Richard Shinnick

What Are Brokers' Exposures to Carlyle Capital?

JbMaria,

Long gone, I actually made a miniscule profit on that trade, but I saw the writing on the wall and jumped out in the $4.90 range. Its those pesky mortgages again. In any case, these days the long trades are just hedges and the short trades seem to be the real "investments" as it is hard to hold any long trades with any conviction.

What Are Brokers' Exposures to Carlyle Capital?

Barry,Mark,

Right you are, I personally know a few people "on the verge" whose home equity lines have not quite run out. These are prime and alt-a types. Also, I think S & P limited its prediction to "supprime" but the market heard what it wanted to hear.

What a mess.

Latest Bank Headache: Home Equity Loans

Barry,

You are really bumming us out here. We need more denial not more reality. We absolutely have to get on the same page, the consumer exists to spend, that is what HELOC's are for! That is what credit cards are for! In tough times we can't under any circumstances stop spending! If the consumer can't borrow then it is the government's job to borrow for them-and mail them checks to keep spending! The fed can take these HELOC's on their balance sheet! There is absolutely no problem here whatsoever. The market is up 500 points in 2 days, what is your problem Barry! Get with the program! Your one of those "save and invest" guys aren't you?

Will BofA Really Buy Countrywide?

Now, throw in a reported FBI investigation. Come on Ken!!!! Get real!!!

Will BofA Really Buy Countrywide?

Hi User,

"So Richard, question for you: Have you sold all your investments lately?"

Uh, no. I think that is clear above. I like this discussion. It kind of centers on what the RIGHT reason to own BAC is. But, lets all agree on one thing, the price is unknown. CFC's value on the day the deal closes will determine the ultimate price and its mortgage book will set that value. Look at all the banks trying to dump mortgage books right now, BAC is buying when they are selling. Helluva time to try to catch a falling knife, but maybe Lewis is the guy to do it.

Maybe not, he still has time to punt.

Will BofA Really Buy Countrywide?

Very interesting comments. One one side you have those who think BoA will do best if the shed the deal on the other you have those (like me) who think this is a great deal. I guess if either side is right it will be good for BoA, only if BoA buys CFC and it turns out to be a mistake will BoA be a bad deal.

As far as those who think tha BAC is getting CFC's network for a song: The deal has two components which are the price (dillutive to BAC shareholders) and assumption of liabilities. The second is the real price and the real question.

Yes, CFC's servicing unit has value but it comes with the mortgage portfolio. Here is another example, E*Trade, it's brokerage has huge value, but it has 30-40 billion in stated income lonas hanging around it, look at what happened to that stock. I wrote on that too and got smacked around on that thread.

Time will tell. I will note that Mr. Lews himself does not seem to have personally affirmed the deal since January (as I read it). All deals are "on" until the precise moment in time when they are off.

BTW, I don't think anybody here is saying tht BAC actually needs this deal or would suffer without it. That is the interesting thing.

Time to Short Financial Stocks - Starting with BofA

BAC is a short in the $40s not in the $30s. Better to short the entire financial sector rather than the obvious survivors, unless you believe there will be no bank alive in 5 years. Plus there is the dividend and they have expressed a committment to it. And yes, they can and may walk on the CFC deal-if they do, can you say "short covering rally." BAC too many upside risks, much better shorting options out there.

The Chicken's Guide to Picking Stocks in 2008

TJ: thanks for the advice, I will give Dr. Phil a call, he has helped me a lot in the past.

WakeUP: you might be the only one besides me who gets my point, and hopefully the dry humor I used to try to make it..it zipped right past some people.

TJ: I'm kidding about Dr. Phil, you know, joking, its a joke, ding, ding, ding. An yes, I know, this is the world of investing, lets not take ourselves too serious though.

The Chicken's Guide to Picking Stocks in 2008

No Duke, don't feel sorry for me, but you may laugh at me.

Ken Lewis's Call Option on Countrywide

Good points Felix. The question is whether you think BAC is a hold at this point, I do. The market may discount BAC as if the CFC deal is already done, but truth is that if things get too dicey BAC can probably count on help from the Fed, Treasury and various home loan institutions. Is this the deal that is "too big to fail." 1 year ago this would have already been labeled "anti-competitive" by the same folks who took a huge sigh of relief when the deal was announced. The times, they are a changin'

Countrywide Takeover By BoA Would Make Sense

Sorry for the doube post, but I read your article again and had two more questions:

1. BAC gets CFC at a "discount" to what? CFC "true" value, "book" value, what metric is that discount calculated against?

2. Wouldn't BAC get a big chunk of market share anyway if CFC failed?

Countrywide Takeover By BoA Would Make Sense

With respect, it makes sense for BAC to buy CFC because BAC "can sustain any last losses" and because CFC has "liquidity" issues. Huh?

I don't want to buy a company because it is going bankrupt and I can sustain the losses, I want to buy a company because I can make money. How exactly does this benefit BAC? That it benefits CFC is a given.