Merrill’s CDO’s: ‘They Knew What They Were Doing’
This story is amazing. In 2007, during the time in which subprime lenders were collapsing and defaults soaring, Merrill was packaging up and selling $30 billion in rotten CDO’s and selling them as fast as they could.
Everyone already knows about the Merrill 5.47 cents on the dollar CDO deal that just went down. In case you missed it her e is the link.
Now, of course, many are coming out saying ‘but but but that was for the worst of the worst CDO’s’ and ‘but but but, 2005 vintages were not as strong as recent vintages’.
That is not the truth. The truth is that Merrill’s marks are very similar to National Australia Banks write-down earlier this week and other banks with similar holdings will likely have to write down their holdings similarly. Meredith Whitney said the same today in her interview on CNBC. It was great….
Hedge funds are buying up delinquent mortgages
Forbes, July 30, 2008
Guess who holds your mortgage now? It’s your friendly neighborhood hedge fund.
Dozens of hedge funds, private equity groups and other investors have plunged into the beaten-down mortgage market in recent months, buying tens of thousands of distressed loans and foreclosed properties around the country. They hope to profit from the woes of banks and other investors holding mortgages that have plummeted in value as home values sink and defaults soar.
Lawmakers Now Pressing for Banks to Hide Losses Longer
This is infuriating. When will the deception and fraud stop!
It is actions like these by the Solon’s that has turned a ‘crisis of confidence’ into something that has brought the global financial markets to their knees.
The FASB is being pressured by the lawmakers to delay its time line on the revamped FAS 140 and FIN 46R. This of course will help out the financial institutions by creating less transparency and delaying the inevitable probably due to a new tax payer bailout being drawn up that will channel more dollars to parties other than those who need it, the US citizens.
Bush Signs Sweeping Housing Bill into Law
“President Bush signed a massive housing and mortgage relief bill into law early Wednesday morning, the White House said, making official changes ranging from a $300 billion expansion of the underwriting authority of the Federal Housing Administration to a new regulator for twin mortgage finance giants Fannie Mae and Freddie Mac”
You Know The Banking System Is Unsound When….
Mish’s Global Economic Blog
Top 25 Reasons our US banking system is unsound
#25:
25. Of the $6.84 Trillion in bank deposits, the total cash on hand at banks is a mere $273.7 Billion. Where is the rest of the loot? The answer is in off balance sheet SIVs, imploding commercial real estate deals, Alt-A liar loans, Fannie Mae and Freddie Mac bonds, toggle bonds where debt is amazingly paid back with more debt, and all sorts of other silly (and arguably fraudulent) financial wizardry schemes that have bank and brokerage firms leveraged at 30-1 or more. Those loans cannot be paid back.
What cannot be paid back will be defaulted on. If you did not know it before, you do now. The entire US banking system is insolvent.
WaMu: Liquidity Options Running Low
“(The title of this story may be misleading because they have they do have ‘options’ if you are speaking in terms of $10s of billions in Pay Option ARMs. See spreadsheets below.)” WaMu stock price keeps falling. From $40 per share less than a year ago to $20 four months ago to $3.03 a couple of weeks back before the SEC and Treasury ganged up to prop up the markets yet again.
Keep in mind earlier this week WAMU’s Treasurer Robert Williams in an interview with the New York Post said “The banks raising of more than $7bn from TPG has made borrowing from the Federal Reserve’s short-term borrowing window unnecessary.” Did he change his mind literally the next day as WaMu admitted that part of the extra $10 billion cushion absolutely came from Fed Short-Term borrowing window?
Banks Cant Give Away Foreclosures
Video of the Day: Foreclosure Auction on the Courthouse steps in Martinez, CA. It’s amazing how much some of these houses sold for a few years ago, not that I feel any of the homes in this news piece are worth the stated sales prices.
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