July 31, 2007
Alt-A "Liar's Loan" mortgage king IndyMac reports today. Three words you may or may not hear: Mark to Market
Unfortunately the dolt running IndyMac didn't understand Econ 101 (or SEC regulations) when their cancerous loan portfolio starting going bust this spring. They could no longer sell their liar's loans on the open market except at a huge loss, so they held the cancer on their books, but didn't adjust their values ("Mark to Market") or substantially adjust their loan loss reserves.
Here's a pretty ignorant and arrogant statement from their CEO back in May on this. HP's question then was - where were the auditors? HP's question today is - where are the auditors? It really doesn't matter what the CEO thinks the cancer is worth - WHAT MATTERS WHAT THE F*CKING MARKET THINKS THEY'RE WORTH. Geeze, how dense are some people? Kinda like homedebtors thinking their home is worth X, when the market is telling them the home is worth 1/2 of X.
Yes, I'm short IMB. And I'd be shocked if they don't come clean today. Sarbanes-Oxley demands it. Truth or Jail? I'll update on IndyMac throughout the day... and you can listen to their conference call at 11am EST here
Michael Perry, chief executive of IndyMac Bancorp, is stubborn when it comes to delinquent loans.
He refuses to ditch them, even as they expand rapidly on the books of Pasadena-based IndyMac, which has two units based in Irvine and is the largest U.S. lender in a credit category dubbed "Alt-A," which is one level above the risky subprime niche. It turned in a company record of $90 billion in loans last year.
During an April 26 conference call with analysts, Perry said the company didn't sell a single dud loan in the first three months of the year because no one wanted to pay what he thinks they're worth.
"No way is IndyMac selling to a hedge fund for "pennies on the dollar," Perry said.