I guess were marking the passing of an era with the Maes & Macs, good riddance. Pixies, on the other hand will be remembered for the red tongue you got after you licked the sweet stuff from the palm of your hand....good memories of carefree days indeed....
I wonder if the IMB failure and last weeks washout in FNM & FRE will spur both a run on deposits (at least over $100k) and a run on shares, to get out of the way of S&L crisis deux.
Pixies, on the other hand will be remembered for the red tongue you got after you licked the sweet stuff from the palm of your hand....good memories of carefree days indeed....
Sigh.
You are thinking of Pixie Sticks. Or Stix. Whatever.
I watched Kudlow's program. It is truly remarkable, that imbecile Luskin, can't spot a bear market when we've been in one for a year and what's more he doesn't have a clue how they work. Fargin retard.
So when we form a GSE to cover the defaulting loans GM and Ford made to SUV and pickup buyers it will be called "Mac Truck?" And all those pleasure craft permanently tied up to the repo docks "Mae B Knot?" And all those RV loans gone bad that were supposed to allow boomers to crisscross the land Sallie Forth?
[Lehman Brothers has closed their Small Business Finance (SBF) unit announcing they would cease accepting any new applications on 2008-07-02. The Lake Forest, CA based commercial real estate division laid off 200+ people according to an email sent by one AE]
GRETCHEN MORGENSON
The Fannie and Freddie Fallout
"ITS dispiriting indeed to watch the United States financial system, supposedly the envy of the world, being taken to its knees. But thats the show were watching, brought to you by somnambulant regulators, greedy bank executives and incompetent corporate directors..." FAIR GAME; The Fannie And Freddie Fallout - NY Times
But Federal Home Loan Bank (FHLB) Consolidated Obligations are sometimes called "Flubs."
And Fannie May has an outlet store just a little west of the Loop (maybe Adams or Madison just west of Halsted) should you ever be in Chicago and need day old Pixies really cheap.
How about the newly formed Private National Mortgage Acceptance Company, LLC (PennyMac)?. If you think it's a coincidence that it's based out of Calabasas, CA, it's not, it was started by former Countrywide managers.
How about ideas for nicknames for the Fed's new alphabet soup of tools?
For example, when they open the discount window to Fannie and Freddie, I am hoping they call it the Government Sponsored Enterprise Credit Facility, or "GSECF". Because I think "Gassy Fuc" could really catch on.
Re: This week, the owners of the Fannie Mae candy stores in the Chicago area will begin to shut them down. Theyre closing down the business, all the Fannie Mae stores in the Midwest and the Fannie Farmer stores, too. And the Chicago factory, too.
The chief executive officer of Belgian-Dutch bank Fortis stepped down Friday, the bank said, amid shareholder anger over his handling of problems arising partly from the U.S. sub-prime crisis.
Fortis shares were trading at about 30 euros in July 2007 but are now at 10 euros
The members of the board wish to thank Mr Votron for his commitment to Fortis during the past four years. He has made a crucial contribution to the development of Fortis and has transformed the company, thanks to important strategic decisions, into a more international group," said the statement
David, it was started by Stanford Kurland, who was being groomed for #1 at Countrywide. If Fannie (ech) and Freddy (gag) go completely kerplooie, guess who's first in line to soak up all the paper? Supposedly GS has partnered with someone to do this as well.
So there was a trick that the old school, penny stock, pump-and-dump boiler room firms used to use. The firms would choose a name that sounded similar to a respectable investment bank, for example, there was one named A.S. Goldmen. When the elderly target on the other end of the phone heard that the caller was from something something "Goldman", he thought he was dealing with a reputable firm. It must have been a sign that the bubble was reaching a peak when private mortgage lenders started using the same shady trick, by naming themselves things meant to be easily confused with the government sponsored enterprises. CharterMac, MuniMae, IndyMac, these firms are all now insolvent or teetering on insolvency. Good f'ing riddance to y'all.
Given the way these things have gone lately, the move by Lehman is the signal. Monday it will start to crumble. Tuesday through Thursday will bring denials. The crumbling will continue.
Friday will be very quiet.
What a perverted "socialism for the corporatocracy and rich" system we have over here in the US, where I presently live.
Capitalism, the best economic system ever, is not perfect, as many of its basic assumptions are simply not true: people are not rational, information is not perfectly and symmetically available etc.
Therefore, for it to work, one needs REGULATION. Working regulation. The corporatocracy is only really after its own interest: "capitalist" when it suits their self-interest and socialist when that suits their self-interest. And always against regulation.
Well why would people confuse a bank they can deposit money into (or could have) and an agency that doesn't accept deposits, whatever the name? Anyhoo the bank that has deposit customer is already bust, so the bad rep of Fanny and Freddie is beside the point.
The incest goes even further back in time. There was a "Private National Mortgage Assoc." that called itself Pennie Mae, and a "non-governmental security" developed by PMI Mortgage back in the 70's called Pennie Mae.
I have a friend who snorted a pixie stix once when we were kids. Her nose bled intermittently for several days until she finally got all the dust out. Last I heard from her was last summer when she was buying into UYG and advised me to do the same. Told her I'd think about it.
But any intervention could benefit bondholders by strengthening perceptions of government backing of the firms.
"Equity holders would suffer greatly while the position of senior debt holders would actually be enhanced by the more explicit government support," JPMorgan analysts Alex Roever and Cie-Jai Brown wrote in a note to clients.
Recently, Spain tried to float a 15 year bond issue, and failed. This got me thinking: at what point will the US government be unable to continue financing it's deficit? At what point does the fiscal debt become unsustainable, triggering a fiscal crisis? If we were any other country, we would have crossed that Rubicon years ago. Any thoughts?
At what point does the fiscal debt become unsustainable, triggering a fiscal crisis?
Let's see, according to SSA, the SS surplus (2007 ~$179B) starts decreasing in 2010, meaning the government would have to increase private borrowing. By 2017, there is no SS surplus...
with apologies to Robert Burns, this is too good not to be made topical:
Wee sleekit, cowrin, tim'rous beastie,
O, what a panic's in thy breastie!
Thou need na start awa sae hasty,
Wi' bickering brattle!
I wad be laith to rin an' chase thee,
Wi' murd'ring pattle!
....
Thy wee bit housie, too, in ruin!
Its silly wa's the win's are strewin':
And naething, now, to big a new ane,
O' foggage green!
An' bleak December's winds ensuin'
Baith snell an' keen!
Thou saw the fields laid bare and waste
An' weary winter comin' fast,
An' cozie here, beneath the blast,
Thou thought to dwell,
Till, crash! the cruel coulter past
Out thro' thy cell.
That wee bit heap o' leaves an' stibble
Has cost thee mony a weary nibble!
Now thou's turn'd out, for a' thy trouble,
But house or hald,
To thole the winter's sleety dribble
An' cranreuch cauld!
But, Mousie, thou art no thy lane
In proving foresight may be vain:
The best-laid plans o' macs an' maes
Gang aft a-gley,
An' lea'e us nought but grief an' pain
For promised joy.
That's the last and final edifice remaining to be toppled. The ability of the US to borrow in USD.
When this is all said and done its very possible that could happen. But we are some ways from that.
The issue is that the Euro block is also under a lot of stress right now. Countries like Italy, Spain, France, Greece, Portugal, etc can't print their own money - but they have growing deficits and their economies are also decelerating.
And what we need right now is a crazy President really creating a mess for us all:
" Creative Destruction"
The English language is just amazing!
But there's a problem with the English language, we can interpret that phrase as destruction clearing the way for new creations, or as creating new destructive messes.
Fannie Mae Fudge
Ingredients
1/2 c. margarine
3 3/8 c. white sugar
1 1/8 c. packed brown sugar
2 ounces German chocolate
13 ounce Hershey chocolate bar
12 ounce chocolate chips
1 T. vanilla
13 ounces evaporated milk
16 ounce jar marshmallow fluff
1 1/2 -2 c. chopped nuts
July 12 (Bloomberg) -- Henry Paulson, the U.S. Treasury secretary, is planning a $15 billion capital injection into U.S. mortgage companies Fannie Mae and Freddie Mac, the Times of London reported, without citing anyone.
The plan is ``high'' on the list of solutions to the nation's mortgage crisis, the newspaper said. In exchange for the capital, the U.S. government would get a new class of shares, the newspaper reported, citing no one.
Paulson's plan also would allow the two mortgage companies to use the Federal Reserve's discount window so they can borrow from the central bank, the Times reported.
Fannie Mae and Freddie Mac own or guarantee almost half the $12 trillion of home loans in the U.S. and lost about half their market value last week on speculation of a government bailout, the London-based newspaper said.
That article is just more of that morality play crap. Who cares who benefited from the fraud and will effectively end up stealing taxpayers money? The crime has already been committed. Let it go already. We need to get pragmatic and fix these problems that the thieves created! It is time for you to forget those head bandages on your skinless face. It is time to look towards the future. Now is the time for us all to pitch in and do our part! For if we don't act in time, the mobs will soon be at the gates of our private estates! [Ed: Take this last statement out. Too elitist.]
Treasury Secretary Henry Paulson is adamant that no government bailout plan benefit shareholders.
Talk of a rescue heated up this week after a Lehman report Monday said that the companies may need to raise a combined total of $75 billion due to a possible Financial Accounting Standards Board (FASB) rule change that would force the mortgage giants to move securities they now hold onto their balance sheets.
Even though both Fannie and Freddie were quick to say that they have plenty of capital, a sentiment echoed by Treasury Secretary Paulson, the stocks still ended the week down just over 45% for the week and about 75% for so far this year.
dr strangemoney
I will contemplate your thoughts as I drive my BMW to Whole Foods for organic milk and a prepared salmon dinner...I hope the lines are not too long...
Regulators: FAS 140 should not apply to Fannie Mae, Freddie Mac REG - Financial Week
I have to tell you, an accounting change should not drive a capital change, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said in a CNBC television interview.
Lockhart said OFHEO is working with the Financial Accounting Standards Board, or FASB, on the revision of rule FAS 140.
Statements on the possible impact of the accounting rule by Lehman and other analysts on Monday struck a raw nerve for investors already concerned the ailing housing market would create greater-than-expected losses for the government-sponsored enterprises (GSEs). The companies shares, mortgage-backed securities and credit-default swaps that were pummeled on Monday rebounded after Lockharts comments on Tuesday.
Lockhart has obviously been paid off, if you have been watching lately!
Qualified Special Purpose Entity.QSPEs are passive entities with limited permitted activities. SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125 ("SFAS 140"), establishes the criteria an entity must satisfy to be a QSPE, including types of assets held, limits on asset sales, use of derivatives and financial guarantees, and discretion exercised in servicing activities. In accordance with SFAS 140 and FIN 46(R), the Company does not consolidate QSPEs.
This is hyper-technical accounting stuff, but it has enormous potential impact on markets. There may be trillions of dollars worth of derivatives buried on banks' QSPEs.
To grossly oversimplify, Banks have been using QSPEs to effectively boost their leverage and hence, their return on capital. Without the balance sheet constraints of the old days, banks were encouraged to create assets -- by making lots of loans they shouldn't have -- that could, in theory, be sold off later. It hasn't quite worked out that way.
QSPEs can have legitimate purposes -- but they also can obfuscate the true financial condition of a bank or broker.
Which links to this:
US banks fear being forced to take $5,000bn back on balance sheets
Accounting changes could force US banks to take thousands of billions of dollars back on to their balance sheets in the coming months in a move that is likely to curb further their lending and could push them into new capital raisings, analysts have warned.
Analysts at Citigroup said a planned tightening of the rules regarding off-balance sheet vehicles would force banks to reconsider arrangements and could result in up to $5,000bn of assets coming back on to the books.
The off-balance sheet vehicles have been used by financial institutions to keep some assets off their balance sheets, thereby avoiding the need to hold regulatory capital against them.
Birgit Specht, head of securitisation analysis at Citigroup, said: "We think it is very likely that these vehicles will come back on balance sheet.
"This will not affect liquidity because [they] are funded, but it will affect debt-to-equity ratios [at banks] and so significantly impact banks' ability to lend."
Are we worried that the public will think all Maes and Macs are the same?
Well, yes. This is a public where a significant enough fraction thinks Sadam Hussein caused 9/11.
Less snarkily, it's exactly the reason why companies so jealously guard their trademarks. You try to put a lower case 'i' in front of something, and see how fast Apple is all up in your grill. (as an aside, there's been a battle between Jobs and the Beatles for decades)
I'm having trouble wrapping my head around that 5000 Billion write down thing, or this, or fudge:
Banks Say Auction-Rate Investors Can't Have Money Bloomberg.com
Bank of America, UBS AG, Wachovia Corp. and at least four dozen other firms that sold $330 billion of securities with rates set through periodic bidding are thwarting attempts to create a secondary market that would allow investors to access their cash, according to investors. Dealers claim they are saving customers from needless losses on securities they marketed as similar to cash-like instruments.
The island isn't a country hideaway. It's the Causeway Retreat, a mental health and addiction center that charges as much as 10,000 pounds ($20,000) a week for treatment away from the prying eyes of colleagues and the media. There is a waiting list for the facility's 15 rooms.
We get lots of CEOs of companies, traders, high-end business guys,'' says Managing Director Brendan Quinn.They want treatment, but they want it to be discreet.''
RESERVE BOARD FINDS ACTION UNNECESSARY; Six-Hour Session Brings No Change in the New York Rediscount Rate. OFFICIALS ARE OPTIMISTIC Mellon Also Attends Cabinet Meeting, but Declines to Discuss Developments. Board Reviews Credit Situation. Cut in Discount Rate Expected RESERVE BOARD SEES ACTION NOT NEEDED BANK RATE CUT EXPECTED
--New York Times, Oct. 30, 1929
Its not a Fannie Mae outlet store, just west of the Loop, its the Blomberg Chocolate Factory, on the corner of Kinzie and Milwaukee Ave. My office is 1 1/2 blks to the west, and when the wind's off of the lake, it smells REALLY yummy!!...LOL
Monday morning Bush, Paulson and congress, after meeting this evening in emergency session to do the legislative part, announce the charter and immediate opening of a new MC.
This one will sell bonds and common stock immediately to put the house buying pubic back on track.
No impediments of the travesty of the past 5 years, tight underwriting and honest assessments.
Freddy and Fanny can use the same undersriting and if they can get capital compete with the new clean entity.
The bad exposure will be wrung out anyway.
What is important is getting mortgages good written.
Before we swamped again by new rumors and early breaking news, a couple of thoughts:
1) Rupert Murdoch -- how involved is he in the content at the Times? They print the unsourced stuff about Paulson and his $15B helper, and they also just printed some more unsourced speculation about Bush giving Israel the "amber light" for a strike against Iran.
2) Josh Rosner. He first rose to fame with his paper on the the ratings agencies (which in my opinion set this whole horrible ball in motion). He proportedly co-wrote the paper with Mason of Drexel University.
I checked into who this person was last year and didn't get very far. He is widely touted as "managing director" at Graham Fisher. At the time, it looked like Graham Fisher was listed as a software education business that operated out of the same address as Rosner. The address looked like a small residential apartment in New York. So... question still remains, what is Graham Fisher, and who is actually paying Rosner for his "research."
My suspicion is that he receives support from the Hudson Institute where they originally presented their paper -- the one that caused a huge crisis of confidence by calling into question the whole idea of quality in the mbs business.
President of this conservative think tank is Herb London (http://www.herblondon.com) He appears to have links to a great many institutions. The ones that caught my eye were Merrill Lynch, Certification Board for Homeland Security, etc.
Why bother with this? Because a year after Rosner popped up and started the ball rolling, he's back again being widely quoted and interviewed (on bloomberg, re: gse's, for example).
Anyone have any idea if this Rosner is more than a potemkin village?
Roubini has a good post on what to do about the GSEs.
Yves Smith quoting Buiter on the GSEs:
"Off-balance-sheet vehicles and off-budget financing were the bread and butter of the US federal government long before they became popular in Wall Street and the City of London."
Somewhere I think I said months ago that the GSEs are the US Government's SIVs....wish I could remember where....
Krugman links to Tanta's post here, and also adds the helpful info that IndyMac and Freddie Mac are not related to Bernie Mac. But how does he know this for sure?
WTF is up with Fantasy Mae and the on-going continuous, retarded grunting from the highly constipated Lockhart/Paulson, with the suggestion that "OFHEO is working with the Financial Accounting Standards Board, or FASB, on the revision of rule FAS 140" HUH...WTF...an instant revision before the mkt opens in Japan Monday?
Are these criminals so bold, that they need to alter and manipulate accounting fraud, while SEC, FTC, DOJ and thousands of countless bean counters watch in silence, as these (FUC----o97985guuyjgjyiytf) adjust, bend, distort and devalue this corrupt shi-bag of a company further???
Ok, can we step back from this pile of trash and recall, that back in the good ol days ( July 11, 2005) there was already a revision made for the highly corrupt and mis-managed Countrywide...and now the paid for shill and trator Lockhart, is suggestion more revisions, because, by God Friends Of Angelo and Friends Of Bush, Paulson, Bernanke, Lockhart, et al, need more special treatment:
Re: Board members decided to revise paragraphs 40B and 40C of FAS 140 to require that, in order to receive sales accounting treatment, the qualifying special purpose entity (QSPE) be subject to revenue recognition tests only at the time a deal involving derivative securities is made. In other words, says Ernst & Young partner David Thrope, co-chair of the Commercial Mortgage Securities Association's FASB Monitoring Committee, generally these deals would not be subject to ongoing tests.
Hence, as we fast forward, what about using our friends at Citi as an example of these revisions that are more current: Elimination of QSPEs and Changes in the FIN 46(R) Consolidation Model
In April 2008, the FASB voted to eliminate Qualifying Special Purpose Entities (QSPEs) from the guidance in SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities." While the revised standard has not been finalized and the Board's proposals will be subject to a public comment period, this change may have a significant impact on Citigroup's consolidated financial statements as the Company may lose sales treatment for assets previously sold to a QSPE, as well as for future sales. This proposed revision could be effective as early as January 2009. As of March 31, 2008, the total assets of QSPEs to which Citigroup, acting as principal, has transferred assets and received sales treatment were $760 billion.
It just keeps getting better and the more rules and regs, the more these people pretend that the rules they help write, should not apply!
SOP 07-1 sets forth more stringent criteria for qualifying as an investment company than does the predecessor Audit Guide. In addition, SOP 07-1 establishes new criteria for a parent company or equity method investor to retain investment company accounting in their consolidated financial statements. Investment companies record all their investments at fair value with changes in value reflected in earnings. The Company is currently evaluating the potential impact of adopting SOP 07-1.
Published reports said Merrill could resort to selling its 49 per cent stake in the Blackrock asset management firm, along with its 20 per cent interest in the Bloomberg news agency, reportedly for $4.5 billion US. Shares of Merrill dropped $3.03, or nine per cent, to $29.74 US.
"The Senate last night passed the latest Frank-Dodd bill, an attempt designed by Credit Suisse and UBS investment banks, to use Federal money to put a ''floor'' under this collapse in mortgage values. If the bill becomes law, when the home price collapse breaks through this ''floor,'' massive US taxpayer-funded ''nationalized losses'' will occur.''
I think my political representitive just volunteered us to pay for Wall Streets and the Federal Reservese mistakes, they get to keep the gambleing profits and We pay the loses.
That is some nice arrangement, I wonder how much they had to pay the Polititions for that bill?
Oh yes, Ellie Mae. Adopted early by the Trump mortgage company, which they trumpeted widely. And then trump figured out that he had put his name on a bunch of mortgage bozos and gracefully bowed out of the mortgage origination business.
Ech.
I get hot flashes when I think about Ellie Mae, but I don't think it's for the reasons above.
Woes at Loan Agencies and Oil-Price Spike Roil Markets - NY Times
Lehmans stock has lost 37 percent of its value in the last week alone and is on track for its worst weekly streak since the investment house went public in 1994. The perceived risk that the bank will default on its loans also rose on Friday, as measured by the market for so-called credit default swaps.
Freddie Mac stock has lost 47 percent of its value in the last week alone. Fannie Mae shares have fallen 45 percent during that period. Both companies shares are trading at their lowest levels in nearly two decades.
That was a very interesting and astute observation about this "person" and the company that he is a principal of.
It seems like he is referenced in like every article about Fannie and Freddie. The fact that he was here around the same time last year, vanished, and is now back feeding the news is kind of eery.
"It's not enough to prove that a defaulted loan was deficient in underwriting but you have to prove that the reason that it defaulted is tied to the deficiency," said Joshua Rosner, a financial consultant at Graham Fisher & Co.
It's rare for bondholders to take such action given the potential legal costs and the strain a move like this could have on an investor's relationship with a Wall Street bank.
However, many investment managers are facing billions in losses, and things are widely expected to get worse, one CDO manager told The Post
The administration is considering all options in its contingency planning,'' Rosner said.That doesn't mean to say that we're at an inflection point where any decision is required immedia
Looks like the rescue of Fannie and Freddie will be arriving before the market open on Monday, to ensure there are no problems with the auction of debt.
No doubt, TEH BULLS!!! will see this as a very bullish signal. I, however, seeing as Paulson was telling the whole world that Fannie and Freddie were in wonderful shape on Friday, and will now be flying to their rescue in Benny's helicopter less than 72 hours later, will take this as a sign that things at FRE and FNM are far worse than we are imagining.
Dead cat bounce Monday, maybe. Dollar tanks. Treasury sell off. Steady declines throughout the week on bank earnings. And if we get another present from Chucky, maybe WaMu will be gone on Friday night.
Joshua Rosner, an analyst with Graham Fisher Co., and Len Blum, a partner at Westwood Capital LLC, talk with Bloomberg's Kathleen Hays in New York about U.S. Senate Banking Committee Chairman Christopher Dodd's statement about Fannie Mae and Freddie Mac, the solvency of the two largest U.S. mortgage-finance companies and the potential for a government bailout. Fannie Mae and Freddie Mac pared losses in New York trading after Treasury Secretary Henry Paulson said the government backs them ``in their current form.'' Dodd later said the companies may have several options for capital and liquidity, including gaining access to the Federal Reserve's discount window.
Josh Rosner is a real person. I went to high school with him. He apparently was Ranger hockey fan, or just overweight. Curly red hair like a clown. Very loud. Is this helpful?
That is what you call really serendipitous, when a poster actually has a connection to the person in question, some history and then another person changing bongwater, while another person makes fudge and then Fannie gets bailed out. I like it, and all in the space of maybe ten minutes.
Sylvain Raynes, Joshua Rosner, and Christopher Whalen are the power trio that has come to personify today's collapsing capital markets.
Raynes (an expert at decoding the value of complex structured securities), Rosner (who advises policymakers and regulators scrambling to deal with the housing and credit blowups), and Whalen (whom accounting firms hire to find skeletons lurking in investment bank closets) started appearing together on economic panels several years ago. Once obscure, they have graduated from giving small group talks to packing venues like Washington's American Enterprise Institute and the New York Athletic Club in Manhattan.
This is actually very good night night to test my hunch, my hypothesis, my vision -- which is that CR is a poster of alias names, i.e, I feel in my heart he dresses up like a poster that has several names and thus he interjects small talk into these blogs while in disguise.
Now that the fox is outside of the coop, I suggest one look for missing names.
I think Tanta posts as anonymous and CR posts as anonymouse.
Hmmm.. there's a Josh Rosner of Westchester County associated with the "Paradise Heating Oil Company" as a contact for the epa. Their naics classification is "solid waste collection" Other contact there has a name that is associated with a ton of litigation.
"There are many forms of socialism. The version practiced in the US is the most deceitful one I know. An honest, courageous socialist government would say: this is a worthwhile social purpose (financing home ownership, helping my friends on Wall Street); therefore I am going to subsidize it; and here are the additional taxes (or cuts in other public spending) to finance it.
Instead the dishonest, spineless socialist policy makers in successive Democratic and Republican admininstrations have systematically tried to hide both the subsidies and size and distribution of the incremental fiscal burden associated with the provision of these subsidies, behind an endless array of opaque arrangements and institutions. Off-balance-sheet vehicles and off-budget financing were the bread and butter of the US federal government long before they became popular in Wall Street and the City of London."
QUOTE 2:
"So lets call a spade a bloody shovel: nationalise Freddie Mac and Fannie May. They should never have been privatised in the first place. Cost the exercise. Increase taxes or cut other public spending to finance the exercise. But stop pretending. Stop lying about the financial viability of institutions designed to hand out subsidies to favoured constituencies. These GSEs were designed to make losses. They are expected to make losses. If they dont make losses they are not serving their political purpose.
So I call on Secretary Paulson, Chairman Bernanke and Director Lockhart to drop the market-friendly fig-leaf. Be a socialist and proud of it. Come out of the red closet. The Soviet Union may have collapsed, but the cause of socialism is alive and well in the USA. Granted, the US version of socialism is imperfect thus far. The federal authorities have mainly intervened to socialise the losses in the financial sector while allowing the profits to continue to be drained off into selected private pockets. But that is bound to be an oversight. It surely cannot be the intention of such committed Marxists to target taxpayer-funded largesse solely at the very rich and at a few favoured, electorally sensitive constituencies. Fannie and Freddie are, or will be, safe in the hands of comrades Paulson, Bernanke and Lockhart."
Argento
check the article. It says 1Billion isn't covered by FDIC, accounting for 10,000 people. That's 100 grand per soul, and the govt will cover half. So it's probably 50,000 rather than half a million, lost by 10,000.
A report that the treasury is "seriously mulling" anything is not hard news, and until it is confirmed and detailed, should be considered more likely a planted story. Penalty points for the UK Times, and everyone on down, for passing rumors, and probably serving the fed's purpose.
China, what is China thinking/doing. Since they have been funding our debt and they have a cool trillion or so US dollars, they are the big player hear. How do you suppose they are reacting to this slow motion implosion???? If they hit the door, it is all over very quickly.
Now that I think about it, China is the top dog here, but there are several other lenders/bankers that could start a stampede for the door. The Saudi's, the Russian's and as I said China.
All these guys got to be feeling something warm running down their leg.
Why wait till monday? Sunday night Asia opens. Those people bought serious GSE paper. Partly to inflate dollar so we could gorge on trinkets and flat panels.
The freddie runoff threat beat down Paulson. Without access to capital, the only responsible position is to go to runoff, which provides maximum protection, but totally farks the lending markets.
You want us to do our work, give us money and protect our shareholders, otherwise we cut risk and head to runoff.
That was ballsy, and Hank had to give in.
Now, all we need is somebody to start buying these houses, maybe we should allow Kuwait citizens to all buy second homes here for when Iran takes over the empty husk after the oil is gone.
Last time we had a big bank failure someone pointed out to me in a comment thread that FHLB actually stands in line in front of the FDIC for bank assets during failures. Given that IndyMac is into the FHLB for some $10B or so is it possible we're effectively seeing a massive shift of assets from the FDIC coffers into the FHLB (FHLB raids the deposit accounts, FDIC pays the depositors off from the insurance fund)? Who wins or loses in that deal?
Uncle Billy Vs. Mt. Pelerin writes:
Some people call me Maurice.
I think Tanta posts as anonymous and CR posts as anonymouse.
Tanta wouldn't bother,...and you'd have to be very good to fool the majority of the readers of this blog.
CR might feel the need to post a line or two as anonymous, but he's so busy with the news feeds, analysis, and chart crafting that I doubt he has the time.
They both have fairly distinctive styles, and an upfront nature, so why would they need the subterfuge? I think they're mostly entertained by the wacky band of misfits as it is.
[I got a feeling 15 Billion is not the answer Mr. Market was looking for]
Agreed. This last moment lame stick save will result in a quick rebound and get stuffed in the net immediately. There is now little wiggle room for the authorities. No BSC bottom this time around. Intra-day suckers rally - maybe.
Sources close to the US Treasury suggested, however, that it was more likely the Federal Reserve would intervene to help the two companies shore up their finances. The Fed could extend them 10-year loans on favourable terms. Alternatively, it could buy shares in each company in the event of a cash call. 'Both of these routes would seem less drastic and more favourable than any direct government control,' the source said
America has $6.881 trillion dollars in deposit institutions, but only $4.241 trillion of those deposits are insured, according to the latest FDIC year-end statement. That leaves a staggering gap of more than $2.6 trillion sitting in uninsured bank accounts.
In the IndyMac takeover, it has been estimated that around $1 billion of deposits in the bank were uninsured, impacting 10,000 depositors.
Still, thou art blest, compar'd wi' me!
The present only toucheth thee:
But Och! I backward cast my e'e,
On prospects drear!
An' forward, tho' I canna see,
I guess an' fear
Most of us now think that providing a special kind of accounting for those kinds of securitizations is no longer appropriate, FASB chairman Robert Herz said on Monday.
Mr. Herz has been calling the proposal killing the Qs, a reference to the accounting concept known as the qualified special purpose entity, or QSPE.
Under U.S. accounting rules, banks have been allowed to use QSPEs to keep mortgage-backed securities and other passive investment vehicles that are legally isolated from the banks that created them off their books.
At its meeting on Wednesday, FASB will consider adjusting FAS 140 so that it eliminates the idea of a QSPE and a related exemption from another rule called FIN 46R.
But some worry FASB, under pressure to do something about the credit crisis, is moving too quickly.
FASB is being pressed by a request from the (U.S. Securities and Exchange Commission) to finish this project by the end of this year... so they are taking the route that they are currently on, said Scott Stengel, a structured finance attorney at the Orrick law firm in Washington.
Its very unclear if this would be better disclosure for investors, he said.
Re: The knee-jerk reflex is to put everything on the balance sheetall the assets and all the liabilities, said Jack Ciesielski, publisher of The Analysts Accounting Observer, on Monday. But you also wind up having a balance sheet that means less because you put assets and liabilities on the balance sheet that might not be able to be used by the company.
We're truly staring into the abyss here, with implications far beyond simple stock market machinations.
Current situations kind of makes the Olympics silly...
Unless you're of the camp that feels that Beijing 2008 has a certain Berlin 1936 feel to it, except without Jesse Owens, and hopefully, genocide and war...
I remember a number of years ago I saw some news item where an nsa official in military uniform was talking about how China was waging economic war on us, and how his job was to defend the country against this type of war. That people had no clue what was going on.
FIN 46R requires an entity to consolidate a VIE if that enterprise has a variable interest that will absorb a majority of the variability of the VIEs expected losses, receive a majority of the variability of the VIEs expected residual returns, or both. The entity required to consolidate a VIE is known as the primary beneficiary. A QSPE is a type of VIE that holds financial instruments and distributes cash flows to investors based on preset terms. QSPEs are commonly used in mortgage and other securitization transactions. In accordance with SFAS No. 140 and FIN 46R, Merrill Lynch typically does not consolidate QSPEs. Information regarding QSPEs can be found in the Securitization section of this Note and the Guarantees section in Note 11 to the Condensed Consolidated Financial Statements.
Where an entity is a significant variable interest holder, FIN 46R requires that entity to disclose its maximum exposure to loss as a result of its interest in the VIE. It should be noted that this measure does not reflect Merrill Lynchs estimate of the actual losses that could result from adverse changes because it does not reflect the economic hedges Merrill Lynch enters into to reduce its exposure.
\t \t mortgage related positions, both residential and commercial, within trading assets of $9.3 billion, derivative assets of $20.6 billion and loans measured at fair value on a non-recurring basis of $12.5 billion;
\t \t credit derivatives of $18.0 billion on corporate and other non-mortgage underlyings that incorporate unobservable correlation;
\t \t corporate bonds and loans within trading assets of $6.2 billion (including $1.6 billion of auction rate securities);
\t \t private equity and principal investment positions of $4.3 billion within investment securities;
\t \t equity, currency and commodity derivative contracts of $7.6 billion, that are long-dated and/or have unobservable correlation.
Level 3 liabilities are primarily comprised of:
\t \t mortgage related derivative liabilities, both residential and commercial, of $25.0 billion;
\t \t credit derivatives of $16.9 billion on corporate and other non-mortgage underlyings that incorporate unobservable correlation;
\t \t equity and currency derivative contracts of $7.5 billion that are long-dated and/or have unobservable correlation;
\t \t structured notes classified as long term borrowings of $5.7 billion with embedded equity and commodity derivatives that are long-dated and/or have unobservable correlation; and
\t \t non-recourse debt arrangements classified as long term borrowings of $1.7 billion related to certain non-recourse long-term borrowings issued by consolidated SPEs.
Blest are those
Whose blood and judgment are so well commingled
That they are not a pipe for Fortunes finger
To sound what stop she please.
- William Shakespeare
"China: No. The United States is too big to fail. The doctrine of MAD (Mutually Assured Destruction) will surely prevent a general run on the U.S."
Wish I believed that. But I keep thinking about all the wars people start. If MAD actually worked there wouldn't be pre-emptive (political) wars. But you don't have to go back in history very far say 5 years, to find stupid people starting stupid wars for stupid reasons.
We're very lucky that the Olympics are coming soon, I can't see China as a country doing anything really stupid before then. But the individual politician, military officer or banker, yep that is still a possibility.
No doubt we have managed to give China, Saudi's, Russia etc control of our economic future in many ways. This is a real amazing accomplishment in just a few years.
who cares about failing Macs! What about those failing iPhones????
what about the brand new Penny Mae (PNMA)?
Tanta,
how will the Fed/Treas. avoid the mother of all moral hazards? Lesser evil override principle?
It lives on...
Fannie May Candies - Gourmet Chocolates, Candies and Gifts
Sincerely,
An Old Fart
My iMac works fine, for now. Can I get a bailout when it fails?
Once you stop laughing from Tanta's latest, you could read this if you wanted to laugh again:
Every Time I Try to Crawl Out, They Pull Me Back in! - J. Bradford DeLong's Grasping Reality with All Eight Tentacles
I guess were marking the passing of an era with the Maes & Macs, good riddance. Pixies, on the other hand will be remembered for the red tongue you got after you licked the sweet stuff from the palm of your hand....good memories of carefree days indeed....
I wonder if the IMB failure and last weeks washout in FNM & FRE will spur both a run on deposits (at least over $100k) and a run on shares, to get out of the way of S&L crisis deux.
i don't like most macs - including big macs. but i like mac and cheese.
Pixy Stix were a different Pixie--I think Tanta's referring to Fannie May's version of the turtle.
Pixies, on the other hand will be remembered for the red tongue you got after you licked the sweet stuff from the palm of your hand....good memories of carefree days indeed....
Sigh.
You are thinking of Pixie Sticks. Or Stix. Whatever.
Fannie May Pixies were something else entirely.
Fannie May Pixies | Gourmet Chocolate Caramel Candies
I watched Kudlow's program. It is truly remarkable, that imbecile Luskin, can't spot a bear market when we've been in one for a year and what's more he doesn't have a clue how they work. Fargin retard.
So when we form a GSE to cover the defaulting loans GM and Ford made to SUV and pickup buyers it will be called "Mac Truck?" And all those pleasure craft permanently tied up to the repo docks "Mae B Knot?" And all those RV loans gone bad that were supposed to allow boomers to crisscross the land Sallie Forth?
I knew a Sloppy Sally in high school. She ended up working at the tanning salon which is somehow appropriate.
Nice post Tanta!
Hope you are well.
When the both get socialized I vote for FEDemac.
OT, CRE - from ml implode
[Lehman Brothers has closed their Small Business Finance (SBF) unit announcing they would cease accepting any new applications on 2008-07-02. The Lake Forest, CA based commercial real estate division laid off 200+ people according to an email sent by one AE]
mal writes:
who cares about failing Macs! What about those failing iPhones????
mal | 07.12.08 - 4:03 pm | #
Clearly, iPhones are more important than the 2nd largest bank failure in U.S. history.
CNN yesterday:
http://img369.imageshack.us/my.php?image=cnnindymacwtffd5.jpg
Attaboy for RobDawg. Funny stuff. I especially liked Mae B Knot.
So, Tanta, I would like to know your opinion. Are we in for years of mortgage turmoil, or will this clear up in a year or so? IYHO, of course.
GRETCHEN MORGENSON
The Fannie and Freddie Fallout
"ITS dispiriting indeed to watch the United States financial system, supposedly the envy of the world, being taken to its knees. But thats the show were watching, brought to you by somnambulant regulators, greedy bank executives and incompetent corporate directors..."
FAIR GAME; The Fannie And Freddie Fallout - NY Times
oops, i meant PennyMac:
Private National Mortgage Acceptance Company
But Federal Home Loan Bank (FHLB) Consolidated Obligations are sometimes called "Flubs."
And Fannie May has an outlet store just a little west of the Loop (maybe Adams or Madison just west of Halsted) should you ever be in Chicago and need day old Pixies really cheap.
Bobby Darin sings "Mack the Knife"
YouTube
- Bobby Darin sings "Mack the Knife"
That "PennyMac" is quite interesting. It's a bottom feeder (acceptance corp). I guess that's how low the brand has fallen.
FFDIC:
I hate to be the one to point this out, but Gretchen should have added "clueless financial press" to her list of sponsors.
How about the newly formed Private National Mortgage Acceptance Company, LLC (PennyMac)?. If you think it's a coincidence that it's based out of Calabasas, CA, it's not, it was started by former Countrywide managers.
Actually you want a black hole one:
Penny Benny.
The Pension Benefit one.
Soon to have GM, Ford, and Chrysler.
That should put the fear into congress.
Someday this war's gonna end...
Jimmy Mack? Jimmy! Aw Jimmy Mack, when are you comin' back?
oooohh! Choclate Pixies...even better, thanks!
How about ideas for nicknames for the Fed's new alphabet soup of tools?
For example, when they open the discount window to Fannie and Freddie, I am hoping they call it the Government Sponsored Enterprise Credit Facility, or "GSECF". Because I think "Gassy Fuc" could really catch on.
"Jimmy,Jimmy,Oh Jimmy Mack,when are you coming back?"
I thought Fanny Mae was a candy company?
Yah, Tanta, you have it wrong, it is candy:
Re: This week, the owners of the Fannie Mae candy stores in the Chicago area will begin to shut them down. Theyre closing down the business, all the Fannie Mae stores in the Midwest and the Fannie Farmer stores, too. And the Chicago factory, too.
How about KolkhozMae? And as motto: "We feed and house people!"
2 in 1 baby!
M Reeves.......Great minds and all that!
Don't U B changin' stuff, Pitchfork.
YouTube -
CR should not be allowed to go on vacation. Bad things happen.
Yeah, when is CR coming back? I'm with you.
The chief executive officer of Belgian-Dutch bank Fortis stepped down Friday, the bank said, amid shareholder anger over his handling of problems arising partly from the U.S. sub-prime crisis.
Fortis shares were trading at about 30 euros in July 2007 but are now at 10 euros
The members of the board wish to thank Mr Votron for his commitment to Fortis during the past four years. He has made a crucial contribution to the development of Fortis and has transformed the company, thanks to important strategic decisions, into a more international group," said the statement
Business finance news - currency market news - online UK currency markets - financial news - Interactive Investor
Want cheese on that?
Is Momma Macs'd out yet?
David, it was started by Stanford Kurland, who was being groomed for #1 at Countrywide. If Fannie (ech) and Freddy (gag) go completely kerplooie, guess who's first in line to soak up all the paper? Supposedly GS has partnered with someone to do this as well.
Pixie stix? Isn't that what Ben's been waving around lately in some vain attempt to create a new wave of nostalgia?
So there was a trick that the old school, penny stock, pump-and-dump boiler room firms used to use. The firms would choose a name that sounded similar to a respectable investment bank, for example, there was one named A.S. Goldmen. When the elderly target on the other end of the phone heard that the caller was from something something "Goldman", he thought he was dealing with a reputable firm. It must have been a sign that the bubble was reaching a peak when private mortgage lenders started using the same shady trick, by naming themselves things meant to be easily confused with the government sponsored enterprises. CharterMac, MuniMae, IndyMac, these firms are all now insolvent or teetering on insolvency. Good f'ing riddance to y'all.
Given the way these things have gone lately, the move by Lehman is the signal. Monday it will start to crumble. Tuesday through Thursday will bring denials. The crumbling will continue.
Friday will be very quiet.
I owned MuniMae briefly. I love their guidance on how to fill out the K-1, with arrows for all the entries, kinda like an auto repair manual.
Read this, please:
Time for comrade Paulson to pull the plug on the Fannie and Freddie charade
What a perverted "socialism for the corporatocracy and rich" system we have over here in the US, where I presently live.
Capitalism, the best economic system ever, is not perfect, as many of its basic assumptions are simply not true: people are not rational, information is not perfectly and symmetically available etc.
Therefore, for it to work, one needs REGULATION. Working regulation. The corporatocracy is only really after its own interest: "capitalist" when it suits their self-interest and socialist when that suits their self-interest. And always against regulation.
Well why would people confuse a bank they can deposit money into (or could have) and an agency that doesn't accept deposits, whatever the name? Anyhoo the bank that has deposit customer is already bust, so the bad rep of Fanny and Freddie is beside the point.
The Bank of the United States had nothing to do with the US government- but it sure didn't help confidence when it failed in 1930.
fanniemay is a gour-may candy company, dishing out sweet treats to its customers. FNM isn't doing anything like that now. No cause for confusion.
I always just assumed that IndyMac was from Indianapolis or Indiana. Not that their location matters.
And if the Bank of America fails, not to mention United States Bank, what would that do to public confidence? LOL
The incest goes even further back in time. There was a "Private National Mortgage Assoc." that called itself Pennie Mae, and a "non-governmental security" developed by PMI Mortgage back in the 70's called Pennie Mae.
And what we need right now is a crazy President really creating a mess for us all:
President George W Bush backs Israeli plan for strike on Iran - Times Online
Bush backs Israel's plan to bomb Iran.
I have a friend who snorted a pixie stix once when we were kids. Her nose bled intermittently for several days until she finally got all the dust out. Last I heard from her was last summer when she was buying into UYG and advised me to do the same. Told her I'd think about it.
jim, I don't know how to tell you this bit have you ever heard of the phrase, wie nieder?
BONDHOLDERS BENEFIT
But any intervention could benefit bondholders by strengthening perceptions of government backing of the firms.
"Equity holders would suffer greatly while the position of senior debt holders would actually be enhanced by the more explicit government support," JPMorgan analysts Alex Roever and Cie-Jai Brown wrote in a note to clients.
UPDATE 1-Paulson cool to shield Fannie/Freddie investors-WSJ
| Reuters
Ya think?
Recently, Spain tried to float a 15 year bond issue, and failed. This got me thinking: at what point will the US government be unable to continue financing it's deficit? At what point does the fiscal debt become unsustainable, triggering a fiscal crisis? If we were any other country, we would have crossed that Rubicon years ago. Any thoughts?
Please don't forget about the Sophie Mae Peanut Brittle
uke, that would put us straight into Argentina style crisis.
So lets not talk about it for a while.
O-kay?
Someday this war's gonna end...that would be an qualifying event for someday.
Nemo, I love you man! The English language is just amazing! Think about it! It has more words than French, German, and Russian languages combined.
At what point does the fiscal debt become unsustainable, triggering a fiscal crisis?
Let's see, according to SSA, the SS surplus (2007 ~$179B) starts decreasing in 2010, meaning the government would have to increase private borrowing. By 2017, there is no SS surplus...
How bout we merge all the failed organizations and have them run under a new agency called Resolution Trust Properties Corp., or RatPac?
with apologies to Robert Burns, this is too good not to be made topical:
Wee sleekit, cowrin, tim'rous beastie,
O, what a panic's in thy breastie!
Thou need na start awa sae hasty,
Wi' bickering brattle!
I wad be laith to rin an' chase thee,
Wi' murd'ring pattle!
....
Thy wee bit housie, too, in ruin!
Its silly wa's the win's are strewin':
And naething, now, to big a new ane,
O' foggage green!
An' bleak December's winds ensuin'
Baith snell an' keen!
Thou saw the fields laid bare and waste
An' weary winter comin' fast,
An' cozie here, beneath the blast,
Thou thought to dwell,
Till, crash! the cruel coulter past
Out thro' thy cell.
That wee bit heap o' leaves an' stibble
Has cost thee mony a weary nibble!
Now thou's turn'd out, for a' thy trouble,
But house or hald,
To thole the winter's sleety dribble
An' cranreuch cauld!
But, Mousie, thou art no thy lane
In proving foresight may be vain:
The best-laid plans o' macs an' maes
Gang aft a-gley,
An' lea'e us nought but grief an' pain
For promised joy.
Nuke
That's the last and final edifice remaining to be toppled. The ability of the US to borrow in USD.
When this is all said and done its very possible that could happen. But we are some ways from that.
The issue is that the Euro block is also under a lot of stress right now. Countries like Italy, Spain, France, Greece, Portugal, etc can't print their own money - but they have growing deficits and their economies are also decelerating.
And what we need right now is a crazy President really creating a mess for us all:
" Creative Destruction"
The English language is just amazing!
But there's a problem with the English language, we can interpret that phrase as destruction clearing the way for new creations, or as creating new destructive messes.
How about ideas for nicknames for the Fed's new alphabet soup of tools?
ala RTC
Taxpayer-Underwritten Resolution Department
FUDGE A LA "FANNY MAE"\t
1 stick butter (only)
1/2 c. milk
2 pkgs. Kosto (brand) chocolate pudding (regular)
Boil the above for 1 minute only (small boil).
Add: 1 tsp. vanilla 1/2 c. nuts, chopped
Pour into 7 1/2 x 11-inch pan (or 9 x 12-inch pan if you want thinner fudge). Do not butter pan. Makes 2 pounds.
They say this is the official "Fanny Mae" Candy Store recipe. It's not, but it's good enough to be!!!
Oh me, I think there is a little fudge confusion here, sorry kids:
Michigan Country Lines Online | Recipes
| Fannie Mae Fudge
Fannie Mae Fudge
Ingredients
1/2 c. margarine
3 3/8 c. white sugar
1 1/8 c. packed brown sugar
2 ounces German chocolate
13 ounce Hershey chocolate bar
12 ounce chocolate chips
1 T. vanilla
13 ounces evaporated milk
16 ounce jar marshmallow fluff
1 1/2 -2 c. chopped nuts
Uncle Billy, does this look right?
Oh boy, here's the latest rumor from Paully and Bubbles, Fannie & Freddie get the discount window, and a $15billion equity infusion from the Treasury.
Fannie, Freddie to Get $15 Billion From U.S., the Times Says - Bloomberg.com
July 12 (Bloomberg) -- Henry Paulson, the U.S. Treasury secretary, is planning a $15 billion capital injection into U.S. mortgage companies Fannie Mae and Freddie Mac, the Times of London reported, without citing anyone.
The plan is ``high'' on the list of solutions to the nation's mortgage crisis, the newspaper said. In exchange for the capital, the U.S. government would get a new class of shares, the newspaper reported, citing no one.
Paulson's plan also would allow the two mortgage companies to use the Federal Reserve's discount window so they can borrow from the central bank, the Times reported.
Fannie Mae and Freddie Mac own or guarantee almost half the $12 trillion of home loans in the U.S. and lost about half their market value last week on speculation of a government bailout, the London-based newspaper said.
FFDIC: GRETCHEN MORGENSON
That article is just more of that morality play crap. Who cares who benefited from the fraud and will effectively end up stealing taxpayers money? The crime has already been committed. Let it go already. We need to get pragmatic and fix these problems that the thieves created! It is time for you to forget those head bandages on your skinless face. It is time to look towards the future. Now is the time for us all to pitch in and do our part! For if we don't act in time, the mobs will soon be at the gates of our private estates! [Ed: Take this last statement out. Too elitist.]
How about "Securities Trust and Bank Investment Division" or STBID the Shitbirds.
Nevski,
"Henry Paulson is planning a $15 Billion capital injection into US mortgage companies FNMA and FRE...."
Looks like a trial baloon to me. Congress has to approve gov't expenditures.
No help for Fannie and Freddie shareholders
CNNMoney.com: 404 Page Not Found
Treasury Secretary Henry Paulson is adamant that no government bailout plan benefit shareholders.
Talk of a rescue heated up this week after a Lehman report Monday said that the companies may need to raise a combined total of $75 billion due to a possible Financial Accounting Standards Board (FASB) rule change that would force the mortgage giants to move securities they now hold onto their balance sheets.
Even though both Fannie and Freddie were quick to say that they have plenty of capital, a sentiment echoed by Treasury Secretary Paulson, the stocks still ended the week down just over 45% for the week and about 75% for so far this year.
dr strangemoney
I will contemplate your thoughts as I drive my BMW to Whole Foods for organic milk and a prepared salmon dinner...I hope the lines are not too long...
Regulators: FAS 140 should not apply to Fannie Mae, Freddie Mac
REG - Financial Week
I have to tell you, an accounting change should not drive a capital change, James Lockhart, director of the Office of Federal Housing Enterprise Oversight, said in a CNBC television interview.
Lockhart said OFHEO is working with the Financial Accounting Standards Board, or FASB, on the revision of rule FAS 140.
Statements on the possible impact of the accounting rule by Lehman and other analysts on Monday struck a raw nerve for investors already concerned the ailing housing market would create greater-than-expected losses for the government-sponsored enterprises (GSEs). The companies shares, mortgage-backed securities and credit-default swaps that were pummeled on Monday rebounded after Lockharts comments on Tuesday.
Lockhart has obviously been paid off, if you have been watching lately!
The following discussion relates to "SFAS 140"
10-Q: LEHMAN BROTHERS HOLDINGS INC
Jul 10, 2008
Qualified Special Purpose Entity.QSPEs are passive entities with limited permitted activities. SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125 ("SFAS 140"), establishes the criteria an entity must satisfy to be a QSPE, including types of assets held, limits on asset sales, use of derivatives and financial guarantees, and discretion exercised in servicing activities. In accordance with SFAS 140 and FIN 46(R), the Company does not consolidate QSPEs.
This is a month old, but nice backgroud for Fannie:
FASB Bombshell: FAS 140 to Eliminate QSPEs
The Big Picture
This is hyper-technical accounting stuff, but it has enormous potential impact on markets. There may be trillions of dollars worth of derivatives buried on banks' QSPEs.
To grossly oversimplify, Banks have been using QSPEs to effectively boost their leverage and hence, their return on capital. Without the balance sheet constraints of the old days, banks were encouraged to create assets -- by making lots of loans they shouldn't have -- that could, in theory, be sold off later. It hasn't quite worked out that way.
QSPEs can have legitimate purposes -- but they also can obfuscate the true financial condition of a bank or broker.
US banks fear being forced to take $5,000bn back on balance sheets
Accounting changes could force US banks to take thousands of billions of dollars back on to their balance sheets in the coming months in a move that is likely to curb further their lending and could push them into new capital raisings, analysts have warned.
Analysts at Citigroup said a planned tightening of the rules regarding off-balance sheet vehicles would force banks to reconsider arrangements and could result in up to $5,000bn of assets coming back on to the books.
The off-balance sheet vehicles have been used by financial institutions to keep some assets off their balance sheets, thereby avoiding the need to hold regulatory capital against them.
Birgit Specht, head of securitisation analysis at Citigroup, said: "We think it is very likely that these vehicles will come back on balance sheet.
"This will not affect liquidity because [they] are funded, but it will affect debt-to-equity ratios [at banks] and so significantly impact banks' ability to lend."
FT.com / Registration / Sign-up...
Wow baby!
Are we worried that the public will think all Maes and Macs are the same?
Well, yes. This is a public where a significant enough fraction thinks Sadam Hussein caused 9/11.
Less snarkily, it's exactly the reason why companies so jealously guard their trademarks. You try to put a lower case 'i' in front of something, and see how fast Apple is all up in your grill. (as an aside, there's been a battle between Jobs and the Beatles for decades)
I'm having trouble wrapping my head around that 5000 Billion write down thing, or this, or fudge:
Banks Say Auction-Rate Investors Can't Have Money
Bloomberg.com
Bank of America, UBS AG, Wachovia Corp. and at least four dozen other firms that sold $330 billion of securities with rates set through periodic bidding are thwarting attempts to create a secondary market that would allow investors to access their cash, according to investors. Dealers claim they are saving customers from needless losses on securities they marketed as similar to cash-like instruments.
Bankers Use Secret Clinics, Nurses to Beat Breakdowns
Bankers Use Secret Clinics, Nurses to Beat Breakdowns (Update1) - Bloomberg.com
The island isn't a country hideaway. It's the Causeway Retreat, a mental health and addiction center that charges as much as 10,000 pounds ($20,000) a week for treatment away from the prying eyes of colleagues and the media. There is a waiting list for the facility's 15 rooms.
We get lots of CEOs of companies, traders, high-end business guys,'' says Managing Director Brendan Quinn.They want treatment, but they want it to be discreet.''
good luck to them all in treating their npd.
RESERVE BOARD FINDS ACTION UNNECESSARY; Six-Hour Session Brings No Change in the New York Rediscount Rate. OFFICIALS ARE OPTIMISTIC Mellon Also Attends Cabinet Meeting, but Declines to Discuss Developments. Board Reviews Credit Situation. Cut in Discount Rate Expected RESERVE BOARD SEES ACTION NOT NEEDED BANK RATE CUT EXPECTED
--New York Times, Oct. 30, 1929
the dark side of the moon is probably piped into their rooms.
Re: Causeway retreat. I am willing to give them treatment, and I will be discreet.
Auntie Mae: Yes, especially the part about the chopped nuts.
Its not a Fannie Mae outlet store, just west of the Loop, its the Blomberg Chocolate Factory, on the corner of Kinzie and Milwaukee Ave. My office is 1 1/2 blks to the west, and when the wind's off of the lake, it smells REALLY yummy!!...LOL
oldtrader
I think that the following nicknames should now be used:
Alaska Housing Finance Authority: Frostie Mae
American Mobile Home Finance - Trailer Mac
Please add your own.
Monday morning Bush, Paulson and congress, after meeting this evening in emergency session to do the legislative part, announce the charter and immediate opening of a new MC.
This one will sell bonds and common stock immediately to put the house buying pubic back on track.
No impediments of the travesty of the past 5 years, tight underwriting and honest assessments.
Freddy and Fanny can use the same undersriting and if they can get capital compete with the new clean entity.
The bad exposure will be wrung out anyway.
What is important is getting mortgages good written.
I'm bookmarking this. Will I find this as intriguing when I'm not stoned?
I think so.
Before we swamped again by new rumors and early breaking news, a couple of thoughts:
1) Rupert Murdoch -- how involved is he in the content at the Times? They print the unsourced stuff about Paulson and his $15B helper, and they also just printed some more unsourced speculation about Bush giving Israel the "amber light" for a strike against Iran.
2) Josh Rosner. He first rose to fame with his paper on the the ratings agencies (which in my opinion set this whole horrible ball in motion). He proportedly co-wrote the paper with Mason of Drexel University.
I checked into who this person was last year and didn't get very far. He is widely touted as "managing director" at Graham Fisher. At the time, it looked like Graham Fisher was listed as a software education business that operated out of the same address as Rosner. The address looked like a small residential apartment in New York. So... question still remains, what is Graham Fisher, and who is actually paying Rosner for his "research."
My suspicion is that he receives support from the Hudson Institute where they originally presented their paper -- the one that caused a huge crisis of confidence by calling into question the whole idea of quality in the mbs business.
President of this conservative think tank is Herb London (http://www.herblondon.com) He appears to have links to a great many institutions. The ones that caught my eye were Merrill Lynch, Certification Board for Homeland Security, etc.
Why bother with this? Because a year after Rosner popped up and started the ball rolling, he's back again being widely quoted and interviewed (on bloomberg, re: gse's, for example).
Anyone have any idea if this Rosner is more than a potemkin village?
Stunning post Tanta - I take an interest in "what's in a name", etymology, vox pop soc(iology).
Your post was illuminating.
-K
BTW... the "Graham-Fisher" website looked exactly the same this time last year.
Home
Roubini has a good post on what to do about the GSEs.
Yves Smith quoting Buiter on the GSEs:
"Off-balance-sheet vehicles and off-budget financing were the bread and butter of the US federal government long before they became popular in Wall Street and the City of London."
Somewhere I think I said months ago that the GSEs are the US Government's SIVs....wish I could remember where....
Krugman links to Tanta's post here, and also adds the helpful info that IndyMac and Freddie Mac are not related to Bernie Mac. But how does he know this for sure?
WTF is up with Fantasy Mae and the on-going continuous, retarded grunting from the highly constipated Lockhart/Paulson, with the suggestion that "OFHEO is working with the Financial Accounting Standards Board, or FASB, on the revision of rule FAS 140" HUH...WTF...an instant revision before the mkt opens in Japan Monday?
Are these criminals so bold, that they need to alter and manipulate accounting fraud, while SEC, FTC, DOJ and thousands of countless bean counters watch in silence, as these (FUC----o97985guuyjgjyiytf) adjust, bend, distort and devalue this corrupt shi-bag of a company further???
Re: Board members decided to revise paragraphs 40B and 40C of FAS 140 to require that, in order to receive sales accounting treatment, the qualifying special purpose entity (QSPE) be subject to revenue recognition tests only at the time a deal involving derivative securities is made. In other words, says Ernst & Young partner David Thrope, co-chair of the Commercial Mortgage Securities Association's FASB Monitoring Committee, generally these deals would not be subject to ongoing tests.
In April 2008, the FASB voted to eliminate Qualifying Special Purpose Entities (QSPEs) from the guidance in SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities." While the revised standard has not been finalized and the Board's proposals will be subject to a public comment period, this change may have a significant impact on Citigroup's consolidated financial statements as the Company may lose sales treatment for assets previously sold to a QSPE, as well as for future sales. This proposed revision could be effective as early as January 2009. As of March 31, 2008, the total assets of QSPEs to which Citigroup, acting as principal, has transferred assets and received sales treatment were $760 billion.
SOP 07-1 sets forth more stringent criteria for qualifying as an investment company than does the predecessor Audit Guide. In addition, SOP 07-1 establishes new criteria for a parent company or equity method investor to retain investment company accounting in their consolidated financial statements. Investment companies record all their investments at fair value with changes in value reflected in earnings. The Company is currently evaluating the potential impact of adopting SOP 07-1.
Bitch, bitch, bitch..... more fudge in a moment
Oh wait......obvious stuff, Blackrock will slither out from the snakepit and take over......I'm currently barfing fudge!
Hmmm
Published reports said Merrill could resort to selling its 49 per cent stake in the Blackrock asset management firm, along with its 20 per cent interest in the Bloomberg news agency, reportedly for $4.5 billion US. Shares of Merrill dropped $3.03, or nine per cent, to $29.74 US.
Great post Tanta. It put a smile on my face, and I'd always wondered how those names came to be.
"The Senate last night passed the latest Frank-Dodd bill, an attempt designed by Credit Suisse and UBS investment banks, to use Federal money to put a ''floor'' under this collapse in mortgage values. If the bill becomes law, when the home price collapse breaks through this ''floor,'' massive US taxpayer-funded ''nationalized losses'' will occur.''
I think my political representitive just volunteered us to pay for Wall Streets and the Federal Reservese mistakes, they get to keep the gambleing profits and We pay the loses.
That is some nice arrangement, I wonder how much they had to pay the Polititions for that bill?
Don't forget Ellie Mae -- loan origination system company; still going strong.
Oh yes, Ellie Mae. Adopted early by the Trump mortgage company, which they trumpeted widely. And then trump figured out that he had put his name on a bunch of mortgage bozos and gracefully bowed out of the mortgage origination business.
Ech.
I get hot flashes when I think about Ellie Mae, but I don't think it's for the reasons above.
Damn, damn, damn..nothing! WTF!
Silobreaker: Document Not Found
"I get hot flashes when I think about Ellie Ma"
Ahhh, butter!
Woes at Loan Agencies and Oil-Price Spike Roil Markets
- NY Times
Lehmans stock has lost 37 percent of its value in the last week alone and is on track for its worst weekly streak since the investment house went public in 1994. The perceived risk that the bank will default on its loans also rose on Friday, as measured by the market for so-called credit default swaps.
Freddie Mac stock has lost 47 percent of its value in the last week alone. Fannie Mae shares have fallen 45 percent during that period. Both companies shares are trading at their lowest levels in nearly two decades.
Woe is me!
See Also: Vanessa-Mae - Wikipedia, the free encyclopedia
Re: Joshua Rosner and Grahm Fischer & Co.
That was a very interesting and astute observation about this "person" and the company that he is a principal of.
It seems like he is referenced in like every article about Fannie and Freddie. The fact that he was here around the same time last year, vanished, and is now back feeding the news is kind of eery.
Maybe he's Mephistopheles?
God they just keep coming....I'm done already: Nellie Mae—Undergraduate and Graduate Student Loans and Student Loans for Parents
Nelliemae???
SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America
Re: Rosner says a straight bailout is out of the question. But there are other options. The government's considering what those might be. But, Rosner warns, Fannie and Freddie may still be able to sort it out on their own.
Can Fannie and Freddie fight free fall? | Marketplace From American Public Media
What about the syrup.....
Oh sorry was thinking Aunt Jemima.....
Nevsky: I don't think so, he sounds a little Canadian.
"It's not enough to prove that a defaulted loan was deficient in underwriting but you have to prove that the reason that it defaulted is tied to the deficiency," said Joshua Rosner, a financial consultant at Graham Fisher & Co.
It's rare for bondholders to take such action given the potential legal costs and the strain a move like this could have on an investor's relationship with a Wall Street bank.
However, many investment managers are facing billions in losses, and things are widely expected to get worse, one CDO manager told The Post
snorted a pixie stix. bled intermittently for days.
yet somehow quite germane
OT question: When will we know who will buy IMB?
The administration is considering all options in its contingency planning,'' Rosner said.That doesn't mean to say that we're at an inflection point where any decision is required immedia
I went to bed with Sallie Mae, but I didn't love her in the morning...
Looks like the rescue of Fannie and Freddie will be arriving before the market open on Monday, to ensure there are no problems with the auction of debt.
No doubt, TEH BULLS!!! will see this as a very bullish signal. I, however, seeing as Paulson was telling the whole world that Fannie and Freddie were in wonderful shape on Friday, and will now be flying to their rescue in Benny's helicopter less than 72 hours later, will take this as a sign that things at FRE and FNM are far worse than we are imagining.
Dead cat bounce Monday, maybe. Dollar tanks. Treasury sell off. Steady declines throughout the week on bank earnings. And if we get another present from Chucky, maybe WaMu will be gone on Friday night.
The cavalry has arrived. $15 billion cash injection for F&F from Paulson:
US Treasury rescue for Fannie Mae and Freddie Mac - Times Online
meant to include this link:
UK Times: Freddie, Fannie to Get $15 Billion Cash Injection « naked capitalism
Blum Says Freddie Insolvent,' FannieRunning on Fumes'
Blum Says Freddie `Insolvent,' Fannie `Running on Fumes' - AOL Video
Joshua Rosner, an analyst with Graham Fisher Co., and Len Blum, a partner at Westwood Capital LLC, talk with Bloomberg's Kathleen Hays in New York about U.S. Senate Banking Committee Chairman Christopher Dodd's statement about Fannie Mae and Freddie Mac, the solvency of the two largest U.S. mortgage-finance companies and the potential for a government bailout. Fannie Mae and Freddie Mac pared losses in New York trading after Treasury Secretary Henry Paulson said the government backs them ``in their current form.'' Dodd later said the companies may have several options for capital and liquidity, including gaining access to the Federal Reserve's discount window.
Whoa Nellie. It's almost getting easy to tell the difference between the whiskey drinkers, coffee addicts, bongloaders, tweakers, and bakers.
All I do is coffee, honest.
i'm just on water ma
Speaking of that...I really gotta change my bongwater. Shizzle is black as Cheney's heart.
Josh Rosner is a real person. I went to high school with him. He apparently was Ranger hockey fan, or just overweight. Curly red hair like a clown. Very loud. Is this helpful?
I thought you might say dick...
gerald,
That's the guy we been looking for!
I saw him on Lehrer some months ago and he was so calm I thought...Ritalin!
That is what you call really serendipitous, when a poster actually has a connection to the person in question, some history and then another person changing bongwater, while another person makes fudge and then Fannie gets bailed out. I like it, and all in the space of maybe ten minutes.
Rosner File: went to high school in Westchester New York,no honors classes or sports. Smoker. Not Canadian.
Was this helpful?
Yeehaw. Jung in da house! (or something like that)
So... Gerald... where did you go to school? This might be helpful, but I still want to know who pays this fellow.
Linkage so far: Rosner-Hudson Institute-Herb London (Merrill)-NYU-Larry Fink (Blackrock)
...and then? Nuthin? Smoker yes... tells us he's easily corruptible.
UB,
He gave $1000 to RUDY GIULIANI PRESIDENTIAL COMMITTEE
Hudson Institute >
Hudson Upcoming Events Detail
Curly red hair like a clown. Very loud.
We are having his IRS audit sent to us now.... please standby
Rosner File: check him out at this link, Lehrer Newshour talking with Gwen Ifill and Mark Zandi. That's cred it you ask me.
Online NewsHour: Analysis | Mortgage Foreclosures on the Rise | March 12, 2007 | PBS
As to the school, I'll demur, but it's a public one. Don't know any more
Prophets of the credit crisis
The oracles of collapsing credit markets - Jul. 11, 2008
By Katie Benner, writer-reporter
JULY 11, 2008: 11:05 AM ED
Sylvain Raynes, Joshua Rosner, and Christopher Whalen are the power trio that has come to personify today's collapsing capital markets.
Raynes (an expert at decoding the value of complex structured securities), Rosner (who advises policymakers and regulators scrambling to deal with the housing and credit blowups), and Whalen (whom accounting firms hire to find skeletons lurking in investment bank closets) started appearing together on economic panels several years ago. Once obscure, they have graduated from giving small group talks to packing venues like Washington's American Enterprise Institute and the New York Athletic Club in Manhattan.
This is actually very good night night to test my hunch, my hypothesis, my vision -- which is that CR is a poster of alias names, i.e, I feel in my heart he dresses up like a poster that has several names and thus he interjects small talk into these blogs while in disguise.
Now that the fox is outside of the coop, I suggest one look for missing names.
see how I can pretend to be Tanta. Haloscan isn't exactly secure. I told CR and Tanta they could be impersonated, but to they listen?
I'm a joker, I'm a smoker, I'm midnight toker...
YouTube - Steve Miller Band - The Joker
I'm Spartacus. I'm Spartacus.I'm Spartacus.I'm Spartacus.I'm Spartacus.All together now!
Some people call me Maurice.
I think Tanta posts as anonymous and CR posts as anonymouse.
Hmmm.. there's a Josh Rosner of Westchester County associated with the "Paradise Heating Oil Company" as a contact for the epa. Their naics classification is "solid waste collection" Other contact there has a name that is associated with a ton of litigation.
Red Hair... not so sure bout that.
According to CNN:
"10,000 customers of failed IndyMac Bancorp Inc could lose as much as $500,000."
Who the hell was this stupid?
I wrote this post a few days back. Only with much less erudition and experience:
Gumby Fresh: Time To Retire The Cutsie Diminutives
The habit is a small melanomia on the body of late period US capitalism.
Required reading:
Time for comrade Paulson to pull the plug on the Fannie and Freddie charade
QUOTE 1:
"There are many forms of socialism. The version practiced in the US is the most deceitful one I know. An honest, courageous socialist government would say: this is a worthwhile social purpose (financing home ownership, helping my friends on Wall Street); therefore I am going to subsidize it; and here are the additional taxes (or cuts in other public spending) to finance it.
Instead the dishonest, spineless socialist policy makers in successive Democratic and Republican admininstrations have systematically tried to hide both the subsidies and size and distribution of the incremental fiscal burden associated with the provision of these subsidies, behind an endless array of opaque arrangements and institutions. Off-balance-sheet vehicles and off-budget financing were the bread and butter of the US federal government long before they became popular in Wall Street and the City of London."
QUOTE 2:
"So lets call a spade a bloody shovel: nationalise Freddie Mac and Fannie May. They should never have been privatised in the first place. Cost the exercise. Increase taxes or cut other public spending to finance the exercise. But stop pretending. Stop lying about the financial viability of institutions designed to hand out subsidies to favoured constituencies. These GSEs were designed to make losses. They are expected to make losses. If they dont make losses they are not serving their political purpose.
So I call on Secretary Paulson, Chairman Bernanke and Director Lockhart to drop the market-friendly fig-leaf. Be a socialist and proud of it. Come out of the red closet. The Soviet Union may have collapsed, but the cause of socialism is alive and well in the USA. Granted, the US version of socialism is imperfect thus far. The federal authorities have mainly intervened to socialise the losses in the financial sector while allowing the profits to continue to be drained off into selected private pockets. But that is bound to be an oversight. It surely cannot be the intention of such committed Marxists to target taxpayer-funded largesse solely at the very rich and at a few favoured, electorally sensitive constituencies. Fannie and Freddie are, or will be, safe in the hands of comrades Paulson, Bernanke and Lockhart."
Argento
check the article. It says 1Billion isn't covered by FDIC, accounting for 10,000 people. That's 100 grand per soul, and the govt will cover half. So it's probably 50,000 rather than half a million, lost by 10,000.
I got a feeling 15 Billion is not the answer Mr. Market was looking for.
A report that the treasury is "seriously mulling" anything is not hard news, and until it is confirmed and detailed, should be considered more likely a planted story. Penalty points for the UK Times, and everyone on down, for passing rumors, and probably serving the fed's purpose.
Um, Anonymous, the discount window is the big schwing.
Uncle Sam providing capital just insures that shareholders too get a bone.
Monday is going to be wild. Like I said before, retail piled on at the wrong moment.
Now they get clipped by the knife catchers.
Someday this war's gonna end...
China, what is China thinking/doing. Since they have been funding our debt and they have a cool trillion or so US dollars, they are the big player hear. How do you suppose they are reacting to this slow motion implosion???? If they hit the door, it is all over very quickly.
Now that I think about it, China is the top dog here, but there are several other lenders/bankers that could start a stampede for the door. The Saudi's, the Russian's and as I said China.
All these guys got to be feeling something warm running down their leg.
Why wait till monday? Sunday night Asia opens. Those people bought serious GSE paper. Partly to inflate dollar so we could gorge on trinkets and flat panels.
The freddie runoff threat beat down Paulson. Without access to capital, the only responsible position is to go to runoff, which provides maximum protection, but totally farks the lending markets.
You want us to do our work, give us money and protect our shareholders, otherwise we cut risk and head to runoff.
That was ballsy, and Hank had to give in.
Now, all we need is somebody to start buying these houses, maybe we should allow Kuwait citizens to all buy second homes here for when Iran takes over the empty husk after the oil is gone.
Someday this war's gonna end...
Now, all we need is somebody to start buying these houses
Expand the EB-5 Visa to immigrants who are able to buy a 500K house in cash, along with the other requirements.
Vai Kapitalistishe cowboys no go to sleep veez pretty young vomans? Vai ztay up vorry? Yes, ve drink to former Empires togezer. Skoll!
China: No. The United States is too big to fail. The doctrine of MAD (Mutually Assured Destruction) will surely prevent a general run on the U.S.
It's not much of stretch anymore however that there might be crazies intent on popping the global bubble for fun and profit.
The hedge funds honed their "bear raiding" skills with Iceland -- an entire country. Maybe theyr'e ready for primetime now?
If the helicopters are all busy in asia, maybe Uncle Ben will rent a fleet of Mac trucks.
Last time we had a big bank failure someone pointed out to me in a comment thread that FHLB actually stands in line in front of the FDIC for bank assets during failures. Given that IndyMac is into the FHLB for some $10B or so is it possible we're effectively seeing a massive shift of assets from the FDIC coffers into the FHLB (FHLB raids the deposit accounts, FDIC pays the depositors off from the insurance fund)? Who wins or loses in that deal?
Since I got her late and the comments on this post have already gone to hell, remind me to someday tell y'all the joke about MacGregor and the goat.
MacGregor - AOL Video
Oh hell, just buy something. Farm land...beef critters...palladium...wood stoves...silver buckles...Kto znyet?
UB,
You did see the 5000 Billion thing right?
Uncle Billy Vs. Mt. Pelerin writes:
Some people call me Maurice.
I think Tanta posts as anonymous and CR posts as anonymouse.
Tanta wouldn't bother,...and you'd have to be very good to fool the majority of the readers of this blog.
CR might feel the need to post a line or two as anonymous, but he's so busy with the news feeds, analysis, and chart crafting that I doubt he has the time.
They both have fairly distinctive styles, and an upfront nature, so why would they need the subterfuge? I think they're mostly entertained by the wacky band of misfits as it is.
[I got a feeling 15 Billion is not the answer Mr. Market was looking for]
Agreed. This last moment lame stick save will result in a quick rebound and get stuffed in the net immediately. There is now little wiggle room for the authorities. No BSC bottom this time around. Intra-day suckers rally - maybe.
sdtfs,
I thought doc was just kidding ;^)
Sources close to the US Treasury suggested, however, that it was more likely the Federal Reserve would intervene to help the two companies shore up their finances. The Fed could extend them 10-year loans on favourable terms. Alternatively, it could buy shares in each company in the event of a cash call. 'Both of these routes would seem less drastic and more favourable than any direct government control,' the source said
America has $6.881 trillion dollars in deposit institutions, but only $4.241 trillion of those deposits are insured, according to the latest FDIC year-end statement. That leaves a staggering gap of more than $2.6 trillion sitting in uninsured bank accounts.
In the IndyMac takeover, it has been estimated that around $1 billion of deposits in the bank were uninsured, impacting 10,000 depositors.
See Hobo: YouTube - Hobo v. Tramp
Still, thou art blest, compar'd wi' me!
The present only toucheth thee:
But Och! I backward cast my e'e,
On prospects drear!
An' forward, tho' I canna see,
I guess an' fear
Anonymous,
Re: ;^)
See (what I mean) that's frigg'n obvious as hell --- who the hell else would'a done that? Is it me?
Nah, nah, nah nah naaa
YouTube - Of Mice and Men ~ Slipped Away
WTF is this?
UB^2: I did. But this frog has been boiled slowly and completely. Only quadrillions would have any effect at this point.
FAS 140 revamp: FASB mulls plan for killing the Qs
Standards-setter leaning toward ending special accounting treatment for QSPEs; 'knee-jerk reflex'
REG - Financial Week
Most of us now think that providing a special kind of accounting for those kinds of securitizations is no longer appropriate, FASB chairman Robert Herz said on Monday.
Mr. Herz has been calling the proposal killing the Qs, a reference to the accounting concept known as the qualified special purpose entity, or QSPE.
Under U.S. accounting rules, banks have been allowed to use QSPEs to keep mortgage-backed securities and other passive investment vehicles that are legally isolated from the banks that created them off their books.
At its meeting on Wednesday, FASB will consider adjusting FAS 140 so that it eliminates the idea of a QSPE and a related exemption from another rule called FIN 46R.
But some worry FASB, under pressure to do something about the credit crisis, is moving too quickly.
FASB is being pressed by a request from the (U.S. Securities and Exchange Commission) to finish this project by the end of this year... so they are taking the route that they are currently on, said Scott Stengel, a structured finance attorney at the Orrick law firm in Washington.
Its very unclear if this would be better disclosure for investors, he said.
BOOO!!
The BSC debacle had us peering over the cliff of a market meltdown, but that pales in comparison to a GSE failure/takeover.
We're truly staring into the abyss here, with implications far beyond simple stock market machinations.
Scary times ahead.
I'm slow..
Re: The knee-jerk reflex is to put everything on the balance sheetall the assets and all the liabilities, said Jack Ciesielski, publisher of The Analysts Accounting Observer, on Monday. But you also wind up having a balance sheet that means less because you put assets and liabilities on the balance sheet that might not be able to be used by the company.
We're truly staring into the abyss here, with implications far beyond simple stock market machinations.
Current situations kind of makes the Olympics silly...
Unless you're of the camp that feels that Beijing 2008 has a certain Berlin 1936 feel to it, except without Jesse Owens, and hopefully, genocide and war...
I remember a number of years ago I saw some news item where an nsa official in military uniform was talking about how China was waging economic war on us, and how his job was to defend the country against this type of war. That people had no clue what was going on.
Did they win?
tj & the bear writes:
The BSC debacle had us peering over the cliff of a market meltdown, but that pales in comparison to a GSE failure/takeover.
We're truly staring into the abyss here, with implications far beyond simple stock market machinations.
Scary times ahead.
HaloScan.com - Comments
Re: right to pledge or exchange...
For your entertainment:
Merrill Lynch & Co Inc · 10-Q · For 3/28/08
http://www.secinfo.com/dsvr4.t51a.htm
Variable Interest Entities
FIN 46R requires an entity to consolidate a VIE if that enterprise has a variable interest that will absorb a majority of the variability of the VIEs expected losses, receive a majority of the variability of the VIEs expected residual returns, or both. The entity required to consolidate a VIE is known as the primary beneficiary. A QSPE is a type of VIE that holds financial instruments and distributes cash flows to investors based on preset terms. QSPEs are commonly used in mortgage and other securitization transactions. In accordance with SFAS No. 140 and FIN 46R, Merrill Lynch typically does not consolidate QSPEs. Information regarding QSPEs can be found in the Securitization section of this Note and the Guarantees section in Note 11 to the Condensed Consolidated Financial Statements.
Where an entity is a significant variable interest holder, FIN 46R requires that entity to disclose its maximum exposure to loss as a result of its interest in the VIE. It should be noted that this measure does not reflect Merrill Lynchs estimate of the actual losses that could result from adverse changes because it does not reflect the economic hedges Merrill Lynch enters into to reduce its exposure.
Can I haz a phree howsh now?
It's a dead horse, but since I'm the only one entertained, a little more on Merrill:
Merrill Lynch & Co Inc · 10-Q · For 3/28/08
http://www.secinfo.com/dsvr4.t51a.htm
Level 3 assets are primarily comprised of:
\t \t mortgage related positions, both residential and commercial, within trading assets of $9.3 billion, derivative assets of $20.6 billion and loans measured at fair value on a non-recurring basis of $12.5 billion;
\t \t credit derivatives of $18.0 billion on corporate and other non-mortgage underlyings that incorporate unobservable correlation;
\t \t corporate bonds and loans within trading assets of $6.2 billion (including $1.6 billion of auction rate securities);
\t \t private equity and principal investment positions of $4.3 billion within investment securities;
\t \t equity, currency and commodity derivative contracts of $7.6 billion, that are long-dated and/or have unobservable correlation.
Level 3 liabilities are primarily comprised of:
\t \t mortgage related derivative liabilities, both residential and commercial, of $25.0 billion;
\t \t credit derivatives of $16.9 billion on corporate and other non-mortgage underlyings that incorporate unobservable correlation;
\t \t equity and currency derivative contracts of $7.5 billion that are long-dated and/or have unobservable correlation;
\t \t structured notes classified as long term borrowings of $5.7 billion with embedded equity and commodity derivatives that are long-dated and/or have unobservable correlation; and
\t \t non-recourse debt arrangements classified as long term borrowings of $1.7 billion related to certain non-recourse long-term borrowings issued by consolidated SPEs.
Blest are those
Whose blood and judgment are so well commingled
That they are not a pipe for Fortunes finger
To sound what stop she please.
- William Shakespeare
WTF?
HoeBoy Mae:
I guess you're not using that to refer to Horatio, but then who?
Bernanke, Paulson & Lockhart discuss Fannie: SCENE I. A desert place.
Goodnight and hope I didn't piss anyone off
RE: It's a dead horse, but since I'm the only one entertained, a little more on Merrill:
Don't feel like you need to follow the bone,
HaloScan.com - Comments
More like a skull?
Tanta would perhaps like this, but then again...
Yahoo! GeoCities: Get a web site with easy-to-use site building tools.
The Mousetrap for the Narrator
of W. Shakespeare's Hamlet
"China: No. The United States is too big to fail. The doctrine of MAD (Mutually Assured Destruction) will surely prevent a general run on the U.S."
Wish I believed that. But I keep thinking about all the wars people start. If MAD actually worked there wouldn't be pre-emptive (political) wars. But you don't have to go back in history very far say 5 years, to find stupid people starting stupid wars for stupid reasons.
We're very lucky that the Olympics are coming soon, I can't see China as a country doing anything really stupid before then. But the individual politician, military officer or banker, yep that is still a possibility.
No doubt we have managed to give China, Saudi's, Russia etc control of our economic future in many ways. This is a real amazing accomplishment in just a few years.
there have been some new Macs recently...PennyMac (Private National Mortgage Acceptance Company, LLC), launched just this year