Contemplating the Demise of Bank of America, Citi and JPMorgan 45 comments
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The collapse in the share prices of our country’s three largest money center banks over the last week has been truly stunning and is assuredly a crisis of confidence. What started out as a growing unease that the losses of the past year would continue into late 2009 and early 2010 for Bank of America (BAC), J.P. Morgan (JPM) and Citigroup (C) has now snowballed into utter fear that these banks, along with their European peers, could potentially face nationalization as government regulators strive to save a financial system that is still on the brink of cataclysmic failure.
Bank of America, Citigroup and J.P. Morgan have all reported results over the last week and they have ranged from being appalling and awful to just plain bad. One bright spot has been that each of these banks appears to have reduced their exposure to various mortgage securities and derivatives to acceptable levels when compared to where they were in 2007; however, this has come at an enormous cost. Primarily in the form of vast infusions of dilutive government capital that these banks have been required to take since the passage of the first half of the U.S. government’s TARP program.
While losses associated with Bank of America’s, Citigroup’s and J.P. Morgan’s exposure to securities tied to the credit market has likely peaked, each of these banks still face enormous pressures from the rapid economic deterioration that has engulfed the United States and the world. In essence, the banks that toiled in credit market sensitive instruments are facing a double blow; as they must now deal with deterioration in the core of their balance sheets as loans to consumer across the United States begin to deteriorate in quality.
What began with subprime mortgage backed securities and spread to the credit market and its alphabet soup of credit derivative products is on the verge of engulfing Main St. U.S.A. and the bread and butter of these institutions' productive assets. Whereas the regional banks received TARP money to bolster their balance sheets for what was widely viewed as a coming storm, it is painfully apparent that the TARP money received by Bank of America, Citigroup and J.P. Morgan was only used to help the companies recover partially from the implosion of the credit markets. This has left them acutely exposed to a worsening U.S. economy.
As it stands now, the big three U.S. money center banks are clearly unprepared to deal with a severe and deep recession. Had Bank of America, Citigroup and J.P. Morgan found themselves in a position where they did not have to worry about a deteriorating macroeconomic environment, the TARP money that they have already received would have been more than enough; however, this is not the case as December's unemployment data shows. With unemployment creeping up to 7.2% from 6.2% in September and with no sign of any improvement in payrolls we can be assured that the statement made recently by the Chicago Fed Board president that unemployment will rise significantly throughout 2009 and into 2010 is accurate.
For Bank of America, Citigroup & J.P. Morgan such a rise will likely be a deathblow as their significant earnings power will be unable to catch up to surging defaults in their consumer banking divisions. Given their current reserves and their own acknowledged expectations for unemployment rates going forward the balance sheets of these banks will begin to become impaired yet again as the unemployment rate rises above 7.5% and it is likely that they will face near catastrophic stress should the unemployment approach 8.5% - 9%. As a result, it is without a doubt that a significant portion of the second half of the TARP will be designated to these banks, as their capital bases will likely become impaired beyond self-repair in 2009.
In September, J.P. Morgan stated that the bank would face nearly $56 billion in loan losses should unemployment rise to 8% and $42 billion in losses should unemployment rise to 7.5%, yet in its most recent quarterly report, J.P. Morgan stated that it is only likely to experience $32 - $36 billion in losses going forward. This is curious as such a loss projection pays little attention to their past expectations and most importantly to the recent surge in the unemployment rate.
Instead of breaking out their losses in relation to the unemployment rate, as they did previously, the bank is now correlating their losses to a decline in housing prices. Such a correlation is surprising as home prices could easily stabilize before the unemployment rate. Given the bank’s $81 billion in tangible capital and $136 billion in tier 1 capital it is clear that it could survive under its current expectations but increasingly doubtful should the unemployment rate approach and pass 8.5%. If we use the bank’s September numbers as a guide, J.P. Morgan could face an additional $10 billion in losses for each .5% rise in the unemployment rate above 8%.
In looking at Bank of America and Citigroup, one must be a little more creative as neither of these two banks are as open as J.P. Morgan is about their balance sheets and their potential exposures to assets that are in danger of becoming impaired. As a result, we must look at their current loss rates on important sections of their loan portfolios.
For Bank of America the key figure is the fact that the bank only had $1.3 billion of reserves tied to $255 billion in first lien mortgages or about .56%. Such a low reserve amount is shocking and will likely be the point by which Bank of America faces the worst pain going forward. The bank’s total managed consumer portfolio was better, yet still only had reserves of 2.83% on a $694 billion portfolio. In addition, its total commercial portfolio of $380 billion only had reserves amounting to 1.96%.
In comparison, Citigroup sports a larger loan loss reserve pool that will be needed to support a portfolio that is performing significantly worse than either of its larger domestic peers. In a cruel twist of fate, Citigroup’s more global operations could very well prepare it better to deal with a surge in unemployment in the United States.
The future of Bank of America, J.P. Morgan & Citigroup is unquestionably tied to the rise of the unemployment rate in the United States. Should it peak at 8%, the current valuations on these companies make them the buy of a lifetime. On the other hand, should the economy deteriorate significantly and unemployment rise well above 8%, these three titans will become the primary recipients of the second half of the TARP fund.
The United States, despite acting faster than its European peers to battle the credit crisis, is dangerously close to following them down the path of nationalization and must take whatever measures necessary to avoid such an event. With the inauguration of a new administration in Washington we can only hope that Obama’s massive stimulus plan will be expanded, that a national moratorium on foreclosures becomes a reality and that the idea of an “aggregator bank,” as proposed by the head of the FDIC, is given serious credence as these are likely the only steps that will limit federal ownership of Bank of America, J.P. Morgan and Citigroup to current levels.
Disclosure: None
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This article has 45 comments:
I told
you
so.
Banks are playing build Frakenbank so that they can hold the US economy hostage for free money and playing Where's Waldo with their CDS and bad mortgage debt. How is this good for the American public. Especially as they hoard cash and cut jobs.
BOA was already bailed out by the government once. I suppose we should have let it die then.
The best solution for the present economic crisis would be a REBOOT or restart of the entire debt system for the ENTIRE WORLD.
1. A data base listing ALL DEBT, government, business and personal needs to be created. The list would need to list the debt and debt holder with a bank that could make an accounting of the debt. Included would be all national debt of all nations, all mortgages car notes and credit cards for individuals. All outstanding bond and other debt for corporations, The idea is to list ALL DEBT of any kind owed.
2 . Every government on the planet would need to call a special secession of its legislature.
Using the same authority that governments have to use or create FIAT CURRENCY the legislatures and Central Banks need to authorize the creation of ACCOUNT CREDIT in an amount equal to all the listed debts in the world.
3. The Various governments and Central Banking Systems then need to make a accounting change equal to the debt in the form of an ACCOUNT CREDIT or CREDIT zeroing out ALL THE DEBT in the entire world.
The following day the economy of the entire world would restart and the Stock Markets of the world would react to the new renewed capital in the banking systems, the Capitol now available to restart all business and the disposable income to the individual people would restart and grow the retail sectors and the manufacturing sectors of the entire world.
Allen Charles Report
allencharlesreport.blo.../
COSTS YU BILLIONS LOST
NOW YU SEE WHERE HE STANDS
1. Writing off the debts of dead-beat borrowers.
2. Shafting the taxpayer with a 'bad bank', whilst leaving good banks to move on up to the sunlit uplands (doubtless accompanied by an eventual resurgence of dividends and executive bonuses).
Be that as it may, kelm is most probably correct. Nationalisation in some form or other, both in the US and Europe, seems from the outside at least to be inevitable; the issue is moving from whether it will happen to how politicians will spin it.
Call it by its right name.
Socialism is NOT government regulation.
Socialism is government ownership.
Will Newspeak never die?
It may be 0-2 for the American free enterprise banking system but if we do finally step up to bat for free enterprise, we had better not try to hit a football into center field.
Let's remember the game we are playing, at least: Nationalizing the banks would be a REAL step in the direction of socialism. Intelligent regulation would not be.
On Jan 21 06:55 AM Allen Charles wrote:
> The Worldwide DEBT is the problem.
>
> The best solution for the present economic crisis would be a REBOOT
> or restart of the entire debt system for the ENTIRE WORLD.
>
> 1. A data base listing ALL DEBT, government, business and personal
> needs to be created. The list would need to list the debt and debt
> holder with a bank that could make an accounting of the debt. Included
> would be all national debt of all nations, all mortgages car notes
> and credit cards for individuals. All outstanding bond and other
> debt for corporations, The idea is to list ALL DEBT of any kind owed.
>
>
> 2 . Every government on the planet would need to call a special secession
> of its legislature.
> Using the same authority that governments have to use or create FIAT
> CURRENCY the legislatures and Central Banks need to authorize the
> creation of ACCOUNT CREDIT in an amount equal to all the listed debts
> in the world.
>
> 3. The Various governments and Central Banking Systems then need
> to make a accounting change equal to the debt in the form of an ACCOUNT
> CREDIT or CREDIT zeroing out ALL THE DEBT in the entire world. <br/>
>
> The following day the economy of the entire world would restart and
> the Stock Markets of the world would react to the new renewed capital
> in the banking systems, the Capitol now available to restart all
> business and the disposable income to the individual people would
> restart and grow the retail sectors and the manufacturing sectors
> of the entire world.
> Allen Charles Report
> allencharlesreport.blo.../
The best solution for the present economic crisis would be a REBOOT or restart of the entire debt system for the ENTIRE WORLD.
Yeah, and that is going to happen. In Canada we can't even get our politicians to agree on anything.
Everyone should read this link before decided if the banks are worth time to talk about investing in much less investing in.
Unfortunately we will have to revolt. There is no bargaining with these international bankers.
When will you all wake up, I wonder? I suppose when you're 401k / retirement is worthless.
What do you make of Lewis & Co at BAC buying millions of their stock today in the open market? One person suggested that they dropped the Merrillbomb in the fashion they did to provide them an opportunity to profit (buying on the subsequent crash in share price).
There are many reasons executives sell, but only one reason they buy (in the open market). Given all the dramatics re: the banks this week - why in the world would they put so much of their personal money on the line? Especially if BAC (JPM, C, etc) are all going to be diluted and nationalized....
You know where MER is now. IndyMac insiders were buying like there was no tomorrow all the way to oblivion.
I would like to believe that this time its different. But I've learned that they know and use the Insider traders to manipulate stock prices.
I do not have a clue as to BAC's condition. I do know they are trying to maintain a share price above $5.00.
Something to do with $5.00 being the lowest limit allowable for qualifying as Investment Grade by all and sundry. Back in 2002-2003, AT&T did a 1 for 5, after its shares dropped to $3.00.
After the dust finally settles, the Banks with brokerage assets will be the companies to own. If they are not nationalized first.
ken lewis made a deal with the devil when he agreed to follow through with the merill purchase with government help. he couldn't have made that decision based on merrill's deterioration alone. my guess is his own bank is rotting from within just like Citi and, merrill or not, he needed more government money.
another remarkable factoid: after the first capital injection from TARP, ken lewis claimed it wasn't needed, but accepted on government insistence. if the CEOs of these banks don't even understand their own exposure what hope does an individual investor have investing in them?
Why do banks always fail when a Bush is in Office ?
Why do banks always fail when a Bush is in Office ?
B/C Kinja Rules...Check it out~Jimmy Buffett
Thriving in this Economy less than Hopeful for these & many others. The way out, from everything I've read is an Experiment @ best. So, we wait. If you have no understand of what is going on, wait until you do. This has been my motto for many yrs. Opportunity lost is little against Capital lost for good. People are rather tired of losing, on Bank Stk's or other. This sentiment is rising Fast in the 60+ crowd as far as I can see.
So, where does the Fresh Capital come from; other than the Govt? It is really questionable if the Experiment will work from the FED. I read a Great News Letter that answered Questions I've been asking for months.
Maudlin's Front Line. There was a Guest Writer, who backed it all up by chart, time & econ theory over 125 yrs. Well, it made sense to me. I don't agree completely w/the final conclusion, but do feel that Hard Assets are of Value @ a Discount...Capital Preservation. Seems a Prudent Call today. Mine anyway.
From 9/30 10Q issued
SHE was listed at 145 billion with 46 billion of gw and 22 billion of other intangibles. This is 86 billion of tangible net. However post 9/30 they received 25 billion in tarp funds with a 4th quarter net income of 0.7 billion. Tier 1 capital listed from the 10Q was 111 billion.
Therefore, I understand how you came to the 136 billion T1 number, but I think you may have misstated the tangible net worth. It appears it should be 25 billion higher at 111 billion, not 86 billion
Kind Regards
What can i expect to get in interest to try to live on ?
My C bank is issuing fees for checking plus advances plus 18 percent interest . How much fiat money can these freeloaders expect taxpayers to fork over to keep the banks afloat they have pushed to the edge of bankruptspy or auto plants that want credit to sell cars that people can't even take anymore credit on as it is.
What is this give away mentality that people have who's going to pay the piper?
What the hell do people think that life is free?
Retired and tired.
Saved and broke.
Money and no interest to live on.
How can these fools think that govts. can just print our way out of the hell they created by buying cars and toys they knew they couldn't ever pay back at 18 percent ?
Where are these people from Mars?
Where on Earth do people get the idea that nationalizing banks is somehow bad?
What we have just been through should clearly prove to anyone that, given the chance, the people who run ** private ** banks will favor their own personal interests, including huge bonuses based on clear-cut fraud, and essentially rip off the public for their own benefit. In the end, the taxpayer is asked to clean up the mess. Check the history books, this has happened over and over in the past.
We have been left with a "banking" system that is trillions in the hole, a smoking ruin of self-dealing, crime and mismanagement on a truly grand scale, and THAT is what you want to preserve at all costs???
Who are you, one of the Bushes?
> Where on Earth do people get the idea that nationalizing banks is
> somehow bad?
> Who are you, one of the Bushes?
Maybe, since we are on an investing site - and not a geo-political rant site - we are the owner's of the common stock of these banks. Nationalization is eminent domain seizure of the equity position without compensation. Have you never heard of property rights?
The common stock owners are the landlords, and if the tenants are doing things illegally, the solution is to prosecute the tenants (the people who have care, custody and control of the landlords' property), not seize the property of the landlord.
The real question I was posing was whether, after all the news hit, the property had any value left in it.
> ...the people who run ** private ** banks will favor their own
> personal interests...
> We have been left with a "banking" system that is trillions in the hole, a
> smoking ruin of self-dealing, crime and mismanagement on a truly
> grand scale, and THAT is what you want to preserve at all costs???
I don't even know how to begin.... let's just say I'm shocked anyone would be naive enough to think that the government has no self-dealing, crime or mismanagement (Blagojevich anyone?) and that government ownership would be an instant and perfect solution to the problem.
This isn't some Third World socialist dictator arbitrarily nationalizing an industry out of ideology. They are being nationalized because their fall threatens the fabric of our economy.
The government's (and ours) main interests in keeping them operating is that they provide the infrastructure for financial transactions, and there is a public interest in protecting bank depositors.
The government (and those of us who do not own bank stock) really have zero interest in seeing equity holders receive a dime for their now worthless investments.
Government may have a poor track record of running companies, but has the private sector really proved any better?
We are living in an "accept anything as just fine society" now, and all the problems that naive and unrealistic belief lays upon us for our lack of desire to control any of our destructive animal natures will cost a heavy price, and perhaps an overwhelming one.
> Nutflush - Equity owners tend to lose all in bankruptcy. The banks
> are de facto bankrupt.
In the specific case of BAC, many of the assets that have been marked to market as a result of FAS 157 are *not* worthless, but rather are in the performing category. Their balance sheets are being forced to be marked down to a substantially low level forced by a market in which there are no willing buyers. BAC isn't GM - it isn't having trouble paying the rent. It's capital ratios are in jeopardy - not whether paychecks to employees are going to bounce. And the capital ratio crisis is due to unique economic cicumstances.
Per Lewis (with no comment by Treasury to the contrary), BAC was going to back out of the deal with Merrill for undisclosed losses in December, but Treasury told them they would guarantee a certain portion of the assets (over $100 billion) if they were good citizen's and kept the deal alive. This transaction is going to increase the balance sheet pressures on BAC and hence the need for TARP or other assistance.
If any of the last paragraph is true - then there is a moral hazard to doing what's right (according to Lewis' account of the Treasury Dept's position) for the country in not letting Merrill fail. Without Merrill's $16b post tax loss in Q4 (operationally it was far higher) BAC isn't in the same situation as Citi or State Street or others.
BAC clearly did not do their due diligence properly when making the offer for Merrill Lynch. Management mistake. (Maybe they got blinded by the bullish M_L ads.) By extension, management's mistakes hurt equity holders the most. That's capitalism.
Just a few short years later, the same type of bank crisis that started the depression reoccurred. What - A - Surprise.
Reinstating this vital depression-era reform should be at the top of the new administration's list. Not allowing too-big-to-fail bank oligopolies should be at the top of the justice dept's list. Hopefully we've relearned the lessons our grandparents learned.
I disagree. Your point is well taken that high unemployment in the economy will hurt the banks. But just as well will it hurt the economy at large, due to weak consumer spending.
C and BAC would be already bankrupt, were it not for Uncle Sam chipping in.
Let's all ask for our shares. They have our SS numbers, right?
"The United States is dangerously close to following them down the path of nationalization and must take whatever measures necessary to avoid such an event.
With the inauguration of a new administration in Washington we can only hope that Obama’s massive stimulus plan will be expanded, that a national moratorium on foreclosures becomes a reality and that the idea of an “aggregator bank,” as proposed by the head of the FDIC, is given serious credence as these are likely the only steps that will limit federal ownership of Bank of America, J.P. Morgan and Citigroup to current levels."
It is very interesting, on one side we must prevent banks' nationalization at any cost by nationalizing everything else [moratorium on foreclosures, creation of nationalized “aggregator bank,” huge increases in government employment detrimental to private sector, etc.,]. Why just stop on a moratorium on foreclosures? Let us forgive all mortgages and all debts to everybody and let release all jail prisoners...
It is clear that the author has no trust in free-market economy. His objectives are to protect failed banks and their criminal & corrupt management. Let give thieves and criminal a "second chance" at the expense of everybody else, specifically hard-working and honest citizens.
In my opinion, let us nationalize these three totally corrupt and failed criminal banks, clean them up, sent criminals to jails, recover stollen loot, and re-privatize financial institutions.
Remember governments are not very good producing goods and totally incapable of providing regular services.
If you want to call receivership nationalization, be my guest. But that train left the station 70 years ago.
Are you insane? COLLECTIVELY, Ken Lewis and his board bought $1.2M dollars worth of BAC stock. They probably borrowed the money from the government too, errr sorry, the taxpayers. It's a pittance to these guys. Their club memberships cost more than that.
Dimon bought roughly $11M worth of JPM. That's at least a little more noteworthy since he's not the completely egomaniacal dunce that Lewis is. Good luck finding his net worth. All I know is he made around 50M in '08 and 30M in '07. He's been running JPM since '04 and before that he ran BankOne. Before that he was at Citi as Weill's protege.
These guys collective STOLE several Billion in compensation by cashing out before the investments came due and turned out to be complete stinkers. Now the taxpayers are being asked to fill the gap.
We all need to tell the government to GO GET IT BACK FROM THE CROOKS!
On Jan 22 01:10 AM nutflush wrote:
> .... ignoring the one world theme for a moment....
>
> What do you make of Lewis & Co at BAC buying millions of their
> stock today in the open market? One person suggested that they dropped
> the Merrillbomb in the fashion they did to provide them an opportunity
> to profit (buying on the subsequent crash in share price).
>
> There are many reasons executives sell, but only one reason they
> buy (in the open market). Given all the dramatics re: the banks this
> week - why in the world would they put so much of their personal
> money on the line? Especially if BAC (JPM, C, etc) are all going
> to be diluted and nationalized....
As for JP Morgan, they are currently insolvent, and I mean very insolvent right now. At least 1.4x over. See boombustblog.com/Reggi... for a comprehensive, forensic analysis of their balance sheet. I am amazed that know one has called them to task on this earlier. I made it clear to my blog subscribers a month or two ago, but decided to bring it public since it appears that very few are seeing this company for what it is.
To be frank, I doubt very seriously if Dimon or Lewis were foolish enough to buy the rotting assets that they did voluntarily, thus I suspect government influence in play. The interesting twist is that BAC attempted to buy both Countrywide and Merrill without government aid, and obviously bone headed maneuver, even back then without the benefit of hindsight. At least JPM requested and received subsidies and debt reprieves (although it still will not save them, since the WaMu and BSC purchases are killing the balance sheet). Both of these companies could have gotten their last 4 acquisitions for free and still have been pulled deep underwater.
It is also quite interesting that the MSM has not carried anybody who has stated such explicitly and offered proof - there is a lot of proof abound. I have issued an ongoing challenge to those in the media who are willing to rate pundits by track record, in lieu of time spent being a pundit. See boombustblog.com/Reggi...
hanari + truefire , you are spot on . it's called " one world order " . They have been planning for + waiting for + causing this worldwide demise since 1913 ! the retired one , you have worked hard + saved + now you are broke like me who saved , worked hard , paid taxes + SS all my life . they simply have taken our money + now going to reduce the generation who have paid into this country the most into ruin . Wait till you see what they are going to do to medicaire + healthcare ! Death at 50 if you are lucky ! Generation X + Y , it'll be you , in a few decades . Just wait + see .
Jack... a small portion of the their profits come from interest income... they had huge investment portfolios where they keep their exotic CMO and CDO... that sadly will bring the banks down...these banks are zombie entities with no equity and hugely leveraged still!!
On Jan 21 05:20 AM Jack K wrote:
> Banks make money by loaning out money to people who will pay them
> back more. Period. When credit is flowing, they can extract a lot
> out of people and get away with it. When credit is tight and people
> and/or businesses become concerned with the difficulty in paying
> back more money than they borrowed, doesn't it make sense that bank
> traffic will be reduced, especially amongst those with the ability
> to repay. I was always amazed at how easily banks write off capital,
> when they have to generate a lot of activity to make up a dollar
> lost.
>
go to school??
On Jan 22 05:07 AM Kinja Rules wrote:
>
> Why do banks always fail when a Bush is in Office ?
>
> B/C Kinja Rules...Check it out~Jimmy Buffett
>
> Thriving in this Economy less than Hopeful for these & many others.
> The way out, from everything I've read is an Experiment @ best. So,
> we wait. If you have no understand of what is going on, wait until
> you do. This has been my motto for many yrs. Opportunity lost is
> little against Capital lost for good. People are rather tired of
> losing, on Bank Stk's or other. This sentiment is rising Fast in
> the 60+ crowd as far as I can see.
>
> So, where does the Fresh Capital come from; other than the Govt?
> It is really questionable if the Experiment will work from the FED.
> I read a Great News Letter that answered Questions I've been asking
> for months.
> Maudlin's Front Line. There was a Guest Writer, who backed it all
> up by chart, time & econ theory over 125 yrs. Well, it made sense
> to me. I don't agree completely w/the final conclusion, but do feel
> that Hard Assets are of Value @ a Discount...Capital Preservation.
> Seems a Prudent Call today. Mine anyway.
I, Remove 2 million homes from the MLS (for Sale) that financial institutions currently have
for Sale. Any Institution that received TARP funds will be required to first offer the home
to the RTC for purchase. RTC will not purchase any home above $417,000. No Jumbos.
2, Government Resolution Trust will purchase these homes from these institutions for 20%
less than original first Mortgage amount. No negotiating.
3, 600 billion dollars to buy these homes (app $300,000 each average) will come from the sale
of long term 30 year bonds. (Currently app 3-5%) issued by Government.
4. RTC will send these homes to the local HUD offices for disposition thru voucher program
(rentals). $5000 will accompany each home for repairs & upkeep. eventually as the MLS
system reaches certain inventory levels (i.e. 30-60 days) HUD will be allowed to place these
homes on the sale market. If the inventory increases HUD will remove homes accordingly.
This will be a local HUD market decision, differing from region to region. Rental Income will
help cover expenses such as maintenance, insurance and property taxes.
Pro's:
Supply/demand economics will create a bottom in the housing market once 2 million homes
for sale are removed. Prices will start to increase.
Local governments will see a bottom in declining values and revenue will increase as values
slowly stabilize and slowly increase.
Individual homeowners as well as other sellers will find a housing market ready and able
to absorb the inventory.
Banks will now have a fresh source of funds to lend on homes that are not declining in value.
Banks will be able to clean balance sheets of hard to liquidate assets.
Lending/leverage/credi... markets will slowly begin to return to normal. Applications will
increase, appraisals, home inspections, title work, all types of stimulating activity for business.
As home prices stabilize and increase the local HUD agency selling homes over a 3-7 year time
frame will see prices rise for properties purchased by the RTC. HUD will only be required to
return to RTC the original amount of the purchase price plus the 20%. Or the original amount of the
selling banks first mortgage.
Once the RTC is closed and all homes sold, all losses (if any) will be covered proportionately
by the selling institutions. All financial Institutions selling homes to the RTC will share the loss
at the RTC as a percentage of total homes purchased and homes sold to the RTC. That percentage
will be the Banks percentage for covered losses. These losses will be paid by the banks over a 30 year period liquidating the original bonds sold to finance the purchase.
Other agenda items:
Mark to Market accounting will only apply to non performing assets.
Spend 50 billion each year for the next 3 years rebuilding infrastructure. Bridges, Roads, tunnels,
water plants, dams, levies anything to create jobs.
Stimulus checks for $300 only help pay a credit card bill once.
Any comments?