Downey is going to report a loss of close to $1 billion dollars this year. Last time I checked, they have a deposit base of around $13 billion. They're going to lose 7-8% of their deposit base this year.
If only those bloggers would shut up, they wouldn't be losing so much money.
I guess FDIC will only take control of a bank after a bank run depletes all their money.
Of the $668 billion still in NPA, $548 million have made all payments due so far (that might be less than six, since some of these mods will be less than six months old).
actually, by definition it's less than six, because if it was six or more, they wouldn't be in that bucket.
Downey wasn't the only servicer offering these re-works, most of which were unsolicited.
I'm starting to see some of these borrowers who now have a hardship post-mod, which makes it a little more difficult to work with, as these were done less than 12 months ago.
"Hey, thanks for that rate reduction you guys gave me 6 months ago, but now I've got a REAL problem."
I just checked their numbers and I stand corrected. Their deposits as of 6/30 were just under $10 billion, so they're going to lose about 10% of their deposit base this year.
Plus they borrowed an additional $250 million or so from FHLB. I guess they picked up this trick from Countrywide. I wonder when the press will pick up on how FHLB has become the preferred bank bailout mechanism for failing banks.
The FDIC has always had strict internal policies of silence when it comes to dealing with the media. On a regular basis it widely distributes 'reminders' to all employees/contractors nationwide to direct all media inquiries to one central DC point. At bank closings FDIC's employees are told to never speak to the media no matter what and in the alternative direct all media to one bank closing contact or the DC central contact point. The media is so in the dark that it is still writing articles about the FDIC's plans to hire '25' former employees who retired. All one has to do is go to fdic.gov - careers and see hundreds of FDIC job postings not the 25 still being quoted. IndyMac had THOUSANDS of employees and it will take hundres if not thousands of FDIC employees to deal with the crisis not 25. The FDIC has a plan in the works to extend the policy outward into the blogs and is working with Congress to pass new laws which will prohibit certain acts against the homeland security. You can bet on it.
Original FDIC 25 article in the WSJ: FDIC to Add Staff as Bank Failures Loom - WSJ.com
From DSL'
"Most of the modifications were adjustable rate loans, which permitted negative amortization, that were modified into five-year interest-only adjustable rate loans with interest rates that adjust semi-annually but do not permit negative amortization"
I believe First Fed is using 5yr I/O in their mods as well.
The only thing she said (and she will need to look up the other part of it) was that Downey offered them (I/O) for a lot longer than anyone else. My guess is that they are still I/O...
so we have $1.015B of modified loans, $347M of which are 6m or older and performing. the question i have is how many of the remaining $668M are 6m or older? $548M cannot be, so potentially $120M. worst case scenario, then, the DQ rate on loans that have aged 6m or more would be 26% (120/467).
Well a program such as this DOES help to remove the perverse incentive to stop paying on you mortgage to so as to persuade your lender to restructure your loan. I'm guessing that at this point SOMEBODY figured that these suicide loans really ARE bad business once the appreciation fairy stops her quarterly visits. And that proactively offering to refi avoids those pesky details like verifying income, getting a new appraisal etc.
Does this imply that these loans were retained? Probably in response to the dissapointing price the market was offering for this poo.
bacon, your WALA point is a good one. Worst-case could be even 'worse', considering that. Also, there is still no reduction in principal taking place here, since they're all I/O.
Wachovia will be seeing similar results with its efforts to rewrite its PAP portfolio. Especially in light of laying off all the World people who KNEW the product. Wachovia will have its own people attempt to rewrite the PAP portfolio to an FHA standard. Seeing as most of the PAP portfolio was done as a QQ or stated/stated loan they will have considerable difficulties getting their borrowers qualified under a Full Doc program. Forget declining values for a moment. The majority of the PAP portfolio will not qualify under Full Doc guidelines. And even if as a borrwer you did with a 55 DTI off your gross income - Would you even WANT to redo your loan?
Wachovia is totally screwed and it couldn't have happened to a bunch of nicer guys.
Banking is based on good faith and trust; so long as consumers respect the debt they assume once they purchse something - just as BoA has done to set the standard - all will be well.
I'm glad the FDIC is open to new ideas and thoughts that are shared on blogs. This is a positive sign. Democratic journalism adds spice and sizzle to the MSM messages juiced by the billions paid in PR and lobbying fees - imho.
A future Texas Senator or President?
Dallas Morning News
"A 5 year old boy slipped out of a Denton day care center unnoticed Tuesday after noon, crossed two busy streets and wandered to Hooters on the Interstate 35 service road in 100 degree heat, police said. The 5 year old boy left the 'Imagination Station' daycare center crossed the northbound I-35 service road, bought a soft drink (he wanted a beer instead)at a service station and walked to Hooters. He was released to his father unharmed and in good (if not great) condition." (There is no place like Texas!)
OMG, Yup moved from neg am to 5 year I/O. Great! Fabulous, they'll just slow the unraveling, not in any way lessen its final amplitude. See there is hope for affordability of housing after all, because we've got 5 more years to go of this distressed crap hitting the market.
Is the FDIC really better off not moving on DSL sooner?
I raised this with the overnight crowd two posts below:
Control of information leads to... Well, let's just say leads to Godwin's law being invoked.
To be fair Blair isn't really trying to control the flow of information. She's just used to information asymmetry which in the past has allowed the FDIC and brethren to do their job more easily. Tough, times change. Now even the lowest cretins such as I can look at real time indicators and successfully identify troubled banks. Now that WaMu is visibly wobbly the FDIC is left with a tough decision. They'd prefer anything but a takeover seeing as that one event alone appears likely to wipe out half the insurance pool and tie up a similar fraction of employees but it might be too late if instead they reorganize the likes of Downey and National City first. Bank triage of that sort depends upon information asymmetry.
Lifeboat situational ethics with 9 zeros appended.
I think Ms Bair still remembers the good old days when it was a federal crime to slander or impugn the creditworthiness or financial soundness of a national bank. As you may recall, that law prevented the savings and loan crisis. I once knew the citation to the statute but don't remember it anymore, though I suppose it's still on the books--right alongside the laws requiring motorists to silence the infernal combustion engines of their horseless carriages in the presence of nervous equines.
To my knowledge, however, it's never been against the law to question the solvency of the FDIC. Unless every last one of the troubled regionals is mated to a financially stronger partner (and I don't think there are enough of those to go around), the deposit insurance scheme in its present form will be overwhelmed. And that's without even dealing with all those community banks and mini-holding company chains that bungle their commercial real estate and development exposure.
Perhaps the emergency legislation that deals with that mess should impose a 'financial responsibility' obligation on blog owners who permit discussions of insured institutions on their premises--say a $10-million bond, like drilling for oil offshore (sounds environmentally correct, put that way, doesn't it?). Call it the Bank Oversight Virtue Enhancement requirement, in honor of Mr. BOVE, who I understand is currently facing a bit of litigation for calling it as he sees it (despite his rep on this board as a pollyanna).
I work at a local pizza place in OC and yesterday an unnamed FDIC official placed an advance order for pizza to be delivered after hours on Friday to the "Calculated Risk Residence".
I could just make out under his bulletproof vest a t-shirt with a logo reading
All your blogs are belong to us
If I were you Tanta I'd be trying to round up some ex-arthur anderson experts with shredders.
It is still my firm belief that FED is or will be insolvent in a matter of months.
FDIC can't take them all over at once.
At 10$ the stock can probably be shorted with a fair of volatility +-50%. Too volatile for me, unless it was a tiny position. (Ties up a lot of capital!)
And I am really $!@#! at TWM, it doesn't even become close to tracking the Russell 2000. I will take a tony profit if I can. I got in when RUT was at 730 with TWM at 77 !
Now it is at 700 or so and it is at 70, meh.
I will just go direct and short the Russell 2000 Future, at least this way it will track! Geez.
The Ultras are really pathetic tools. And yes, I know that it tracks daily movement and not the underlying, but still... Sell 'em when they spike.
OMG, Yup moved from neg am to 5 year I/O. Great! Fabulous, they'll just slow the unraveling, not in any way lessen its final amplitude.
Well a skeptic might say something like "Waiter, 5 more years of bonuses for me and my pigman friends." But that would be wrong, what with the FDIC watching and all....
In terms of whether all the unsolicited workouts should be counted as NPA's, Downey is closer to the truth than its auditor is. Right now a nonperforming loan has about a 20% chance of a successful workout in Socal, so if Downey is getting 82% success, it's like the rework portfolio is about 75% performing and 25% nonperforming. Plus, while the auditor is correct that there are high-risk loans, everybody else gets to count high-risk loans as "performing" until they actually stop paying. So for purposes of comparison to other institutions, counting all - or even most - of these loans as NPA is misleading.
.. the FDIC is going to be keeping its eyes on bloggers.
I believe this may be a misunderstanding. The purpose of this move is to provide the FDIC with at least one credible source of information. Heaven knows they need it.
""The blogs were a bit out of control," Sheila Bair, chairman of the Federal Deposit Insurance Corp., "
- that's what Putin said before he grabbed and locked down any free media in that country.
Are we next? Hopefully someone will sue the hell out of FDIC for those remarks.
Cut Sheila some slack. She is trying to convince the public that she has enough money to really insure up to $100,000 in deposits in every failed institution we will see in the next six months. This is hard work and having a blog pointing out that she, as the emperor, has no clothes is not helpful. I warned Tanta some months ago that a black suburban would someday pull up next to her on the street and she would be snatched and sent to Gitmo. Pack a bag!
Darn missed some of the party, still sleeping good up here. Very good Tanta, and don't worry. We will re-start the underground railroad, it saved many blacks in the 1800's so should be able to save most bloggers........ Parks Canada-The Underground Railroad in Canada
July 21 (Bloomberg) -- Investors worldwide are betting more than $1 trillion on a collapse in stock prices.
[snip]
More than $1.4 trillion of equities worldwide are now on loan, about a third higher than at the start of 2007, data compiled by Spitalfields Advisors, the London-based firm specializing in securities lending, show. Almost all of that is being used to speculate that shares will fall...
[snip]
Short selling on the New York Stock Exchange rose to 4.6 percent of total shares last month, the highest since at least 1931, according to data compiled by Bespoke Investment Group LLC, the Harrison, New York-based firm that manages money for wealthy investors and provides financial research to institutions.
There were likely in-depth negotiations between Downey mgt and KPMG as to the treatment of these NPA's. There always are in cases where the company stands to have its reporting numbers officially degraded.
The biggest problem with US GAAP is that it is written in very detailed legalese. While attempting to stave off challenges by being thorough, it actually invites over-analysis. That quickly turns to people (mgt) attempting to use the strict letter of the rules to undermine their true intent. Some FASB pronouncements literally contradict each other and the negotiations turn to which pronouncement is more applicable in which case.
great analysis tanta. look for dsl to engage a new auditor should it survive the year. like indymac, dsl is not under any formal enforcement action from the ots so it is very unlikely to be on the fdic problem bank list. on cnbc the other day, bair said the problem bank is comprised of institutions with a camels rating of 4 or 5. institutions with those ratings should be subject to formal enforcement action. the fdic will "paint the tape" so to speak by placing indymac on the list when it is released in august as it was not rated 4 or 5 when it failed.
I really hope "they" didn't get Jas. I kinda miss him, but he'd definitely be first against the wall.
I'm thinking DSL this Friday or next, but I can't imagine FDIC will take over WaMu in any circumstance beyond utter crisis with the support of Treasury. WM's deposit base is just too large to save; the event itself would cause widespread panic; and there's nothing the FDIC could do that careful suggestions to current management won't.
Why would the FDIC want to keep tabs on you? Perhaps because you are not helping the bad situation and perhaps making it worse?
Sheila Bair will kick your ass Tanta. She has a bigger brain and an actual idea(s) to help solve the problem. You seem to be stuck in "I told you so" mode which has gotten old. Real old. At this point it is destructive, not constructive.
Quit flogging a dead horse, especially when the FDIC is trying to revive it???
You can count me a huge a fan of your work, but I think you're making a mountain out of a semantic molehill here. I agree KPMG appears to have made the right call, but much more importantly, Downey mgt made the right call proactively getting people out of Option ARMs -- the right call for the borrowers, for Downey's shareholders and as far as I can imagine, for everyone.
By getting the borrowers out of Option ARMs, Downey eliminated the Neg Am risk/opportunity and eliminated (or at least delayed) the reset risk from hitting the Neg Am limit. Assuming they put borrowers into amortizing (not IO) loans, they forced borrowers to start paying down their principal -- this is a win for everyone.
Beating them up for calling it a retention program is silly.
(1) Downey put them into 5 year I/O arms, just like what FirstFed is doing.
(2) Even in the 5 year I/O ARMs, the borrowers are defaulting at an incredibly high rate.
"We will re-start the underground railroad, it saved many blacks in the 1800's so should be able to save most bloggers........"
Not anymore - Canada's kangaroo courts aka "Human Rights Commissions" assault bloggers, journalists and writers - Google Ezra Levant and Mark Steyn or search "Kangaroo Court" at Instapundit.
Got Free Speech? - Only if they decide not to prosecute.
Unfortunately, there is no alternative. Putting someone who makes $30K into a loan to buy a Ferrari does work, no matter how you try to rework the loan. Similarly, the loose underwriting standards on housing created situations where there is no workout.
This is just the sort of out-of-control blogging that Ms. Bair has been warning us about.
(And which is liable to get CR added to the "problem blog list".)
Downey is going to report a loss of close to $1 billion dollars this year. Last time I checked, they have a deposit base of around $13 billion. They're going to lose 7-8% of their deposit base this year.
If only those bloggers would shut up, they wouldn't be losing so much money.
I guess FDIC will only take control of a bank after a bank run depletes all their money.
Bow to ultralord Shiela W Hitler.
Of the $668 billion still in NPA, $548 million have made all payments due so far (that might be less than six, since some of these mods will be less than six months old).
actually, by definition it's less than six, because if it was six or more, they wouldn't be in that bucket.
Investors grab Fannie
WRAPUP 3-US Senate on course to vote Sat. on housing bill
| Reuters
And taxpayer grab theirs.
snicker
Downey wasn't the only servicer offering these re-works, most of which were unsolicited.
I'm starting to see some of these borrowers who now have a hardship post-mod, which makes it a little more difficult to work with, as these were done less than 12 months ago.
"Hey, thanks for that rate reduction you guys gave me 6 months ago, but now I've got a REAL problem."
" Of the $668 billion still in NPA, $548 million have "
If Sheila's indeed watching, you may want to fix that little Freudian Slip.
Trying to shut people up always comforts and reassures them in times of uncertainty, dontcha think?
Thanks Tanta -- are there enough examples like this for an Orwellian bankspeak glossary yet?
The retention mods are a bit out of control. Time for my shampoo. Sheila
actually, by definition it's less than six, because if it was six or more, they wouldn't be in that bucket.
That wasn't one of my better sentences, was it?
I blame the FDIC.
I just checked their numbers and I stand corrected. Their deposits as of 6/30 were just under $10 billion, so they're going to lose about 10% of their deposit base this year.
Plus they borrowed an additional $250 million or so from FHLB. I guess they picked up this trick from Countrywide. I wonder when the press will pick up on how FHLB has become the preferred bank bailout mechanism for failing banks.
a better way to look at the performance of these things would be by wala (how many of those $548M are only a couple months old?).
That wasn't one of my better sentences, was it?
that's okay, you're sleep deprived.
If Sheila's indeed watching, you may want to fix that little Freudian Slip.
You see what happens when she messes with my naps?
I still want to know if the 5/1's they converted these to are amortizing or I/O? Anybody know?
boogity boogity boo!
still want to know if the 5/1's they converted these to are amortizing or I/O? Anybody know?
I sure as hell hope they were amortizing. If they were IO and they got early DQ numbers like this, it's even bleaker.
Any truth to the rumor that CR has been ordered to hand over the IP addresses of all his readers to the authorities at Gitmo?
my wife "did" alot of business with Downey....i'll ask her what she says when she gets back from walking the doggies.....stay tuned.
Ciao
MS
...If the FDIC is going to be worrying about the bloggers, the bloggers are going to have to be worrying about the insured depositories
Zing! so absurd, yet so true.
The timing on these FDIC actions is really intriguing. Is the FDIC really better off not moving on DSL sooner?
The FDIC has always had strict internal policies of silence when it comes to dealing with the media. On a regular basis it widely distributes 'reminders' to all employees/contractors nationwide to direct all media inquiries to one central DC point. At bank closings FDIC's employees are told to never speak to the media no matter what and in the alternative direct all media to one bank closing contact or the DC central contact point. The media is so in the dark that it is still writing articles about the FDIC's plans to hire '25' former employees who retired. All one has to do is go to fdic.gov - careers and see hundreds of FDIC job postings not the 25 still being quoted. IndyMac had THOUSANDS of employees and it will take hundres if not thousands of FDIC employees to deal with the crisis not 25. The FDIC has a plan in the works to extend the policy outward into the blogs and is working with Congress to pass new laws which will prohibit certain acts against the homeland security. You can bet on it.
Original FDIC 25 article in the WSJ:
FDIC to Add Staff as Bank Failures Loom - WSJ.com
From DSL'
"Most of the modifications were adjustable rate loans, which permitted negative amortization, that were modified into five-year interest-only adjustable rate loans with interest rates that adjust semi-annually but do not permit negative amortization"
I believe First Fed is using 5yr I/O in their mods as well.
Any truth to the rumor that CR has been ordered to hand over the IP addresses of all his readers to the authorities at Gitmo?
Yeah, but so far we've only turned over the IP addresses of FDIC staff who read the blog.
The only thing she said (and she will need to look up the other part of it) was that Downey offered them (I/O) for a lot longer than anyone else. My guess is that they are still I/O...
If that helps....
Ciao
MS
Thought so.
Thx, RJ
Sheila - just let your soul glo!
sheila.c.bair@fdic.gov/shampoo/blog me
FDIC: Banks
Bodyguard: Amy Winehouse
so we have $1.015B of modified loans, $347M of which are 6m or older and performing. the question i have is how many of the remaining $668M are 6m or older? $548M cannot be, so potentially $120M. worst case scenario, then, the DQ rate on loans that have aged 6m or more would be 26% (120/467).
Well a program such as this DOES help to remove the perverse incentive to stop paying on you mortgage to so as to persuade your lender to restructure your loan. I'm guessing that at this point SOMEBODY figured that these suicide loans really ARE bad business once the appreciation fairy stops her quarterly visits. And that proactively offering to refi avoids those pesky details like verifying income, getting a new appraisal etc.
Does this imply that these loans were retained? Probably in response to the dissapointing price the market was offering for this poo.
bacon, your WALA point is a good one. Worst-case could be even 'worse', considering that. Also, there is still no reduction in principal taking place here, since they're all I/O.
tanta,
any loan modification done in the last 6 month is still in the program even if they havn't made the payments. this sques the stats.
Real starts can be done only after 6 month away from being 6 month in the prog.
Wachovia will be seeing similar results with its efforts to rewrite its PAP portfolio. Especially in light of laying off all the World people who KNEW the product. Wachovia will have its own people attempt to rewrite the PAP portfolio to an FHA standard. Seeing as most of the PAP portfolio was done as a QQ or stated/stated loan they will have considerable difficulties getting their borrowers qualified under a Full Doc program. Forget declining values for a moment. The majority of the PAP portfolio will not qualify under Full Doc guidelines. And even if as a borrwer you did with a 55 DTI off your gross income - Would you even WANT to redo your loan?
Wachovia is totally screwed and it couldn't have happened to a bunch of nicer guys.
Banking is based on good faith and trust; so long as consumers respect the debt they assume once they purchse something - just as BoA has done to set the standard - all will be well.
I'm glad the FDIC is open to new ideas and thoughts that are shared on blogs. This is a positive sign. Democratic journalism adds spice and sizzle to the MSM messages juiced by the billions paid in PR and lobbying fees - imho.
A future Texas Senator or President?
Dallas Morning News
"A 5 year old boy slipped out of a Denton day care center unnoticed Tuesday after noon, crossed two busy streets and wandered to Hooters on the Interstate 35 service road in 100 degree heat, police said. The 5 year old boy left the 'Imagination Station' daycare center crossed the northbound I-35 service road, bought a soft drink (he wanted a beer instead)at a service station and walked to Hooters. He was released to his father unharmed and in good (if not great) condition." (There is no place like Texas!)
If DSL loses 10% of their deposit base, does that mean their Tier I ratio is at @% or something?
Ruh-roh
ice post. Straighten them out.
RJ
OMG, Yup moved from neg am to 5 year I/O. Great! Fabulous, they'll just slow the unraveling, not in any way lessen its final amplitude. See there is hope for affordability of housing after all, because we've got 5 more years to go of this distressed crap hitting the market.
Is the FDIC really better off not moving on DSL sooner?
I raised this with the overnight crowd two posts below:
Control of information leads to... Well, let's just say leads to Godwin's law being invoked.
To be fair Blair isn't really trying to control the flow of information. She's just used to information asymmetry which in the past has allowed the FDIC and brethren to do their job more easily. Tough, times change. Now even the lowest cretins such as I can look at real time indicators and successfully identify troubled banks. Now that WaMu is visibly wobbly the FDIC is left with a tough decision. They'd prefer anything but a takeover seeing as that one event alone appears likely to wipe out half the insurance pool and tie up a similar fraction of employees but it might be too late if instead they reorganize the likes of Downey and National City first. Bank triage of that sort depends upon information asymmetry.
Lifeboat situational ethics with 9 zeros appended.
...Wachovia will have its own people attempt to rewrite the PAP portfolio to an FHA standard
Wow, If correct that's a manual time consuming process.
The "fire in a crowded theater" argument only works when the theater isn't on fire.
I think Ms Bair still remembers the good old days when it was a federal crime to slander or impugn the creditworthiness or financial soundness of a national bank. As you may recall, that law prevented the savings and loan crisis. I once knew the citation to the statute but don't remember it anymore, though I suppose it's still on the books--right alongside the laws requiring motorists to silence the infernal combustion engines of their horseless carriages in the presence of nervous equines.
To my knowledge, however, it's never been against the law to question the solvency of the FDIC. Unless every last one of the troubled regionals is mated to a financially stronger partner (and I don't think there are enough of those to go around), the deposit insurance scheme in its present form will be overwhelmed. And that's without even dealing with all those community banks and mini-holding company chains that bungle their commercial real estate and development exposure.
Perhaps the emergency legislation that deals with that mess should impose a 'financial responsibility' obligation on blog owners who permit discussions of insured institutions on their premises--say a $10-million bond, like drilling for oil offshore (sounds environmentally correct, put that way, doesn't it?). Call it the Bank Oversight Virtue Enhancement requirement, in honor of Mr. BOVE, who I understand is currently facing a bit of litigation for calling it as he sees it (despite his rep on this board as a pollyanna).
I work at a local pizza place in OC and yesterday an unnamed FDIC official placed an advance order for pizza to be delivered after hours on Friday to the "Calculated Risk Residence".
I could just make out under his bulletproof vest a t-shirt with a logo reading
All your blogs are belong to us
If I were you Tanta I'd be trying to round up some ex-arthur anderson experts with shredders.
It is still my firm belief that FED is or will be insolvent in a matter of months.
FDIC can't take them all over at once.
At 10$ the stock can probably be shorted with a fair of volatility +-50%. Too volatile for me, unless it was a tiny position. (Ties up a lot of capital!)
And I am really $!@#! at TWM, it doesn't even become close to tracking the Russell 2000. I will take a tony profit if I can. I got in when RUT was at 730 with TWM at 77 !
Now it is at 700 or so and it is at 70, meh.
I will just go direct and short the Russell 2000 Future, at least this way it will track! Geez.
The Ultras are really pathetic tools. And yes, I know that it tracks daily movement and not the underlying, but still... Sell 'em when they spike.
Anyway, rant off.
On a related note, the mortage pig was picked up heading to Tijuana at 90MPH with $10,000 in cash and the passport of a goat.
OMG, Yup moved from neg am to 5 year I/O. Great! Fabulous, they'll just slow the unraveling, not in any way lessen its final amplitude.
Well a skeptic might say something like "Waiter, 5 more years of bonuses for me and my pigman friends." But that would be wrong, what with the FDIC watching and all....
In terms of whether all the unsolicited workouts should be counted as NPA's, Downey is closer to the truth than its auditor is. Right now a nonperforming loan has about a 20% chance of a successful workout in Socal, so if Downey is getting 82% success, it's like the rework portfolio is about 75% performing and 25% nonperforming. Plus, while the auditor is correct that there are high-risk loans, everybody else gets to count high-risk loans as "performing" until they actually stop paying. So for purposes of comparison to other institutions, counting all - or even most - of these loans as NPA is misleading.
That said, Downey is still ****ed.
I'd like to see you in my office.
If the FDIC is watching Bloggers they must be some tough cookies if they start before I have had my coffee.
Thanks for the clear explanation, Catwoman!
.. the FDIC is going to be keeping its eyes on bloggers.
I believe this may be a misunderstanding. The purpose of this move is to provide the FDIC with at least one credible source of information. Heaven knows they need it.
""The blogs were a bit out of control," Sheila Bair, chairman of the Federal Deposit Insurance Corp., "
- that's what Putin said before he grabbed and locked down any free media in that country.
Are we next? Hopefully someone will sue the hell out of FDIC for those remarks.
Fair warning: I'm too pretty to survive in jail. When the FDIC asks- I'm turning you all in.
...That said, Downey is still ****ed.
lol. nice summary. Growing NPAs and inability to raise capital is not a good sign. Then again, maybe there's a Deus Ex Machina I'm not aware of.
So when the Fed drops the ball on employment and price stability, we have to grant them more power?
And when the FDIC drops the ball on Indymac (some good that list of 90 did, eh?), we've got to keep a better eye on the blogs?
Why do I get the feeling that Terry Gilliam is secretly working in the US Government?
YouTube - monty python-witch scene
Cut Sheila some slack. She is trying to convince the public that she has enough money to really insure up to $100,000 in deposits in every failed institution we will see in the next six months. This is hard work and having a blog pointing out that she, as the emperor, has no clothes is not helpful. I warned Tanta some months ago that a black suburban would someday pull up next to her on the street and she would be snatched and sent to Gitmo. Pack a bag!
Don't worry too much tanta.
We ACLU and libertarians have got your back.
Darn missed some of the party, still sleeping good up here. Very good Tanta, and don't worry. We will re-start the underground railroad, it saved many blacks in the 1800's so should be able to save most bloggers........
Parks Canada-The Underground Railroad in Canada
Apparently Bloomberg needs to be watched:
July 21 (Bloomberg) -- Investors worldwide are betting more than $1 trillion on a collapse in stock prices.
[snip]
More than $1.4 trillion of equities worldwide are now on loan, about a third higher than at the start of 2007, data compiled by Spitalfields Advisors, the London-based firm specializing in securities lending, show. Almost all of that is being used to speculate that shares will fall...
[snip]
Short selling on the New York Stock Exchange rose to 4.6 percent of total shares last month, the highest since at least 1931, according to data compiled by Bespoke Investment Group LLC, the Harrison, New York-based firm that manages money for wealthy investors and provides financial research to institutions.
Bloomberg.com
Why wasn't IndyMac on FDIC problem list?
Kathleen Pender
Why wasn't IndyMac on FDIC problem list?
There were likely in-depth negotiations between Downey mgt and KPMG as to the treatment of these NPA's. There always are in cases where the company stands to have its reporting numbers officially degraded.
The biggest problem with US GAAP is that it is written in very detailed legalese. While attempting to stave off challenges by being thorough, it actually invites over-analysis. That quickly turns to people (mgt) attempting to use the strict letter of the rules to undermine their true intent. Some FASB pronouncements literally contradict each other and the negotiations turn to which pronouncement is more applicable in which case.
great analysis tanta. look for dsl to engage a new auditor should it survive the year. like indymac, dsl is not under any formal enforcement action from the ots so it is very unlikely to be on the fdic problem bank list. on cnbc the other day, bair said the problem bank is comprised of institutions with a camels rating of 4 or 5. institutions with those ratings should be subject to formal enforcement action. the fdic will "paint the tape" so to speak by placing indymac on the list when it is released in august as it was not rated 4 or 5 when it failed.
I really hope "they" didn't get Jas. I kinda miss him, but he'd definitely be first against the wall.
I'm thinking DSL this Friday or next, but I can't imagine FDIC will take over WaMu in any circumstance beyond utter crisis with the support of Treasury. WM's deposit base is just too large to save; the event itself would cause widespread panic; and there's nothing the FDIC could do that careful suggestions to current management won't.
LA Times online has a headline up, "Downey Financial Ousts CEO, Chairman" but I get nothing when I click on the link.
what ndk said.
Why would the FDIC want to keep tabs on you? Perhaps because you are not helping the bad situation and perhaps making it worse?
Sheila Bair will kick your ass Tanta. She has a bigger brain and an actual idea(s) to help solve the problem. You seem to be stuck in "I told you so" mode which has gotten old. Real old. At this point it is destructive, not constructive.
Quit flogging a dead horse, especially when the FDIC is trying to revive it???
Tanta,
You can count me a huge a fan of your work, but I think you're making a mountain out of a semantic molehill here. I agree KPMG appears to have made the right call, but much more importantly, Downey mgt made the right call proactively getting people out of Option ARMs -- the right call for the borrowers, for Downey's shareholders and as far as I can imagine, for everyone.
By getting the borrowers out of Option ARMs, Downey eliminated the Neg Am risk/opportunity and eliminated (or at least delayed) the reset risk from hitting the Neg Am limit. Assuming they put borrowers into amortizing (not IO) loans, they forced borrowers to start paying down their principal -- this is a win for everyone.
Beating them up for calling it a retention program is silly.
Price Stout, dude, whatever. Read the thread.
(1) Downey put them into 5 year I/O arms, just like what FirstFed is doing.
(2) Even in the 5 year I/O ARMs, the borrowers are defaulting at an incredibly high rate.
Iceman, "dude," what is the alternative?
"We will re-start the underground railroad, it saved many blacks in the 1800's so should be able to save most bloggers........"
Not anymore - Canada's kangaroo courts aka "Human Rights Commissions" assault bloggers, journalists and writers - Google Ezra Levant and Mark Steyn or search "Kangaroo Court" at Instapundit.
Got Free Speech? - Only if they decide not to prosecute.
Iceman, "dude," what is the alternative?
Unfortunately, there is no alternative. Putting someone who makes $30K into a loan to buy a Ferrari does work, no matter how you try to rework the loan. Similarly, the loose underwriting standards on housing created situations where there is no workout.