Well, it's not pretty and it's not ugly, it's just pretty ugly.

YouTube - Talking Heads "Burning Down the House" 

And as to C4C, one of the reasons that I blew it off in consideration was the notion that somehow, that $3500/$4500 really wasn't going to come off after all.

Promise 'em anything, but give 'em a Pez.

Ya gotta like Angela Merkel. I agree with every quote of hers above. And her comments hit key points, not just distractions designed to keep the public off the scent.

. . . the real question is how many of those delinquent loans will become foreclosures?

Absolutely the most important question at this stage. I would suggest the answer will be some percentage above historical norms (for multiple reasons).

Meanwhile, I was ragging on the OC Register editorial board yesterday. Today they had a story which cited the "subprime mortgage crisis."

CR is, of course, their homey. You would think they would glance at an occasional chart of his and notice that there are at least twice as many delinquent prime loans as there are delinquent subprime loans. But, to borrow from another frequent commenter here, to them it's still a subprime problem to them because then it can be blamed on 'those people.'

"We're all subprime now" --Tanta. "We're all sublime now"--sportsfan, . . . got a few laughs.

the real question is how many of those delinquent loans will become foreclosures?

I'll take 'What is 85% for $2,000 Alex"

SF, if the OC Register is like our local rag (and it's not, the OC is still superior), then they've gutted the reporting & editorial staff due to drops in ad revenues...the shell that's left is merely regurgitating press release and news feeds from AP and Rueters.

Im still sending our local rag the weblink to the BLS press releases and data tables that show the U-4, U-5, and U-6 jobless rates, in a losing effort to get the reporters to ask questions and do some digging & "journalism".

For now, they prefer to "parrot" press releases.

But ur right, its laughable to call it a subprime problem.

"This mustn’t repeat itself."

WTF? Is that not the whole point of ? Trying to reinflate the same damn bubble to save the bad banks, who were already too damn big for their britches?

Help me understand something about the second chart in the post. It (and the text) indicate that only 14% of 60+-day delinquents end up with foreclosere initiated and an even smaller percentage actually foreclosed.

Today I checked similar numbers on the Alameda County (CA) public records web site and here it looks like about 50% of 30-day Notices of Default end up in Trustee Sales (i.e. Foreclosures).

What's the difference?

O/T:
Someone earlier commented on the oil sands. I saw a few mistakes I can clarify.
The oil/tar sands are not in Calgary, that's just the business center of the province and industry. They're much farther north, Fort McMurray is the center of the oil sands.

There are pipelines for crude oil to them. Crude oil pipeline map of North America

You will see 2 proposed pipelines to the west coast. Strength: Introduces more competitive pricing, Weakness: Expensive, Opportunity: Oil diversity/security for Pacific countries,
Threat: Environmental concerns. The current provincial government of BC has a majority, a big deficit no one likes, and would likely support the building of a pipeline if it comes up again. There's a NG pipeline to the west coast that is further along, with South Korean investment I believe.

As to the profitability of the oil sands. It varies so much over time. Royalty agreements, price of natural gas, capital costs, labor costs, exchange rate. At one point in time not long ago (mid to late 90s), everything above $8 USD per barrel represented pure profit. Technology and efficiency is being improved over time but I don't know what the proposed projects are projecting now. As conventional crude production declines, the real value of the oil sands is in security of supply in terms of politics and military. The other important is they represent all new production. The operations are capital intensive and require massive planning lead time, but it's still wide open and you can produce as much and as fast as you want.

They oil sands get more press than they warrant in my opinion if you look at projected absolute daily production.

As for Chinese involvement, look at Li Ka-Shing and Husky. It's not so new. As for Chinese SOE involvement, I don't see any real concerns. Government might choose to impose some arbitrary limits on board of directors composition. The SOE may be too eager to import labor to work on the projects. Nothing that is a real obstacle. Every other major oil producer has already come to the oil sands.

"But ur right, its laughable to call it a subprime problem."

It is laughable to even call it a housing problem, It is a debt problem. Homeowners and Banks owe more than they are worth.

“We mustn’t waste this opportunity” in Pittsburgh, Merkel said.

You already have. It is six months too late for any unity to coalesce around the harder-edged proposals. The game has moved on. The best to be hoped for is the absence of a humiliating countermove by some of your G7 colleagues, and the chance to play the act through according to an agreed script. As for corraling the wider G20, good luck, as the signs of forelock tugging in the direction of a franco-german detente are not exactly numerous right now.

C

China's SOEs May Terminate Commodities Contracts

China's state-owned enterprises may unilaterally terminate commodities contracts as they try to cut massive losses from financial derivatives, an industry source told Caijing on August 28.

According to the source, China's State-owned Assets Supervision and Administration Commission (SASAC) has sent notice to six foreign financial institutions informing them that several state-owned enterprise will reserve the right to default on commodities contracts signed with those institutions.

Keith Noyes, an official with the International Swaps and Derivatives Association, a trade organization, confirmed that he is aware of the matter, but provided no further comment.

The truly sad thing is that the situation has gotten so bad that we no longer question whether the government should be addressing mortgage loss mitigation but rather we now blithely score the performance.

Sadder still would be if no one calls me on this comment and correctly points out that by most any common sense reading of the laws of this land that it isn't a case of should but a case of government explicitly lacking even the discretion to intervene.

Map of crude oil pipelines in Canada and USA
sorry about that other link, thanks for the correction HomeGnome, but if anyone wants to talk hockey by chance, I'm game.

Puck off.

C

Avl Dao, the OC Register has outsourced their editing to India, two or so years ago.

while we surrender to the banks.
Cmon, we cant be surprised. let's face it, back on Nov 3rd we had 1 candidate who admitted he knew lil 'bout economics and another who (I voted for) who had no original thoughts on the subject beyond "tweaking" NAFTA and is still totally beholden to whatever Timmie, Larry & Ben whisper to him.

since this is in the off-hours, I feel free to share a funny little image that popped into my head.
The UK has these ASBOs (Anti-Social Behaviour Order), and they can now ban you from drinking alcohol for 2 years if served with one. I just pictured Gordon Brown stalking through the streets, Mervyn King at his left, Alistair Darling at his right., hunting down financial doomers. Maybe I can't explain it, but the visual is very funny.

Exploiting the oil sands requires a great deal of water and that water is generally polluted as a result. Ends up in holding ponds (but doesn't necessarily stay there) & is therefore not available for any other use. Like for agriculture, drinking, fish, etc. Water Pollution | Greenpeace Canada

It's a high cost resource and some of the cost is in a more or less irreplaceable resource.

It'll be interesting to see what the US rep/delegate to the G-20 meeting comes up with the explain why the US thinks TBTF is a good idea and bailouts essential to the American Way of Life and Homeland Security and all that.

On the other hand, if every other member of the G-20 jointly passed & implemented regs of the type Merkel & Sarkozy describe, then it would no longer be possible for the CEOs , et al to argue that they & their staffs "have" to receive such high compensation because otherwise all that great talent will go elsewhere. There won't be anywhere (outside of the US) to go. And wouldn't it be a pleasure to watch them realize that.

What's that? Chinese state owned enterprises are facing massive losses on DERIVATIVES? And the ChiGov is going to make FOREIGN financial institutions eat the losses? So the US taxpayer will likely have to foot the bill, as Goldman and other US institutions are likely involved.

Let's tell them we'll trade some RMBS for those commodities contracts and call it even.

sportsfan,
No there hasn't been an increase in taxes. Alberta corporate taxes are 15% federal and 10% provincial I believe. Only a 5% Federal government sales tax.
Alberta did raise royalties last year though.
As for Oil Sands + America. I think most Canadians are well aware of their importance in that sense. That being said an invasion would be pointless. We're an open market top to bottom pretty much. All an invasion might do is slow production and increase costs. It's not a new concept, we've cooperated through NORAD for a long time.

I do not think they deserve that opportunity. Rent and try again in 7 years.

That is the alternative and one that happens to be costly to society at large in addition to that particular family.

Cramdowns were always permitted prior to the 2005 BK law that Congress passed.

Cramdowns are still ordinary in all but owner occupied single family residential mortgages, the exception carved out in 2005 [Note: Basel Too disagrees and claims this merely codified existing practice.]

If I own five houses and file bankruptcy because I'm underwater on all five, I can get cramdowns as a matter of course on the four rental properties I own. Where I live, on the other hand, is that big exception.

Why? What's the rationale other than abuse of the working class (the ones who don't own four rentals)?

Avl Dao, from previous thread: Spock has successfully seduced the Romulan commander. You may fire at will.

Avl Dao wrote:
"Im still sending our local rag the weblink to the BLS press releases and data tables that show the U-4, U-5, and U-6 jobless rates, in a losing effort to get the reporters to ask questions and do some digging & "journalism"."

Perhaps CR should start issuing press releases. If that's all the MSM can digest any more, that's what we should feed it.

"What's the rationale other than abuse of the working class "

The rationale was that, in order to get the lowest cost possible for loans for primary residences, the lenders would need the strongest protections. Lending costs = cost of funds + banking expenses + bank profits + risk charges. Lower the risk, and you lower the charges.

Push everything forward and pay for it later. Cash for clunkers low interest housing loans.

HOPE NOW pain later.

"Let's tell them we'll trade some RMBS for those commodities contracts and call it even"

We already did that trade, and I think this is their way of calling it even.

azurite
The amount of water isn't a big deal, but the toxic water that isn't reused and settling ponds are probably the worst part of the oil sands in my opinion. That being said, I know of a lot of research being done in order to cut water usage down to the point where it is all re-used/self-contained, and to improve the energy output/energy input of the extraction. All kinds of projects. For the settling ponds I know of trials where they were using robots to allow them to use smaller ponds. There is room for improvement, and that's what I would keep in mind for something that will occur over decades

Perhaps CR should start issuing press releases. If that's all the MSM can digest any more, that's what we should feed it.

That's an inspired idea.

As China & the US learned, you dont need no stinking army and invasion...all you need is to get one highy indebted to another, and highly dependent in reverse, in a weird condom-free kind of exchange of finances...where it;s hard to tell who's the pimp and who's the ho.

So Canada could be seduced by the dark Side on the world stage and have her oil shale beholden to whoever's her pimp.

On the Chinese SOEs:

July 2009...
Konaxis China | 20090713887 | China Tightens Control Of SOE's Financial Derivative Transactions | Accounting - auditing - finance - admin. China | News

August 2009... "Chinese State-owned enterprises (SOEs) may unilaterally terminate derivative contracts with six foreign banks that provide over-the-counter commodity hedging services, Chinese business magazine Caijing reported, citing unnamed sources. "
Derivative deals hit a rough patch - People's Daily Online

This news has sent KD into paroxysms of mirth! Watch commodities tank, Chinese SOEs default on hedges, and "hilarity ensues".

Anyone have any ideas on why China is taking an axe to one of the financial pillars of trust?

Just posted August trustee sale data for the following counties:

Effective Demand: Orange County Trustee sales for August 2009

Effective Demand: Ventura County Trustee sales for August 2009

Effective Demand: Trustee Sales for Los Angeles County August 2009

Effective Demand: San Diego Trustee Sales August 2009

LOL....never a dull moment.

Counterpointer,
Not as funny as Merkel pounding back the beer and getting 'legless' before heading out on to the dance floor, getting the DJ to play some east german industrial techno as she teaches the others how to do the 'Helmut Kohl'
`
Seriously though, I think the only concrete agenda item for this G20 are the tax treaties. There have been a blizzard of signings. Germany/France will bring up bonus pay. China will bring up a super SDR. The US will push for fair competition in trade. Italy will try to relocate the meeting to the nearest strip club. I don't know what Japan or the UK might bring up. Canada will probably have some government minister grandstanding for the home crowd about the stability of Canadian banks.

The Case Against a Super-Regulator

y SHEILA C. BAIR

OP-ED CONTRIBUTOR; The Case Against a Super-Regulator - NY Times

She has to be rocking some heavy boats with this!

@patient, there's one story about the UK banks & Government that's laughable yet somehow missed America's radar this past July:

Iceland's central bank – mercifully, no longer listed beside al Qaeda as a terrorist body by UK authorities. Britain's application of anti-terrorism laws over failed banks has created lasting resentment in Iceland.

By Ambrose Evans-Pritchard, in Reykjavik 22 Jul 2009
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5889325/Britains-gunboat-diplomacy-still-angers-Iceland.html

As for insuring against an invasion, I guess you have to get your money's worth from AIG ; )
Honestly though, who other than the US would be invading Canada.

Okay, ensuring would have been a better choice. You know, NORAD and all that tech stuff.

As to who else would invade (the prize being commodity wealth), I expect the next major war will be fought with China.

I expect the U.S. and Canada will be on the same side. As to who actually invades whom, or whether it's all done on a single game between Go Masters, winner gets to dominate the world, who knows?

"Why? What's the rationale other than abuse of the working class (the ones who don't own four rentals)? "

Oh...inside of a BK, s a primary residence protected by the appropriate state laws, I am fine with it. Particularly if wage garnishment is part of the deal.

Cmon, EHP, you got the larger geo-political/economic point about the new "warfare"

This news has sent KD into paroxysms of mirth! Watch commodities tank, Chinese SOEs default on hedges, and "hilarity ensues".

And just last night I was arguing the commodities to the moon crowd was starting to look exactly like the bears were back in October and March.

"the real question is how many of those delinquent loans will become foreclosures?"

At least 50%, based on historical DTC trends.

Blackhalo, sorry I strayed a little too far OT with that comment.

I don't expect the U.S. will do much saber rattling in the near to midterm future.

I do believe the next great war will be started by China, although the 'starting point' may well be a move that requires a particular reaction that involves shots being fired.

A lot of weight will be thrown around before that day arrives, but I believe it will arrive.

I also believe the U.S. and Russia will be allies in that war.

I'm not talking about next year. I'm not even talking about the foreseeable future.

I am talking about what I hope the Joint Chiefs are considering.

Just as I mentioned recently about China's one-child policy having led to a situation where millions of men will never find a mate in that country.

sportsfan,
An enemy could disrupt and destroy, but as for an occupation my perspective is that it is difficult enough for the Canadian government to occupy Canada. Then again Germany never occupied countries so much as they co-opted them. I don't know enough about Japanese occupied rule other than it being strict and exaggerated punishment. For both of them, we don't know how the occupations may have fared in peace time. However Canada has a healthy amount of rugged terrain and harsh environment to make things challenging. I just don't think importing 200mn Chinese or Indians would be a successful occupation in itself. Then there would be the fallout. Invading one commodity supplier collectively begets trouble from other remaining commodity suppliers, and aggravated commodity importers. As long as Canada isn't withholding supplies, production, and investment -- I really don't see the economic case for invasion. Of course in a worldwide war where everyone picks side A, side B, or neutral.. it gets complicated

So,what do you "investors" think of this?

Reuters.com

EHP, yes, I have to agree with you that it just doesn't seem very plausible that a foreign power would try to invade, much less occupy, Canada.

In a world war, invasion for the sole point of controlling commodity distribution is a possibility.

I did get a chuckle out of "I don't know enough about Japanese occupied rule other than it being strict and exaggerated punishment."

I would say "strict" was being kind, since "brutal" would be more appropriate.

The Chinese certainly know all about that. Hopefully those millions of 'excess' men now in China won't be sent elsewhere in need any American or Canadian 'comfort women.'.

"I really don't see the economic case for invasion."

Me neither. There are too many other, less well defended targets for Chinese adventurism. Sudan, Somalia, Ethiopia, CAR, Zimbabwe or Darfur might provide direct access to new resources, and outside any loss of life from the action, might do some good to stabilize the region down the road.

"During the 1812 invasion, we burned York (now known as Toronto) leaving the citizens homeless during the Canadian winter"

Naughty.

re: delinquency + default
http://www.bos.frb.org/economic/ppdp/2009/ppdp0904.pdf (July 6 2009)
30% self cure
40-50% of all modifications re-default within 6 months (fewer than 8% of delinquent borrowers received any modification) (they later refer to 30-45% of modifications ending up in re-default within 6 months)
50% foreclosure was initiated, 30% foreclosure completed during sample
so 20% of delinquent loans just patiently age and ripen without any events

Very naughty.

It kinda pissed them off.

They wanted to invite us to a no gloves hockey match, but cooler heads prevailed.

NW

EHP, those stats help a little, but don't you think that the foreclosure process has changed so radically (under govt pressure) that these older stats aren't very predictive?

Re: investment taxes.

The long-term capital gains welfare program is absurd, has encouraged securitization of even toxic junk like securitized securities just to game it, and does not promote long-term capital investment in more useful production than the government would otherwise with the tax money (IMO, of course).

Not talking my book. I stand to lose if they abolish this welfare.

several state-owned enterprise will reserve the right to default on commodities contracts signed with those institutions.

Someone spell this out for me, if you can. The SOEs signed a contract promising $X dollars (yuan, euro, shekels) for some commodity, and now the price has gone lower, so they are reneging. Is that an accurate translation?

In a word, yes.

EHP, yes. ED's monthly updates on So Cal are helpful, as are ghostface's comments. I think none of us quite knows how the govt redirection of the foreclosure process will go.

kcoop, for the record, postings are generally taking 8-10 seconds, but twice the process just stopped and after about 20 seconds, I hit the 'submit' key again.

The first time I got the error pop-up (which is a neat device) and the comment immediately posted . . . just once.

The second time I got the error pop-up, but it took at least a minute for the comment to post. I had cycled back to CR and reopened the comments, but it just wouldn't load, nor would it give me a 'network timed out' message. The status bar just kept saying 'waiting for hoocoodanode.org' until it finally clicked and the message (the one immediately prior to this one) was there on the board.

Edit addon: this one took 14 seconds to load. Note also: the two times it took so much longer to load I was in 'in reply to' mode, meaning I only had the comment to which I was replying (not the entire message board) visible while waiting.

Second edit addon: took 21 seconds to load the first edit.

Thanks, sportsfan. Good to know what's going on.

I'm going to back out that last change. It appears to be causing more harm than good.

It's fun to see the moral hazard making itself felt in unexpected ways.

I have no problem with that at all. The reaction will be to put safeguards in place. For example, escrow accounts with deposits. They'll get to pull this stunt once and only once, and then the market will adjust.

I note that adjustment is deflationary, since credit will no longer be extended. Hoocoodanode.

"They'll get to pull this stunt once and only once"

Really? US borrowers seem to pull this off whenever a majority of the voters want it.

kcoop, I have no idea whether 'that last change' had anything to do with the posting delays I recently saw.

Remember, I brought down GM. My old tower computer may be jinxing your system protocols.

Edit: 10 seconds to load this one. See what I mean?

Okay, I'll play.

Edit: 20 seconds, but when I moved the mouse, it loaded. Again, could be me.

patientrenter,
In my opinion (greatest caveat ever): Whether homes are foreclosed on day 91 or year 10 of delinquency, the destination is the same. Prices will fall whether it be through a purchase/lease, or living rent free. Novel ways of responding to the negative equity/foreclosure crisis will spread like social viruses.
`
The biggest change in my opinion is the increasing importance of seasonality to all economic indicators, including house sales. Seasonal variation is now relatively much larger. I haven't thought through how long this may last, or everything that could be feeding into it. Government intervention, slack production capacity, changes in saving instead of financing (higher elasticity?), overshooting while trying to aim for the new normal, relatively becoming more agriculture/manufacturing dependent at the expense of service sector,

I realize the late night crowd doesn't do much news-breaking, but this seems important:

Sept. 1 (Bloomberg) -- Bank of America Corp. is offering to repay part of the $20 billion in U.S. government aid related to the bank’s acquisition of Merrill Lynch & Co., the Wall Street Journal said, citing unidentified people familiar with the plan.

Bank of America is also seeking to end a loss-sharing arrangement with the government on Merrill Lynch assets, the newspaper said. The Treasury Department and Federal Reserve have asked Bank of America to pay between $300 million and $500 million to end the arrangement, the Journal reported.

Bank of America Aims to Repay Some U.S. Aid, WSJ Says (Update2) - Bloomberg.com

Anyone wanna bet CR doesn't have a blog post on this tomorrow. I'm giving odds he does.

WSJ

"The Coming Deposit Insurance Bailout
Another lesson that federal guarantees aren't free."

The Coming FDIC Bailout - WSJ.com

If you watched the 60 Minutes segment on CDS, or have been following this blog for a while, you'd know that bucketshops (derivative stock betting parlors) were outlawed in the aftermath of the Panic of 1907.

Congress stuck in a special exemption in 2000, for fear that derivative trading disconnected from the underlying entity would be ruled gambling. It is, as well as being part of "Hurricane Ponzi" ( J. Tavakoli's term).

"I don't... blame government intervention for every event"

You blame multinational corporations for every event?

Yeah, so China SOE's can no longer buy oil or iron futures, they must buy the commodities in hard cash. Sure, that's deflationary. Can the US bid for that Australian stuff, too? We have a helicopters and bazookas full of dollars...

What do the Chinese have to shoot, apples and blackberries?

Everything but posting is extremely fast

Then I have the (a) solution:

Oh now I'm pissed.

WSJ "article" on FDIC:

"Rather than further soak capital from already weak banks, the FDIC ought to draw down at least $25 billion from its Treasury line of credit. Ms. Bair is going to have to ask for the cash sooner or latter, and she might as well do it before the fund hits zero and we get another round of even mild depositor anxiety. ..."

"ALREADY WEAK BANKS!!!!"

Record profits, record bonuses at some banks.

"What do the Chinese have to shoot, apples and blackberries?"

An awful lot of T-bills... If they shoot those, they can crash the bond market, sending rates to the moon and making Timmy's auctions a bit more interesting. Oh, it might have some impact on housing and TBTF balance sheets...

OT, but I had a really trippy vivid dream last night:
Took place in "Hawaii" (that was the place in the dream). I was sitting on a cliff overlooking a beach with some big waves. People were surfing below Some type of American marked plane (a wildcat or hellcat?) all green with white stars on the wings (I was looking up) flew over. The story was that this plane was going to be landing on an aircraft carrier that was pretty close to where I was at sea. There were people swimming below on the beach in the water... one of them was my brother (I didn't see him, just my intuition). I wasn't with my family since I had already divorce my wife and she was marrying some new guy this weekend (again, my intuition from in the dream).

So this plane goes barreling over my position, and then seems like he loses altitude pretty quick. I'm watching it thinking, "damn, he's going into the water." Pilot gains control at like 20 feet altitude (my estimation from the dream) and I think he's going to make it. All of a sudden I see a 30 foot wave crest and its about to engulf the plane... so the plane noses up to make it over the wave... successful at getting over, but it stalls out and hits the water. I dunno know why but there was no explosion.

After the crash was walking through and learn some stuff. My brother was okay, as my first concern was that he was down there swimming when the crash happened. The sad news about the crash was that there were some other folks flying in the back of the plane... observers who had been asked to take part in this historical moment of a plane landing on an aircraft carrier close to "Hawaii".

That's a helluva lot of details to remember from a dream...

Yeah, Bh, I was responding to the notion that China was somehow cheating by defaulting on derivative bets made by Official gamblers with the peoples' money.

Pretty sure Australians can value a Blackberry in soy beans better than they can figure the odds that the Fed's promise to stop buying Treasury's after 'just one more month' will be honored.

More from the Wall Street Journal "article" [in "Opinion" section, to be fair]

"Everyone now assumes the FDIC will hit banks with yet another special insurance fee in anticipation of even more bank losses. The feds would rather execute this bizarre dodge of weakening the same banks they claim must get stronger rather than admit that they'll have to tap the taxpayers who are the ultimate deposit insurers."

Bullshit lie, you liar.

I'm not an expert on the FDIC's Statute, but I know the general framework is that deposits at a failed bank are supposed to be repaid by member banks. Even if they're broke, they're supposed to pay back Treasury with future assessments. Member banks paid billions in bonuses this year.

If deposits beyond the new $500 BB emergency Treasury line (which must be approved) were really backed by the Full Faith and Credit of the US, why is there any limit? Who cares whether their check is signed by Sheila or Tim, if it's coming out of the Treasury?

This is from an advisory opinion of FDIC GC
FDIC Law, Regulations, Related Acts - Advisory Opinions 

"FDIC-87-36

November 9, 1987

Alan J. Kaplan, Counsel

Your October 7, 1987 letter asks whether the full faith and credit of the United States Government stands behind the Federal Deposit Insurance Corporation and its deposit insurance fund. You noted that in my earlier letter to you, dated August 26, 1985, I stated that a joint resolution of Congress (H.R. Con. Res. 290) adopted in March 1982, which reaffirmed that the United States pledges its full faith and credit behind the federal deposit insurance funds, may have served as a moral pledge on the part of Congress to support the deposit insurance funds should they ever need it, but, because of its status as a non-binding resolution, did not serve to create any legal liability on the part of the United States Government to support the funds. You now ask whether Congress has passed a statute that makes the United States Government legally liable for any and all obligations of the FDIC.

...
Title IX of the Competitive Equality Banking Act of 1987 ("CEBA"), signed into law by President Reagan on August 10, 1987, provides:
...

(b) SENSE OF CONGRESS.--In view of the findings and declarations contained in subsection (a), it is the sense of the Congress that it should reaffirm that deposits up to the statutorily prescribed amount in federally insured depository institutions are backed by the full faith and credit of the United States. [emphasis added]

While any final conclusion on this matter rests with the Attorney General of the United States and ultimately with the courts, it is our opinion that Title IX of CEBA merely represents an expression of the intent of Congress to support the FDIC's deposit insurance fund should the need arise. Title IX does not change any existing underlying law. It does not amend the Federal Deposit Insurance Act, nor does it or any other provision of CEBA alter the method by which the FDIC is funded. The FDIC continues to receive no government appropriations, and its funding continues to consist entirely of its income obtained from insurance assessments and from the return on investments made in government securities. ... "

Blast from the Past for you.

FDIC Fund 'Under Stress', More Money Needed:
With the nation's economy in a slump, the government fund that insures bank deposits is under stress'' and needs more money to cope with bank failures, the chairman says. William Seidman, chairman of the Federal Deposit Insurance Corporation, said the fund is expected to pay out $4 billion in 1990 to cover bank losses. A new forecast for 1991looks like another $5 billion loss,'' he said. That would drop the FDIC's reserves to $4 billion, he said. Seidman told a House Banking subcommittee today ``action should be taken early next year'' to inject billions of dollars from banks into the FDIC fund. Seidman suggested the nation's commercial banks need to inject 1 percent of their deposits, or $24 billion, into the fund. Also, annual deposit insurance premiums should be raised for the third time in as many years to 23 cents for every $100 in deposits, nearly triple the 8.3 cents charged last year, he said.

The bankers will recapitalize the FDIC by paying more premiums into it, Seidman said. We think they have plenty of resources to do that, and we expect that they will agree that that's the way it ought to be done.'' A banking-industry official said today banks are committed to making sure the fund remains solvent.If it needs to be recapitalized, the banks are willing to put the necessary money into the fund,'' Donald Ogilvie, executive vice president of the American Bankers Association, said on NBC-TV's ``Today'' show.

December 17, 1990

You want inflation-talk from 20 years ago?

I will reintroduce a bill to require the General Accounting Office to conduct a complete and thorough audit of the Federal Reserve System and banks. Such an audit of the Federal Reserve is necessary when one considers that the Federal Reserve, the FDIC , and the Office of the Comptroller of the Currency `are empowered to carry out functions crucial to our system of Government and to our Nation's economy.' Yet amazingly enough, Congress enacted a law that prevents the GAO from auditing these vital entities of our National Government. The ramifications of this secrecy take on greater significance when one considers that the Monetary Control Act allows the Fed to purchase paper obligations of foreign governments and use them as collateral for Federal Reserve notes. In stating a reason for excluding these crucial functions from the purview of the GAO audit, the Senate Committee on Governmental Affairs wrote in 1978: The Federal Reserve must be able to independently conduct the Nation's monetary policy.

By allowing the Congress to audit the Fed, we will finally be able to piece together how it makes its decisions. This will make the Fed more accountable to Congress. Since Congress is an elected body, such oversite will ultimately serve the goals of representative Government. It is important that the people be given an increased say in matters which affect their well being in such a vital area.

is this a put up job?

Going to the enabling statute:

15c(5) MAXIMUM AMOUNT LIMITATION ON OUTSTANDING OBLIGATIONS.1 --Notwithstanding any other provisions of this Act, the Corporation may not issue or incur any obligation, if, after issuing or incurring the obligation, the aggregate amount of obligations of the Deposit Insurance Fund, respectively, outstanding would exceed the sum of--

(A) the amount of cash or the equivalent of cash held by the Deposit Insurance Fund, respectively;

(B) the amount which is equal to 90 percent of the Corporation's estimate of the fair market value of assets held by the Deposit Insurance Fund, respectively, other than assets described in subparagraph (A); and

(C) the total of the amounts authorized to be borrowed from the Secretary of the Treasury pursuant to section 14(a).

...
15(d) FULL FAITH AND CREDIT.--The full faith and credit of the United States is pledged to the payment of any obligation issued after the date of the enactment of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 by the Corporation, with respect to both principal and interest, if--

(1) the principal amount of such obligation is stated in the obligation; and

(2) the term to maturity or the date of maturity of such obligation is stated in the obligation.

Well that statue was written after the above letter? I must've missed the point you are making...

statue: an object, sculpted from stone, or cast in bronze (or some other metal) or plaster

statute: a law, written by legislators and administered by bureaucrats

The enabling Statute is the original, updated with amendments.

Why one person or entity can open as many fully insured accounts at different banks as he can sign his name to is beyond me, although it might become an issue in triage, after the $500BB has vanished faster than LEH's capital reserves.

I chooose: Up from Slavery...

An update for anyone listening: the good news is the extremely long time to post has been fixed. The bad is that the spikes are still with us. But I'd take them right now any day.

Thanks for your continued patience. This will get resolved...

Returning to your regular programming. Time for bed.

thank you kcoop

Bberg:

"Five U.S. commercial banks, including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Bank of America Corp., are on track to ["]earn["] more than $35 billion this year trading unregulated derivatives contracts. ...

The Washington fight, conducted mostly behind closed doors, has been overshadowed by the noisy debate over health care. That’s fine with investment bankers, ..."

But the Wall Street Journal said they couldn't afford $25 billion in their weakened state...guess they're paying lobbyists the big bucks too.

One more point, the major grain companies mustn't have suffered too much because they continued to do business with Chinese grain companies after contracts were cancelled.

Chicago Dude (profile) wrote on Mon, 8/31/2009 - 8:31 pm

China's SOEs May Terminate Commodities Contracts

......this reminds me of South Korean currency KIKO(Kick in Kick out) case several months ago......damn Gooks........

hamm ! sound to be interesting i think Germans have very rich tradition ! Home mortgages loss is extending due to the current economical crunch !
Reverse Mortgage Information 

Trader, as a lifetime Republican along with Armey, translating I'd say he's saying its all bullshit, the younger one knows this the better life they can lead. He also said at a speaking one night, if his wife had caught him as Hil caught Bill the only thing she would ever say to him again is how do I reload this gun. I did like him, but was raising my family and my political time was very limited and politics was his bread and butter.

"“No bank must grow to a size that puts it in a position in which it can blackmail governments,” Merkel "

Limit the growth of a 'Franchise' ?

Hey Jay D, just pointing it out in case you weren't aware. It doesn't make the slightest bit of difference what your story about KIKO is, or whether it's true. You'll probably be ignored from now on..

Bberg:
"[New Fed Gov]Tarullo, 56, aims to go further. The new system “will have a quantitative mechanism which systemically collects, analyzes, and models data for specific institutions but also in the aggregate” to strengthen the ability to detect systemic risks, he said in the interview. "

FAIL

Because bots know when real estate is in a bubble.

Heh, GIGO. Just last week Shapiro was moaning about having too little information on derivatives to reach any firm conclusions, let alone do jack about it. Every regulator has the same problem of information asymmetry, even if they have the law/regs, will, and capacity to perform effectively.

What's Tarullo, the noob, saying? Our HAL will talk to their HAL? What about, algos, flash orders, dark pools, and exchange shopping? I'm sure that'll work just fine.

C

Tarullo is a former Georgetown University’s law professor. Yeah, that'll give him the necessary background to vet scenario models. Fail.

Mormons Become Victims in $50 Million Scam to Sell Gold Bullion - Bloomberg.com

This comment will get pigged or overtaken, so I'll do some more work on it and post maybe this evening when there are more than 10 of the community on line:

I get the sense that there is a massive PR operation in motion setting up a one year on crisis, TARP, and political retrospective and reputational rehabilitation play.

The core piece will be the Vanity Fair coverage of Paulson. Every OpEd page, network, think tank and political machine should be set by now to chime in. This is necessary for perception management, that the crisis was contained, in record time given its severity, that the foundations are in place for growth, that the genius handlers did a more than adequate job (they should be reappointed - BB; continue with a strengthened hand - TG; trusted with complex things like crises, systemic management, international relations, new regulations and structures even if the individuals are vampire squid spawn).

In political management terms it makes no sense to allow the continued demonization of banksters, except selectively and for convenience. Those who voted either way on TARP need cover and to make hay out of the retrospective. This can be done in two ways: we got X right, so trust us with more of X; or they got X wrong, so can't be trusted with Y. Both sides will do it. Independents will lose oxygen in this environment.

This is how you set up a decent mid-terms play. Maybe some other legislative achievements, but if they're not coming, better to re-engineer the past.

C

/additional points to watch, Wall St doing its bit too, and as many of the big 19 as possible paying back TARP funds.

....the unfortunate aspect of the Mormons being conned out of $50-million was that it was to be used for positive purposes.......a shame.

BSR,
I think the BLIND FAITH of the 'investors' is the unfortunate aspect.

/snip
While some Tri Energy claims were implausible -- the 20,000 tons of gold was more than twice the total U.S. bullion reserve, the largest in the world -- investors rarely wavered in their loyalty.

Looks like a lot of golden bull to me.

C

Yep BSR.
The Purple CORPORATIST party.
YouTube - Bill Hicks on politics

Ok, BSR, I'll rephrase it: both "sides". I'm not behind any crook. I'm neither a citizen of, nor a voter in, this country, I just observe and comment.

C

It is real, BSR. That's the truly frightening part.

I once tried to form the Apathy Party. It was a total failure, People actually showed up.

YouTube - Bill Hicks - People Who Hate People

Hotels: "A False Bottom in RevPAR?"