SLW

U.S. Forfeiting Billions in Future Taxes So Citi Can Exit TARP

In a broader sense, because of the unique and necessary role the banking system plays in our economic system, the government (taxpayers) underwrite the entire banking system anyhow. So, it matters little how they go about propping up the system in times of crisis. Regulators simply try to find the most effective and least costly method of doing so. In the end, we pick up the tab. It stands to reason that the end cost to the taxpayer would be far greater if large bank failures resulted in a systemic collapse. So the question really is how do we structure the system to avoid future systemic issues and reduce the necessary cost of supporting our monetary system. That is the question that is not getting the proper attention. Congress is responsible to destruction of Glass-Steagal and other preventative measures, not the regulators. We and our elected officials need to pay more attention to what Voelker is saying and worrying less about "bailouts" and "evil" banks.

Dividend Aristocrats: 3 to Watch

I, too, have some minimum yield requirements (3.5%, generally) but like the growth prospects of many of the Aristocrats which don't have a yield that high, which is the normal and logical trade-off. To capture exposure to the lower yielding Aristocrats but maintain higher cash flow, I have been making smaller purchases of BDV and BDJ which are Blackrock closed-end funds focused on "Dividend Achievers" which are mostly Aristocrats with a long record of raising dividends. They are managed funds and BDJ is "enhanced" with buy-write activities. And they have managed distribution policies so normal caveats to current yield do apply. BDV is currently selling at a near 7% discount to NAV and paying a near 7% yield on current MV.

Switching subject a little, I am surprised that VZ and ATT aren't mentioned as high value propositions in the Aristocrat group.

Not for everbody, perhaps, but another way to approach it.

Earth to GE: Boost Your Dividend

Good article by Low Sweat Investing. Strategically, a dividend increase makes good sense. It doesn't need to be large but should signal confidence in the steps taken thus far and vastly improved conditions in the financial markets (which was the main reason for hoarding cash in the first place.

The debt load is related to the finance business. CRE issues are a challenge but the players are ahead of the curve on this one and stable, low interest environment will allow orderly workout. In the meantime, the industrial side of the company holds great promise, paritcularly in the energy fields. NBC was never a good fit for GE so they have turned over management to someone who might be able to make something out of it, generating cash but still retaining potential for additional earnings and economic gain. That move alone would support a little extra in the shareholders Christmas stocking.

So, forking over a little cash to shareholders is not only a good strategic move but is very doable, as long as the government doesn't spoil it. They haven't been very friendly to companies who are receiving public support when it comes to paying dividends.

Wells Fargo's Assets Sale Begs Some Questions

Seems like a lot of hypotheticals, maybes, whatifs, and speculation to me. Also, keep in mind that WFC is really Norwest with a name change so it shouldn't be much of a surprise it holds assets originated in the midwest (more like MN, WI, IA,NE rather than Ohio and Michigan). And my preference would be for assets from the midwest rather than west coast ( perhaps we should refer to the Plains States rather than midwest - I always find it hard to think of anything east of the Mississippi as "midwest").

It seems much more likely to me that these assets had already been written down by the time they were sold and WFC is just as likely to recored a gain as a loss from the sale (assuming, of course, they owned them in the first place).

Its OK to have questions (and you raise some good ones), but don't try to provide the answers until you have all the information.

PHK Carnage Continues: Who Smells Smoke?

I would like to know how it got up to where it had been. I was happy, mind you, but not suprised it is returning to earth. I was about to sell it myself just because I couldn't pass up the price - looks like others beat me to it. But I'll be just as happy as long as distributions continue, even if somewhat abated. ( the extent of ROC is beginning to be worrisome).

Karl, I hope your instincts prove wrong in this case - I think I'll hang in there to see what happens, I'm in at a pretty low cost.

U.S. Forfeiting Billions in Future Taxes So Citi Can Exit TARP

And this would have cost the BIF how much? With no chance of recovery?


On Dec 16 03:00 PM Edward Harrison wrote:

> This is how I see it: if Citi were in such bad shape, all of this
> could have been avoided if the government allowed Citi to fail and
> then seized the company as unsafe and unsound, wiping out the equity.
> All employment contracts could be rewritten. The goal would have
> been to carve out bad assets from Citi, split Citi up and sell off
> pieces. The money from the asset sales and the bad bank assets could
> then be used to pay off subordinated unsecured lenders. Senior lenders
> could have been made substantially whole.
>
> This is not rocket science. But, there is an ideological aversion
> to this strategy in the Obama White House for whatever reason. All
> of the issues on tax, compensation and bailout would be moot if Citi
> had been seized, split up and re-privatized.

Enterprise Products Partners, Linn Energy: Petroleum Profits Without the Drama

HI, Neil,
Glad to see you are still alive and kickin'. I sort of miss your ranting and ravings and the "show me the cash" mantra in your former endeavor. I don't care much for the new look and direction, though Roger still maintains some of the old.

I like to see the cash. I figure my kids will eventually get the principal anyhow so as long as I can live on the income I'm not greatly concerned about volatility. EPD/TPP and LINE are two great examples which have helped soften the blow from a few "wrecks" like Thornberg and Acrtic Glacier (though the latter isn't down for the count just yet). What else is up? (or down and going up?)

Consolidation to Crank Up CPRs?

Are you sure most GSE debt is sold to AGNC, NLY, etc. at a premium? Where does that information come from?

UBS-Lehman Note Case a Potential Bellwether for All Banks

Ah, a breath of fresh air. An attorney who is in it solely for the purpose of helping others. Quite an accomplishment all right. One hopes their is some redress to the arbitration panel's decision.

Wells Fargo's Assets Sale Begs Some Questions

Thanks for taking the time to reply. I agree that once we know the details of this transaction, it could provide a clearer picture in a number of areas - but I will resist trying to extrapolate one specific transaction too broadly.


On Jul 15 05:38 PM Edward Harrison wrote:

> At this point, it IS a bunch of hypotheticals and getting some clarity
> will be very helpful in determining what this sale means for the
> PPIP program, where asset values are trading, what to expect at WFC
> for Q2, and how other regional banks in the Midwest are doing.<br/>
>
> I understand that the assets in question actually may NOT only be
> Milwaukee-based loans given the wording of the article. We maybe
> dealing with a standard MBS - so the Milwaukee part may just be a
> ed herring.
>
> Here are three possibilities regarding ownership:
>
> 1. This is a transaction where WFC is merely the broker/servicer.
> The question then becomes: who is the seller and is this a distressed
> sale
>
> 2. This is a Wachovia asset. Wachovia is known to hae had a lot o
> dealings with NovaStar pre-2007. The question then becomes: how far
> were these assets marked down? Wachovia assets were marked way down
> before going on WFC's books. So, it is entirely conceivable that
> WFC would record a gain from the sale.
>
> 3. This is a WFC asset. The question then is the same: where are
> the marks and are these MBS assets or straightforward loans?
>
> As to Norwest exposure, WFC does not have large exposure in MI and
> OH, but other large banks operating in the Midwest do and that's
> the point: if Milwaukee-based assets are selling at 35 cents on the
> dollar, where would Cleveland or Detroit-based assets sell in a similar
> transaction. And what does that mean about the potential writedowns
> for FITB or HBAN and the like?
>
> So, getting a hold on this situation will be very illuminating on
> a lot of fronts.

Treasury's Standardized Terms

Though Wells may say they didn't want it, it is remarkably timely. Considering that they needed to raise $20 Billion or so to support the Wachovia purchase, this is a very fortuitous event, indeed. The cost to raise that kind of capital would surely have been higher in the private market, even under improved conditions.

That Sucking Sound? It's FDIC Insurance Taking Over

The article plays to emotion and I would say is borderline irresponsible. Our banking system has been and continues to be the strongest and most admired system in the world. To suggest otherwise in an attempt to undermine our confidence in the system accomplishes nothing. Do you expect the corporations and other large depositors to move their money to a mattress? Perhaps to some Wall Street money market funds? Some banks are having some problems - it's the nature of the business and, actually, a sign the system is working. No pain, no gain.