FDIC Chairman Issues Statement on IndyMac Federal
Submitted by
CalculatedRisk on Sun, 07/13/2008 - 12:25pm (174 comments)
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Quite a time we live in. I have an acq. that worked at IndyMac. A good percentage of his wealth is gone.
Fourth wave, here we are.
Sheila Blair. I'll bet she doesn't have a firm handshake.
the Fed giveth and the Fed taketh awayz.
Mark: your acquaintance held shares in his own employer? That would be called concentrated risk.
Still gobsmacked at the ability of the US financial system to implode.
$500,000,000/10,000 = $50,000 lost per depositor. That's a brutal loss to those effected.
People need to reevaluate their choice of institution, and keep their deposits under $100K.
Been talking with some friends... all have agreed that we need to look more closely at where we have deposit accounts, and that WaMu and Wachovia are places to stay away from. I would expect a mini-run on these two tomorrow as people extract their over-the-limit funds.
Yeah, the chatter regarding Wachovia and WaMu has started reaching fever pitch. They will be the ones to watch over the next week or two.
Translation: FDIC is worried about runs on other troubled thrifts.
So Sheila Bair is putting out a statement on Sunday evening to try and calm the nervous masses. A sunday evening press release from any govt or insurance agency does more to scare the sh$t out of me than waiting till monday to let it out.
I liked the part about 8,494 and IMB only being .2 percent of banking assets..
Way to try and calm the nervous people shiela by telling them your insurance isn't worth sh$t and can only cover another 9 or so banks like IMB our of 8494. Well Capitalized huh........FU Sheila
So taxpayers are going to bailout the uninsured as well. Even though everyone knew well ahead of time that the collapse was imminent.
Wife and I have been migrating our bank biz to New Resource Bank for the past month, after WAMU put near 3 week holds on multiple checks, which caused us returned check fees and non-explanation excuses from a branch manager. Can't complete this process fast enough...
JR: Been talking with some friends... all have agreed that we need to look more closely at where we have deposit accounts, and that WaMu and Wachovia are places to stay away from. I would expect a mini-run on these two tomorrow as people extract their over-the-limit funds.
Here's the potential pitfall, as I see it, and let smarter people set me straight if I'm wrong:
Banks under stress to raise deposits will offer above-market CD rates, attracting a higher-than-normal percentage of deposits over the insured limits. If IndyMac's fate spooks people at such banks (and why should it not?) then the "mini-run" will likely occur, and that run will likely be enlarged through panicky withdrawals by other people who don't understand the whole FDIC thing and don't want to take any chances. So the fear of failure can become self-fulfilling.
As I understand it, it was just this kind of panicky withdrawal of deposits that spurred the FDIC to act on IndyMac.
FDIC is worried about runs on other troubled thrifts.
If the average depositor were to learn that the FDIC is worried...
Max, look at the insured deposits too. $18 billion with "more than" 200,000 depositors. That is close to $90,000 per depositor - or just under the FDIC limit (with a margin for interest earned).
I think this shows how easy it is for depositors these days to chase the highest paying FDIC insured CDs. This is the moral hazard problem.
Best to all.
Seems like a lot of articles are mentioning the D word lately.
Officials Check on Freddie Mac Securities Sale
"Until now, these are two of the biggest post-Depression financial rescue efforts, the paper said."
Sheila's AOL account must be full with email from angry Indy customers
The long emergency has begun in earnest. There will be good days, and many many bad days. If you live far from a bus line and far from work, move immediately before the stampede!
Just a word to the wise. The $100.000 CD may not be at risk but any accrued interest in excess goes poof.
Max, look at the insured deposits too. $18 billion with "more than" 200,000 depositors. That is close to $90,000 per depositor - or just under the FDIC limit (with a margin for interest earned).
I think this shows how easy it is for depositors these days to chase the highest paying FDIC insured CDs. This is the moral hazard problem.
Excellent point.
Help me understand this, please!
Why on earth are uninsured deposits being covered at 50%+ while the FDIC taks a $4 billion hit???
This makes no sense, why is the FDIC eating losses before uninsured depositors???
Traveling around the intertubes, I'm often astounded by what otherwise intelligent people don't know about the rules governing their savings and investments.
I'll bet a fair number of those 10,000 had no clue what the insured limit was.
Uncle Stosh will make sure that folks who have saved all of their lives, get to keep a little bit of the cash stash they have put in the bank to augment the pathetic retirement our wonderful Federal Government put in place for us. Even if he does it with devalued dollars, at the expense of the middle and lower classes.
Uninsured will only mean uninsured when the Fed has NO more securities left.
Wait for it, it's not far now........
This makes no sense, why is the FDIC eating losses before uninsured depositors???
My thoughts exactly. Free ponies. It sucks that uninsured people are losing money, but FDIC as a whole is at risk of a wipeout in the months ahead. Is Bair creating a precedent or is this normal practice?
It really feels like the rule of law is breaking down.
It really feels like the rule of law is breaking down.
Angry Renter
Rule of Law? LOL. There is no stinkin rule of law for BushCo.
BOO!! Now calm down.
Like two before me I would like to know why the FDIC wants to guarantee 50% of the money above their own FDIC limit when the FDIC is likely to take a hit on this. Wouldn't it be better to save that money for the coming rainy days and put all the deposits over 100k in the line of uninsured creditors who will be compensated only if the assets allow it?
The Chess game of the wealthy and the powerful. FDIC Chairwoman Bair
has given the answer that we all expect from the Government as their move,now its the depositors move.
Check mate wil be the final move.
Government 1 depositors O
MLB
This is one of the verbal tics that most annoys me:
And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits.
"Almost" can always be substituted for "virtually". Now let's look at the sentence.
And if that does happen, you will continue to have almost uninterrupted access to your insured deposits.
Not quite as impressive. Sort of like saying, "I am almost certain your plane will not crash between here and Chicago," versus "I am virtually certain your plane will not crash between here and Chicago."
Don't get on either plane.
I don't think the FDIC is guaranteeing deposits over $100K. I think they are saying there are sufficient assets to pay those off right now at 0.50/$. The remainder will have to wait on further asset sales and will probably come in somewhere below the full face value.
Seems like the FDIC is mortified about the prospect of a Monday morning bank run tomorrow. Yes the vast majority of banks are fine. However, a bank run is a self-fulfilling prophecy.
Knowing that, it's actually frightening that they put out a Sunday night statement to re-assure people, because IndyMac was a page three story in most places, and this puts it back on people's minds.
The fact remains that something like 1/3 of bank deposits in FDIC insured institutions are either over the limit or in non-insured deposits. If I were Sheila Bair, I couldn't sleep.
I am just boggled that anyone keeps more than the insured amount anywhere! Put the rest somewhere else, duh!
And I wouldn't keep any amount in a bank/thrift that looked wobbly. Yeah, it's insured. You'll get it back - eventually. If you are lucky, you won't have to fill out hours of paperwork and have it lost.
I guess these have been pretty smooth so far, but how about when we are up to a hundred or more failed banks? I am guessing longs waits and lots of paperwork.
Why anyone had more than the insured limit at IndyMac, with all the negative news, is definitely baffling. It looks like government officials are working on Sunday again ...
My inlaws do not like to listen to me. Instead they tend to chase the highest yield CD's. I'm heading over now... it should be an interesting conversation. Instead of "I told you so," I'm planning to be more diplomatic. "How did you like the blogs I've been recommending the last two years?"
50% is better than zero. So its only a little deflation.
Got Popcorn?
Neil
The older generation should know better than to unilaterally trust bank deposits. And the younger generation needs to learn that lesson. Here we go round again.
Max, look at the insured deposits too. $18 billion with "more than" 200,000 depositors. That is close to $90,000 per depositor
It also makes you wonder how much "panic withdrawal" there was vs. people acting prudently to get below $100K. It's hard to blame Schumer if that was the case.
Of course, you can go up to $200K on a joint saving account and still have full FDIC insurance if both depositors have equal withdrawal rights on the account.
Don't think that works for CDs, though.
"I don't think the FDIC is guaranteeing deposits over $100K. I think they are saying there are sufficient assets to pay those off right now at 0.50/$. The remainder will have to wait on further asset sales and will probably come in somewhere below the full face value."
If Indymac's 'assets' are covering the 50% payout, then why is the bailout costing the FDIC $4 to $8 billion? Is that what it costs to hire FDIC regulators for a weekend?
Seems like the FDIC is mortified about the prospect of a Monday morning bank run tomorrow.
There might be a run... to get below $100K. It looks like that was enough to kill Indy; maybe some others are in the same boat.
OT- CR, if you need to get back into the dive part of dive_hike the leopard sharks are running inshore at La Jolla Shores for the next month or so, some in knee deep water,...take the kids! The most dangerous part of the whole thing is finding parking.
I don't think the FDIC is guaranteeing deposits over $100K. I think they are saying there are sufficient assets to pay those off right now at 0.50/$.
Then the FDIC does not need to put in any of its own money?
Or perhaps I do not understand how this works.
On the issue of Fannie and Freddy, can the treasury act unilaterally without congressional approval to bail them out, or even extend them a credit line? We know the Fed seems to answer to no one, but I thought congress holds the purse strings.
"WaMu and Wachovia are places to stay away from. I would expect a mini-run on these two tomorrow as people extract their over-the-limit funds."
JR | 07.13.08 - 5:02 pm |
I just finsihed talking with my dad who is way over limit at Wachovia. I just scared the shit out of him with the IndyMac story and he is there first thing tomorrow morning to transfer excesses to other banks.
Sir John, prescient as always...for what it is worth:
We are sad to report that the legendary stock investor, Sir John Templeton, has passed away at the age of 95 in the Bahamas.
In the closing years of his life, our Christopher Ruddy, editor of Newsmax and Publisher of the Financial Intelligence Report, was invited twice to meet with Sir John at his Lyford Cay enclave.
Among Sir John's last interviews, he spoke with Christopher Ruddy. In February 2005, Newsmax published one of the last the exclusive interviews with Sir John Templeton.
In his prescient comments, Sir John alerted the readers of our Financial Intelligence Report of the coming housing crash.
At the time, he warned that housing prices could crash as much as 50% by the year 2007 and to get out before it was too late. Today, in many parts of the country, his prediction has come true with devastating consequences for many Americans
I just finsihed talking with my dad who is way over limit at Wachovia. I just scared the shit out of him with the IndyMac story and he is there first thing tomorrow morning to transfer excesses to other banks.
Now if we had a national (government owned) bank, as do other nations, he could transfer his money there and sleep easily and not have to run around spreading it over umteen different institutions.
I wonder how many of the "customers" are brokered accounts from MM and short term mutual funds broken into $100K pieces to capture high interest rates? And how do these funds get around the issue where accounts with the same name are added together?
Attracting deposits with brokered accounts was a technique used by the S&L's before they tanked (as I recall) including (especially) Sen. McCain's best friend (Charles Keating) at Lincoln S&L.
Jim
Rescue package:
Bush Offers Plan to Save Fannie, Freddie - NY Times
I had my mom move her excess out of SunTrust week before last.
There are times when clients had two or three day balances over $100K due to sales and transfers, between roll-overs. Usually in trusts with multiple beneficiaries but one tax number on the trust instrument. Not sure how that would play out. And then there's the operating accounts of businesses, often with large amounts in the payroll account in cash, credit card receipts and the like.
It's not always easy to keep the balance under $100K all the time.
I conjecture those over the 100K limit might be trustee accounts held for minors or others legally incompetent.
From the NYT article: The plan calls on Congress to give the government the authority over the next two years to buy an unspecified amount of stock in the two companies. Over the same period of time, it would permit the companies to have greater access to the Treasury, by expanding the credit line that each company has from the Treasury.
As if proposing to save the shareholders butts would ever happen in an election year.
Paulson stmt out....
Wow. How quickly the tide is turning. Read between the lines of this statement:
"The overwhelming majority of banks in this country are safe and sound. The chance that your own bank will be taken over by the FDIC is extremely remote. And if that does happen, you will continue to have virtually uninterrupted access to your insured deposits."
If there were no cause for alarm, there would be no cause for reassurance. Within the space of a few weeks, Washington has gone from total unequivocal denial to creating an expectation that more banks will fail.
Where's the Canadian watching with popcorn. Great movie, huh? Can't wait to see the ending.
It's mostly contingent on congressional approval so the debate is about to begin. I'd propose that FNM and FRE be required to fully open their books for public inspection before a bailout is initiated but hey how likely is that...
Now that this will all be subject to Congressional debate, I actually think the situation gets a lot uglier. Because there's no real immediate action.
Especially if this goes into the Houses' housing bill, and then goes to a resolution committee and then ends up getting vetoed by Bush.
Could get very messy. Meanwhile, pandora's box continues to unleash its demons.
The plan calls on Congress to give the government the authority over the next two years to buy an unspecified amount of stock in the two companies.
Did the NYT hire a five year old write this, treating Congress and the government as two separate entities.
More political gamesmanship. Schumer kicked one ball into the Executive's court. Now, BushCo is placing Fannie and Freddie in Congress's hands.
Meanwhile, Rome is burning...
My father in law was talking to my wife yesterday. Apparently he held a bunch of Fanny and Freddy stock as "safe" investments. He told her it was ok because they were insured by the FDIC. She informed him they weren't.
So much for my inheritance. Good thing I wasn't counting on one.
6:00 p.m.
[FNM] Treasury gets authority to by Fannie, Freddie stock
6:00 p.m.
[FNM] Paulson says Fannie Freddie must be saved
6:00 p.m.
[FNM] Fed to extend discount window to Fannie, Freddie
6:00 p.m.
[FNM] Treasury to increase credit line to Fannie, Freddie
I don't know how the NYT got advance notice. Good scoop.
FNM and FRE shareholders should be wiped out. Bondholders should take most of the hit, and the taxpayers can take some of the hit.
Then, FNM and FRE should be fully privatized. This will put their cost of borrowing in line with every other institutions and they will shrink accordingly.
Unfortunately, I suspect the exact opposite will happen.
12th, sorry to hear that.
"Treasury gets authority to by Fannie, Freddie stock"
I assume they mean "buy"?
So let me get this straight:
There is no problem, but if there is a problem, it won't be your problem. Now if that problem becomes your problem, don't worry because you are insured for the problem. Now if you were silly and didn't think there ever could be a problem we will reimburse you for 1/2 of the never existent problem.
All right, so back to the problem at hand...are we ordering Meat Lovers or All veggie on the pizza tonight?
New bagholders will be the US govt when they buy this stock...what a f'n joke
In spite of my caution I do on balance think Wachovia and Suntrust will not go bust. But these days anything almost can happen.
I think, and hope, that USB and WFC and Northern Trust are very sound. Whatever "sound" is these days. LOL
The Fed also has just announced that the GSE's will have access to the discount window if it is needed.
FRB: Press Release--Board grants Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary--July 13, 2008
" In addition, Treasury have been given the power to buy the two companies stock."
Who gave them this authority? President Cheney?
How the hell did the Treasury already get the authority to purchase equity as MW is claiming?
I very much doubt that the bond holders will take any hits at all. After all a large % are important foreign central banks. Not wise to stiff them.
Vomits...
The Fed also has just announced that the GSE's will have access to the discount window if it is needed.
LOL that was the rumor that turned the markets green (albeit briefly) Friday.
"soundvision writes:
Wife and I have been migrating our bank biz to New Resource Bank for the past month"
I'm in the middle of doing the exact same thing.
The upfront bailout is the potential purchase of straight equity. That's to keep people from shorting it to hell.
The Fed also has just announced that the GSE's will have access to the discount window if it is needed.
So will the Fed money be used to support new lending, or offset asset devaluation?
NYT: White House Will Ask Congress to Approve Stock Buy
Looks like I picked the wrong election year to stop sniffing glue.
Now if we had a national (government owned) bank, as do other nations, he could transfer his money there and sleep easily and not have to run around spreading it over umteen different institutions.
UST...notes.
full faith and credit...of yours mine and ours...taxes, that is
12th, sorry to hear that.
Ah, he and the MIL will be fine.
At least I got my parents out of all their index funds last summer. Many of their friends are none too happy right now. Their one friend, who is 70, ridiculed them for listening to me. Then when everything tanked he said, "that is ok, i'm in it for the long haul". That guy sees the glass half full.
I tried to get my brother out as well but he probably didn't feel good listening to his bro who just reads blogs, drinks, and rants.
I assume they will try to purchase the stock to support it for an offering at a much higher price...they just want to kill the shorts
meant Bills, notes too
A good read over at the Wall Street Examiner about IndyMAC and those to follow:
Take Downs and Drawing the Wrong Straw
Winter (Economic and Market) Watch » Take Downs and Drawing the Wrong Straw
Basically Russ Winter argues that IndyMAC is one of many take downs to come that benefit former Bush cronies with strong insider connections, e.g. Goldman Sachs, et al., to take out vulnerable banks and get their prime assets on the cheap through recycled petro-dollars and consumer crap import dollars coming in the back-door. Seems both accurate analysis (if not somewhat conspiratorial) and real-time on-the-ground honest-to-god truth.
Fannie Mae and Freddie Mac will not get the short stray (because the are being removed from the Chinese Checkers game) whereas many others will be taken down (IndyMAC) or get the short straw (LEH).
I tried to get my brother out as well but he probably didn't feel good listening to his bro who just reads blogs, drinks, and rants.
I raise my glass to you.
Treasury will NOT buy the common in the open market. I'll bet they buy a new issue pfd. Common holders should and will be toast.
Yeah, 50 cents on the dollar is just ducky for the innocent and gullible. Again and again I say this is why we need a government owned bank where people can put as much money as they want and sleep soundly. It can offer less interest than private banks so that they can keep some advantage IF and I repeat IF they follow prudent policies that sensible bankers would follow anyway, but that all our nutty bankers have ignored for reasons of greed and stupidity.
I assume they will try to purchase the stock to support it for an offering at a much higher price...they just want to kill the shorts
There is going to be one helluva political process here in DC. I can already see the headlines about using taxpayer dollars to bail out Raines' leftover buddies.
The limit has been reached?
Government not expected to help more companies
NEW YORK (AP) — The U.S. government is signaling it won't throw a lifeline to struggling financial companies — except for mortgage linchpins Fannie Mae and Freddie Mac — marking a shift to a new and potentially more volatile phase of the credit crisis.
"One consequence of Freddie and Fannie is that other firms are allowed to go under," he said. "If you couldn't get your act together after four months of unprecedented financing terms, maybe you don't deserve to be thrown yet another lifeline."
I agree with Ross: pfd stock is the only politically viable option.
Another attempt to "save" the markets which will of course work short term only to then go down to lower lows.
I've seen this movie already.
"Treasury will NOT buy the common in the open market"
Then the common goes to 0.00! What do they gain from Preferreds? A lousy divy for a bk company?
Next.
Then the common goes to 0.00! What do they gain from Preferreds? A lousy divy for a bk company?
The gain: They get to say "At least we tried." Add in a scapegoat, and mission accomplished.
What does this mean for F&F shareholders? Is this a shareholder rescue, or an indication that the stock is worth zero? Very confused here... Everyone is saying this is a rescue -- who is rescued???
None of it is approved so it could be a very interesting day tomorrow. I'd be looking at the dollar and T bills to get a sense of what the market thinks the real cost will be.
Can they buy the common without congressional approval? If not, then tomorrow could be another whoosh down. Otherwise, I'd expect shorts to be heading for the exits fairly rapidly as it appears to be a full bailout.
Next Sunday night...
Paulson - we are taking over FNM and will wipe out the commons. GS will run the company for a small fee...I am going back to GS to help them out on this project...thank you America for making me wealthy twice!
Can't wait to see how the Asian markets open. May give an insight as to how the market will accept this.
as it appears to be a full bailout.
Not exactly. Nobody has yet issued statements about guaranteeing the bonds etc. Why? Because the dollar would enter the toilet phase of the cycle.
They should have just renamed it "No-Longer-Indy Mac".
Treasury bonds just opened up through Friday's lows...
Treasury will buy PFD's as a bridge from good bank to bad bank.
Think a modified RTC workout.
Will The Bank Formerly Known as IndyMac be making The Loans Formerly Known AAs Jumbo for resale to the Government Guarantors Formerly Known As Freddie & Fannie? Will they be paying with colored toilet paper Formerly Known As Dollars?
I dont see a problem with the insolvent banks. Hell, buy their 6month CDs at 4.25%. Its insured by FDIC, and you get 4.25% guaranteed. So the bank goes kaput, you still get yo money and interest. Whats not to like.
Wachovia is giving 5% for savings plus a one time 5% bonus. Screw CDs
Treasury will separate the good assets from the hopeless and guarantee the bonds of the hopeless.
If they buy PFD's of the good bank/assets, some future recovery might be anticipated. Clean hand washing the dirty hand.
It's not that hard a workout.
Just looked at the ROE of some banks that might be a good canary to tell which ones might be risky. I would think it ok to keep your money in WFC, USB, NTRS and BK, but I would not leave, myself, over 100T in WB or BAC or STI. I haven't looked at any others. 'Course all bets are off if there is a general banking panic.
Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities
Whar is 'federal agency securities'?
Banana republic
I'm going to need to park $100K in the next two weeks. This sounds intriguing.
Wachovia is giving 5% for savings plus a one time 5% bonus. Screw CDs
Any downside to that under current FDIC rules?
REBear --
What is 'federal agency securities'?
In this context, Fannie/Freddie mortgage-backed bonds. In other words, the Treasury will be able to buy those bonds that they... um... don't guarantee.
somebody should do a stress test on banks, bank by bank, to see what would happen if all its depositors reduced their deposits to the 100T limit
Stock futures gain after Fed, Treasury statement
NEW YORK (Reuters) - Stock index futures and the dollar rose on Sunday after the U.S. Treasury Department and the Federal Reserve announced sweeping measures to lend money and buy equity if necessary in embattled mortgage lenders Fannie Mae and Freddie Mac.
S&P 500 futures rose 12.70 points, Dow Jones industrial average futures jumped 85 points and Nasdaq 100 futures gained 16.25 points.
The dollar rose against the euro and the yen.
Wachovia one time bonus of 5% maxes out at $300 but I don't see a limit on the other 5%.
The rise in the futures is just a temporary emotional reaction, IMO. When good common sense settles in again, I think things will resume their downward course.
The rate is variable and can be canceled at any time...
from the text at
Paulson Statement on Freddie Mac, Fannie Mae: Full Text - Bloomberg.com
"Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer. "
conjectures as to these terms and conditions ?
sidd
jim- makes sense. The question is how long will the euphoria last.
And from Perino:
GSEs should remain owned by shareholders - W.House
| Reuters
Paulson Statement on Freddie Mac, Fannie Mae: Full Text
July 13 (Bloomberg) -- Following is the text of a statement issued today by Treasury Secretary Henry Paulson:
Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies. Their support for the housing market is particularly important as we work through the current housing correction.
GSE debt is held by financial institutions around the world. Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore we must take steps to address the current situation as we move to a stronger regulatory structure. In recent days, I have consulted with the Federal Reserve, OFHEO, the SEC, Congressional leaders of both parties and with the two companies to develop a three-part plan for immediate action. The President has asked me to work with Congress to act on this plan immediately.
First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the GSEs have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn.
Second, to ensure the GSEs have access to sufficient capital to continue to serve their mission, the plan includes temporary authority for Treasury to purchase equity in either of the two GSEs if needed.
Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer. Third, to protect the financial system from systemic risk going forward, the plan strengthens the GSE regulatory reform legislation currently moving through Congress by giving the Federal Reserve a consultative role in the new GSE regulator's process for setting capital requirements and other prudential standards.
I look forward to working closely with the Congressional leaders to enact this legislation as soon as possible, as one complete package.
Last Updated: July 13, 2008 18:00 EDT
Read the NY Times article, and it appears the Government wants to be able to buy common stock. If this is actually the case the US is turning into one mighty big banana!
Thanks Nemo.
Marketwatch Headline:
"US Rescues, Fannie and Freddie"
I look forward to working closely with the Congressional leaders to enact this legislation as soon as possible, as one complete package.
in an election year.
Hahahahahahahahaha.
Any downside to that under current FDIC rules?
It's a bizarre savings account. You can transfer max 100$/mo to it, plus a 1$ automatic transfer when you use your debit card. In order to get the full 300$ bonus at the end of the first year, you'd need to use your card 4800 times during the year (assuming a: I read the agreement correctly and b: my math isn't completely whack)
Just give me enough time to pull my cash Monday morning....
the plan strengthens the GSE regulatory reform legislation currently moving through Congress by giving the Federal Reserve a consultative role in the new GSE regulator's process for setting capital requirements and other prudential standards
Fox to guard the hen house?
Didnt Paulson say last week companies will need to fail...after this one...and the next one...and the next one...
Sounded too good to be true.
thanks, all.
Yeppers REBear
The Bushie MO
It's For Our Own Good
12th percentile writes:
I tried to get my brother out as well but he probably didn't feel good listening to his bro who just reads blogs, drinks, and rants.
I was amazed how few people I know didn't want to hear anything about the mess we're in when I tried to enlighten them. Finally gave up and now just keep my mouth shut and shorts in place. When I see more than a scatterd few finally get it, then I'll cover.
Paulson just said that govt will extend line of credit to Fred and Fannie....
"Wachovia is giving 5% for savings plus a one time 5% bonus."
But they only let you transfer $100 a month...and have a laundry list of possible fees in their legal fine print.
Everyday is 'opposites day' for Paulson.
squeezed ,
Can't we write a check?
futures screamin up...go figure.
Maybe I'm just dense but I haven't seen any explanation as to why it is "important" that the GSE's continue to operate as shareholder-owned entities with $5 trillion in liabilities "implicitly" guaranteed by the U.S. govt.? I understant that they are (were?) privately owned, and that the existing shareholders are probably toast, but I don't see what the value to the financial system (or the taxpayer) is in insisting that they remain private. Again, it's probably just that I'm dense, but I haven't even seen the argument for keeping them private laid out anywhere.
Gotta face it. Treasury has effectively nationalized (temporarily?) the mortgage market. It has also taken over regulation.
They are writing law much the same way as the FED. The freakin idiots in congress are asleep at the switch.
The suspense is over, for now. Doesen't mean more accidents will happen during the great deleveraging but for now, sleep tight, good night.
There is really no reason for F&F to stay private other than American paranoia at government ownership of anything. They should be nationalized for now and possibly privatized again when it is all sorted out. If ever.
Remember it's expiry week and JPM and MER report as well. Moves will be exaggerated.
I think we'll see a withering rally tomorrow.
Any thoughts on LEH tomorrow? Do they benefit from the distraction of the center ring of the circus or suffer from the neglect of Barnum (Paulson) and Bailey (Ben) this weekend?
I think LEH is toast. Especially now that we hear from the grapevine that Helicopter Ben isn't going to rescue any more brokers.
I was amazed how few people I know didn't want to hear anything about the mess we're in when I tried to enlighten them. Finally gave up and now just keep my mouth shut and shorts in place. When I see more than a scatterd few finally get it, then I'll cover.
You are one person. You aren't on TV. The media is constantly telling everyone there is no problem. The majority of the country still thinks the media just reports the facts. And has a liberal bias. Ben Stein is considered someone you should listen to for financial advice.
I hope this rally is a big one. I'm going to start buying SRS below a hundred and keep buying all the way to 80. And then I'm going on vacation.
Fill in the blank (even with a rumor!)
You are a regular schmo watching nightly news (top story: bank mess) - govt stepping in shore up the Fs.
You, like the majority of Americans, have grown wary of the govt.
On Monday morning you:
They should be nationalized for now and possibly privatized again when it is all sorted out. If ever. -- jim
I can empathize with the first part; sort of like Medicare for RE? But if they do turn it around, meaning making them profitable (I guess,) wouldn't it be useful to turn those profits to lowering costs or the deficit? Or something?
Somewhat OT: I have to laugh thinking of Chaplain's unappreciated post WWII film, Monsieur Verdoux. There, in order to get his hands on the savings of one of his "wives", he tells her there is going to be a bank crash and to get her money out pronto. She does and of course he takes it and then does away with her. The whole movie centers around financial collapse in pre WWII Europe. Funny, very.
On Monday morning you:
go to work and wait all week for Friday happy hour.
Nine out of ten Americans are entirely clueless about what is going on right now. Many are just wondering if tonight's episode of Desperate Housewives is going to be a rerun.
futures screamin up...go figure.
I'm a very inexperienced daytrader but something told me to casht out my ultrashorts at the peak Friday.
My mental map of the future going forward is a direct projection of the 2000-2003 slide.
Heck, AFAICT you can just copy-paste the 2000 peak onto the 2007 peak and see what's going to happen for the next 18 months.
There was a free-fall from 1400 to 1100, then a recovery from 1100 to 1300, then a fall from 1300 to 950, then a recovery from 950 to 1150, then a fall from 1150 to 800, some rattling around there until mid-2003 when the lending spigots were opened and the bulls had their run.
We ~could~ see a rally to 1350 coming, but I'll be buying SDS into it, that's for sure.
This link will probably be updated soon for the typo but look at the freudian slip in paragraph 11:
The official, who spoke on condition of animosity, also sought to send a calming message about Fannie's and Freddie's financial shape, saying: "There's been no deterioration of the situation since Friday."
It's rough working weekends.
Expired
S&P Futures up 11.50 right now. Looks like a bounce to sell is coming.
Show of hands please. How many posters here have purchased "investment software" in the last 12 months?
Wonder if the S&P action is in any way related to the forex action -- Bucky beating back the gap-up from Friday.
I am going to throw in a line of toast in my branch at Mordor on the Potomac, right next to Paulsons' office. That way, he can just pick up a few packages, shut someone down, and I, will have a new a new revenue source.
My "investment software" is CMD-R [F5 for you IE people] on my tdameritrade summary page
Only 259 people online now, the CR contrary indicator at this news indicates that tomorrow could be a down day.
Paulson. What an idiot.
He's supposed to release the statement right before opening so we have a bounce! Now we have the entire night to have the rally dissipate...
He can't even get that right. (Who cares about Asia, anyway?)
crispy&cole writes:
Marketwatch Headline:
"US Rescues, Fannie and Freddie"
crispy&cole | Homepage | 07.13.08 - 6:49 pm | #
and who will rescue US?
So what does the Paulson/Barnacle announcement actually do??? Seems like it just passes the buck to congress and doesn't fix anything.
ConnedYaMae;
Down day??? Did you see the Bloomberg news about Fannie/Freddie??? They will be celebrating!!! The government spoils the foolish!!!
DK writes:
So what does the Paulson/Barnacle announcement actually do???
The announcement proves they were liars last week when they said everythings fine. move along.
NEW THREAD alert
crispy&cole --
I believe the conventional phrasing is:
"Last!!"
Chase Sucks writes:
I was amazed how few people I know didn't want to hear anything about the mess we're in when I tried to enlighten them. Finally gave up and now just keep my mouth shut and shorts in place. When I see more than a scatterd few finally get it, then I'll cover.
Chase Sucks | 07.13.08 - 6:55 pm | #
YES! And professional types too! MBAs, CFAs, etc. I don't know where people got the idea that I am a doom and gloomer. I just looked at the big picture with an open mind. I certainly don't want a fvcking depression. They cannot tell the difference. Time will tell if their strategery of avoidance and denial works - compared with mine.
Why on earth are uninsured deposits being covered at 50%+ while the FDIC takes a $4 billion hit???
This makes no sense, why is the FDIC eating losses before uninsured depositors???
The FDIC press release says that there are deposits of $19.06 billion and the preliminary estimated cost is about 4 to 8 billion dollars. I infer that without insurance depositors would get about 60 to 80%. The FDIC is paying insured deposits 100% and uninsured deposits what they would get without insurance when the creditor claims are settled. The uninsured deposits take the normal loss but are not supposed to also pay for the insured deposits.
jim--As opposed to the movie Goodbye Lenin when the dutiful son can't find his mom's stash of Ost-marks before M-Day to convert them into Deutshe Marks, leaving them so much worthless, pretty paper.
I was amazed how few people I know didn't want to hear anything about the mess we're in when I tried to enlighten them. The first few boats off the Titanic weren't full. They just couldn't persuade people to get off of big sturdy oceanliner and onto a little boat on the cold North Atlantic. People would really rather trust the calm officers rather than the crazy person saying that the ship is sinking, the water is cold and there are not enough life boats.
many do not understand closing procedures such as this comment:
"Why on earth are uninsured deposits being covered at 50%+ while the FDIC takes a $4 billion hit???"
there is a pecking order when an institution is closed. typically secured creditors are first (think FHLB or other depositors -- municiapls that perfect with securities, or other collateralized creditors. then comes insured depositors. finally all other unsecured creditors including the amount of uninsured depositors.
normally at closing, the fdic writes a check to secured creditors to obtain the collateral (for IMB they are not writing a check to FHLB SF, unsure about others). insured deposits have been transfered to the bridge bank (including portions of uninsured).
it sounds like unsecured and uninsured deposits have been placed in a seperate receivership, which the fdic then will wind down. from this receivership, the fdic costs will be paid and any amounts left go to unsecured creditors. at closing, the fdic makes an estimate of what this receivership is likely to realize; then they will provide an "advance dividend" that is some fraction of the expected estimate. in this case, the "advance dividend" is 50% of the unsecured credit amount, which does seem a bit high. the wind down of the receivership and any subsequent "dividend" payments can drag for many years.
Who is it I vote for in the next election if I am not happy with the way things are being handled?
[You can vote for anyone you want but they will never leave.]
"Now if we had a national (government owned) bank, as do other nations, he could transfer his money there and sleep easily and not have to run around spreading it over umteen different institutions."
Uh, I vote no.
As far as Conjure and I are concerned, Paulson's initiative is too vague to be a starter, it's simply a recognition that there's a problem, and it's dead on arrival.
some movie clips from a few decades ago are still apt today...this one shows what bank runs can be like...
YouTube - It's A Wonderful Life bank run (full version)
old man potter's giving 50 cents on the dollar!
Marketwatch Headline:
"US Rescues, Fannie and Freddie"
Rather a misleading headline, is it not? Backstopping liquidity is not at all like guaranteeing solvency. Two different worlds there... and Paulson has made some pretty strong statements about letting failures fail. This action is designed to prevent a run, pure and simple. Beyond that, nada.
How about answering a direct question, Hank: If F or F proves to be insolvent, what will the government do?
My grandmother was in front of one of those banks in GD I. Her very small fortune survived Our AT&T has been in my family for more than a hundred years.
I have to agree with the guy who said Paulson released the statement too early...as pointed out, futures and Nikkei are up....which doesn't mean squat for tomorrow morning, imho
ja
If F or F proves to be insolvent, what will the government do?
Wally, Paulson can't answer this question. Only Congress can guarantee the solvency of F/F.
Some random thoughts:
1. The FDIC insured limit should be raised to $200,000. Failure to do this will result in capital draw down on deposits over $100,000 from 'at risk' banks, which will only serve to put said banks further at risk.
Following up on SurferDude, check out http://www.fdic.gov/bank/analytical/banking/1999oct/2_v12n2.pdf for more on "depositor preference" and how the FDIC pays out creditors in case of insolvency.
Re: "I haven't seen the "inaccurate and inflammatory" reports"
I think she was talking about me?
I saw some news clip of some shmuck for the failed bank on TV this morning.
He was saying that "IndyMac is now entirely in the hands of the FDIC... It is a safe... and secure... bank..."
It reminded me way too much of Emperor Palpatine speaking about bringing "peace... and order... throughtout the galaxy."
Yeesh... no truth here!