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Charlie Munger Wants Banks' Wings Clipped

I guess that they bought these particular bank stocks because they thought that they had good management and were undervalued.
I also guess that they believe that the banking industry needs to be reformed for the good of the economy. They have lots of money invested in the economy. Having a better economy is good for them and for everybody else.

This aside from the motive of honesty, which may be incomprehensible.

All Original 3x ETFs Are Down Over Last Six Months

Please read the prospectus. The funds are doing exactly what they are supposed to do. If you want them to do something else please start your own ETFs. If you don't like them don't trade them. I like them the way they are.

Double-Short Drawbacks

The 3x ETFs are excellently behaved. I find FAS and FAZ NAV to be tracking 3x the daily index change very well, with only small price errors over NAV.
If you don't understand the underlying mathematics you should not be trading these ETFs at all. The malfunction is yours. In general, holding any of these for a long amount of time will guarantee poor results. (perfectly explained by the math). If you do it do not complain.
Regarding going to zero: ever heard of reverse splits?

FHLB Chairman Quits Due to Discomfort with FASB Shifting Accounting Rules

Please go to Ben Graham's book, The Intelligent Investor, and look for the parable of Mr. Market. Do you think it prudent to ask Mr. Market to value an enterprise? or a bond? to paraphrase Mr. Graham, the poor guy sometimes lets his enthusiasm and fears run away with him, and the value he proposes seems short of silly.
Now think of the way a perfectly good stock or bond is valued in a market panic. If its value starts to go down, everybody drops it like a hot potato and its value goes down even more. now you hitch the value of the whole banking system, the same guys who secure the bond, to this, and you get a self fulfilling prophecy. being an engineer, I would call that a closed loop with positive feedback. that means that left to its own devices the value of the bonds and banks together will go down to zero. The banks will not be worth anything and therefore the bonds won't be worth anything and therefore the banks won't be worth anything.
Pure market theorists understand all about the market correcting itself, but they have this strong religious faith in feedback being always negative (correcting), never positive (enhancing aberrations). As long as people treat the market as god and not as a scientifically researchable phenomenon they are not better than Marxists.

Banks Are Unwilling to Solve REO Problems

Banks that provide mortgages style themselves as "not being in the real estate business". As a result they make moronic decisions - like destroying any remaining value in the houses they foreclose upon and selling them for pennies on the dollar, and making sure that they do not provide any financing to the new buyers who buy at an incredibly low risk.
regarding skin in the game - please note that smart Fannie Mae will provide 90% financing to investors in certain properties they own, while insisting on 75% financing for investors buying REOs. The amount of cash which includes down payment, closing costs and other parasite subsidies, and renovation can become easily 50% of the price. Why would anybody finance? those who can buy for pennies using cash buy and are becoming rich, the rest are sitting on the sidelines.
If these policies continue house prices may plummet in some areas by another 50% before it will be worthwhile for investors to get back in and stabilize the price.

Triple Leveraged ETFs

If you look at the Direxion website you will find that both were trading at a discount to NAV. This is just a readjustment of the discount.

Why Mortgage Payments Should Be Lower Than Rents

If there is no bubble (meaning a house will appreciate at the rate of inflation minus about 0.7% a year because it is getting older!!!),
it makes sense to buy a house only if the present value of the cash flow going out as mortgage+taxes+insuran... is less than the present value of rent, plus the benefit that when you rent you are not tied down.

So, the market is starting to become rational in some places? what's strange about it?

The Housing Market Will Improve with Lower Prices, not Lower Interest Rates

What matters are both down payment and monthly payment.
There are two types of buyers:
1. People who buy houses to live in. They need the total payment (mortgage, taxes, maintenance) to be reasonable relative to rent. The house is bought for psychological reasons (stability) and as a hedge against inflation.
2. People who buy houses to rent (investors). They need rent to cover, more or less, mortgage, taxes, maintenance, and real depreciation (about 0.7% per year).

There is another kind, speculators, or "flippers", but they can only survive in a highly appreciating housing market and should by now have disappeared.

When property values deteriorate rapidly normal people will wait and not buy (deflation hazard).
The exception to that is an event where there is a high return on investment for investors. If an investor can buy a property where he gets 20% ROI from rent after taxes, maintenance, mortgage, and management fees, he is not going to wait any longer for prices to drop.

So, what needs to happen is the following:
1. calculate the value to a renter of buying real estate, including the inflation hedge. There can be large variation on the assumptions. The more restrictive the assumptions are, the less buyers there are.
2. calculate the value of the real estate for a buy and hold investor. It should be lower than for the ex-renter.

If the down payment + ongoing expenses make sense instead of rent, and house prices are falling, they will not buy. House prices have to stabilize first.

The investors are the people who will stabilize the market - at a certain level buy and hold will make money even if home prices go down even more.

Unfortunately, the historical investor safety net has big holes in it. There is practically no way even for Warren Buffett to get a 5th mortgage after he took loans on 4 properties. That is why you can see in some areas huge bargains and no buyers - no loans to the buyers since the government agencies and the PMI companies tightened their guidelines, so no buyers, so continued fall in house prices.
There is no infrastructure for residential loans that are not commercial, and once the government plans were pulled, there is no way to get credit.

Conclusion:
In some areas, for example southern California, house prices are still too high and may fall more.
In other areas, like in Texas, the government, under the cloak of "responsible" guidelines, is ecouraging the decline in house prices.

Homeowner Associations: Another Housing Minefield

HOAs are a nuisance. That is what we have a municipality for. They get into stuff they should never get into. Hundreds of dollars per month means that the HOA is running commercial level facilities. The builders usually like that, it sells the houses, but the new homeowners don't understand the implications. Many HOAs should not exist.