Hell, I couldn' t resist

The article also notes that the results of the stress test could be released the week of May 4th - and not on May 4th as originally announced.

As I said, CR, I'd be willing to bet that there is an internal debate going on right now within the administration over exactly how much and what information will be revealed to the public.

(I suspect Geithner is on the side of telling no one nuthin'.)

Re: "No one will believe the test"

What test? This is just an extension of mark-to-fantasy and a way to adjust PR...

Last night, I saw a dude under 880, just off the ramp to the Webster Tube in Oakland, CA. He had the full set up: a tent, a desk, a bookcase with some books, a rack for clothes - all under a freeway. The stuff looked decent so I'm guessing some CRE was vacated recently.

He does not yet have a shingle indicating his business; but he's set up, under the freeway, for what ever business it is.

Goodnight, Blonderengel, where ever you are-

It's the Lake Wobegone test - all banks are above average...

Anybody with half a brain(or reads here) knew Citi was gonna need money and BofA does because of Merrill(and the government is backstopping that because that's the dowry of the Shotgun wedding.)

Is this really news?

Obviously, the goal of the stress tests is to tell the public to take their money out of THAT bank and put it into THIS bank. Right?

I think Sheila Bair is correct - the FDIC should be able to liquidate the commercial banks just as they do the others... anyone notice the power grabbing going on between the various agencies, and also the IMF and the World Bank - everyone is trying to take advantage of the crisis to expand their powers and empire - so they can justify a higher salary for themselves of course - that's how it works in the gubamint service..

"Would you lend money to either of these fine financial institutions?"

You already have. Actually, you've given them money. No return is required.

So how long until Citi and BofA receive C&D orders?

(Hey, I can dream.)

Why are people supposed to give money to these banks? A repost..

Roubini Says U.S. Stress Tests Not ‘Serious,’ Banks Insolvent
Roubini Says U.S. Stress Tests Not ‘Serious,’ Banks Insolvent - Bloomberg.com
By Carlos Torres

April 27 (Bloomberg) -- A persistent recession and mounting unemployment will leave the U.S. financial system “insolvent,” implying the stress tests performed by regulators weren’t rigorous enough, said Nouriel Roubini, the New York University economics professor who predicted the financial crisis.

Losses at U.S. banks and broker dealers will swell to $1.8 trillion, almost 100 percent more than the current amount, as the economic slump lasts at least through this year and the jobless rate climbs to 12 percent by 2010, Roubini said today at the CFA Institute’s annual conference in Orlando, Florida.

The losses would exceed the $1.4 trillion in capital that banks currently have, meaning “the system in the aggregate looks insolvent,” Roubini said. The rate at which the U.S. economy contracts will diminish from the 6 percent annual pace in the fourth quarter to about 2 percent in the last three months of 2009, he said. Still, Roubini estimated the jobless rate will reach 11 percent by the end of this year and keep rising as companies retrench. Policy makers assumed the rate would reach 10.3 percent in 2010 in the “more adverse” of U.S. regulators’ two scenarios in the stress tests to determine how much capital banks may need over two years.“ The stress tests are not really serious,” he said, predicting even the more adverse outcomes predicted by officials will be overtaken by events.

You can blow your fife and bang your drum but all you will get....... is that there is more of the same yet to come.....Patriots are defined in the current environment are those who will take MASSIVE near term pain for the long term gain of the Country...or some form of B.S. like that. Frankly, NO NEWS is good news.......now a daze.

Shit that's up town brother! Cause the rest of us will be lucky to be located in the "tent city" camp. We will be thankful to have a TARP over our heads....:^)

No one will believe the test results if Citi isn't required to raise more capital.

Will anybody believe the test results no matter what they publish?
Does anyone believe that any of the large banks are solvent?

"Does anyone believe that any of the large banks are solvent?"

One? C'mon, gimme one. No?

Crystal balls tend to be inaccurate.

Jobless claims hit highest level since 1992
Christopher S. Rugaber, Associated Press
Friday, November 21, 2008

Jobless claims hit highest level since 1992

Bykere said RGE Monitor, a consulting firm chaired by economist Nouriel Roubini, forecasts that unemployment will peak at 8.5 percent by the end of 2009. Last year, the rate averaged 4.6 percent.

Hellenic Shipping News Worldwide - Online Daily Newspaper on Hellenic and International Shipping

Ship owner declares futures market finished
Monday, 27 April 2009

The ship owner who once controlled about 15 per cent of global trading in shipping futures has pulled out of the market to concentrate on building up his physical fleet. Nobu Su said TMT, the company he owns, believed the shipping futures market was "finished".

"We didn't trade anything for the last year," he said. "Basically, this time the world has gone back to the real economy, not paper economics. People must go into real business and we're doing it."

TMT had closed most of the positions it kept open during last autumn's shipping market crash, when it is thought to have made significant profits from correctly betting that earnings of dry bulk ships would fall and rates for tankers would hold steady. Average earnings for the largest dry bulk ships fell 99 per cent from their peak in June to the low in December and are still down 80 per cent.

"We have a few [positions] left but very small and the market is dead," Su said.
Market participants believe Su must have made profits of hundreds of millions - if not billions - of dollars from his aggressive bets on the direction of shipping markets, as well as comparable losses when the market moved against him. He struggled to meet his obligations to other market participants last summer when the dry bulk market hit all-time record highs and he was betting on falls.

Su declined to say how much TMT had made from the paper market but said the company had been lucky always to have been proved right eventually in its bets.
"We want to use the capital to build a new generation of ships and return the money to the industry," he said.

The dry bulk market - ships that carry coal, iron ore, wheat and other bulk products - had now hit bottom, Su said. Demand would be helped by China's economic stimulus package and consequent spending on infrastructure. Many older ships were also being scrapped and 50 per cent of orders for new ships had been cancelled - a far higher figure than most market analysts give.

The market now represented a good "bottom-buying opportunity", said Su. "It's a good time to make innovative investments."

TMT again controlled 130 ships - including dry bulk ships, oil and gas tankers and car carriers - after briefly cutting the number of ships it chartered from other owners last year, Su said. Around 30 of the ships are owned directly, a figure that will increase as the new ships are delivered.

Regarding credibility....As was said in Jonathan Weil's Bloomberg editorial today (regarding the BofA-Merril deal):

"The best that can be said about Bernanke and Paulson is that they believed the ends justified the means, . . .And yet, if you think they didn’t breach the public’s trust, ask yourself this:

What about Paulson’s successor as Treasury secretary, Timothy Geithner, who at the time was still the president of the Federal Reserve Bank of New York? How could he have been out of the loop?

One Nation, Under Banks With Justice for No One: Jonathan Weil - Bloomberg.com 

Who's left to trust? I don't even trust Sheila Bair.

You guys might as well discuss about the details of the Glorious 1985 Soviet Union 5-year plan because those stress tests are all crap. The purpose of the tests is to give an appearance of normality while the reality is everything but normal. Meanwhile, the banksters are looting everything on sight and giving themselves extra bonuses for their excellent looting skills! Well, they and their families will also make nice bullet magnets for sure, after the collapse...

Security Prison 21,

Your view doesn't hold up against reality.

You make it sound as if there's never been a revolution or a coup in the world.

Optimist!!

//“I don’t want to be alarmist, but I’m worried next Monday could feel like September all over again,” Bank CEO from one of the 19 Banks Stress Tested."//

I think CR needs a full thread discussion on what it actually means when they talk about banks raising capitol. For my own benefit and the benefit of the audience, I would like to read about all the nuances of what it actually means and how it is done.

p.s. anytime I hear Stress Test, the voice inside screams to infinity and beyond.

Lehman bonds allegedly marketed to mentally ill
Isn't that a given?

"The CEO's [Ken Lewis, who made 100 million in '07] have taken as big a hit as anyone..."

cause he got Arrogant, wanted to be out there - number one, without any concern for shareholders or anyone else. It was all about an ego satisfaction and 5 min fame of being CEO who steered BoA into the glory during the crisis. Poor guy overestimated his .. size and underestimated the size and consequences of yet another asset bubble.

Sorry Security Prison 21, the current way of doing thins is totally unacceptable and I thank God every day for the complete and total economic catastrophe. With todays Internet, everyone can figure out what has been going on and what has to be done about it. Fortunately Divine Retribution is interceding for the know nothings and the smarter people are seeing to it that things are made right. Tuff shit for TPTB who don't like it.

since the crash started i keep thinking about this guy.

"Tsunami engulfs a man"

YouTube - Tsunami engulfs a man - Khao Lak, Thailand

Poor guy overestimated his .. size and underestimated the size and consequences of yet another asset bubble.

He also overestimated his ability to stay out of prison by claiming he broke the law because "they told him to."

Still, his money would make life easier in a minimum security facility.

The important question is: how do you indict Lewis without also indicting Paulson (and perhaps Bernanke)?

Michael, you put $10 in a bank.
The bank can lend out $9, practically no questions asked.
Of the other $1, about 30 cents is supposed to be "tangible", like the bank could probably get 30 cents for it if it had to sell fast.

When the loans start to go bad, the bank must either get money from the government or the market to get up to the 10%. They can sell shares for cash, but of course that lowers the price for those shares, Ponzi dominos in reverse.

Easier to get bailed out as long as you can, or just go BK after having handed out the 250k guaranteed per depositor in bonuses and dividends.

Game over.

My discussion concerns only the here and now, and only the psychological process of grief.

As expected, most are stuck in denial and anger. I am simply your friendly neighborhood S-21, trying to reduce your inner conflict, and move you on to a place of acceptance.

unless...

Michael and Short, are you preparing the revolutionary forces? If so, cool - it will be interesting to watch it play out. I am most interested in what factions arise as I have often pondered whcih I would join.

Security Prison 21,

The most powerful human on this planet has no more influence on the universe than an ant.. sorry to pour cold water on your deluision.

I'm waiting for Ken Lewis to start singing the second verse of that nice song he was sharing last week. Sing, Pigeon, Sing!

Thank God for the vultures that are giving TPTB pennys on the dollar for their no good debt instruments.

The best way for Citi to raise money is to buy back bonds at a discount.

Ann Schwartz (co-founder of Monetarism as econ "movement") on current FED policy:

Monetarism Defiant by Guy Sorman, City Journal Spring 2009

ouch.

p.s." Bernanke is right about the past, Schwartz says, “but he is fighting the wrong war today; the present crisis has nothing to do with a lack of liquidity.” (!!!)

I think we need to move beyond The Stress Test and get back to how banks report earnings to shareholders. The Stress test is a scam and a PR stunt, nothing more; it has no legal backbone and is just smoke and mirrors to add drama and noise to the TARP confusion. This test does not add credibility or add to levels of confidence and that is why actual audited earnings reports should be dealt with in terms of Sarbanes Oxley/Patriot Act accountability. If there is fraud by management they simply need to go to prison, and America simply needs justice. Enron was not a perfect example of accountability, but there was a legal process that involved accountability -- where is that now? Why do we have the governmnet involved in fraud, conspiracy and involved with bailing out a wide spectrum of Enron-like entities that have provided a non-stop stream of fraud and non-accountability? Where is justice, where is the law, why is Obama seeming to be corrupt and allowing Timmy to continue to usurp authority from congress ...huh, huh?

" banks raising capitol."

Michael, i think you meant to say "banks razing Capitol".

Foucault you, Broward.

The financial system will implode anyway, silly. It's a matter of who winds up in jail.

Let's not forget:
If the government wants to convert their preferreds to dilute shareholders to a $1 I'm fine with it , but this is approaching throwing the baby out with the bathwater territory.

What's this precious baby we're trying to save?

Within hours of signing the landmark Sarbanes-Oxley legislation to fight corporate fraud, President Bush attempted to severely narrow which whistleblowers would be covered by the Act. White House Counsel Alberto Gonzales defended the narrowed interpretation when Senators Charles Grassley (R-IA) and Patrick Leahy protested the attempt to undermine whistleblower protections they had authored.

Ultimately, the White House backed down on its narrowed interpretation of the Act.

[sorry to get politico]

The greatest act of W. Bush's Presidency will be the failure to pardon Paulson, Cheney, and himself.

And the shoe-ducking act was pretty cool.

I'm sure it's my ignorance talking, but that cascading cross defaults sound like bad news for the financiers and the rest of the world. Without them it's just bad news for those of us who make up the rest of the world. I guess we should save them and be grateful if they decide to help us out in any way. But I guess helping us isn't in the best interest of their shareholders, whereas taking our money is. Just one of those tough tough conundrums.

"Cascading cross defaults, anyone? The treasury didn't have the personnel(and still don't) to have a baby the size of Merrill dropped off at the front door in the middle of the night."

No I get that and with it would go AIG, C, BOA and a few others. I would think though that for less than 700B$ you could put together a pretty functional liquidation agency.

Still even if these TBTF entities failed tomorrow, how devastating would it be? No payroll checks for how many? How long until the good banks could fill in?

Banks razing capitol, good turn of phrase

Broward could recode Treasury Direct into a retail savings bank in between games of pool.

these stress tests... what scenarios are they using?

i heard they use something around 3.3% decline in GDP as the bear case scenario, but I think that should be our base case scenario, and that a bear case would be a bit more severe.

Looking at level 3 assets on these guys' balance sheets, it is clear to see that in most cases they exceed their tangible equity by quite a bit. So if you are expecting future losses (which everyone is) you need to raise a lot of money.

Something in the range of 300-500 billion wouldn't be too far fetched.

More government ownership? I don't see any confidence from investors to put that much money into flailing institutions really...

Also these guys can't earn their way out of this mess. Q1 results were also dodgy and i took some time to write about this here:

The Simmering Pot: The RISKIER you are, the richer...

Good luck all. We are going to need it...

BBerg on CDS clearinghouse contest:

"Intercontinental’s clearinghouse, known as ICE Trust, has the backing of nine banks including Goldman Sachs Group Inc., JPMorgan, Citigroup Inc. and UBS AG that Intercontinental obtained through its acquisition last year of the Clearing Corp., which the banks owned. The banks receive half the profit from clearing trades on ICE Trust.

Melamed said CME Group’s bank customers told it that the initial proposal to offer credit-default swaps for clearing only through its CMDX platform wasn’t how they wanted to use the system. The banks wanted to trade the contracts among themselves or with clients and then bring them to CME Group to be cleared, he said. "

--But evidently Melamed had seen 3-card monty enough to refuse.

"ICE Trust has cleared 875 credit-default swap transactions in Markit CDX North American indexes, guaranteeing $98 billion of the contracts, according to its Web site. "

--The big bad bank, taking nice fat insurance premiums, on policies they could never pay, steadily growing too big to fail even as everyone promises to cut that crap out.

Ice ICE, baby.

"The total in credit swaps cleared by ICE Trust comprises 1.5 percent of the investment grade and high volatility CDX indexes, which total $6.4 trillion, according to the New York- based Depository Trust & Clearing Corp., which runs a central registry that captures most trading. Revenue from the business could reach $50 million a year, according to Goldman Sachs. That would boost revenue 6.2 percent at ICE or 2 percent at CME Group based on 2008 sales. "

The total CDS market is down to about 28 trillion, according to the article. So ICE becomes the official new AIG. Not regulated as insurance, self-governed, god knows what capital in reserve. "Trust us".

No I get that and with it would go AIG, C, BOA and a few others. I would think though that for less than 700B$ you could put together a pretty functional liquidation agency.

Still even if these TBTF entities failed tomorrow, how devastating would it be? No payroll checks for how many? How long until the good banks could fill in?

$700bn? With X cascades last fall, you're talking $700bnx10 and liquidity wouldn't exist for a decade, 1890s panic. BAC is bigger than the next 2 banks combined.

There's nothing to do for AIG and C but go off to runoff mode, but BAC is only hobbled by the forced aquisition of Merrill. Countrywide is already accretive to earnings.

And a fine runoff it is. Taxpayer gives billions to AIG. AIG gives billions to GS. Launder. Repeat. Only 1.6 trillion left, according to Liddy.

I'll take liquidation over that liquidity.

Timothy Geithner, who at the time was still the president of the Federal Reserve Bank of New York? How could he have been out of the loop?

There were plenty of articles around the time of Timmay's confirmation hearings bragging that he not only was in the loop but that he took the lead in TARP design.

"The U.S. Securities and Exchange Commission (SEC) today issued an exemptive order permitting ICE Trust to clear CDS transactions. In December 2008, ICE Trust received approval from the New York State Banking Department (NYBD), and on March 5, 2009, the Superintendent of the NYBD issued the authorization certificate to ICE Trust to commence business as a regulated bank based in New York. These approvals, combined with the Federal Reserve Board of Governors' approval received on March 4, mark the completion of the required regulatory reviews prior to the launch of ICE Trust.

"Regulatory approval allows ICE Trust to bring to market the most comprehensive range of CDS clearing and risk management services available today," said Jeffrey C. Sprecher, Chairman and CEO of ICE. "ICE Trust has been designed to further enhance well-functioning CDS markets by reducing counterparty and systemic risks, and increasing transparency and capital efficiency in the CDS markets. ICE will continue to work closely with the Federal Reserve and other regulatory bodies in the U.S. and abroad in implementing risk management solutions for the vital credit markets."

"Robust counterparty risk management is a cornerstone to the success of privately negotiated derivatives and of the ISDA architecture," said Eraj Shirvani, ISDA Chairman and Head of Fixed Income for EMEA, Credit Suisse. "The development of options that deliver strength, flexibility and transparency to clearing and settlement are key to the evolution of CDS. We in the industry welcome solutions that help us achieve these goals."

Bank of America, Barclays Capital, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Merrill Lynch, Morgan Stanley and UBS have supported the establishment of the clearing house for CDS transactions, and are the initial clearing members of ICE Trust. Each of these participants has completed a rigorous technical testing and validation process over the past several months. In addition, each member has made a significant contribution to establish the ICE Trust guaranty fund, which will continue to increase as positions are transferred into the clearing house."

"...to further enhance well-functioning CDS markets..."

Bwaahhhaaahhaahhaahhh. That language is a dead giveaway. Like jumping up in a crowded theater and yelling, "THERE"S NO FIRE"

"ICE has contributed an initial $10 million to the guaranty fund from
cash on hand. Over a two-year period, ICE expects to increase its
contribution to the guaranty fund to a total of $100 million."

Of course, "In addition, each member has made a significant contribution to establish the ICE Trust guaranty fund." I suppose we're supposed to again guess what 'significant' means.

"The aggregate size of the guaranty fund will be determined by positions held
in the clearing house."

Oh the transparency is killing me. Well at least we know they're underwriting 98 billion with 10 million.

your handle Security Prison 21 I hope doesn't allude to S-21 or Tuoul Sleng here in Phnom Penh. does it?

if so it is not only lacking in taste and respect but it is also factually wrong. S-21 was not a prison, it had but a
sole purpose - interrogation. The killings that occurred there were an afterthought.

"Last night, I saw a dude under 880, just off the ramp to the Webster Tube in Oakland, CA. He had the full set up: a tent, a desk, a bookcase with some books, a rack for clothes - all under a freeway. The stuff looked decent so I'm guessing some CRE was vacated recently.

He does not yet have a shingle indicating his business; but he's set up, under the freeway, for what ever business it is."

Are you seroius?

I live pretty near there in alameda, right off broadway ? I might have to see this. I am not sure a tent city under the 880 would be so great, given the proximity to oakland and that its pretty cold out right now.

=(

Store sales fell back steeply in the April 25 week according to ICSC-Goldman's same-store index that fell -0.7 percent for a -1.7 year-on-year rate -- the worst rate in nearly three months. Redbook is up at 8:55 a.m. ET.

I had been under the impression that the "Swine Flue" was a direct money channel to the offal men that are in the midst of destroying our country, one lie at a time.

What a long, strange trip the government is making out of this.

I'm a day late (and a dollar short), but I want to draw your attention to a very important topic. Yesterday was:

National Hairball Awareness Day.

Please celebrate appropriately and responsibly with a feline of your choice.

Meow!

(Sun GlassFish Enterprise Server v2.1.1 Patch06 - Error report

curious,
"Days before an expected vote, Senate leaders yesterday touted their version of a proposal to allow bankruptcy judges to modify mortgages, but have yet to secure the support of the financial services industry and face fierce opposition that could derail the proposal again."
Mortgage Modification Bill Faces Trouble as Senate Vote Nears - washingtonpost.com

People are running out of equities so they can fund the U.S. deficit? I don't get it.

Elmo in bed with fluuu.

Hmmm, the top five cities in the Americas all have something in common. Interesting...
I think the banking system there still has a pulse too.
Course, we all know when it comes to banks no pulse is required.
Did anyone notice if Bill Gross's head has exploded yet? He must hold GM debt, no?

Very few people are going to believe the results anyways given how they were administered with kid gloves.

.....that's probably the brightest thing I've ever heard you say, AMF......good one!

Oh, Ken! You're a Prince!

WSJ Breaking: S&P Case-Shiller 20-city home price index fell 18.6% year over year in February.

Re. the Senate "mortgage cramdown bill" Sen. Durbin has been playing with this for two years. Fiscal conservatives are against it, as is the Credit Union National Association. The Mortgage Bankers Association, American Bankers Association and Independent Community Bankers of America have walked away from nogociations - refusing even to discuss it.

Wouldn't this be like me financing a car for someone, and then some bankruptcy judge in a bad mood telling me that Joe Blow (who bought my car) no longer owes me $5000 for the car but instead will be liable only for $2250? If so, that's major BullZhit.

There are a million stories of greed and avarice, in the naked Citi.

Ken Lewis has been stating loudly, publicly and repeatedly that BofA does not need new capital. Does the SEC bring charges? Shareholders? Does Bair remove him for obvious incompetence? I say all of the above.