dcxavier's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/171433/comments http://seekingalpha.com/article/136825-sifting-through-100-companies-that-passed-the-deep-value-screen?source=feed#comment-498903 498903 Mon, 11 May 2009 10:28:09 -0400 http://seekingalpha.com/article/97530-when-it-rains-it-pours?source=feed#comment-265912 265912
Someone has to take a hit for these failures. The best and fairest way to ensure this doesn't happen in the future is to make those pay who enabled it to happen.]]> Fri, 26 Sep 2008 10:51:33 -0400
Someone has to take a hit for these failures. The best and fairest way to ensure this doesn't happen in the future is to make those pay who enabled it to happen.]]> http://seekingalpha.com/article/97530-when-it-rains-it-pours?source=feed#comment-265817 265817
I'm not signing on to the House Republican plan in full either. And how is opposing a plan proposed by a Republican treasury secretary and supported by a Republican president being obstructionist? If you want to talk politics, the Democrats have the votes to pass this if they want. But they have no clue either, the reason they want the "fourth leg" is so they can blame others when it fails.

What I am proposing is basically the way the RTC worked, and worked well in the 1990's. Remember that?]]> Fri, 26 Sep 2008 09:48:16 -0400
I'm not signing on to the House Republican plan in full either. And how is opposing a plan proposed by a Republican treasury secretary and supported by a Republican president being obstructionist? If you want to talk politics, the Democrats have the votes to pass this if they want. But they have no clue either, the reason they want the "fourth leg" is so they can blame others when it fails.

What I am proposing is basically the way the RTC worked, and worked well in the 1990's. Remember that?]]> http://seekingalpha.com/article/97530-when-it-rains-it-pours?source=feed#comment-265771 265771
Under Paulson's plan, the taxpayer would have purchased mortgages from WaMu and close to full value to reliquify the bank and take them off the books. That would free WaMu to make more loans and ease the credit crunch. Uh huh. That also would have bailed out Bonderman and others who made foolish investments in these zombies. I think Paulson can't bear to see his beloved Goldman Sachs, leveraged 25:1, go BK. It's this taxpayer bailout of fat cats that has everyone but the rent seeking politicians against it.

Here's what to do. Make failure a prerequisite for taxpayer money. the government acquires the assets, then auctions them off to the highest bidders. Stock and bond holders should get wiped out. Will this cost money? Sure, but I don't think it will be as much as Paulson's plan, but the benefits go to the innocent creditors, and people who are willing to risk their own money have an opportunity to pick up assets on the cheap. This will work especially well for mortgage backed securities, which no one says they can accurately price. Let's auction them off after failure to people spending their own money, that establishes no fooin' prices for these securities.

If your insolvent, too bad, lights out, no more gravy train. It doesn't matter who you are. We're going to take you over and sell your assets to people putting their own capital into the market.]]> Fri, 26 Sep 2008 09:20:07 -0400
Under Paulson's plan, the taxpayer would have purchased mortgages from WaMu and close to full value to reliquify the bank and take them off the books. That would free WaMu to make more loans and ease the credit crunch. Uh huh. That also would have bailed out Bonderman and others who made foolish investments in these zombies. I think Paulson can't bear to see his beloved Goldman Sachs, leveraged 25:1, go BK. It's this taxpayer bailout of fat cats that has everyone but the rent seeking politicians against it.

Here's what to do. Make failure a prerequisite for taxpayer money. the government acquires the assets, then auctions them off to the highest bidders. Stock and bond holders should get wiped out. Will this cost money? Sure, but I don't think it will be as much as Paulson's plan, but the benefits go to the innocent creditors, and people who are willing to risk their own money have an opportunity to pick up assets on the cheap. This will work especially well for mortgage backed securities, which no one says they can accurately price. Let's auction them off after failure to people spending their own money, that establishes no fooin' prices for these securities.

If your insolvent, too bad, lights out, no more gravy train. It doesn't matter who you are. We're going to take you over and sell your assets to people putting their own capital into the market.]]> http://seekingalpha.com/article/97516-would-better-disclosure-have-saved-wamu?source=feed#comment-265735 265735 Fri, 26 Sep 2008 08:56:55 -0400 http://seekingalpha.com/article/96605-robin-hood-in-reverse-in-defense-of-the-u-s-taxpayer?source=feed#comment-261669 261669
That's where the 1990's RTC concept looks good. Make failure a prerequisite for government takeover, don't buy assets from solvent firms. Don't reward the managers that got us into this mess. Then auction the assets to the highest bidder. It will establish a true market price for the assets and encourage new capital.]]> Mon, 22 Sep 2008 13:36:26 -0400
That's where the 1990's RTC concept looks good. Make failure a prerequisite for government takeover, don't buy assets from solvent firms. Don't reward the managers that got us into this mess. Then auction the assets to the highest bidder. It will establish a true market price for the assets and encourage new capital.]]> http://seekingalpha.com/article/96605-robin-hood-in-reverse-in-defense-of-the-u-s-taxpayer?source=feed#comment-261255 261255
And what's really bad about the process is that the same managements that got us into the trouble will remain in place, and they'll probably get big bonuses for bringing home the taxpayer bacon. The comment about TPG is dead nuts on.]]> Mon, 22 Sep 2008 08:47:11 -0400
And what's really bad about the process is that the same managements that got us into the trouble will remain in place, and they'll probably get big bonuses for bringing home the taxpayer bacon. The comment about TPG is dead nuts on.]]> http://seekingalpha.com/article/93588-wamu-speculative-value-play?source=feed#comment-244046 244046
WM hasn't written down the value of the non-performing loans either. Banks have great flexibility about when to write down the value of the loans. There are numerous anecdotal reports about WaMu refusing short sales, I believe because it would force them to recognize a loss. By refusing an offer, they can keep the non performing loan at full value on the books.

Clueless KKK estimates that WM will lose $19B on mortgages, note that does not include upcoming billions in credit card losses which started last quarter. Compare delinquency rates and loss provisions with Capital One to see what I mean. So why don't they reserve the $19B? It would put the bank below minimum Tier 1 capital requirements if they did. One good puff of wind would topple this house of cards.]]> Tue, 02 Sep 2008 16:19:11 -0400
WM hasn't written down the value of the non-performing loans either. Banks have great flexibility about when to write down the value of the loans. There are numerous anecdotal reports about WaMu refusing short sales, I believe because it would force them to recognize a loss. By refusing an offer, they can keep the non performing loan at full value on the books.

Clueless KKK estimates that WM will lose $19B on mortgages, note that does not include upcoming billions in credit card losses which started last quarter. Compare delinquency rates and loss provisions with Capital One to see what I mean. So why don't they reserve the $19B? It would put the bank below minimum Tier 1 capital requirements if they did. One good puff of wind would topple this house of cards.]]> http://seekingalpha.com/article/88196-five-stocks-to-own-now-that-the-dow-has-bottomed?source=feed#comment-219115 219115
www.moodys.com.br/bras...]]> Thu, 31 Jul 2008 08:24:45 -0400
www.moodys.com.br/bras...]]> http://seekingalpha.com/article/86462-citi-merrill-wamu-death-spiral-financing?source=feed#comment-212400 212400 Wed, 23 Jul 2008 11:23:20 -0400 http://seekingalpha.com/article/76228-wamu-s-suspect-mortgage-pool?source=feed#comment-164003 164003
The A-1 tranche is typically 50% of the entire securitization. It has first dibs on all interest and principal payments. Because of that, it carries a low interest rate. I'm guessing that 30-40% of the interest collected goes to holders of the A-1. Since 70% of the loans are still viable, the A-1 is more than well covered. So are the next few tranches in line. The A-1 also gets the first 50% of the repaid principal. It appears that 5-10% of the mortgages have been closed out due to sale or foreclosure. All that principal has paid down owners of the A-1. In addition, these loans were written to about 80% LTV. So the house could take a 20% hit in value and not affect the securitization at all. ((Side note: Second mortgages written on these properties are where the absolute disaster is occurring.)) The 30% delinquent properties could be bulldozed at zero value like you said, and the A-1's and a couple other senior tranches would still be paid off in full.

The big issue in the securitizations are the mezzanine and B/C/D's. These were typically also rated AAA based on backward looking loss analysis. But when housing prices were in the bubble, a buyer could default on the property immediately, and the bank come out whole because the value of the property rose so much in the interim. Heck, defaulting homeowners sometimes made money reselling the house. Those were the figures the so-called analysts used to rate the securitizations. That isn't happening any more.]]> Thu, 08 May 2008 08:24:30 -0400
The A-1 tranche is typically 50% of the entire securitization. It has first dibs on all interest and principal payments. Because of that, it carries a low interest rate. I'm guessing that 30-40% of the interest collected goes to holders of the A-1. Since 70% of the loans are still viable, the A-1 is more than well covered. So are the next few tranches in line. The A-1 also gets the first 50% of the repaid principal. It appears that 5-10% of the mortgages have been closed out due to sale or foreclosure. All that principal has paid down owners of the A-1. In addition, these loans were written to about 80% LTV. So the house could take a 20% hit in value and not affect the securitization at all. ((Side note: Second mortgages written on these properties are where the absolute disaster is occurring.)) The 30% delinquent properties could be bulldozed at zero value like you said, and the A-1's and a couple other senior tranches would still be paid off in full.

The big issue in the securitizations are the mezzanine and B/C/D's. These were typically also rated AAA based on backward looking loss analysis. But when housing prices were in the bubble, a buyer could default on the property immediately, and the bank come out whole because the value of the property rose so much in the interim. Heck, defaulting homeowners sometimes made money reselling the house. Those were the figures the so-called analysts used to rate the securitizations. That isn't happening any more.]]> http://seekingalpha.com/article/74845-real-estate-and-financials-sell-the-rally?source=feed#comment-159232 159232 Wed, 30 Apr 2008 09:02:10 -0400 http://seekingalpha.com/article/74404-how-to-buy-a-bank-and-other-beaten-down-stocks?source=feed#comment-157984 157984 ]]> Mon, 28 Apr 2008 11:33:59 -0400 ]]> http://seekingalpha.com/article/72612-mortgage-resets-subprime-may-be-ending-option-arms-have-just-begun?source=feed#comment-152336 152336 Thu, 17 Apr 2008 13:30:31 -0400 http://seekingalpha.com/article/72612-mortgage-resets-subprime-may-be-ending-option-arms-have-just-begun?source=feed#comment-152164 152164 Thu, 17 Apr 2008 10:04:01 -0400 http://seekingalpha.com/article/70757-wamu-alt-a-pool-deteriorates-further?source=feed#comment-146085 146085
Do you really how these securitizations work?

Tranche A1 is 50% of the securitization. For a buyer of the A1 to lose on principal, 50% of the houses would have to be a 100% loss, totally worthless. Or 100% of the houses would have to be a 50% loss. Or something in between. Not even the most bearish here-we-go-to-depressi... individual has stated things will get that bad. Already over 5% of these loans are off the books, all the principal from them has gone to the A1 holders.]]> Sun, 06 Apr 2008 17:28:36 -0400
Do you really how these securitizations work?

Tranche A1 is 50% of the securitization. For a buyer of the A1 to lose on principal, 50% of the houses would have to be a 100% loss, totally worthless. Or 100% of the houses would have to be a 50% loss. Or something in between. Not even the most bearish here-we-go-to-depressi... individual has stated things will get that bad. Already over 5% of these loans are off the books, all the principal from them has gone to the A1 holders.]]> http://seekingalpha.com/article/70757-wamu-alt-a-pool-deteriorates-further?source=feed#comment-134933 134933
Now about 25% is NPA, so they are collecting about 75% of the possible interest. That should be enough to cover through the A4 and probably through the A5 and into the first mezzanines. Now as far as principal coverage goes, you need to get over 100% LTV on a loan before that becomes a risk. Then, it's on a loan by loan basis. A1 through A4 should be golden, A5 is on the bubble.

So where's the big problem? It is at WM. I suspect a vast majority of these loans have seconds behind them. WM didn't generally securitize the seconds. Each of these defaulting loans, you're probably looking at close to 100% wipeout of the seconds. If you figure $100M in seconds behind these primaries, that could turn into $20-30M loss or even more. Ouch!

Tranche A1 is still AAA in my book, that's half the package. But when you get to M-1 and below, that's not investment grade.]]> Tue, 01 Apr 2008 22:52:21 -0400
Now about 25% is NPA, so they are collecting about 75% of the possible interest. That should be enough to cover through the A4 and probably through the A5 and into the first mezzanines. Now as far as principal coverage goes, you need to get over 100% LTV on a loan before that becomes a risk. Then, it's on a loan by loan basis. A1 through A4 should be golden, A5 is on the bubble.

So where's the big problem? It is at WM. I suspect a vast majority of these loans have seconds behind them. WM didn't generally securitize the seconds. Each of these defaulting loans, you're probably looking at close to 100% wipeout of the seconds. If you figure $100M in seconds behind these primaries, that could turn into $20-30M loss or even more. Ouch!

Tranche A1 is still AAA in my book, that's half the package. But when you get to M-1 and below, that's not investment grade.]]>