wobatus

Bank Stress Tests: Tangible Common Equity a Critical Metric

Indeed. Good point. Even experts need the proper incentives. :) And some experts aren't so expert.


On Apr 24 11:20 AM Pj568 wrote:

> We know government is not the brightest nor leading edge when it
> comes to financial analysis.
>
> My question is where have all the experts, banks execs and other
> corporate gurus been to have ignored this. Are there really any true
> experts in our corporate suites?
>
> Sadly to say, the mega banks didn't want to cut common dividends
> until the Feds forced them.
>
> This whole thing is just pathetic.

Bank Stress Tests: Tangible Common Equity a Critical Metric

Level 2 and level 3 assets may be a drag for a while. depends on what you mean by years and years. Go look at 1974. 1982. 1991. Different scale, sure. Maybe your reference is more 1933.

We'll see.

If inflation is everyone's eventual worry, well then...


On Apr 24 10:45 AM bonddude wrote:

> "Just a spoonful of sugar"- Mary Poppins
>
> There ain't enough honey in the world to make me think that level
> 2 & 3 assets won't be a drag for years and years. Those catagories
> add up to far more than level 1 right? Of course.
>
> So JP Morgan has how many off book CDS committments?
>
> 88 $ Trillion? Spoken with a Fargo accent--"OH GEEEZ"

Bank Stress Tests: Tangible Common Equity a Critical Metric

What is this about the media? I see reports in the media every day, across the political spectrum, of people ticked off about this process, lack of openness, etc. CNBC every day has folks on railing against the stress test, secrecy, etc., WSJ headlines to the Times. I'm not here to sing the praises of the media, government, bankers, whatever, but it isn't like there isn't a diversity of opinion available and out there. The good thing is almost everyone you talk to is pissed off about this. Maybe this "2-party" system is cracking.

Anyway, everyone seems to gravitate to the media outlet they want to hear anyway these days. :)

Best of luck.


On Apr 24 10:28 AM conceptwizard wrote:

> There is no confidence or trust left by the investors, taxpayers,
> & Labor force towards the truth and clarity provided by our administration.
> Scandal leads the way. Obama has had an opportunity to make a difference
> but has decided to make the status quo work instead.
> 1. People should have been put in leadership that were not in a conflict
> of interest towards the financial sector, lobbyist or tax frauds.
>
> 2. A well thought out plan rather than throwing money out with any
> regulatory oversight or conditions was deplorable and shoddy workmanship.
> And now has come back to haunt the credibility of the path forward.
>
> 3. legislation was not followed by the FDIC in relation to dismantling
> insolvent institutions. Decisions were made behind closed doors to
> the detriment of the legalities of the situation.
> 4. It is visual that the emphasis is on saving the "To Big to fail"
> Financials, rather than other aspects that are as critical to our
> economy such as auto manufacturers and others . This has caused an
> outcry from the general populace, a political mistake.
> 5. Clarity has not been provided as to how bad the situation is,
> how big are the losses and who owns them.
> 6. The Banks are saying they are fine the treasury is looking for
> 2 trillion for something. What?
> 7. The Attourny General is tabling conspiracies from BOA CEO Ken
> Lewis landing the the Fed/Treasuries feet. Thus the President feet
> as they are his chosen ones.. This places huge distrust in the face
> of investors.
> 8. The media refuses to report truth and has instead become a voice
> of the government. Rather than investigative reporting that may have
> given us a heads up to some of this crises, they simply wait until
> the news headline rolls off the screen for the day from the stories
> that the Government wants covered and how they want them covered.
>
>
> I believe that a true recovery can't start until we have confidence.
> And we can't have confidence until we have trust, and we can't have
> trust until we have faith in the truth. And we are not getting the
> truth. Obama has missed his opportunity to be something Great, An
> Icon, A true Flag carrier. Instead it is policial pruning and business
> as usual. A great campaign was waged on the basis of "CHANGE". Instead
> we are dealing with lack of transparancies, conspiracy, and protectionism
> of the elite. I challege the President to PROVE ME WRONG!

Bank Stress Tests: Tangible Common Equity a Critical Metric

Salaries, loans and competetion.

I personally do not like salaries being dictated by congress. You have to admit that if banks are lavished with public money, the public is going to want some say in how their money is spent. Shareholders tend to want a say.

Geithner, actually, is the one whio DIDN'T want congress meddling too much in that realm. he has to put up a fig-leaf of caring and stewardship of funds, but he WANTS the banks to be able to run themselves. It is congress that is actually pushing back against this, leading some banks to try to get out of TARP.

And the tea parties are actually people (not all of them conservative as traditionally thought) who don't like their tax dollars going to pay these huge bonuses as salaries. So your lauding of tea parties and then complaining about government getting involved in salary decisions seems a bit unfocused.

And I am all free enterprise. Unfortunately, a lot of this mess has been caused by a complete breakdown in shareholder oversight of corporations. Not necessarily through the fault of the shareholders, but certainly partially due to the large shareholders, financial intermediaries: pension funds, mutual funds, etc., who did not check the distorted pay packet incentives. Often because they just throw up their hands and vote with their feet, often because they just don't care, they are paid by assets under management, and aren't careful stewards because it isn't their money really...often because the corporation laws are horribly stacked AGAINST shareholders, egged on by free marketeer publications like the WSJ which often opposes shareholder voting rights initiatives.

Anyway, a crisis makes strange bedfellows. I like free enterprise, opennes, anti-communist, don't want government meddling in private salary decisions. Folks get up in arms about the bonuses and salaries. Fine. Sure, it is a deflection from the bigger issue. Folks are pissed about that too. Good. Corporate pay decisions have been badly screwed up foer years. I don't think free enterprise was at play. Logrolling by boards was more like it.

Anyway. Great that you are angry. I am sure you are like some who say the entire bank mess is all due to the Community Reinvestment Act. Somehow, Angie Mozillo comes off like just a poor innocent actor in that few. There is a LOT of blame to go around, on many fronts. It is GREAT that you are pissed off. Don't concentrate your fire in one direction WAYYYYY behind you. They are coming at you from all sides.

Take care and best of luck.



On Apr 24 10:53 AM wobatus wrote:

> Time warp.
>
> Anyway, you have GOT to be kidding me.
>
> Somehow, I don't blame the media pandering to the SDS and Black Panthers
> for the banking sector disaster (I know you aren't doing that specifically-but
> wow, what a bunch of raggedy old straw men), nor was that disaster
> caused by (as opposed to aided and abetted by) "statists". Nor would
> I cal the response exactly dovetailing with the communist internationale.
>
>
> I'd stop worrying about how MSNBC short-shrifted the Tea Parties.
> Fox covered it all, it is all out there (and at least CNBC, their
> other arm, had Santelli as a chief spokesman for it). :)
>
> Not to get partisan or anything. Plenty of blame to go around. This
> has been a fairly across-the-board disaster if you ask me.

Bank Stress Tests: Tangible Common Equity a Critical Metric

Time warp.

Anyway, you have GOT to be kidding me.

Somehow, I don't blame the media pandering to the SDS and Black Panthers for the banking sector disaster (I know you aren't doing that specifically-but wow, what a bunch of raggedy old straw men), nor was that disaster caused by (as opposed to aided and abetted by) "statists". Nor would I cal the response exactly dovetailing with the communist internationale.

I'd stop worrying about how MSNBC short-shrifted the Tea Parties. Fox covered it all, it is all out there (and at least CNBC, their other arm, had Santelli as a chief spokesman for it). :)

Not to get partisan or anything. Plenty of blame to go around. This has been a fairly across-the-board disaster if you ask me.


On Apr 24 09:49 AM Prudent Man CFA wrote:

> I look for the so-called "Stress Test", constructed by political
> lackeys for political purposes, to be rigged. The strong Regional
> Banks will be put into a non-competitive position so the statists
> can nationalize the whole system and finally completing their goal
> of ending Free Enterprise as we have historically know it.
>
> The cost of this silent overthrow of the Free Enterprise System will
> inexorably be paid for by generations to come. Who else will? Shame
> on us!
>
> We are seeing that salaries, loans and competition is being directed
> by closet Socialists so no one should be surprised when loans are
> made upon political preferences and priorities and not meritocracy,
> which the statists abhor.
>
> We also saw the Tea Parties, a populist movement to stop government
> intrusion in the private sector and our lives, being denigrated by
> the media. Why? Isn't dissent an integral ingredient of Freedom?
> The same media that supported the Students for Democratic Society
> (seekingalpha.com/symbo...), the violent Communist supported,
> murderous Weathermen and the Black Panthers do not want the people
> who support Free Enterprise to have their say. This is not accidental
> but show how far back the movement to destroy the Free Enterprise
> System dates.
>
> Where is the anger by the media with the intrusion of government
> in the financial sector last year has exploding into of government
> controlled Industrial Policy?
>
> With the foregoing in mind and considering that Tim Geithner, as
> President of the NY Fed had a major part last year in this intrusion,
> does any serious observer of markets, economics and politics believe
> the "Stress Test" will be anything by self-serving the statists agenda?
> BHO, his Administration and the current Congress makes the timing
> perfect and the investment is showing fruit of its labors.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Volume has not been higher on down days generally. NYCE volume was lower on Monday. of course friday was opex.

That said, if what you say is being done, why was it not done when the market went to 12 year lows? or if "they" benefit from that, why is it up now?

Anyway, i suppose if we forced banks to liquidate today, they are insolvent. I saw that scene in It's a Wonderful Life. :) Kidding. I know citi has gone bust about every 10 years for decades now.


On Apr 22 01:51 PM dcb wrote:

> Folks, we are all smart here. Let us face facts. the banks are insolvent
>
> as we and the IMF all know. Because of the public distaste out gov't
> can't get money to them directly anymore. so every other trick in
> the book is OK.
>
> take a look at the S&P volume buying spikes. when things are
> going up the buying is small and measured. when things start to go
> down and we would turn down someone is spending a lot of money to
> make sure it isn't happening. I have never seen it so clear that
> an agent is doing all it can to prop up the market. we are dealing
> with a market that is being manipulated and a covert program to capitalize
> the banks at the expense of the tax payer at the same time a massive
> disinformation campaign (like Bush and the iraq war) is being fought
> by our government.
>
> Have to keep the market propped up to get rid of inflated crap assets
> to the public. happening with our governments blessing because they
> won't tell us the truth and can't get the money they need to the
> banks via the front door. At the same time lobby money has bought
> enough influence in washington that it does't really matter which
> party is in power.
>
> We have the illusion of democracy, no more that that.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Hate to be sensitive, but that was a pretty mild post for someone to bother to give it a thumbs down. Oh well. Likely not the only. :)


On Apr 22 11:08 AM wobatus wrote:

> The banks obviously were desperate to get the debt off their books.
> Why? They have capital requirements and it is hard to roll and the
> market pricem, because of that, is low. Why is it hard to roll? Because
> many who would lend also have requirements and can't do it, and many
> of the shadow system can't do it because THEIR funding sources have
> capital requirments, losses in other areas etc. And because, due
> to unemployment, reining in of credit card limits, again due to their
> other losses, and over-extended consumers, malls are losing stores,a
> nd rents are being driven down, and collateral is lower, with other
> reits having to raise, some in bankruptcy a la GGP.
>
> The subprime crisiis, we know is bad. Commercial real esatte, same.
> But (and as Pee Wee herman says everybody has a big butt):
>
> GGP could service debt. It just couldn't roll. Yes, some reits are
> awful. Some are usually fairly well run and got in too deep, not
> seeing through to what happens in a credit drain the likes of which
> hasn't been seen ina longwhile, to this extent maybe not in their
> working lives or in their lives period.
>
> Yet GGP services. KIM services. Not all of KIM's tenants are Circuit
> City or Linens and Things. GGP is bankrupt. But Ackman gives them
> DiP funding and holds many tiers through equity.
>
> I don't and did not recommend their (GGP's) equity. But Ackman is
> no dummy. He made a killing shorting MBI etc.
>
> I pointed out, in response to another "Tyler" post, that while I
> wouldn't buy GGP, i liked KIM below $7. Despite the risk. And reporting
> of The Great REIT Unraveling reaching a crescendo only made that
> seem more likely, and that some may get out of those shorts that
> had been in for a while. if only temporarily.
>
> KIM and reits have had a nice run, and could raise equity to breath
> for a spell.
>
> But let's get back to this thread: why would it be so hard to roll
> over performing loans? Because things will get worse? Things always
> seem oike they will be a never ending spiral down. You always read
> that. More unemployed, fewer people to buy goods, etc. if that were
> always never ending we would never get out of any downcycle. maybe
> there is something to this social safety net? :)
>
> I digress.
>
> Some folks figured out how things would play when their was a big
> hole blown in the side of the banks. Smart people. Kudos. There is
> now a push back. One can say it is manipulation. There is a lot of
> manipulation that goes on in equity markets. both ways.
>
> In the very long run, if you can get past the short run (always a
> big if, look at GGP), reality does set in. Reality right now may
> say more unemployment, economy getting worse before it gets better.
>
>
> What will be reality in 3 years? 5 years? 10 years? Maybe everyone
> will shop on amazon for what limited amiounts of stuff they can afford.
> maybe folks will still want to hit a mall now and then. Although
> I personally don't want any stuffed spuds at the food court, and
> I am past the age where I play video games, and why play there when
> you have your wii and playstation? But heck, i gotta do something
> on saturday, and i DO need a new weed-whacker, and we have that wedding
> upstate...maybe I can get a gift at, oh, the hell with Nordstrom,
> they'll just have to be happy with that crap from TJmaxx.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

The banks obviously were desperate to get the debt off their books. Why? They have capital requirements and it is hard to roll and the market pricem, because of that, is low. Why is it hard to roll? Because many who would lend also have requirements and can't do it, and many of the shadow system can't do it because THEIR funding sources have capital requirments, losses in other areas etc. And because, due to unemployment, reining in of credit card limits, again due to their other losses, and over-extended consumers, malls are losing stores,a nd rents are being driven down, and collateral is lower, with other reits having to raise, some in bankruptcy a la GGP.

The subprime crisiis, we know is bad. Commercial real esatte, same. But (and as Pee Wee herman says everybody has a big butt):

GGP could service debt. It just couldn't roll. Yes, some reits are awful. Some are usually fairly well run and got in too deep, not seeing through to what happens in a credit drain the likes of which hasn't been seen ina longwhile, to this extent maybe not in their working lives or in their lives period.

Yet GGP services. KIM services. Not all of KIM's tenants are Circuit City or Linens and Things. GGP is bankrupt. But Ackman gives them DiP funding and holds many tiers through equity.

I don't and did not recommend their (GGP's) equity. But Ackman is no dummy. He made a killing shorting MBI etc.

I pointed out, in response to another "Tyler" post, that while I wouldn't buy GGP, i liked KIM below $7. Despite the risk. And reporting of The Great REIT Unraveling reaching a crescendo only made that seem more likely, and that some may get out of those shorts that had been in for a while. if only temporarily.

KIM and reits have had a nice run, and could raise equity to breath for a spell.

But let's get back to this thread: why would it be so hard to roll over performing loans? Because things will get worse? Things always seem oike they will be a never ending spiral down. You always read that. More unemployed, fewer people to buy goods, etc. if that were always never ending we would never get out of any downcycle. maybe there is something to this social safety net? :)

I digress.

Some folks figured out how things would play when their was a big hole blown in the side of the banks. Smart people. Kudos. There is now a push back. One can say it is manipulation. There is a lot of manipulation that goes on in equity markets. both ways.

In the very long run, if you can get past the short run (always a big if, look at GGP), reality does set in. Reality right now may say more unemployment, economy getting worse before it gets better.

What will be reality in 3 years? 5 years? 10 years? Maybe everyone will shop on amazon for what limited amiounts of stuff they can afford. maybe folks will still want to hit a mall now and then. Although I personally don't want any stuffed spuds at the food court, and I am past the age where I play video games, and why play there when you have your wii and playstation? But heck, i gotta do something on saturday, and i DO need a new weed-whacker, and we have that wedding upstate...maybe I can get a gift at, oh, the hell with Nordstrom, they'll just have to be happy with that crap from TJmaxx.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Good one. Sorry to be pedantic on the other post. :)


On Apr 22 09:26 AM Insiderman wrote:

> Sounds to me like Jeffrey Donnelly, CFA needs to review the CFA Institute
> Research Objectivity Standards:
>
> 4.0 (a) ii. Ensure that investment banking objectives or employees
> do not have the ability to influence or affect research or recommendations;
>
>

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

A picayune point, but the compliance department doesn't issue a report. They may bless it. Perhaps they were side-stepped, duped or brow-beaten (the last 2 hardly good defenses). But yes, the firm is to blame.


On Apr 22 09:50 AM Insiderman wrote:

> There is simply NO WAY a firm's compliance department should issue
> a market moving research report within 48 hours of an issue.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

Fair enough. Now i will flip flop as devil's advocate. Who is buying the higher priced offering? Are they unsophisticated? Even if so, are they, and pardon the hoary phrase, free, white and 21? Under durress? An off balance sheet SIV of Merrill et al.? :)


On Apr 22 10:08 AM jhartz wrote:

> The VNO (Vornado) stock was manipulated upwards some two and a half
> points last night at the close. Is it a coincidence that a close
> of 47 allowed ML and cohorts to price the offering of 14 million
> new shares at a higher level?
>
> If the regulatory agencies allow the financial institiutions to keep
> getting away with this outright manipulation and maneuvering against
> the interests of unsuspecting investors, there will be another long
> period of chaos and deep suspicion that will keep independent investors
> away from the market. This has happened before, and it served to
> change the way people employed their surplus capital.

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

How about the already outstanding, non-insider equity holders? Well, not doing too bad now...I think it is fair game to point out the disclosure. It deserves a littlwe prominent display a la a warning on the side of a cigarette pack-could be dangerous for your health. And I speak as a holder of KIM.


On Apr 22 09:23 AM jasonjim wrote:

> I see nothing wrong about the transactions discussed in this article.
> It is normal business with a buyer beware sign. The banks win by
> having their loans repaid. DRE and WRI and other REITs win because
> they get rid of debt on their balance sheets. The purchasers of the
> equity offering who buy at a discount may or may not win depending
> upon how the market views the transaction. Since DRE and WRI and
> other REITs are in a much better position now to conduct their business
> I expect that their shares will rise, maybe considerably. So the
> purchasers of the new equity will win also. Everybody wins, so what
> is the problem here?

Open Letter to SEC: Wall Street's REIT Bait-and-Switch

I gotta say, having been a critic: nice work Tyler and Zero hedge. Thanks.

IF (big if) the credit markets thaw, I like KIM. Despite the debt, on and off balance sheet. GGP, for example, had decent cash flow. It just couldn't roll. KIM is raising equity and raised unsecured. Obviously, the banks are pulling in their horns. And it is risky. But no pain no gain.

Did you see Milken's paean to capital structure adjustments in yesterday's WSJ?

But in any event, if one is going to roll the dice, good to know what is going on. So kudos, Messrsr. Fight Club Pseudonym and ZH. File this under you can lead a horse to water but can't make him drink.

Banking Observations: Even Good News Seems Bad

I love it.

The U.S. Banking System's Terrifying Balance Sheet

Doug Kass was short financials, and is a long time smart bear. Now he is long. It isn't all the clueless nabobs who now think we have reached an inflection.


On Apr 10 09:54 AM Mary LaRue wrote:

> Of course I have an issue with the banks and can't grasp why anyone
> with an extensive amount of knowledge of the banks' balance sheets
> wouldn't have an issue with them. Additionally, with respect to your
> question about where we were when the market was going down, I can
> tell you that I dumped my BAC, GE, JPM and AIG BEFORE they tanked
> in 07 because I relied upon my own research and failed to listen
> to the ones who insisted that everything was just fine. At that time,
> the big picture wasn't adding up and it STILL isn't adding up today.
> As someone who has been in the market for more than twenty years,
> I can easily detect the psychological aspect of this "rally," and
> the fact that a pyramid scheme in the financial sector is in the
> works. This has been going on for almost one month now.
> I recognize that an investor can profit greatly from the psychological
> aspect of the existing financial rally, and I completely understand
> why a short term investor would want to profit from such a rally
> (that is exactly what is happening), however, there are other companies
> with powerhouse balance sheets and increasing dividends that will
> be more rewarding on a long term basis and eventually produce greater
> returns than these financials when the market correction comes (and
> believe me, a market correction is inevitable).
>
> On Apr 09 09:59 PM CJJ wrote: