Fitz919

Congress Made the Bank Bailouts Work for Taxpayers

Banks can go to the Discount Window and borrow at .5%. TARP forced them to pay 5%. Did this 5% money help them lend? No. Would .5% money help them lend? Of course. What are banks doing with the .5% money they are borrowing from the Discount Window? They are buying Treasuries. The 10 year Bond pays 3.5%. This means the banks are borrowing from the Fed and lending to the Treasury. There was never a more perfect money making machine, and all they do is put up their junk mortgage backed securities as collateral, and they get to claim they are lending to boot.

Why Dick Bove Is Wrong About Citigroup

Citi will soon be a 75 cent stock, and won't be able to find a rock to hide under. It's exposure to failed mortgages, and failing credit, puts it in the catagory of the worst of the worst. If you only took the Home Equity Lines of Credit which are now valued at zero, and actually placed those losses on Citi's books, the FDIC could haul off what's left of Citi in a single wheelborrow. Maybe Citi should simply go green right now and turn out the lights....I'm sure Obama would give Citi a big fat tax break.

Stocks Bounce, But Big-Name Investors Aren't Convinced

You say "It doesn't pay to be early in the cycle." It's actually much more than that....It doesn't pay to be early in the cycle, when the market is held together by confidence, rather than reality.

Why did banks take TARP money at 5%, when they had access to the Fed Discount Window money at .5%? The answer is simple they were forced to take TARP money. Our govt found that it was quick and easy to take over those banks, Chrysler, GM, AIG, Fannie, Freddie etc. Now they have their eyes on our Healthcare System, and there is nothing in their way.

For the Govt it pays to be early in the cycle...they didn't even need a ladder to pick all the low hanging fruit.

'Too Big to Fail' Has Gotten Much Bigger

Reckless lending is what got us in this mess....and it can never get us out. Lending in the form of liar loans, where the lender does no due dilligence is not even a sound business practice. If you create a stable interest rate for everyone, then the next question is: How much money does the borrower have for a downpayment, and how much does he make? Once that has been established, a simple formula will tell you the maximum dollar amount you can borrow. Some flexibility in the term of the loan would be another good option. Getting people into homes they can actually afford has nothing to do with credit scores. Punishing people with higher interest rates is what loan sharks and credit card companies do.

Often times people are trying to get into a home, and at the last second the libor rate, or prime rate moves, or something beyond your control effects your credit score, and you suddenly can't get the home.

Look at the far reaching global effect our mortgage market has had.
It took down the world. A stable mortgage system will work, and it doesn't require that every dollar comes from Uncle Sam, or the Chinese.

Oh, and by the way, when the Fed raises interest rates, it causes inflation. And when the Fed raises interest rates too much, it causes a feedback loop that crushes the economy, and once crushed, inflation is once again abated.

A proven inability to pay ones debts and obligations will be obvious in ones credit history, and should be taken into account by any lender. FICO scores are more voodoo than reality when you take into account all the nonsense credit card companies are pulling to justify bumping up your interest rates.

This isn't rocket science guys, this is basic math and 4% fixed.

'Too Big to Fail' Has Gotten Much Bigger

Consider this....Mortgages and Loans at fixed rates don't reset. This is the solution. Subprime, Alt A, Option Arms, And Obama's Mortgage Rescue Plan, all have mortgages that reset their interest rates. It's idiotic to have the loan on your most valuable asset to have the interest rate reset in 3, 4, or 5 years. This is where the solution to our economic crisis rests. All mortgages could be written at 4% fixed for the next 7 years, and all refinances at 4% fixed for the next 7 years, and we will have a real recovery. If we made all mortgages in the U.S. 4% fixed permanently we would have financial market stability.

Goldman and the Interconnectedness of Banks

"Too Big To Fail" may be a misnomer. It may better be expressed as "Too Interconnected or Too Intertwined" to be allowed to fail. And it all boils down to the kind of derivatives they use to protect themselves in the case of a default, and whether or not that counterparty has the liquid assets with which to pay. It's a game which cannot be won by anyone, because there isn't enough cash on the planet to pay the bill when it comes due.

This type of fraudulent insurance scam must be unwound and then abolished. It's the worst type of leverage the world has ever seen.

Banks Not Buying FDIC Line on California IOUs

I for one applaud the banks for thumbing their collective noses at the Federal Government. Now we should lock the California legislature in the building, and not let them out untill they come to a budget agreement. If that doesn't work, force them to watch Schwarzzenegar movies....that aught to break them.

Delinquent Mortgages Are Soaring; Foreclosures Aren't

The Author missed the answer bigtime! The reason foreclosures are slowing down has to do with Home Equity Lines Of Credit attached to those mortgages. When a foreclosure happens, any HELOC instantly has a value of ZERO. That means any lender will be reluctant to foreclose, because he has to report the full amount of that loss. Citigroup for example has so many properties with HELOCs, that the total amount when reported guarantees Citigroup's insolvency.

The Real Weakness in the Reform Strategy for Banks

The Government just wants to be able to say, "We did something...and it worked." It doesn't matter to the Government whether it's true or not.

The BofA / Merrill Mess - A Misguided Mob Goes After the Wrong Guy

Lets get right to the point, Lewis was forced to take TARP in exactly the same way he was forced to take Merrill. Bernanke lied, and so will Hank...end of story.

Banks: Long Way to Go Before Things Get Better

5 more little banks failed on Friday, that makes 45 so far this year. At least one of them had no buyer, so the FDIC starts cutting checks and mailing them to depositors on Monday. Oh yeah, the banking sector is just great. I'm holding my short position with TZA.

Tier 1 Capital Ratios of Large U.S. Banks

I'll stand by the word "require", just as the Government required the banks to take the first round of TARP funds (TRAP funds is more like it), and just as Ken Lewis was required to take on Merrill Lynch, when he said he wanted to get out of the deal.


On Jun 21 03:34 PM InnocentsAbroad wrote:

> Rather, allowing banks to report numbers which they know are false,
> and thus allowing the pillaging of the public purse.

Tier 1 Capital Ratios of Large U.S. Banks

Who in their right mind would trust a bank to accurately report a Tier 1 number? It's pure nonsense, it will never happen. Notice how many are clustered around the 10% figure, it's a number they want us all to believe.

If a regulator didn't have a clue that 10.5% of IndyMac's loans were producing no income, then a bank can hide anything they want to from anyone they want to. It was months before B of A knew how bad things really were at Merrill Lynch.

What we have right now is the Government requiring banks to report numbers which they know are false, in order to maintain confidence in their badly broken system.

Big Banks Drag Feet in Foreclosures to Reap Gains

So the big 4 banks are holding off on forclosures because the Home Equity Lines Of Credit connected to those mortgages will be valued at zero on their books. The dollar amount involved is so huge that the banks will go broke and therefore be insolvent.

And this is supposed to be news. There are already lots of reasons why the big 4 are insolvent. They get to carry on their charade because the government has forced them to. If they don't play ball with the government, CEO's and boards are fired. So they continue to play their game.

If the big 4...the too big to fail big 4, collapse, confidence in the U.S. financial system will collapse, and we won't be able to sell our debt to foreigners any more. Credit will freeze even tighter than it already has, and everyone will go into survival mode, not just the people whose unemployment benefits have run out.

This is why government reports are "Seasonally Adjusted', or have fictional "Births and Deaths" numbers thrown in to make them look better. Everything is being spun so that we don't lose confidence.

For the Obama administration, it's one wrong move, and they're presiding over a Depression. So they just keep dancing around the truth, and keep the lies flowing. It's amazing what they can accomplish with a good teleprompter, some arm-twisting behind the scenes, and repeating a pack of lies.

This Rally Smells Fishy to Me

I'm sticking with my short positions. This things comin down.