siegfried

6 Questions on the Relationship Between Investment Banks and the Fed

Last 2 Fed Reserve CMBS for Treasuries indicate rising demand to dump paper for cash--at higher interest rates

Release Date: April 8, 2008
For release at 10:00 a.m. EDT

On April 7, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.820 percent

Total propositions submitted: $91.569 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.83

Number of bidders: 79

Bids at the stop-out rate were prorated at 67.70% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on April 10, 2008, and will mature on May 8, 2008. The stop-out rate shown above will apply to all awarded loans.

Release Date: March 25, 2008
For release at 10:00 a.m. EDT

On March 24, 2008, the Federal Reserve conducted an auction of $50 billion in 28-day credit through its Term Auction Facility. Following are the results of the auction:

Stop-out rate: 2.615 percent

Total propositions submitted: $88.869 billion
Total propositions accepted: $50.000 billion
Bid/cover ratio: 1.78

Number of bidders: 88

Bids at the stop-out rate were prorated at 98.87% and resulting awards were rounded to the nearest $10,000 (except that all awards below $10,000 are rounded up to $10,000).

The awarded loans will settle on March 27, 2008, and will mature on April 24, 2008. The stop-out rate shown above will apply to all awarded loans.

Lehman's Preferred Offering: Bullish for Stocks

giving investment bankers access to the Fed is like giving a crackhead access to a cocaine mine.

Financial Stocks: A Look at the Big Picture

As of 12/31/05 BBT had $11.94 billion in construction and land development loans. As of 12/31/07 BBT had $19.47 billion. The $7.53 billion in construction and land development loans underwritten in the last 2 years represent commercial and residential construction projects underwritten during the boom years of real estate expansion and are now being finished--just in time for the biggest contraction in real estate values since BBT was created. This portfolio of construction loans is now turning into devalued real estate assets. This means the $7.53 billion might be a 50% write off in 2008. Current loss reserves for BBT are slightly over $1 billion. These construction loans are the bomb that could sink BBT just as sure as sub prime mortgages sank Bear Stearns. Don't say you weren't warned.

'Fedization': Bear's Rescue Presents a Major Moral Hazard

giving investment bankers access to the Fed window is like giving a crackhead access to a cocaine mine.

Financial Stocks: A Look at the Big Picture

BBT has 21.24% or $19.5 billion of its loan portfolio in construction loans. This is 153% of shareholder's equity, which by the way has a bunch of goodwill in it. As of 12/31/07 BBT had $3.3 billion of Alt A loans. BBT's loss reserve as percentage of its loan portfolio was 1.11%. Does valuation even matter any more?

Survey of Banking Industry Intangible Assets

Also look at weak assets as percent of loan portfolio. For example, SNV has $8.008 billion of construction loans in its loan portfolio, or 30+% of its loan portfolio. This is also 233% of shareholder's equity, including intangibles. STI has 11.26% of its loan portfolio in construction loans, or 76% of shareholder's equity, before your haircut for intangibles. However, it is not working as a trading strategy, since its difficult to "fight the Fed" with revaluations of risky assets like ABS upwards.

Fed too Little, too Late?

giving an investment banker access to the Fed window is like giving a crackhead access to a cocaine mine

The Bailout's Pathetic - Here's Who To Blame

wall street senior execs have taken cash money off the table big time for the last 5 years. i get why fed is sucking in mbs--can't worry the toilet don't flush when the house is on fire-- but don't get why the execs in charge keep their money. why not make them write down shareholders equity to zero--send all their personal shares to zero-- and they should be barred from dealing in securities for the rest of their lives.

The Bailout's Pathetic - Here's Who To Blame

Giving investment banks access to the Fed window is like giving a crackhead access to a cocaine mine.

Financial Stocks Respond to Fed Move

mtrader i hope you protected that gain by selling off those picks