dimelab dimelab: shrinking the gap between talk and action.

16 Topic in The Credit Debacle Catalog

1/16/2009 (1); 2007-11-16 (1); 2008-02-16 (2); 2008-10-16 (7); 2009-03-16 (1); April 16 (1); July 16 (1); March 16 (2); November 16 (1); September 16 (2).

Tue 2010-10-12 16:13 EDT

Iceland Rejects Icesave Depositors Bill in Referendum - BusinessWeek [2010-03-07]

Icelanders rejected by a massive majority a bill that would saddle each citizen with $16,400 of debt in protest at U.K. and Dutch demands that they cover losses triggered by the failure of a private bank...Voters rejected the bill because ``ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, are being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers,'' said President Olafur R. Grimsson, whose rejection of the bill resulted in the plebiscite...Icelanders used the referendum to express their outrage at being asked to take on the obligations of bankers who allowed the island's financial system to create a debt burden more than 10 times the size of the economy...

2010 03 07; BusinessWeek; Iceland Rejects Icesave Depositors Bill; referendum.

Tue 2010-05-11 09:02 EDT

Barofsky Says Criminal Charges Possible in Alleged AIG Coverup - Bloomberg.com

...The TARP watchdog [Neil Barofsy] has also criticized Treasury Secretary Timothy F. Geithner in reports and in congressional testimony for his handling of the process by which insurance giant American International Group Inc. was saved from insolvency in 2008, when Geithner was head of the Federal Reserve Bank of New York. The secrecy that enveloped the deal was unwarranted, Barofsky says, adding that his probe of an alleged New York Fed coverup in the AIG case could result in criminal or civil charges. In Senate Finance Committee testimony on April 20, Barofsky said SIGTARP would investigate seven AIG-linked mortgage-related securities similar to Abacus 2007-AC1, the instrument underwritten by Goldman Sachs Group Inc. that is at the center of a U.S. Securities and Exchange Commission lawsuit filed against the investment bank on April 16...

Alleged AIG Coverup; Barofsky Says Criminal Charges Possible; Bloomberg; com.

zero hedge Fri 2010-04-23 20:02 EDT

An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility

Recently, Zero Hedge presented a snapshot analysis of the various securities that made up the triparty repo agreement involving JPM, Lehman and the Fed. We uncovered numerous bankrupt companies' equities that were being pledged as collateral for what ultimately was taxpayer exposure. To our surprise, this discovery is not an exception, and in fact in the days immediately preceding the collapse of Bear Stearns first, and subsequently, Lehman Brothers, the Federal Reserve established and refined a program that permitted banks to pledge virtually any security as collateral, including not just investment grade bonds and higher ranked securities, but also stocks of companies, the riskiest investment possible, and a guaranteed way for taxpayer capital to evaporate in the context of a disintegrating financial system, all with the purpose of bailing out Wall Street's major institutions. On two occasions last year: on March 16, 2008, and subsequently on September 14, 2008, the Federal Reserve first established what is known as the Primary Dealer Credit Facility (PDCF), and subsequently amended it, so that the Fed, in becoming the lender of last resort, would allow any collateral, up to and including stocks, to be funded by the Federal Reserve's credit facility, in order to prevent the $4.5 trillion repo financing system from imploding. By doing so, the Federal Reserve effectively gave a Carte Blanche to primary dealers to purchase any and all equities they so desired, with such purchases immediately being funded by the US taxpayer, via the PDCF. In essence, this was equivalent to the Fed purchasing equities by itself through a Primary Dealer agent...

equity markets; Fed's interventions; overview; Primary Dealers Credit Facility; Zero Hedge.

Bruce Krasting Tue 2010-03-09 17:10 EST

Some Thoughts on Fannie's Horrible Year

Fannie Mae released it's annual and 4th Q numbers after the close on Friday and during one hell of a messy snowstorm. FNM posted a loss of $16.3b for the quarter and $74.4b for the year. An unmitigated disaster. The timing of the release suggests that they were hoping that no one would notice how bad the last twelve months were. There was nothing particularly new in the most recent quarter, just more bad news. What is happening at Fannie is also happening at Freddie Mac and to a different extent at FHA. There are some trends that I think are worth noting...they have moved to restrict lending to better borrowers...all three of the D.C. mortgage lenders are pulling on the credit reins...It will be harder to get a mortgage in one month from today and even harder to get one six moths from today. For me the implications of this are very obvious. Broad RE values will have to go lower, high-end homes will suffer the most in percentage drops...the biggest seller of RE over the past 24 months in America has been the federal government...The vast majority of defaults come because borrowers are underwater. Falling RE prices are the number one contributor to the default cycle...

Bruce Krasting; Fannie's Horrible Year; thought.

Wed 2009-11-25 09:59 EST

Hussman Funds - Weekly Market Comment: "Should Come as No Shock to Anyone" - November 16, 2009

The big picture is this. There is most probably a second wave of mortgage defaults in the immediate future as a result of Alt-A and Option-ARM resets. Yet our capacity to deal with these losses has already been strained by the first round that largely ended in March. The Federal Reserve has taken a massive amount of mortgage-backed securities onto a balance sheet that used to be restricted to Treasury securities. The purchase of these securities is reflected by a surge in cash reserves held by banks. Not only are the banks not lending these funds, they are contracting their loan portfolios rapidly. Ultimately, in order to unwind the Fed's position in these securities, it will have to sell them back to the public and absorb those excess reserves, so to some extent, the banking system can count on losing the deposits created by the Fed's actions, and can't make long-term loans with these funds anyway. Increasingly, the Fed has decided to forgo the idea of repurchase agreements (which require the seller to repurchase the security at a later date), and is instead making outright purchases of the debt of government sponsored enterprises (GSEs such as Fannie Mae and Freddie Mac). Again, the Fed used to purchase only Treasuries outright, but it is purchasing agency securities with the excuse that these securities are implicitly backed by the U.S. government. This strikes me as a huge mistake, because it effectively impairs the Fed's ability to get rid of the securities at the price it paid for them, should Congress change its approach toward the GSEs. It simultaneously complicates Congress' ability to address the problem because Bernanke has tied the integrity of our monetary base to these assets. The policy of the Fed and Treasury amounts to little more than obligating the public to defend the bondholders of mismanaged financial companies, and to absorb losses that should have been borne by irresponsible lenders. From my perspective, this is nothing short of an unconstitutional abuse of power, as the actions of the Fed (not to mention some of Geithner's actions at the Treasury) ultimately have the effect of diverting public funds to reimburse private losses, even though spending is the specifically enumerated power of the Congress alone.

2009; comes; Hussman Funds; November 16; shocks; weekly market comments.

zero hedge Thu 2009-11-19 10:38 EST

An Overview Of The Fed's Intervention In Equity Markets Via The Primary Dealer Credit Facility

the Federal Reserve established and refined a program that permitted banks to pledge virtually any security as collateral, including not just investment grade bonds and higher ranked securities, but also stocks of companies, the riskiest investment possible, and a guaranteed way for taxpayer capital to evaporate in the context of a disintegrating financial system, all with the purpose of bailing out Wall Street's major institutions. On two occasions last year: on March 16, 2008, and subsequently on September 14, 2008, the Federal Reserve first established what is known as the Primary Dealer Credit Facility (PDCF), and subsequently amended it, so that the Fed, in becoming the lender of last resort, would allow any collateral, up to and including stocks, to be funded by the Federal Reserve's credit facility, in order to prevent the $4.5 trillion repo financing system from imploding. By doing so, the Federal Reserve effectively gave a Carte Blanche to primary dealers to purchase any and all equities they so desired, with such purchases immediately being funded by the US taxpayer, via the PDCF. In essence, this was equivalent to the Fed purchasing equities by itself through a Primary Dealer agent.

equity markets; Fed's interventions; overview; Primary Dealers Credit Facility; Zero Hedge.

zero hedge Mon 2009-09-21 14:35 EDT

Atlanta Fed On Federal Reserve Monetization Activities; $1.1 Trillion In USTs And Agency MBS Purchased To Date

The Fed now has $15 billion in purchasing power left under the Treasury component of QE. Of the $1,250 billion in MBS projected to be bought by the end of the year, the Fed was already purchased $840 billion, leaving $410 billion in budgeted purchases over the next three and a half months: about $125 billion per month. On September 15, the Fed purchased $2.05 billion in Treasuries, roughly in the 10-17 year sector; on September 16, it purchased $1.799 billion in the one-to-two year sector. It has purchased a total of $285.2 billion of Treasury securities through September 16.The Fed plans to purchase $300 billion by the end of October, or about six weeks from now, which makes for a pace of about $2.5 billion in purchases per week.

1; 1 Trillion; Agency MBS Purchases; Atlanta Fed; date; Federal Reserve Monetization Activities; ust; Zero Hedge.

Bruce Krasting Thu 2009-09-03 18:21 EDT

US Treasury on Agency MBS -- Don't Buy It!

The office of Inspector General, Department of Treasury released a report on 8/6/09 on the failure of the National Bank of Commerce. NBC went toast on 1/16/2009. The principal source of its collapse was its investments in Fannie Mae Preferred Stock. They owned $98mm of that swill. When they wrote it off they had no tier-one equity left and had to be shuttered... This report is a kick in the head for everyone involved. Fannie and Freddie look bad. Who would want to own the GSE paper with this warning from Treasury? It makes Treasury look silly. They hold the Government Pref. issued by the Agencies. If they guy down the hall is saying don't buy the debt he is certainly saying don't buy the equity. The Fed looks the worst of the lot in light of this. They are in the process of buying $1.25 Trillion of Agency MBS. I wonder what the Treasury IG would have to say about that level of concentration.

Agency MBS; Bruce Krasting; buy; Treasury.

Tue 2009-04-21 00:00 EDT

naked capitalism: Wiliam Black Savages Treasury's Conduct on AIG

2009-03-16

AIG; naked capitalism; Wiliam Black Savages Treasury's Conduct.

Fri 2008-11-07 00:00 EST

naked capitalism: US Hedge Fund Withdrawals Reach $43 Billion in September

2008-10-16

43; Hedge Fund Withdrawals Reach; naked capitalism; September.

Fri 2008-11-07 00:00 EST

Mish's Global Economic Trend Analysis: EU Calls For Summit To End Bretton Woods

2008-10-16; dollar losing reserve status

End Bretton Woods; EU Calls; Mish's Global Economic Trend Analysis; Summit.

Fri 2008-11-07 00:00 EST

Mish's Global Economic Trend Analysis: Industrial Output Plunges 2.8%, Biggest Since Dec '74

2008-10-16

74; 8; biggest; Dec; Industrial Output Plunges 2; Mish's Global Economic Trend Analysis.

Fri 2008-11-07 00:00 EST

naked capitalism: Iceland Defaults Triggering More CDO Woes

2008-10-16

CDO Woes; Iceland Defaults Triggering; naked capitalism.

Fri 2008-11-07 00:00 EST

naked capitalism: Russian Banking System Teetering, Accelerated Withdrawals Underway

2008-10-16

Accelerated Withdrawals Underway; naked capitalism; Russian Banking System Teetering.

Fri 2008-11-07 00:00 EST

naked capitalism: Baltic Dry Index Falls Another 10.7%, Down Nearly 86% From May

2008-10-16

10; 7; 86; Baltic Dry Index Falls; naked capitalism.

Fri 2008-11-07 00:00 EST

Brad Setser: Follow the Money >> Blog Archive >> Foreign central banks seek safety; the Fed, by contrast ...

Brad Setser: Follow the Money >> Blog Archive >> Foreign central banks seek safety; the Fed, by contrast ... ; foreign central banks added Treasuries, dumped Agencies; 2008-10-16

blogs Archive; Brad Setser; contrast; Fed; follows; Foreign central banks seek safety; money.

Fri 2008-03-21 00:00 EDT

naked capitalism: Bush Administration Hides Economic Data

shuttering economicindicators.gov; 2008-02-16

Bush Administration Hides Economic Data; naked capitalism.

Fri 2008-03-21 00:00 EDT

naked capitalism: "Bangladesh bank offers loans to US poor"

Grameen Bank microfinance venture; 2008-02-16

Bangladesh bank offers loans; naked capitalism; Poor.

Fri 2007-11-30 00:00 EST

Five Things You Need to Know: Why Should You Care About LIBOR?; Risk Aversion Leads to Risk Aversion: Financial News - Yahoo!

Five Things You Need to Know: Why Should You Care About LIBOR?; Risk Aversion Leads to Risk Aversion, by Kevin Depew (minyanvill); watching LIBOR; banks hoarding cash, reluctant to lend (2007-11-16)

care; financial News; know; LIBOR; needed; risk aversion; Risk Aversion Leads; thing; Yahoo.

Tue 2007-07-17 00:00 EDT

Hussman Funds - Weekly Market Comment: July 16, 2007 - A Who's Who of Awful Times to Invest

2007; awfully time; Hussman Funds; investment; July 16; s; weekly market comments.