FDIC Prepares for More Bank Failures
Submitted by
CalculatedRisk on Thu, 08/28/2008 - 12:28pm (74 comments)
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Someone is hiring.
Pizza Hut?
Someone is hiring.
Sargento's
They should just put their offices in a struggling REO office building from a dissolved bank. That is thinking ahead intelligently. Leasing now is just thinking very short term.
CRE should be cheap by now.
I guess this means the Dallas job market will be counter cyclical to the rest of the US.
5 year lease? Couldn't they have gotten by with something shorter, say a 2 year term?
Clearly they are expecting this to be a long, painful, drawn out process.
Good time for equities to rally...
The FDIC should open their own line of pizza parlors. It would save on costs and help with secrecy.
Five years? Geez, what do they know?
Looks like there will be plenty of experienced ex-Lehman and Citi employees available.
And these folks will already know where the skeletons are.
Really, thoough, this is just so damn sad it has come to this point in American business.
They should just put their offices in a struggling REO office building from a dissolved bank. That is thinking ahead intelligently. Leasing now is just thinking very short term.
Well, there's always the L.A. branch.
But, But But El Presidente Jorge Bushco told me that 'the economic fundametals are sound'? Do you think that George Bush would lie to the American people if it helped him?
Impeach, Convict, Imprison
1. Revoke passports permanntly
2. Seize assets
3. Arrest.
Bushco-Cheneyburton-Rove
Do It Now.
Not sad, just part of the business cycle that many a-holes thought they could postpone indefinitely.
Yup, adult movie actresses are in huge demand out here in the Valley.......
Although some were a-holes, I'm sure some were also ignorant fools.........
Does Aaron have an implode-o-meter for banks; what will the final tally be when the bleeding is done I will ante-in for the pool?
C Mack writes:
Looks like there will be plenty of experienced ex-Lehman and Citi employees available.
And these folks will already know where the skeletons are.
Really, thoough, this is just so damn sad it has come to this point in American business.
But dont you have to have actual skills like be an accountant?
What was up with FNM at the bell?
Bank failures?! That is unpossible!
GDP is up! Inflation is only at 1.1% - The Decider said so! Hanky Panky Paulson said "Everything is contained" and Bubbles Ben is going to keep rates below the inflation rate so that the inflation expectations are "contained." Everything is contained, and everything only goes up! Buy now, or be priced out forever!
Seriously, though, I can see why they'd get a 5 year rent. If the kleptocrats managed to drag this out for far longer than needed (and making it much worse in the process), it'll take 5 years before the bank failures slow down. Hey, in 5 years we'll be through the next president (betting on a 1-term president, regardless of who "wins") so isn't that also nice.
What a sad joke that our nation's biggest employment opportunities in the future will be picking over the remains of the past!
C Mack writes:
Looks like there will be plenty of experienced ex-Lehman and Citi employees available.
With what they've done to Lehman and Citi, do you really want them rampaging through FDIC?
Those EX-smartest-guys-in-the-room should be mowing lawns.
Or swinging from lamposts.
Funny. Keying off CR's comment about hiring, I checked the Careers page on the FDIC site.
They seem to list the # of vacancies either as: 1. a specific number, 2. Keyword "Few" or 3. Keyword "Many"
There are "Many" vacancies for Criminal Investigators throughout the US.
I'm all in SKF...wish I'd gotten in today at the close though!
Anyone see that "crisis what crisis article on marketwatch.com?
As my grandmother says: Quelle Doucebag..
Heres a little tidbit from a Bloomberg puff piece on Paulson:
Paulson sold his 3.23 million shares in Goldman, worth about $500 million at the time, when he took the Treasury job, according to regulatory filings. He was exempted from paying capital gains tax on the sale of those stakes under a rule meant to avoid penalizing wealthy people who take government jobs and are forced to sell assets.
Paulson also sold about $25 million of holdings in a Goldman fund whose sole asset was a stake in Industrial & Commercial Bank of China, the world's largest publicly traded financial institution. The bank raised $22 billion in its initial public offering in October 2006, the world's biggest IPO.
Paulson Risks Goldman Standard as Fannie, Freddie Shares Erode - Bloomberg.com
This really makes me see red. Whatever happened to Noblesse Oblige? This guy cant retire on $425 M? Does anyone know where I can find this rule that avoids penalizing wealthy people? The taxpayer gets to pony up his missing $75 M, while he figures a way to bail out cronies on the taxpayers dime. How sick is this?
I'm sure I could get a job there.
I'm capable of saying "this toxic crap on your books shouldn't be valued at 100 cents on the dollar; it should be valued at 3 cents on the dollar." It's something that most bankers aren't capable of figuring out.
Hey, in 5 years we'll be through the next president (betting on a 1-term president, regardless of who "wins") so isn't that also nice.
Why bet on one term? Based on recent precedence even a complete cock up could win reelection. Happened more than once.
"I'm all in SKF...wish I'd gotten in today at the close though!"
I think that even the close might be too early ...if LEH sells something there is going to be a pop or if SEC comes in with its new shorting rules, there is bound to be a pop ... not to worry you though, cause the fundamentals are still the same and you WILL soon be making money, but you might have to wait a few days longer
Hey, I wasn't serious about the Lehman and Citi folks working at FDIC,
but, cyclic nature of business granted, Anon, this is and will be a very tough way for lessons to be learned. I only hope the lessons stick this time around.
I'd have no hope for those lessons to stick except it's the Lawn Boyz of Wall Street who are getting hurt too.
Just a matter of time before most in America figure out they do not NEED
Wall Street to manage their retirement finances and proceed to cut out the middleman as much as possible.
Just a thought
Interesting article at Seeking Alpha on all that FNM-FRE preferred stock the banks own. No accident, it was custom made for the banks with exemptions from capital requirements etc.
Now, because they used the banks to beef up the GSE's covertly they now face the dilemma of how to save the GSE's overtly without damaging the banks. Toss in the demand for higher FDIC insurance fees and Treasury and the Fed are like 18th century doctors in that their 'cures' risk killing the patients.
"69 retirees"
Is that some kind of dirty code?
GDP may be up 3.3, but my ruler goes up to 12. The only thing taking a bigger pounding than the U.S. economy is this sally I just got finished with.
Aug. 28 (Bloomberg) -- The U.S. Justice Department issued new guidelines to rein in prosecutors pursuing corporate fraud cases, bowing to pressure from Congress.
The changes bar the government from demanding that companies turn over confidential legal materials to win leniency in plea deals. Announced by Deputy Attorney General Mark Filip at the New York Stock Exchange today, the revisions also prevent prosecutors from penalizing companies that pay attorney fees for employees under investigation.
Arlen Specter, a Pennsylvania Republican who sponsored the Senate bill, called the Justice Department's action today a step in the right direction,'' but said legislation is still needed, in part to make it harder for the agency to change the rules again.
`Welcome Change'
Senate Judiciary Chairman Patrick Leahy, who has urged the department to revise the rules to avoid having Congress do it, praised the guidance asa significant and welcome change.'' Leahy, a Vermont Democrat, didn't indicate whether he would schedule a vote on Specter's measure.
The business and legal groups said they will still press for its passage.
Justice Dept. Reins in Corporate Fraud Prosecutors (Update1) - Bloomberg.com
Take that Sheila!
From WSJ:
"Financial shares were lifted by a Lehman Brothers report saying that mortgage giant Fannie Mae's capital "appears much stronger" than people believe. The report also said that Freddie Mac should be able to make it through the housing downturn without government intervention."
While good for Fannie it sure seems like faint praise for Freddie.
Hey, I wasn't serious about the Lehman and Citi folks working at FDIC,
I know you weren't, Mack. I was hoping you weren't. And I didn't mean to sound like I was raking you over the coals.
It's after 5 here. Toonymars loosened my fingers on the keyboard.
This crisis will pass. The only ones who learn anything will be the ones destroyed; it'll be a life lesson they'll remember to their end of days.
The others, the survivors who come through more-or-less unscathed will repeat this (or one similar) (if and) when things are humming again.
Unless we string them up.
Anybody got any string?
In 2010 do I take a job working for the FDIC that has me working 60 hour weeks and goes on forever or do I get a job working for the census bureau counting empty houses that I can bill 60 hours a week(while working 10), still blow out my quota and will be done by fall?
Pay would be the same after its all said and done.
Get your torch's and your pitchforks and meet me in the village square at midnight
fornicating_in_Fresno
If your in Fresno you are fornicated.
Elvis writes:
"69 retirees"
Is that some kind of dirty code?
Elvis | 08.28.08 - 5:31 pm | #
Could be the IQ requirement.
Fornicating in Fresno?
You mean you're a plastic countertop installer?
I thought everybody went with granite these days.
LOL!
..........
I think we should track CR's "hiking"
There maybe a correlation between his absence and bank failures!
CR who are you closing down tomorrow?
............
@nades
In this case, correlation might be causation...
Did anybody remember to slip the LoJack into his backpack like I suggested last time?
Do you think Tanta helps?
I bet she writes the closure sign that they tape to the inside of the window?
I bet its eloquent and way to long for most americans to read!
.......
There's another group that appears to be hiring in NYC (contrary to the general malaise otherwise developing); at least one major bank is training up a fresh crop of newbies for trading in distressed bonds. Best of luck to all the baby vultures now hatching.
As my Grandmother used to say, las, "One man's crap is another man's compost."
I'd say the odds are rising on Obama. And you know I haven't been an O fan.
It just looks like the "change thing" is working. Right timing. Right message. Right support. But above all, right money.
So much about politics is money. I'll bet Hillary's fund raisers, the Hillraisers, really step up for Obama now, while team Obama helps to whittle down Hill's debts. A 3 to 1 money edge will be hard to overcome in the GE.
Put me down on record for 8 years of Obama. 4 rough years of economic depths, followed by 4 better years of mild recovery. At the end, you won't recognize America. It will be one of the world's leading quasi-socialist-capitalist states.
These will be 8 long years for corporations and the stock market. America won't be a great place to invest, compared to alternatives. A lot of our financial regulatory structure will be overhauled from top to bottom, and Wall Street will have be cut off at the knees. Obama owes Wall Street nothing.
Help?? Help help?? ONe question on valuations by FDIC and by Calculated Risk re house equity. Do they figure house value as gross fmv, or do they deduct the usual and likely cost of disposition (6% or more)?? Huge difference. Sub question, do they include in net house value, the carry cost until likely disposition? Under standard accounting rules, one accrues likely expenses to get to net value; eg acct. receivable reserves. So do the Feds, FDIC, and Calculated Risk use the Gross number? Net? some other? Example: House 200k appraised, bank loans 190 (fha). Known average disposal cost to bank, 11,000 broker/closing and $4000 carrying and $maintenance. Net to bank will be, predictably across the class, $185. ?? For figuring bank capital reserve under accting rules?
Bonus: how do Fannie/freddie/fha compute their net capital after loss reserves, gross appraised values, net?
Please, no guessing, I am baffled enough, since I find authority both ways and neither. Thanks to someone knowledgeable (or who knows what CR does on this).
Taxd2deth
More CRE demand. Maybe the FDIC can hurry and buy a crapload of Dell Laptops for the new hires and bail 3 segments out with 1 bucket.
bearly writes:
More CRE demand. Maybe the FDIC can hurry and buy a crapload of Dell Laptops for the new hires and bail 3 segments out with 1 bucket.
bearly | 08.28.08 - 6:16 pm | #
Three segments? That would be... CRE, IT and what... fast food?
Tyler K writes:
"I'm all in SKF...wish I'd gotten in today at the close though!"
somebody else is accumulating SKF
Money Flows: Buying on Weakness - Markets Data Center - WSJ.com
(was also the case yesterday but to a lesser degree)
and indeed you can see on charts that up/down volume is clearly below 1.
there was a lot of support at the close.
But even short term indicators (30-60 min) look like the downside is not quite done yet, and I see a small gap around 112-113 (60 min. charts) that may get filled.
Also the VIX is very close to turning upward, but not exactly there yet...today
Bearly, they buy Dells, then move offices into vacant Olive Gardens.
The menu could be much more diverse than
"Oh God No! Not pizza again. That's it, I'm quitting!"
Perfect, so the Fed will simply hire everyone and lease all the CRE. Problems solved!!!!
Fitch Downgrades WM Covered Bonds Program to 'AA'
MarketWatch.com
Aug 28, 2008 (BUSINESS WIRE) -- Fitch Ratings has downgraded WM Covered Bond Program's (WMCBP) series 1, 2 and 3 to 'AA' from 'AAA' and removed them from Rating Watch Negative. As of the end of July 2008, aggregate outstanding covered bonds were equivalent to approximately US$7.8 billion and are ultimately secured over a portfolio of U.S. residential mortgage loans of US$11.7 billion held by Washington Mutual Bank ('WMB'; rated 'BBB/F2' by Fitch), resulting in a current overcollateralization (OC) of 50.6%.
"Three segments? "
Well, maybe not a segment but put a bid into the job market and prop it up. Government hiring has been the only bright spot. A bailout.
I believe the soviet union had a low unemployment rate. "You pretend to pay me and I pretend to work"
Anonymous Bosch,
I install wood into "plastics" and when there isn't any wood left to install, I just wait around for more wood.
Anonymous,
Close. Once I am through with a sally in fresno, then she is fornicated. Not because she's in fresno, but because she's in fresno and she has stained my wood. The darker the stain, the smoother the finish.
I think Sheila should spread all these new jobs around. Why put them in Dallas. Pizza parlors everywhere need help!
Well I'd skip Diego. There aren't many pizza parlors worth mentioning here.
(Altho Basic does rep New Haven!)
.........
ades - anything on wooster st beats the pants off anything else....
"Approximately 79.9% of the cover pool consists of hybrid adjustable-rate mortgages (ARMs), with the remainder option ARM loans. The portfolio has a weighted average (WA) original loan to value ratio of 63.5%, a WA FICO score of 750, an average 37-month seasoning and a weighted average remaining maturity of 27.2 years. The pool is highly concentrated in California (48.9%), with the top five states, accounting for 68.6% of the portfolio."
They still rated that manure AA?
WTF?
They must be joking, although it does have some seasoning- but it still will be a bad burrito in the end.
Someday this war's gonna end...
genevieve/tyler-
thought i should point out the sept call option activity in XLF today.
dont get me wrong - i think SKF ~should~ go to 150+, but it kinda seems (to me anyway) like that trade might be played out?
i'm with homedad on TWM.
3rd Generation, hate to tell you son but the Berlin Wall is down. Mozy over to moveon.org. or dailydos and relive he good ole day of the third soviet and Valdimir Illyich's "useful idiots". Remember, the "messiah" is coming!
Why don't they install pizza ovens in the office, and take them on the plane? Then arrive like Pizza Hut delivery boys at the Bank. Plus they can put more toppings on them too. Now who will carry the big bottles of pepsi under their coat?
Well, I guess the upside (at least for the stock market & talking heads) is the more banks that get closed the less writedowns each quarter.
diogenes writes: "...useful idiots."
why do i get the sense you're projecting?
What causes them to close a bank? Is a Texas ratio over 100 enough? Or do they need a run on the bank too? Perhaps only when a Congressman tells his constituents to get their money out? That triggered Indymac. Maybe we need more Congressmen speaking out?
"Obama owes Wall Street nothing."
Then he'd be the first Democrat in a very long time who didn't.
I don't doubt that he took some Wall Street donations. Those "little guy" donations he's so proud of funded half or less or his campaign.
Thanks nullpointer
I had not bothered looking.
I just trade what I SEE. I am very short term orientated. Mostly focused around the 60 min. indicators time frame ie 2-3 days most recently. As I said, my indicators have not turned up for SKF yet (or down for XLF) and when they do I'll take a position. Anything else is speculation-gambling indeed as some say, and that is not the business I am in.
Up/down volume is not an actual indicator, and usually it seems to me that people tend to accumulate SKF before they start selling XLF (obviously). In addition up/down volume can indicate buying on weakness (SKF) for a while -just like a positive divergence can persist- before price actually turns.
It is wait and see, but I won't hold long positions overnight on financials at these levels.
Bob Dobbs writes:
"Obama owes Wall Street nothing."
What about Biden ? Delaware... MBNA
"Fitch downgrades WM Covered Bond Progam to AA."
So much for investor confidence in Paulson's Covered Bond idea.
There are only so many three-day weekends. I make sure to have some lottery tickets for each one.
Iraq Safer Than Ohio Banks Stung by Credit Crisis, Yields Show
Iraq Safer Than Ohio Banks Stung by Credit Crisis (Update1) - Bloomberg.com
"Emerging-market premiums widened 64 basis points, or 0.64 percentage point, from a year ago to an average of 3.05 percentage points, according to New York-based JPMorgan Chase & Co. Iraq's yield spread is smaller than Argentina, Ecuador, Ukraine and Venezuela, JPMorgan indexes show.
Iraq provides some insulation from the market,'' Brown said.The risks are so idiosyncratic that it trades on its own drivers.''
The Repo man is hiring. Business is good. As a group they will miss Bush a great deal.
What the 'problem bank' list doesn't say
More banks are in trouble nowadays, but some experts wonder just how accurate a picture the FDIC's list paints of the industry.
"Typically, the list is published some 8 weeks after all of the nation's banks have reported their latest quarterly results. What's more, notes Mark J. Flannery, a professor of finance at the University of Florida's Warrington College of Business Administration, regulators base their decision on what banks tell them."
What the FDIC problem list isn't telling us - Aug. 28, 2008
Let the games begin.
At least they brought back previous employees with related experience, as opposed to Countrywide and indyMac, who have staffed their workout departments with those who got fired as cashiers for 7/11 because they couldn't do basic math.