BofA Cuts Dividend in Half, Sees Further Weakening
Submitted by
CalculatedRisk on Mon, 10/06/2008 - 12:21pm (246 comments)
in
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BofA DoA?
BAC piling on to the ratecut drumbeat
Thar she blows....
Whoo! top ten?
4th!
Damn, and I just opened a BofA account.
Have you ever been to sea billy?
I think its a buy buy buy, please.
Please, my bank accounts at BoA.
I need time to think where I can hide.
I'm going long on pitchforks.
Bank of Asshats.
What is all this silly talk about a recession?
Definitely sounds like a short position on retail is a good direction to move in for the next several months / quarters. Any thoughts on SDS, SCC, SZK?
I thought BofA was too big too fail?
BWAHAHAHAHAHAHAAHAHA!
How is this possible, now that they have the strength of Merrill Lynch within?
"You're beautiful, more beautiful than me.
You're honorable, more honorable than me.
Loyal to the Bank of America."
Gotta listen to REM "Document" in times like this.
Funny... Guy interviewing Barton Biggs on Bloomberg... Asking him when to buy? When will we bottom?
All BB will say is " who knows?"
HAHAHAHA
BoA could be a $50 stock right now if Ken Lewis could have admitted that his 18% purchase of Countrywide was a mistake.
Canadian watching with popcorn writes:
Have you ever been to sea billy?
No Captain Hindgrinder
Tomorrow should be interesting...
In other news, while Canada's housing market took longer to peak, we're making up for lost time.
Calgary house prices drop in third quarter
Let the unemployment hit well north of 10% nationally and above 15% in CA. Let's see how credit cards and commercial real estate hold up then...I don't think their models grasp the worst-likely case. I think they will try to sell 10Billion of shares every quarter for 5 years and it still won't contain the losses...
Oops, that title was supposed to read "True Canadian watching with Poutine".
Now the joke is all stupid and awkward.
Does anybody have the total number of US credit card transactions per quarter?
Increased loss and delinquency trends first experienced in the home equity and homebuilder portfolios have now spread into the first mortgage, unsecured consumer lending and credit card
What kind of J.O. is so upside down that he cannot make the minimum credit card payment each month? Obviously, it does not pay down the balance, but at least it keeps the account out of deliquency.
Given the upswing during the last hour of Wall Street, there is no doubt in my mind that the PPT was at it.
Just imagine if the market closes in the 9400s. Next stop is in the 8000s or less by end of week.
Two thoughts:
and
Poof.
Gone.
Turn out the lights, the party is over!
OCDan --
The U.S. Treasury will fail before Bank of America does.
It'll all be good for BAC once the TARP gets spun up.
If you are looking to short financials, you are late, IMO. The government has made it clear that priority #1 is to save the banks. Bankers and Brokers first!
What's in your wallet?
No Captain Hindgrinder
OK, you people are starting to scare me, we made fun of that commercial for years. Seriously disturbing subtext to that one.
this should relax the other banks to lend money to each other.
downward spiral of insolvency continues in a sea of liquidity.
money money everywhere, but not a cent to lend.
Where's Baghdad Bob?
Mish has a good chart on all markets, all red except for gold and T/bonds.
Mish's Global etc.
Nemo,
What makes you so faithful they will be able to do that? Just because they want to save the banks doesn't mean they can.
Nemo,
No question, Nemo. I was just being sarcastic.
It wouldn't even shock me to see the country broke and begging at BofA.
Just trying to pick on the big guys.
However, I do think they are gonna take some hits. You don't offer this much stock w/o some serious worries about your exposure. Of course, no one really knows, except the Capone accountant, since there is so much transparency in the system!
Looks like I picked the wrong week to quit amphetamines.
In other news, PPT has brought the DOW to 10,000.34.
Well, well, well...
--
Thank you, Ken Liar!
Guess who is loaded with puts on this TOP Bankrupter?
Jas
skent --
What makes you so faithful they will be able to do that?
I just think they are going to try. Which is good for banks and bad for everything else.
OT- Now this is an interesting take on Moral Hazard, both Massachusetts and California asking the Fed to be allowed the same access to lending facilities as banks as they are currently being locked out of the credit markets. (Apologies if a double post.)
Business, financial, personal finance news - CNNMoney.com
Question:
Does the short-sell ban get lifted three days after bill passage or after the money starts flowing...
"Things are going to hell, buy stock in us" is not the most effective sales campaign I've ever seen.
E-mini Dow ($5)
Q: Are the current numbers a reflection of today's action or already predicting tomorrow?
Off topic, but did anyone read about the UK terror threat approaching "critical"?
Terror threat in UK 'approaching critical' - Telegraph
Then 3 days later, Home Land Security releases this,"....showed that this group expressed significantly lower support for Senator John McCain when exposed to the terror threat than in the control ..."
Study Shows Impact of Terror Threat on Voters | Homeland Security Watch
Wally,
My point exactly. If BofA is in such great shape, why offer this much stock AND AT THIS POINT IN HISTORY?
Geez, nothing says we have no cash on hand like a 10 billion dollar offering.
[Mish has a good chart on all markets, all red except for gold and T/bonds]
So what happen to the 10yr when the next 100bps come off.
What kind of J.O. is so upside down that he cannot make the minimum credit card payment each month?
~~~~~~~
the guy who just got laid off ... had a medical emergency .. is getting divorced ... whose mortgage has doubled ...
What day did the stock market crash on in 1929? It was Black something or other.
does anyone realize that every single us treasury bond issue trades at zero in the overnight repo mkts? this is frightening...
oct 27 1929 is when it crashed..if wrong, wrong by a day
"What kind of J.O. is so upside down that he cannot make the minimum credit card payment each month? Obviously, it does not pay down the balance, but at least it keeps the account out of deliquency."
The kind who lost his job and has a family to feed.
BAC is P/E of roughly 40 after divvy cut and dilution. Come on, this is not investing, this is betting against our own bookies.
They lost money and pay a dividend? Yes, I know the difference and why this sometimes happens but we are talking about the people that just bought CFC and have yet to reflect that cost.
"Reflecting deteriorating economic conditions, the consumer credit card business experienced a decrease in purchase volumes, slowing repayments and increased delinquencies during the quarter."
If they didn't cut peoples credit lines and raise their interest rates by double, maybe this wouldn't have happened. Talk about self-inflicted wounds...
Speed writes:
What day did the stock market crash on in 1929? It was Black something or other.
Monday, just like 1987. They generally occur on Mondays. Would have today but for the massive intervention on multiple fronts.
yogi, you made out with 3.3% today with than USD/JPY Sell. Your other option to be up on the day was to buy Treasuries which evidently make good wallpaper
I missed cramer this morning,is Lehman still a screaming buy? The folks on TV were talking about fundamental sounds or something like that a minute ago,is Dr Ben a gastroenterologist? I am really getting worried about this stuff,wasn't getting rid of excise taxes on wooden arrows supposed to fix things?
the other big banks must follow ...
tomorrow their stocks will plummet like BAC ...
~
scuttlebutt ~ short ban on financials will be extended
Y'all need to not panic and use this thing again :
Recession blocker
Sounds like the market will rally 250+ points on this news tomorrow!
Clearly, when a huge bank is in a death spiral, it is good for the economy, much like how a large asteroid hitting the earth was good for the dinosaurs and provided a real "bottom" to their problems!
Buy stocks before you are "priced out forever" since eventually they go up... for a while... sort of...
BAC is P/E of roughly 40 after divvy cut and dilution. Come on, this is not investing, this is betting against our own bookies.
It's pathetic. These dimwits don't deserve a bailout. Same with GS & MS.
The country would have been better served by outright and immediate nationalizing these incompetent fools.
Given all the fed & gov't financial gymnastics, almost all banks have already been effectively nationalized - except for future profits.
WHAT A SHAM(e)!
WTF is any major bank doing these days in paying a dividend at all. Ok, perhaps a penny a share so that those portfolios that require a stock to be a dividend payer (there still might be a few of those around) can hold the stock, but honesly anything over that strikes me as fraudulent conveyance. Rule #1 for participating in the $700 free cash giveaway should be not paying a dividend. Why should the taxpayer hand out this money so it can just be sent out to the shareholders? The point is to rebuild bank capital and deleverage the system without causing (ok too late for that...shall we say exacerbating) a meltdown. NO DIVIDENDS for banks for a minimum of 5 years. NO SHARE REPURCHASE either.
The market is reacting negatively to bad news - now I've seen everything!
_
How does a bank that needs 10 billion pay any dividend?
Many still have head in sand.
The underlying ISSUE of umemployment that is being addressed by NO one will get you 700b bailout for wallst, and leave Mainstreet not being able to feed themselves,bedamned the credit card balance.
BAC announced early to allow the appropriate time for impact dissipation before tomorrow's open. This is all like some kind of bizarro Kabuki theater at this point, isn't it? A +140 on the futures going into tomorrow's open wouldn't surprise me in the least.
Michael Hudson:
The magic of compound interest refers to the tendency of savings to double and redouble exponentially, with a matching rise in what debtors owe on the other side of the balance sheet. These mathematics have been operated throughout history, ever since the charging of interest was invented in Sumer some time around 2750 BC. In every known society, the effect has been to concentrate wealth in the hands of people with money. In recent years, ones own money is not even necessary to do this. The power to indebt others to oneself can be achieved by free credit creation. However, the resulting mushrooming exponential growth in indebtedness must collapse at the point where its interest and other carrying charges (now augmented by exorbitant late fees, bounced-check fees, credit-card costs and other penalties) absorb the entire economic surplus.
This is the point that has been reached and passed today. It has been developing for many decades. But there is a great reluctance to accept the fact that debts cannot be paid. The poor are honest, as one banker explained to me, and believe that a debt is a debt and must be paid. (This is not what Donald Trump, Bear Stearns or A.I.G. believe, but they are at the top of the economic pyramid, not its base.)
Thinking the Unthinkable: A Debt Write Down, and Jubilee Year Clean Slate
Is Treasury going to take down the entire common offering as their first act? They could point to taxpayers getting equity!
(might be a double post - tried earlier but i-net connection died).
FEDUP: I feel so much better now, thank you
Anoddamoose,
The Treasury specifically can buy stock on the common market
Aleister:
More to the point: the poor, unlike the rich, are indentured to pay their debts.
Listening to Bloomberg Radio this afternoon about 12:15PM (EDT) and heard an interview with the chief investment guy at Oak Associates. As the interview concluded he was asked what would make him feel positive about the market.
His answer was, paraphrasing here, When the market responds to positive news and also when is takes BADNEWS as good news. My head hit the steering wheel and I almost careened off the road.
The stupidity of these people nevers ceases to amaze me.
The curtain is once again pulled back on the Wall Street Banks ...
The mantra of everything is solid ... is dust.
It's dawn in Japan. Probably waking up early with a hangover right now and laughing their asses off that the hollow rally to keep a hair above 10k
grumpy:
"Bad news" is good news when the market responds appropriately.
That is, anytime the market is acting congruently, it's good news.
Going down on bad news is good news.
A 400 point rally today on "bad news" is very bad news.
Nothing to see here ... move along now ... move along ...
All of this, and it's only October 6th.
serf Alan Greenspend wrote:
money money everywhere, but not a cent to lend.
I remember reading that novel...THE ANCIENT BANKSTER, I think. Seems they shot a MBS or CDS or something like that?
So long, and thanks for all the fish ... so long, and thanks for all the fish ...
I hope folks were wandering out into the seas of red ink with hipwaders on, there were some great deals today!
Wall Street is absolutely hilarious when they panic. One would think a penny ante homebuilder would be absolutely destroyed today? Nope, just an average down day for them- while stocks that actually make a profit and have actual earnings are thrown under a bus!
Cramer saying it was time to sell everything was my buy signal.
Someday this war's gonna end...
@grumpyoldvet , You undervalue impaired gains. Impaired gains allow you to mark down your debt and mark up your ratios. Impaired gains can be applied against unimpaired gains. Impaired gains encourage a company to work on razor thin margins that have really pretty RoE
Fed now moving into the cash market, unsecured lending with $150bn.
Way to chuck your entire mission statement out with everything else
re: Unsecured lending
It is because of
FRB: Commercial Paper Rates and Outstandings
See earlier thread w/ me and fair economist
BAC 29.95 AH...
Fed willing to fund UNSECURED lending (i.e. CP). Great, here's my chit for RobDawG Industries 2043 zero coupon notes. Fergit this mark to markit cr@p, gimme da money!
The credit market is breaking. You cannot fix it until it actually breaks.
Top employee contributors to Obama and McCain. Would you trust these guys with taxpayer money?
Barack Obama
Goldman Sachs $739,521
University of California $697,506
Harvard University $501,489
Citigroup Inc $492,548
Google Inc $487,355
John McCain
Merrill Lynch $349,170
Citigroup Inc $287,801
Morgan Stanley $249,377
Goldman Sachs $220,045
JPMorgan Chase & Co $206,392
Presidential Candidate Comparison: Top Contributors, 2008 Cycle | OpenSecrets
Debt to Fed: "I'll see your $150 billion and raise you $3 trillion."
monkeys pick the bottom
also, think what is the allocation to stocks in US/UK/ETC compared to what it was in Japan post crash
You guys want to form a credit union whose mission statement is to borrow unsecured from the fed for the purposes of shorting other financials?
Look at that market. I've never seen such naked intervention in my life.
You sure can't call it a short covering rally, can you.
The Fed and Treasury must have been freaked out. With its trajectory, the Dow was going below 9000.
Smart move by BofA...raise money when you don't need OR when you do but better to raise it if you don't. Wallstreet will continue to bring out their dead.
Why all of the complaining. Cutting dividends in order to increase cash reserves sounds prudent. You folks all prefer instead that our taxes be used to increase cash reserves?
In any case, I pulled out half of my savings in BoA on Friday and marched them across the street to the building from which the fled last month (still called WaMu but was reassured by a very polite manager that I was now in the caring hands of JP Morgan-Chase).
Can't wait until Wells Fargo has to announce in a couple weeks... Let's see whether they can paint a rosy picture (perhaps they'll lengthen the definition of delinquincy again).
rosenberg quoted a study that now those who want to retire on 401K have to work until 85-90
Curlydan,
Please note that at the No. 2 and 3 spots for Obama are two great universities, a feat that cannot be matched by the McPalin.
syvanen,
Goldman giving Buffet effectively sub $100 per share + 10% + 10% closeout = Rally from 115 to 130 something, that is illogical and a sign of a malfunctioning market
chegewara writes:
rosenberg quoted a study that now those who want to retire on 401K have to work until 85-90
With a life expectancy of 80 years or so, that should clear up the problem.
unirealist:
I think today's action is a portent for Dow going to 2500.
Personally, I now have the "street cred" for all my friends and family to get them out of the market. And they are finally starting to move. Finally!
I am hoping to get everyone out by the end of the week.
The bull will return after we get the Alt-A, ARM, credit card and auto loans unscrewed. It will be a while.
Oh my! Check out this from Coldwell Banker. They are trying to get all sellers to cut 10% off. Not sure if I should laugh or cry.
Press release title:
"Thousands of U.S. Home Sellers Will Reduce Their Listing Prices By Up to 10 Percent Between Oct. 10-19"
Coldwell Banker Real Estate LLC
Folks, this is worth watching:
Keating Economics
rosenberg quoted a study that now those who want to retire on 401K have to work until 85-90
yep, I can just see greeting at Walmart from my death bed.
(above coldwellbanker story via jim the realtor)
Smart move by BofA...raise money when you don't need OR when you do but better to raise it if you don't.
cfolounge
~~~~~~~
GE was first , now BAC .... the other banks will have to follow ....
The bull will return after we get the Alt-A, ARM, credit card and auto loans unscrewed. It will be a while.
The bull will be beef by then.
And the movements of the market can be characterized at best by another moniker, maybe the goat.
Comes same day as announcement about modifying Countrywide loans....
59% say depression...
59% say economic depression likely. Do you agree? - Lansner on Real Estate : The Orange County Register
DAYTRADERS!!
B of A CEO sees market turbulence through mid 09.
Yeah baby!
dunno FEDUP, goats are pretty nimble, known for cavorting around mountaintops.
10% = "modest" reduction in home price. I hope all those CB realtors are dropping their commission % to bring buyers and sellers closer together
BoA is still paying out about $10B/year in dividends even at the reduced rate. If they were taking things seriously, they would have eliminated the dividend over a year ago.
syvanen writes: Why all of the complaining. Cutting dividends in order to increase cash reserves sounds prudent.
Yes, it's even more prudent when you cut your dividend to zero or $0.01 a quarter. BoA might as well start now.
As Dirk said upthread, no bank involved in TARP should be paying any dividends (or they should be paying 50% to U.S. Treasury). That would help taxpayers even more.
Until the following graph is stable, major indices will not abate their fall here
The bull will return after we get the Alt-A, ARM, credit card and auto loans unscrewed. It will be a while.
Dave | 10.06.08 - 5:15 pm | #
Dave,
By that time it won't matter anymore. 98% of us will be in souplines.
Just think what it took to keep the Ponzi scheme going the last 14 months. No way the Treasury, FED, taxpayer, or good 'ol USofA withstands 3 more years of resets on that Credit Suisse reset chart.
We are barely holding on know.
Scotty has the engines at Warp 10.
"That's all I can give'ya, cap'in. She'll not go any more."
I need time to think where I can hide.
"The Burrow" by Kafka, might provide illuminatio
Why are universities giving one cent to ANY politician?
If they have so damn much money, why aren't they reducing tuition or increasing research grants?
It's contained people...calm down.
Why are universities giving one cent to ANY politician?
So that the politician can ensure a payroll next year - California?
lawyerliz,
The universities are not giving money. Those lists are grouped by corporation + employees/family of employees in some cases
Works the same way for the financial firms. Wall St always always always plays both sides of the aisle, and tend to bet on the winner by giving them like 30-50% more
fool me once, shame on ... shame on you. It fool me. We can't get fooled again."
"Lying in my heap of Earth I can naturally dream of all sorts of things, even of an understanding with the beast, though I know well enough that no such thing can happen, and at the moment when we see each other, more, at that at the instant we merely guess at each other's presence, we shall both blindly bare our claws and teeth, neither of us a second before or after the other, both of us filled with a new and different hunger, even if we should already be gorged to bursting."
The Burrow, by Franz Kafka
Click on the link, folks:
These tables list the top donors to these candidates in the 2008 election cycle. The organizations themselves did not donate, rather the money came from the organization's PAC, its individual members or employees or owners, and those individuals' immediate families. Organization totals include subsidiaries and affiliates.
Lawyerliz: "Why are universities giving one cent to ANY politician?"
I don't think it is the Univ. it is professors and admin staff in those universities. It is individual contributions rolled up.
treasury Announces Solicitations for Financial Agents under the Emergency Economic Stabilization Act
Washington, DC--The Treasury Department posted today three solicitations for financial agents to provide services that are needed for the effective implementation of the Troubled Asset Relief Program authorized under the Emergency Economic Stabilization Act. The three services being sought are:
* Custodian, Accounting, Auction Management, and Other Infrastructure Services
* Securities Asset Management Services
* Whole Loan Asset Management Services
hp-1185: Treasury Announces Solicitations for Financial Agents under the Emergency Economic Stabilization Act
let the looting begin!
Fed's options here on out:
btw, for banks to be paying out dividends in this environment is absolutely criminal.
Lyrics to live by:
Yesterday I had a dream about dying
About laying to rest and then flying
How the moment at hand
Is the only thing we really own
And I lay in my bed and I wonder
After all has been said and is done for
Why is it thus we are here
And so soon we are gone
-John Denver
Yes, I love John Denver.
How does a bank that needs 10 Billion pay a dividend? That's WHY it needs it.
Though the mills of God grind slowly,
yet they grind exceeding small;
Though with patience He stands waiting,
with exactness grinds He all.
Ok, ok. I see.
So maybe we should be happy the univ people are giving to O? At least neither he nor Biden think the earth is less than 10,000 years old.
Don't misunderestimate the markets ...
I want the Fast Money team to handle the TARP. Each night they can give us a little update, it will be fu
hopeinsd:
too little too late.
People with money to buy (me) won't even consider starting to move until we see a 50% haircut.
More in some areas. Like 75% haircut in East Bay Hills (SF area). Oh yeah, can't happen here...
If there was a 50% cut in the East Bay Hills, we would have knife fights to pay downpayments.
chegewara writes:
btw, for banks to be paying out dividends in this environment is absolutely criminal.
My point exactly. Cut the dividend. Freeze salaries. No bonuses. No stock options. They could use the dividend money to do a stock purchase program.
Criminal. Ponzi scheme.
pres shrub :
LOL.
What time did the $150bn press release (FRB: Federal Reserve Board: Error Page come out?
Was that distributed around 3pm, or was that change of heart just some backroom dealing for political purposes (eg Congress couldn't get more money if wall st. doesn't make it look better)
Dave,
I'm waiting in Fremont...Looking for Castro Valley-Walnut Creek or Pleasanton-San Ramon to get that 75%haircut...
We bought for $250K in the east bay back in 1997, I fully expect we'll get back there. Our home model peaked for right about $750K.
Lots of pain yet to come. American's are broke, easy money is gone, its collection time.
haon, Just wait until ebay/yahoo/hp/etc lay off more people, there will be knife fights at the food bank not the mortgage one
CNN Poll Results.
Looking for safety \t26% \t
Holding steady \t56% \t
Buying stocks \t18% \t
Total responses to this question: 68078
They are paying the dividend because of what not paying it would signal. It would be like blood in the water.
lawyerliz writes:
Ok, ok. I see.
So maybe we should be happy the univ people are giving to O?
Yes, it's a definite plus, unless of course you're one of the Rapture crowd.
haon: we'll see what happens.
cd: I think it's coming in those areas.
We'll see 1998 in Berkeley for sure. The number of listings on Zillow has exploded. Prices are still $1M+, but the number of listings seems to have tripled in the last couple of months.
"Can't happen here."
Anyone in Rockridge waiting to move to the OC, I would be happy to swap straight across.
....to late to sell, and to damn early to buy.
patiently buries monies in the backyard
EvilHenryPaulson writes:
It's dawn in Japan. Probably waking up early with a hangover right now and laughing their asses off that the hollow rally to keep a hair above 10k
EvilHenryPaulson | 10.06.08 - 5:01 pm | #
DOW 369.88
-3.58%
9,955.50
BofA to slash mortgage payments for Countrywide borrowers - Oct. 6, 2008
Bank of America to slash mortgage payments
NEW YORK (CNNMoney.com) -- A plan announced today by Bank of America will be the most aggressive foreclosure prevention effort ever undertaken by a U.S. bank.
The program, scheduled to start in December, will be open to distressed borrowers who signed up with Countrywide Financial between January 1, 2004 and December 31, 2007. Countrywide was acquired by Bank of America (BAC, Fortune 500) in July.
CSC, Rockridge is my 'hood, but I rent and I wouldn't trade for OC for any reason short of a gun to my head.
In other news, you SoCal low tax folks, I would urge you to make an exception for water infrastructure. The corps of engineers used to aim its black humor at how badly underfunded NewOrleans levees were. Now they speculate about the timing of the failure of the Delta levees and the resulting salinization of 2/3 of SoCal water supply.
Lawyer Liz writes:
Why are universities giving one cent to ANY politician?
Unless things have changed a lot in the past 30 years, universities receive millions of dollars in government research grants from the Departments of Defense, Agriculture, etc., even the CIA.
Carl Icahn just dissed American corporate governance, "You just can't get rid of these guys. In Britain, Canada, Australia things are much better"
He's starting a group called "the united shareholders of America", he's pissed that companies can use shareholder money to fight shareholders with fancier lawyers
Calling out boards for not holding execs accountable, financial firms is the focus
CSC - my mom and aunt were driving around monterey peninsula the day JD augured into the bay. She just figured it was the d&mn tourist traffic.
Got 8-track?
@EHP...
"Fed's options here on out:
Don't forget quantitative easing. I think it's what they set up for when that provision allowing them to pay interest on deposits was passed.
More or less kinda sorta didn't fail in Japan.
ren, people in socal don't understand that deserts don't typically support high population densities.
People in socal don't understand that the weather in socal actually sucks. No rain.
From what was on the news this morning BOA was going to let people go to interest only payments for up to 10 years. (kick the can down the road eh?)
Nice hammer today. Shook out all the chickenlittles. Added to my ever increasing spiders collection.
From weak hands to strong hands. It is only natural.
I'm sticking to my plan ...
"My plan reduces the national debt, and fast. So fast, in fact, that economists worry that we're going to run out of debt to retire."
radio address, Feb. 24, 2001
From what was on the news this morning BOA was going to let people go to interest only payments for up to 10 years. (kick the can down the road eh?)
They don't have a whole lot of options at this point.
United Shareholders of America, on Icahn's blog
The Icahn Report™
Truthfully I have long thought he was just a stupid investor who had a poor understanding of any industry created in the last 30 years -- but that interview left me with a positive view of him.
ren:
I don't blame you. I'd put a gun to your head if you'd take my house in OC and throw me a shack by the park.
You guys can ride your bicycles to Oaksterdam. That's tight.
SoCal would be fine if we would build a damn desalinization plant. We've already got a nuke plant we call "the tits."
Dave-
Socal is one of the "aspirational" locations residing at the center of the mythos of western freedom. Energy usage to maintain green lawns, cool houses, and night-time lights exceeds rational explanation, other than - it's that way because, well, that's the way it is.
Until one day it's not.
People in socal don't understand that the weather in socal actually sucks. No rain.
but they come to socal to get away from rain!
From what was on the news this morning BOA was going to let people go to interest only payments for up to 10 years. (kick the can down the road eh?)
They don't have a whole lot of options at this point.
Bond Girl | 10.06.08 - 5:45 pm |
Ten years eh?
Would that make it an even decade? And those reduced payments, would they just be lost? Is it accurate to call it a "lost decade"
Banks need to accept that they lost their money over the past 5 years and it's not coming back without a time machine. Write down the principal, and free up capital to generate actual returns
Comrade Bagholders,
So BofA is going to issue $10B in common to pay the divdend on the existing shares.
Makes sense to me.
Nostrovia,
FYI - If you wish to provide Securities Assets Management Services to Treasury, your response must be in by 5:00 Wednesday.
I'm just too tied up to take this on at the moment.
SoCal would be fine if we would build a damn desalinization plant. We've already got a nuke plant we call "the tits."
Damn straight. Just add a third reactor and it'll look like the mutant martian chick from Total Recall.
CSC: Trail 6 my man, trail 6!
A rocket scientist takes charge of the $700 billion bailout? Interesting.
The latest Effective Federal Funds rate (from 10/2) has dipped below 1% to .75% ....
Anon, you can't grow stuff good to eat without rain. If it doesn't fall where you're at, you gotta "import" rain.
Bank @ the End of the Universe writes:
FYI - If you wish to provide Securities Assets Management Services to Treasury, your response must be in by 5:00 Wednesday.
Perhaps if we charge them for our advice they'd take it.
Happy Days writes:
A rocket scientist takes charge of the $700 billion bailout? Interesting.
A 35 year old rocket scientist
Dave writes:
Anon, you can't grow stuff good to eat without rain. If it doesn't fall where you're at, you gotta "import" rain.
Sprouts, mushrooms, oranges, lemons, limes, avocados... Sure you can, brother. You just can't grow 5 acres of fat strawberries and sling them on the corner for $5/flat anymore.
if credit card companies are having such a bad time, why am I still getting 0% interest check offers? I am tempted to use my available balance over 5 cards to pay off the mortgage...
Bank of America to slash mortgage payments
NEW YORK (CNNMoney.com) -- A plan announced today by Bank of America will be the most aggressive foreclosure prevention effort ever undertaken by a U.S. bank.
...
WTF.
Or may be i should get into a multi miliion dollar place as well. Since the mortage cannot exceed 35% of my gross income.
Let's roll.
From CNNMONEY:Poll finds 6 of 10 believe a depression is somewhat or very likely - seeing 25% unemployed and millions homeless and hungry.
just for all you LA LA land types, I will be speaking live on KFWB at the top of the hour, I think about 3 PM Pacific Time.
Seb writes:
Bank of America to slash mortgage payments
NEW YORK (CNNMoney.com) -- A plan announced today by Bank of America will be the most aggressive foreclosure prevention effort ever undertaken by a U.S. bank.
...
WTF.
I do not believe it was voluntary.
I figure the PPT went through about $500B today. What's going to happen when they dump that stock back on the Market to start buying the TARP sledge?
Dave writes:
Anon, you can't grow stuff good to eat without rain. If it doesn't fall where you're at, you gotta "import" rain.
980AM. I'll check it out. Give me a shout out, dude.
CSC, you're splitting hairs and you know it!
Upshot is, socal can't maintain it's current density without importing, well, virtually everything except sunshine. And Trail 6. Unsustainable...
Whoops...what the hell was that?
Dirk van Dijk writes:
just for all you LA LA land types, I will be speaking live on KFWB at the top of the hour, I think about 3 PM Pacific Time.
Dirk van Dijk | 10.06.08 - 5:54 pm | #
Same answer as above.
"What kind of J.O. is so upside down that he cannot make the minimum credit card payment each month?"
They sent me blank credit card checks so every month I could pay my VISA with a MasterCard check and then pay my MC with a VISA check. Now that I think about it, it did seem a bit odd.
I tell my wife, let's move from California to Oregon, because there is sufficient rain there to support life, but she resists the idea, thinking the constant rainy months will depress her.
Dave writes: Trail 6 my man, trail 6!
LMAO!
Dave: I know. You're right. We have a lot of cheap labor though.
Ugh. Get me outta here.
Exit writes:
Dave-
Socal is one of the "aspirational" locations residing at the center of the mythos of western freedom. Energy usage to maintain green lawns, cool houses, and night-time lights exceeds rational explanation, other than - it's that way because, well, that's the way it is.
Until one day it's not.
Exit | Homepage | 10.06.08 - 5:46 pm | #
My electric bill has never been over $30.
CSC- just walk away, dude
A bit OT - from today's NYTimes
Testifying before the committee, Lehmans chief executive, Richard S. Fuld Jr., said that he took full responsibility for the decisions he made while at the helm. But he also told lawmakers that it was unreasonable to expect that he should have seen the financial crisis coming.
Nobody, including me, anticipated how the problems that started in the mortgage markets would spread to our credit markets and banking system and now threaten our entire financial system and our country, he said. Like many other financial institutions, Lehman Brothers got caught in this financial tsunami.
Hoocoodanode?
I can't believe the inherent bias against 35 year olds with an engineering background.
Seriously, it comes down to the legislation passed by congress that purposely let the intent hide between the lines.
Right now the problem is Paulson has a massive hardon for covered bonds. The covered bond market won't work unless the Treasury puts a floor on these assets which no one is allowed to transparently view and decide their own hold to maturity value.
Which makes the whole frickin program useless. Save the millions in administration costs and give all the mortgage paper holders 15 year cheap loans
barfly writes:
CSC- just walk away, dude
We probably will. We have over 100k in equity right now, but I suspect it will be nothing in months.
If it doesn't hold or we can't sell, we're walking next year. First we've got to get a school bus modified into an RV for life on the road.
Advertising on CNBC has fallen off big time. They now carry ones for mail order catheters -- can't be a very big market
That's all for Squawk Box! Now that your 401k is toast, why not stick something up the head of your dick?
It might work.
But he also told lawmakers that it was unreasonable to expect that he should have seen the financial crisis coming.
We have supercomputers and brilliant mathematicians who could simulate many likely cases, including the worst case. There were very smart people saying this was going to happen. Why didn't the companies pay attention to the research?
The perma-bulls at my work now think the market will just keep going down - captiulation!!!
Captutitlatuiion!
Persecuted: It does not make being right any less painful in this type of situation. The bulls are starting to perceive the shit storm they have charged into.
This is a short squeeze on those who have used the dollar for a vast global carry trade. International banks are facing margin calls on their dollar leverage. It is why the Fed is having to provide $1.25 trillion in dollar liquidity for the entire global system, according to estimates by Brad Setser from the Center for Geoeconomic Studies.
The crisis engulfing Europe, Asia and emerging markets, makes life easier for Washington. The United States is becoming a safe-haven again.
The Fed can now hope to pursue monetary stimulus a loutrance without being slapped down by the currency, debt, and commodity markets. Take comfort where you can.
Germany takes hot seat as Europe falls into the abyss
- Telegraph
Dirk is coming up on KFWB. He was introduced as "an expert." I'll be listening for my shout out.
My electric bill has never been over $30.
are you kidding me! | 10.06.08 - 5:58 pm | #
Lucky you. There do happen to be a few dozen million other people in the state, however.
Try constructing an energy diagram for among other items, transporting irrigation water (including infrastructure), plus pesticides and fertilizer and their maintenance / clean up costs, construction costs for houses including what it takes to manufacture, ship, and sell A/C units, and consider that street lights are not directly paid for by an individual electric bill. A fair amount of 'hidden' energy costs there.
CSC- you'll be stuck with 8 mile per gallon gas. Break even on your house if you can, get on your bikes (unless there are children involved) and head north. You'll find something. You have tunnel vision right now. It's a big world out there. Be tough!
Dave, CSC,
But I want youse guys to maintain your water infrastructure, so that those who are happy with LaLaland can stay there.
On the other hand, for those that understand, welcome to the north.
Whoa. Dirk Van Dijk is his real name.
Where is the money going?
Dirk: Essentially into the mattresses.
Hah!
bac would like to raise more if the interest is there...
Under the terms of the deal, Bank of America has agreed to, where possible, modify the terms of these loans where borrowers are seriously delinquent or likely to become so after their interest rate or monthly payment resets. Bank of America will first try to refinance borrowers into government-backed loans under the federal Hope for Homeowners program, which will generally require a reduction in the principal of the borrower's loan.
Another option is to reduce the borrower's interest rate to make the loan more affordable. In some cases, borrowers' interest rates may be reduced to as low as 2.5%, then rise in a stepwise fashion over time, a Bank of America spokesman said.
"We are seeking to put customers into loan modifications that are affordable and sustainable," the spokesman said. Under the program, borrowers' mortgage-related payments shouldn't exceed 34% of their monthly income. The modifications will be offered to borrowers who live in their homes and not to investors.
For borrowers with option adjustable-rate mortgages, Bank of America will reduce loan amounts so that borrowers have as much equity, if not more, than when they took out the option ARM, a Bank of America spokesman said. Bank of America won't charge borrowers for modifying the loans and will waive any prepayment penalties for those with option ARMs.
The value of the modification program is as much as $8.4 billion, according to the Bank of America spokesman. The costs of the program "have already been estimated and accounted for" by Bank of America as part of its acquisition of Countrywide, the spokesman added.
Need Tanta to explain this BofA/CFC loan modification plan. I caught Jerry Brown midway in his comments and he seemed to be talking about the FHA voluntary program where lenders agree to take 90% of the current appraised value. I guess this means BofA will, under this settlement, agree to that.
Question is home many of those loans does BofA still have and how many of the 390,000 eligible 'homeowners' are still in their houses? Is it really still 390,000 or some portion thereof?
For those loans CFC sold onto investors how does BofA make them agree to a settlement they had nothing to do with?
A fire hose of liquidity against a blaze being propelled by Santa Ana winds. One hose.
Go Dirk.
Our landlord got his monthly payment reduced to what he is charging us for rent. Before that he had to contribute an additional 50 percent of what we were paying him
Somebody explain why somebody (BAC) who had the money to acquire a strategic market presence last month with CFC now needs more money than they paid? Now, now. I know why but I'd like to hear the excuses not the truth.
Nice job Dirk! I agree with the Buffett plan as you do!
They're insolvent, bankrupt...they're gone.
Effin aye, Mr. Dirk.
Here is the idea:
The US Government NATIONALIZES the FEDERAL RESERVE.
Let's see what's up at my favorite barbaric relic dealer:
GOLD: No Credit Suisse, Buffalos, Maple Leafs, or tenth ounce or half ounce Gold Eagles.
SILVER: NO bags, No thousand ounce bars for now. NO SILVER EAGLES FOR NOW. Johnson-Matthey not accepting orders for 100 oz bars till they catch up with back orders.
PLATINUM: US Mint will take no more orders for Platinum. We have no other hallmarks either. Not our fault!
PALLADIUM: Sorry. No more palladium for a while.
Rob Dawg writes:
Somebody explain why somebody (BAC) who had the money to acquire a strategic market presence last month with CFC now needs more money than they paid? Now, now. I know why but I'd like to hear the excuses not the truth.
Rob Dawg | Homepage | 10.06.08 - 6:11 pm | #
Can i haz TARP please?
Anon:
If I were Buffet, I would have had teams of Really Smart Guys running computational finance models on Very Large Computers testing all conceivable outcomes, updating as the economy evolves.
I suspect he will come out of this as the richest person in the world, by multiple factors. I wish I could afford a single share.
Dirk van Dijk didn't give me a shout out.
wtf?
PLATINUM: US Mint will take no more orders for Platinum. We have no other hallmarks either. Not our fault!
PALLADIUM: Sorry. No more palladium for a while.
***** Start collecting catalytic converters?
So Bank of America signing onto the FHA program means
- they foresee losses greater than 10% to go (well foreclosures can cost 15% of current value)
CSC, sorry for no shout out, didnt give me that much time, thought it was better to spend the time pushing the idea of the Feds buying equity stakes rather than toxic assets.
Nigel Swaby | 10.06.08 - 4:52 pm |
Still debating Mish about his ridiculous views about falling RealEstate prices?
The Residential Real Estate Crash Index Message Board - Msg: 23137366
SiliconInvestor All Stars Forum Message Board - Msg: 23360078
Anonymouse thanks for your work here. I use stocktock and daneric40 skf/yahoo to confirm your work but I pull the trigger right after you do (SSO at 38.499 at 10:45am)
"modify the terms of the loan where borrowers are seriously delinquent or likely to become so"
Just great. Once again the honest person is penalized. The one who didn't buy more house than he could afford, who put down enough money to avoid fool financing and who probably has a McCain sign in his yard and not an Obama one.
Dirk: Thanks, brother. Your Buffett point was excellent. Next time, though, you should sign off with "Coinz!"
Rob Dawg writes:
Somebody explain why somebody (BAC) who had the money to acquire a strategic market presence last month with CFC now needs more money than they paid? Now, now. I know why but I'd like to hear the excuses not the truth.
They paid, what, $4B for Countrywide? (I honestly don't remember.) This loan modification plan (which they say they accounted for when they bought Countrywide - perhaps they mean they discounted the value of the company, perhaps they mean they thought their lawyers could handle it, who knows) will cost $8B. They are trying to raise $10B. Perhaps the mortgage modification plan and stock sale are unrelated. Perhaps they do not need the money yet as they say. Perhaps it is related to Merrill.
Just great. Once again the honest person is penalized. The one who didn't buy more house than he could afford, who put down enough money to avoid fool financing and who probably has a McCain sign in his yard and not an Obama one.
Wrong on that count--I want no part of Obama and I am responsible.
I wonder if more banks will be sued for predatory lending.
Dirk: Thanks, brother. Your Buffett point was excellent. Next time, though, you should sign off with "Coinz!"
Currently Smoking Cannabis | Homepage | 10.06.08 - 6:17 pm | #
Yeah, I suppose I could do that easier than saying "hi to my buddy who is currently smoking Cannabis. Not sure that Mr. Zacks would really like that to much. But I'll take a bong hit in your honor tonite.
Currently Smoking Cannabis writes:
That's all for Squawk Box! Now that your 401k is toast, why not stick something up the head of your dick?
It might work.
. . . . . . . .
Brilliant!
onlygold dot com is out of eagles. All eagles, not just 1 oz.
Wonder how much profit I could make selling my stash piecewise on ebay?
CSC you should look at the Medford or Corvalis areas of Oregon, or even think about Idaho.
I know there are a number of tiny, tiny towns in the Medford area that hit the housing boom late, so there will be tons of hollowed out shell houses there going for cheapo cheapo in a few years. End-run up there, live in a $400/month apartment for a few years, and snap up one of those houses and a government job in Medford. Or sell shit on ebay.
I have faith in you; see you in Oregon.
Dirk:
Awesome. That post is cracking me up.
Dividend ($0.32)is more than TWICE the earning per share ($0.15). Why is the real scoop here?
With above dividend, BAC is running a negative EPS (of MINUS $0.17).
Stocks University
RE writes:
Nigel Swaby | 10.06.08 - 4:52 pm |
Still debating Mish about his ridiculous views about falling RealEstate prices?
Nigel had the nerve to post at EN today as well. "Shadow Casey" wannabe is all I can guess.
Bond Girl writes:
$4B for Countrywide? (I honestly don't remember.) This loan modification plan (which they say they accounted for when they bought Countrywide - perhaps they mean they discounted the value of the company, perhaps they mean they thought their lawyers could handle it, who knows) will cost $8B. They are trying to raise $10B. Perhaps the mortgage modification plan and stock sale are unrelated. Perhaps they do not need the money yet as they say.
They screwed the pooch. They made a fatal mistake. Again. Remember BofA is in their second round of special treatment with the Federal government.
BoA is "too big to fail."
A brilliant strategy really.
They know they're already insolvent. No harm in getting even more insolvent. Get super duper insolvent. In the worst case, bankruptcy which is going to happen anyway. But may, daddy feddy waves his magic wand and "Presto!" too big to fail.
Penrod and Sam: We actually looked at Veneta near Eugene. There seem to be a lot of people who look and act just like me.
We love Oregon. (Especially Ashland.) They have very good cannabis up there.
We're also looking in the midwest at raw land and small farms (under 10 acres). This lifestyle is a con game that is about to die.
Maybe Ken Lewis figures once he's modified his subprime deadbeats home loans he can sick Merril Lynch brokers on em and get it all back.
I mean he'll have a mailing list of people who'll believe anything.
BofA won't get 25% of the loans modified before those just modified are in the queue to be re-modified again.
ew thread by the way folks
CSC
yeah, I'm looking to buy a nice dup/quad in encinatas once we have fully melted down. Rent the other units out, I'll always have a killer beach pad, walk to san elijo, pipes, etc.
Midwest and Kentucky, Tennessee are nice, in places. You do have to be a bit choosy to get the piece of ground.
You want good bottom land, but you don't want to flood every year. The best water in the entire country is probably in southern Ohio, south of Chillicothe. Huge glacial aquifer, largely untapped.
Encinitas? Dude...Tim Miller teaches yoga there. Encinitas is awesome. Lots of yogis and stoners around.
We'll look at southern Ohio. Right now we're poking around Indiana. Missouri is also attractive due to their ecovillages.
Just great. Once again the honest person is penalized. The one who didn't buy more house than he could afford, who put down enough money to avoid fool financing and who probably has a McCain sign in his yard and not an Obama one.
You rang? Yes, I bought a new house in May 2007 for $400K. Didn't particularly want to buy into a market that to me appeared obviously inflated, but with a new baby I decided to set down roots. Despite the loan-brokers pushing "interest-only", "neg am" and all kinds of other nonsense, I insisted on a straight 30-year fixed [6%, Countrywide] and made a substantial down payment. The monthly mortgage payment is big but affordable. This is my second home. I have never taken out a HELOC in my life, nor refinanced with money out. I pay extra principal each month, with the intention of someday having a mortgage-burning party surrounded by my friends and family. In short, I am one of those financially responsible people that in today's world is just a quaint artifact or a sucker. I have never reneged on a contract, and I consider a person's word to be his bond, but after what I have witnessed in the last few months, I believe it is now time for me to walk away from my mortgage. Thanks for listening.
Robert,
Nigel had the nerve to post at EN today as well. "Shadow Casey" wannabe is all I can guess.
He deserves to be called out on it. He was not only utterly blind but terribly arrogant.
Flip a coin. Heads, you stay in your house and pay "only" interest. As interest rates are only going up, you won't be able to keep up. That's okay, they'll just tack on what you don't pay to your mortgage. Bank perpetually owns the house.
Tails, there's some scheme to discount the mortgage. Well, the "discount" is much higher than the house's value. Bank wins mortgage-holder stupidly overpays.
This is a Japan-style recovery scheme that sounds good in a press release. The details make the Mob look like Mother Theresa.
Could you believe this:
LIBOR running with high bid, BUT NO ask, which means NO LENDING among banks!
More details below.
MarketWarnings: financial crisis credit crisis: LIBOR, Commercial paper, Brokers, and inter-bank markets
mw writes...
mw, please post this also in the next thread. This is big.
CSC, you might also look up here in Washington. Several former logging towns which never really hit the housing boom have become smokers and tokers Meccas. Affordable housing, really liberal "medical" marijuana laws and locals who appreciate the economic boost.
A friend bought an older but well taken care of 4 bedroom home on 2.5 acres last year for $105K. She keeps her perfectly legal greenhouse full of plants due to her "hard to diagnose exactly" pain from a fall at work. Legal 60 day supply limit at 24 ounces of usable marijuana plus 15 plants.
Simple. The primary regulator should impose dividend restrictions. End of story.
"Bank of America will assume $21 billion in debt owed by Countrywide, Price said, marking the lender's first confirmation of its plans for the holdings. ``It's been very consistent with deals we've done in the past,'' Price said"
This is what BofA depositors should be worried about. More writedowns that BofA didn't really have to assume the risk for. Between this and the Merrill acquisition, I'm dropping my deposits down to the $250k FDIC limit.
Does anyone know if BofA ended up guaranteeing all of CW's debt?, or was it just a portion of it?