosures which would not be affected by the housing bill. If they wanted a 2 month foreclosure moratorium (towards the end of an election campaign; how conVEEENient!) they should have put it in the bill.
When I read FFDIC's comments I sense he is hiding and always looking over his shoulder, ready to leave in a hurry if needed.
Elvis,
Two decades working at FDIC does that to a person. How is Heather?
He was lookin for the place called Lee Ho Fooks, gonna get a big dish of beef chow mein.
It shocked the hell out of me to find out that the name of the song wasn't "Werewolves and Thunder"
This is an interesting tie-in to the previous story on Boscov, where one can find greasy hair products, and the debt protection for banks like WaMu (this is several weeks old, but it shows the condition of credit)
CIT's credit default swaps barely budged after the company
said on Tuesday it would sell $10 billion of mortgage assets in
a deal that removes problem loans from its balance sheet. For
details, see [ID:nBNG289741]
The cost to insure its debt with credit default swaps are
little changed at around 742.5 basis points on Wednesday, or
$742,500 per year for five years to insure $10 million in debt,
according to Markit Intraday.
You guys watching WM today?
CIT Default basis points @ $742,500
Bear Stearns credit default swap spreads widened to 730 basis points, or $730,000 per year for five years to insure $10 million in debt, after earlier tightening to 530 basis points (March 14 )
The cost of protecting Washington Mutual's debt for five years rose to $1.85 million on an upfront basis, plus $500,00
WaMu is something to watch, but Citi is about to explode IMHO!
CIT's spreads soared past 1,000 basis points in March when
it said it drew on its entire $7.3 billion in bank lines after
it was unable to refinance maturing commercial paper.
Meanwhile, market appetite for securitized assets has also
dried up.
Hello, is anyone paying attention to Citi???
I think we all know about Citi, but no one want's to think about the possible repercussions. As someone has said on this board "Mad Max" comes to mind....
Fair Economist,
"Wamu got responsible lending religion back in December so no great harm as long as there'e no run."
With all due respect, IMO you are underestimating Killinger and the Boyz propensity (note exonomic term) to screw things up.
NAB has started a landslide:
Dag NAB It! How NAB's Writedown of U.S. Portfolio Could Hurt Financials -- Seeking Alpha
July 17 (Bloomberg) -- CIT Group Inc., the century-old commercial lender that raised $7 billion since March, posted its fifth straight quarterly loss after the sale of its mortgage units cost the company $2.1 billion.
The second-quarter loss of $2.07 billion before preferred dividends, or $7.88 a share, compares with a loss of $127 million, or 70 cents, in the same period a year earlier, the New York-based company said in a statement today. Four analysts who included the sale of the mortgage unit expected, on average, a $6.91 per-share loss. The company said it has enough money to meet its obligations through the end of 2009.
Commercial borrowers who were at least 60 days behind on payments rose to 2.43 percent, compared with 1.7 percent in the first quarter, the company said. Such figures are beginning to attract the attention of investors, who are focusing on potential losses after becoming more certain the company will survive, said David Chiaverini, an analyst at BMO Capital Markets in New York.
They've settled investor concerns about whether they'll be around,'' Chiaverini said.Delinquencies and chargeoffs become the new risks.''
CIT, which marked its 100th anniversary in February, fell 87 percent in the 12 months through yesterday in New York trading amid concern the company faced bankruptcy. The stock rose $1.24, or 17 percent, to $8.47 at 4:14 p.m. in New York Stock Exchange composite trading.
Anonymous | 07.25.08 - 1:12 pm | #
CITI 780 basis points writes:
July 17 (Reuters) -Debt protection costs on CIT Group Inc (CIT.N: Quote, Profile, Research) also dropped by 60 basis points to 780 basis points, according to Phoenix Partners Group, as it stock rose more than 7 percent.
The commercial lender, which has been hit hard by the credit crunch and has struggled to raise funds to pay back billions of dollars of maturing debt, said measures it has taken, such as selling assets and borrowing on a secured basis, should allow it to meet its liquidity needs through the end of 2009.
CITI 780 basis points | 07.25.08 - 1:15 pm | #
March 19, 2008
Fitch Ratings said it may downgrade the ratings of CIT Group Inc. (CIT:8.21, +0.15, +1.9%) because the company may have to resort to untraditional funding because of tight credit markets. Fitch has a long-term issuer default and senior debt rating of A, and a short-term IDR of F1 on CIT. "Fitch believes CIT may need to utilize established alternative sources of funding and liquidity, which include unsecured, committed bank lines totaling $7.3 billion,"
That was maybe too much and not organized well, many sorries, focus on this:
CITI 780 basis points writes:
July 17 (Reuters) -Debt protection costs on CIT Group Inc (CIT.N: Quote, Profile, Research) also dropped by 60 basis points to 780 basis points, according to Phoenix Partners Group, as it stock rose more than 7 percent.
The commercial lender, which has been hit hard by the credit crunch and has struggled to raise funds to pay back billions of dollars of maturing debt, said measures it has taken, such as selling assets and borrowing on a secured basis, should allow it to meet its liquidity needs through the end of 2009.
Hello, is anyone paying attention to Citi???
Everyone's with Nancy Drew solving the latest murder mystery.
Nancy's friends
Many friends frequently visit the Drew household. The first of these, Helen Corning, appears in the earliest novels, and again in original volumes 8,9, and 20. From volume five, Nancy is accompanied by her two close friends, George Fayne and Bess Marvin. George (short for Georgia in the revised editions, named for her grandfather in the original editions) Fayne, and Bess (short for Elizabeth) Marvin are cousins. George, tall and slim, with short black hair, makes a point of being a tomboy while Bess, slightly plump with luxurious set hair, but not clearly described as blonde until 1936, has the most girlish appearance and attitude of the three. Early in the series, George Fayne is described as bold, slightly clumsy, blunt, and forward, resulting in the nickname "George the Terrible" from series fans. Bess, on the other hand, tries to be proper, and is also easily frightened once wrecking a car simply because she saw something unusual.
Nancy Drew - Wikipedia, the free encyclopedia
WaMu doesn't need your stinking money, go away and take your grease gun and shove it!
A WaMu spokesman said the company does not need to rely on funding from outside sources.
"As we stated publicly months ago, Washington Mutual funds all of its business through its banking operations," the spokesman added.
At end of June, WaMu had more than $40 billion in liquidity, or access to cash and other assets that can be easily converted to cash. The thrift stopped using commercial paper, one common source of short-term borrowing for some companies, roughly a year ago.
Can Nancy Drew solve the mystery of today's aborted rally? Stay tuned...
Basically for WaMu to be bought by JPMorgan, the most likely scenario, you need a bank run, and that's why people who short the stock have a lot of incentives to spread rumors about WaMu's funding. WaMu's deposit base is so enormous, no way it will just go down like IndyMac without being bought out.
On WAMU, the same instinct that leads lenders to slow down on foreclosures while organizing some kind of triage to handle the overload of troubled borrowers leads regulators to slow down on bank closures while organizing some kind of triage to handle the overload of failing institutions.
If you look at the unbelievable growth in the last year in FHLB borrowings (even by 'sound' institutions) you can see that the liquidity that is keeping the system lubed is coming from an arm of the feds.
We are in the very early innings of all this and at the end of the day I think the free market model of limited financial institution regulation in the name of ideology and global competitiveness may end up in what that intellectual loser Karl Marx called the 'dustbin of history' ('ashbin of history'?--Bob in Ma where are you when I need you?)
Anybody else foresee a 'utility model' in the future of the financial services sector? How 'bout 'remutualization'?
I should put this in bold because it's important: CIT AIN'T CITI
FFDIC,
I understand she just left rehab when she wasn't suppose to. Living with two rock star husbands must not be conducive to a drug free life.
Most agree Wamu is too big to allow to fail. But decisive action by the OTS/FDIC is critical now before the situation gets so critical Wamu must fail (lines of depositors withdrawing funds). Three initiatives to begin immediately:
These steps must be taken quickly and decisively, probably this weekend, before it is too late and Wamu is lost.
http://www.efinancialnews.com/assetmanagement/pensionfunds/content/2450683387
(blah, blah...) the dip reflected Pimcos decision to avoid sub-prime mortgage-related securities, which depressed its investment performance until the middle of last year, when the bottom fell out of that market. Pimco launched a fund late last year to invest in distressed mortgage securities, and this year launched a bank loan fund, but McDevitt warned: We are cautious. Banks have been in a deleveraging crisis which has caused dislocation in the markets and there will be second-order effects in the real economy, default rates will rise in the corporate sector. The default rate was less than 1% last year, now a default rate of 5% or 6% in junk bonds is not out of the question.
Not for pussies:
Are Financialistas Over Hedge Fund Chic?
Alex Burns: Search Results
Also see: Errors in Quantitative Models & Forecasting
Alpert quotes hedge fund manager Rick Bookstaber who believes that financial engineers have accelerated crises and systemic risks via the complex dynamics of new futures contracts, exotic options and swaps. These new financial instruments create interlocking markets (capital, commodities, debt, equity, treasuries) which have the second-order effects of larger yield curve spreads and trading volatility. Alpert and Bookstaber's views echo Susan Strange's warnings a decade ago of 'casino capitalism' and 'mad money' as unconstrained forces in the international political economy.
LawyerL is not me. I don't know all that cool stuff about FDIC.
CIT AIN'T CITI
LOL! Sins of the father perhaps?
Re "Can Nancy Drew solve the mystery of today's aborted rally"
FOAD, WTF am I to do here other than provide great financialtainment, like, second-order effects of larger yield curve spreads... huh, huh? WTF do you want anyway, I have shit to do!
Just went to my bank, Union bank of ca
right next door is a WaMu, seemed busy for this hour but no lines out the door. The funny thing is I tell the branch mgr that I brought my camera to take a picture if there were lines, she had no idea wamu was in trouble or stock was that beat up...She did say they were reckless in lending...
I took at picture of ad on side of bank...
Sit, bank and relax....trying to post
Bank Collapse Update: $400 Billion of Writeoffs So Far, $600 Billion to Go
Bank Collapse Update: $400 Billion of Writeoffs So Far, $600 Billion to Go
What happens if these analysts are right and bank managers are wrong? The banks will have to take about another $600 billion of writeoffs on top of the $350+ billion they've already booked. What happens if that happens? Most of the banks will need to raise more capital, not all of them will be able to do so, and many will go bust. Even the ones that are able to raise capital, meanwhile, will dilute the hell out of current shareholders.
Most agree Wamu is too big to allow to fail.
if fnm&fre.org need 25billion as a backstop, what makes you think that statement holds water?
Now We Know It's A Bad Recession: Even Porn Industry Getting Slammed
Now We Know It's A Bad Recession: Even Porn Industry Getting Slammed
"From my experience, as long as I've been in this business, this is the first time I can say that we're absolutely feeling the effects of the economy," says Steve Orenstein, president and founder of Wicked Pictures, and a 29-year veteran of the adult-entertainment industry. "There was a line we used to use about this business being recession proof. When people talked about the economy, we'd say our business is fine. But look, now you'd have to be blind and deaf not to see that there are problems."...
Tanta, go, post the pix, we only hve 339 here, we need to hit 500 before the market in Japan opens!!!
Anonymous writes:
"Most agree Wamu is too big to allow to fail."
So the key, then, is to get big enough to win a free pass?
WTF is going on with the Vodka in Russia?
UPDATE 1-Mechel says to work with govt after Putin criticism
| Markets
| US Markets
| Reuters
Putin singled out Mechel's raw materials pricing policy as detrimental to the national interest on Thursday, hurting investor sentiment and helping push Russia's benchmark RTS index into bear market territory on Friday.
Mechel's pricing policy is already subject to an investigation by Russian anti-monopoly authorities and the decline in investor confidence threatened to derail a preferred share placement planned for August.
We need more protection, be it either for my brothers and sisters at WaMu, Cit, C, JPM, MS, LEH and many more who are now under the greasy wings of The FDIC -- and my fellow vodka drinking buddies in The Mother Land
Ponzi, MiTurn,
I'm going by posts above, and general media comments when saying Wamu cannot be allowed to fail. Not saying a free pass. 1. Fire senior VPs and KK. 2. Put in run off mode (can be reversed later). 3. Put senior examiners on board (this was done with BofA in the 80s).
I'm saying put initiatives in place to stop bleeding now.
Obviously the PPT doesn't have a Russian desk just yet...
Russia Takes A Dump
If Putin wants to be a 'playa' he's gonna have to look into that pronto.
"Nancy upskirt writes:
Now We Know It's A Bad Recession: Even Porn Industry Getting Slammed"
So much for my investment strategy.
This just in on hotwire:
After being in the news for her yoga DVD, Bollywood actor Shilpa Shetty was seen endorsing Romanov Vodka. A contradiction even Shetty had a hard time explaining.
YouTube -
dryfly,
Does that make a BIC out of a BRIC?
It will be interesting to watch the ongoing developments with BP-TNK and the Russian steel industry...
Switching gears slightly:
Mexico's central bank said on Friday it would suspend a daily sale of foreign reserves after the government bought $8 billion from the bank to cover foreign exchange requirements for the coming months.
The bank said it would end the daily sales on Aug. 1 until further notice, and the peso weakened sharply on the news.
The dollar sale, meant to slow the growth of record foreign reserves from oil sales, has supported the peso's value in recent years.
I'm working my ass off here man, where are the helper bees? WTF is going on here?
Come on, can't you people see, asphalt is wicked huge and important -- but PORN is TOO BIG to FAIL!!!
Hello, thank you for calling WAMU Federal, how can I help you?
I'm sorry, we don't accept IndyMac checks backed by the U.S. Gov't.
And, no one accepts our checks either.
BAC extending opeing hours....
Thankfully that WaMu CD I own is under $100k. I may not get the principal back on time but it's insured. Why anyone would have more than the FDIC insured amount there is beyond me.
I always thought this was a cool story:
Operation Bernhard
Operation Bernhard - Wikipedia, the free encyclopedia
The real plan was directed by, and named after, SS Major (Sturmbannführer) Bernhard Krüger, who set up a team of 142 counterfeiters from among inmates at Sachsenhausen concentration camp at first, and then from others especially Auschwitz. Beginning in 1942, the work of engraving the complex printing plates, developing the appropriate rag-based paper with the correct watermarks, and breaking the code to generate valid serial numbers was extremely difficult, but by the time Sachsenhausen was evacuated in April 1945 the printing press there had produced 8,965,080 banknotes with a total value of £134,610,810. The notes are considered among the most perfect counterfeits ever produced, being extremely difficult although not impossible to distinguish from the real thing.
That reminds me of the following, i.e, not only were nazis counterfeiting they were evading debt in other way -- the nazis were the first hedge fund and obviously, the new funds and managers are of the very same DNA, as is the current American coup!!
:http://en.wikipedia.org/wiki/Mefo_bills
Hjalmar Schacht formed the limited liability company Metallurgische Forschungsgesellschaft, m.b.H., or "MEFO" for short. The company's "mefo bills" served as bills of exchange, convertible into Reichsmark upon demand. MEFO had no actual existence or operations and was solely a balance sheet entity. The bills were mainly issued as payment to armaments manufacturers.
Mefo bills were issued to last for six months initially, but with the provision for indefinite three-month extensions. The total amount of mefo bills issued was kept secret.
Essentially, mefo bills enabled the German Reich to run a greater deficit than it would normally have done. By 1939, there were 12 billion Reichsmark of mefo bills, compared to 19 billion of normal government bonds.
This enabled the government to fund rearmament, and do so in a stealthy manner.
Re: Russia and BP
Clearly Russia is determined to take over BP's oil property. If BP sees no hope of anything honest happening (as if it could in the current Russia!), perhaps they should just physically destroy everything they could.
This, Putin's Russia would understand!
According to Taylor's ORIGINS OF THE SECOND WORLD WAR, Hitler, while finding Schacht useful for the first few years of his regime, found his opposition to expanded arms programs inconvenient, and arranged a (non-lethal) purge of a lot of government officials as a cover-up for Schacht's resignation.
[See the chapter on "the Hossbach memorandum"]
I have a special place in my heart for this counterfeiter: