Bank-Implode! Sun 2009-09-20 12:22 EDT

Bank-Implode! >> Blog Archive >> Exclusive -- Wells Fargo's Commercial Portfolio is a ticking time bomb

In order to sort through the disaster that is Wells Fargo's (quote: WFC) commercial loan portfolio, the bank has hired help from outside experts to pour over the books... and they are shocked with what they are seeing. Not only do the bank's outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank...According to sources currently working out these loans at Wells Fargo, when selling tranches of commercial mortgage-backed securities below the super senior tranche, Wachovia promised to pay the buyer's risk premium by writing credit default swap contracts against these subordinate bonds...should the junior tranches eventually default, then the bank is on the hook.

bank implode; blogs Archive; exclusive; ticking time bomb; Wells Fargo's commercial portfolio.

Thu 2009-09-17 09:31 EDT

Why capitalism fails - The Boston Globe

Stephen Mihm

Mainstream economics rediscovers Hyman Minsky; ``Instability,'' he wrote, ``is an inherent and inescapable flaw of capitalism.''...Minsky drew his own, far darker, lessons from Keynes's landmark writings, which dealt not only with the problem of unemployment, but with money and banking...Minsky argued that Keynes's collective work amounted to a powerful argument that capitalism was by its very nature unstable and prone to collapse. Far from trending toward some magical state of equilibrium, capitalism would inevitably do the opposite. It would lurch over a cliff...Minsky spent the last years of his life, in the early 1990s, warning of the dangers of securitization and other forms of financial innovation, but few economists listened. Nor did they pay attention to consumers' and companies' growing dependence on debt, and the growing use of leverage within the financial system... Minsky...argued for a ``bubble-up'' approach, sending money to the poor and unskilled first. The government - or what he liked to call ``Big Government'' - should become the ``employer of last resort,'' he said, offering a job to anyone who wanted one at a set minimum wage. It would be paid to workers who would supply child care, clean streets, and provide services that would give taxpayers a visible return on their dollars. In being available to everyone, it would be even more ambitious than the New Deal, sharply reducing the welfare rolls by guaranteeing a job for anyone who was able to work. Such a program would not only help the poor and unskilled, he believed, but would put a floor beneath everyone else's wages too, preventing salaries of more skilled workers from falling too precipitously, and sending benefits up the socioeconomic ladder.

Boston Globe; Capitalism Failed.

Mish's Global Economic Trend Analysis Wed 2009-08-26 16:00 EDT

Critically Under-Capitalized Banks Direct Result Of "Wonderful Chain of Stupidity"

Michael Shedlock

Last week the Wall Street Journal ran an article about how trust securities sank Guaranty Financial Group and six family-controlled Illinois banks in early July. Please consider In New Phase of Crisis, Securities Sink Banks. Federal officials on Thursday were poised to seize Guaranty Financial Group Inc., in what would be the 10th-largest bank failure in U.S. history. Guaranty's woes were caused by its investment portfolio, stuffed with deteriorating securities created from pools of mortgages originated by some of the nation's worst lenders. Delinquency rates on the holdings have soared as high as 40%, forcing write-downs last month that consumed all of the bank's capital. Guaranty is one of thousands of banks that invested in such securities, which were often highly rated but ultimately hinged on the health of... Security losses are a non-operating item and are listed after pre-tax operating income on the call report. This is very unusual and possibly reveals another cancer hiding on many banks balance sheets. those garbage trust-preferred securities problems are on top of the widely expected fallout from commercial real estate problems affecting small to medium-sized regional banks. Thus, banking woes are much deeper in many areas than either the FDIC or Fed is admitting.

Capitalized Banks Direct Result; Criticizes; Mish's Global Economic Trend Analysis; Stupid; Wonderful Chain.

Mish's Global Economic Trend Analysis Wed 2009-08-26 15:55 EDT

Emails from a Bank Owner regarding FDIC and Under-Capitalized Banks

Michael Shedlock

Here is an interesting Email from a Bank Owner and CEO regarding As of Friday August 14, 2009, FDIC is Bankrupt. ``I have been in banking for over 30 years and from my perspective this is much worse than anything I have seen.'' ABO, who as been in the business 30 years, writes: A comment concerning the FDIC - As of June 30 the rates being charged banks have increased substantially. Risk 1 category went to 12 basis points from 5, risk 2, 17 basis points, risk 3, 35 basis points, and risk 5, 50 basis points. Additionally, a 5 basis point special assessment is being charged on September 30 on total assets less tier 1 capital. It is probable that a second assessment will also be charged in December. The cost of FDIC insurance for a two hundred million dollar, 1 risk rated bank last year would have been around...

bank owner; capitalized banks; Email; FDIC; Mish's Global Economic Trend Analysis.

Sun 2008-11-23 00:00 EST

Untitled

ten rare lectures featured in "The Rediscovered Benjamin Graham: Selected Writings of the Wall Street Legend", by Janet Lowe

untitled.

Thu 2008-07-03 00:00 EDT

Calculated Risk: Oppenheimer's Whitney: Merrill to Write Down $5.8 Billion

Calculated Risk: Oppenheimer's Meredith Whitney: Merrill to Write Down $5.8 Billion

5; 8; Calculated Risk; Merrill; Oppenheimer's Whitney; writes.

Tue 2008-06-24 00:00 EDT

The Big Picture | Did Bank of America Write the Housing Bailout Bill?

America write; bank; Big Picture; Housing Bailout Bill.

Mon 2008-06-23 00:00 EDT

Did Bank of America write the Dodd bailout bill? | L.A. Land | Los Angeles Times

Did Bank of America write the Dodd bailout bill? by Peter Viles | L.A. Land | Los Angeles Times

America write; bank; Dodd Bailout Bill; L. A. land; Los Angeles Times.

Mon 2008-06-23 00:00 EDT

Did Bank Of America / CFC Write The Housing Bill? - The Market Ticker

America; bank; CFC Write; House bill; Market Ticker.

Thu 2008-06-12 00:00 EDT

Jesse's Café Américain: Feds Warn on Another Wave of Bad Debt Write-Offs

Jesse's Café Américain: Feds Warn on Another Wave of Bad Debt Write-Offs

Bad Debt Write-Offs; Feds Warn; Jesse's Café Américain; wave.

Tue 2008-06-10 00:00 EDT

Jesse's Café Américain: Feds Warn on Another Wave of Bad Debt Write-Offs

Jesse's Café Américain: Feds Warn on Another Wave of Bad Debt Write-Offs

Bad Debt Write-Offs; Feds Warn; Jesse's Café Américain; wave.

Tue 2008-06-10 00:00 EDT

Calculated Risk: Whitney: More Write-Downs coming from Bond Insurer Downgrades

Bond insurer downgrades; Calculated Risk; WHITNEY; write-downs coming.

Tue 2008-06-03 00:00 EDT

Calculated Risk: S&P: More Write Downs Coming for Morgan Stanley, Merrill and Lehman

Calculated Risk: S&P: More Write Downs Coming for Morgan Stanley, Merrill and Lehman; "Contained. Problems behind us. ... Not!"

Calculated Risk; Lehman; Merrill; Morgan Stanley; P; s; write-downs coming.

Sun 2008-05-04 00:00 EDT

The Wall Street Examiner >> I Didn't Write This, But...

The Wall Street Examiner >> I Didn't Write This, But... chilling TBAC report on deteriorating federal budget balance, urges increased issuance of long-term debt

Wall Street Examiner; writes.

Tue 2008-04-01 00:00 EDT

Calculated Risk: Deutsche Bank: $3.95 Billion in Write-Downs

3; 95; Calculated Risk; Deutsche Bank; Write Downs.

Tue 2008-03-25 00:00 EDT

Lehman's Debt Shuffle - Portfolio.com

Lehman's Debt Shuffle, by Jesse Eisinger; "Assets rose. Leverage rose. Write-downs were suspiciously minuscule."

com; Lehman's Debt Shuffle; portfolio.