14 replies to this topic

[DraggdOut]

I can't speak for BA or JPM above and beyond the fact that their derivative exposure is significant (not that that necessarily implies significant negative exposure), but Citi & Wachovia are paying the piper right now for some 'agressively entrepeneurial' financing over the past few years

[mike123]

i know they said they are acting as an agent, but still it raises eyebrows. they either didn't want to, or couldn't, finance the loan themselves. so they took the probably-garbage paper to the fed. so the fed is going to end up holding garbage and maybe a lot of it and this makes it harder for the market to finally clear. REMEMBER JAPAN !!!!!!!!

now, here is some perspective: $500 million doesn't sound like a whole lot in today's market, BUT the avergae TOTAL DISCOUNT WINDOW borrowing was well below $300 million before this crunch hit.

For many years we have been telling Japan to do the right thing to get rid of the bad debt. Guess it is easy to say than done.

[tommyt]

considering the hit, from highs, that mortgage firms and housing stocks have taken ( 70-99% on most ), and banks brokers (20-35% on most)...you have to almost have a doomsday outlook after the decline we just had. And normally these all or none scenarios leave you in the dust.. I'm not saying we can't go down, cause we will again, not just now. Most of what we know is in the markets already...what we don't know is the unknown. After COF made their announcement 2 days ago and didn't tank, it told me a bunch of this stuff is in the markets. ST, the mkt is certainly not as easy as it was Monday...sincerely neutral

[mike123]

considering the hit, from highs, that mortgage firms and housing stocks have taken ( 70-99% on most ), and banks brokers (20-35% on most)...you have to almost have a doomsday outlook after the decline we just had. And normally these all or none scenarios leave you in the dust.. I'm not saying we can't go down, cause we will again, not just now. Most of what we know is in the markets already...what we don't know is the unknown. After COF made their announcement 2 days ago and didn't tank, it told me a bunch of this stuff is in the markets. ST, the mkt is certainly not as easy as it was Monday...sincerely neutral

Bad news just starting. How do you know if it is not insitutions pumping up price to distribute?

FDIC eyes markets and banks as troubled home loans rise
2:07 p.m. 08/22/2007 Provided by


By John Poirier

WASHINGTON (Reuters) - The Federal Deposit Insurance Corporation, which insures bank deposits, said on Wednesday it is keeping a close eye on the unpaid real estate loans that are piling up at U.S. banks and thrifts.

"We remain vigilant," FDIC Chairman Sheila Bair said at a news conference on U.S. banks' second-quarter rise in noncurrent real estate loans. "We are closely monitoring the situation in the markets as well as individual institutions."

In a sign of distress that borrowers are facing, U.S. banks' non-current real estate loans rose for the fifth consecutive quarter to $66.9 billion at the end of the second quarter, the FDIC said. That was up 36 percent from one year ago and up 10.6 percent from the end of the first quarter, according to the FDIC.

Non-current loans are those for which payments are overdue by at least 90 days.

Rising U.S. home foreclosures and problems in the subprime mortgage market have spilled into broader financial markets in recent weeks.

Bair said the "tremendous golden age of banking" for U.S. financial institutions had ended, at least temporarily.

"Everybody is being challenged in this current environment," she said.

Many economists are concerned about the credit logjam's potential drag on the economy and a cut in interest rates would help calm jittery financial markets.

The Federal Reserve cut its discount rate for emergency loans by 50 basis points on Friday and acknowledged it is ready to cut the funds rate if needed.

On Wednesday, a Reuters poll of more than 100 U.S. and European economists showed that most are convinced the Federal Reserve will cut interest rates at its September 18 meeting because of the global credit squeeze.

Bair declined to comment on the recent events surrounding Countrywide Financial Corp. (CFC), the largest U.S. mortgage lender. The company recently cut 500 jobs to help cope with the credit crunch and at least two Wall Street analysts said the company could end up in bankruptcy if market conditions worsen.

Industrywide, noncurrent home mortgage loans totaled $27.5 billion at the end of the second quarter. That was up 47 percent from one year ago and up 12.6 percent from the end of the first quarter, the FDIC said.

The FDIC said the number of "problem institutions" grew to 61 in the second quarter from 53 in the previous quarter, including an institution with assets of $10 billion. It did not identify those institutions.

U.S. banks saw second-quarter earnings fall 3.4 percent to $36.7 billion from $38 billion in the year-ago period, but marked the fourth-highest quarter.

Bair said banks are generally well-capitalized and diversified to work through the market adjustments but still face challenges ahead.

"Under the circumstances, the industry's second-quarter earnings performance was very solid," she said.


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[humble1]

tommyt: i hear you. it is important to remember that a bear market can break the bears as easily as the bulls if they don't have a good trading strategy and PERSPECTIVE. for instance, i believe we are in a VICIOUS BEAR MARKET which will last 3+ years. but the angle of decline which started it cannot keep its slope or even close to it or we would be negative thousands of spx, lol. so, even my worst case calls for only between one and two lost spx points per day. but that would be a horrible low. so: PERSPECTIVE IS IMPORTANT; I HEAR YOU.