November 12, 2007

Big banks in desperate attempt to hide housing horror SIV mortgage losses by simply sweeping the problem under the rug


This whole "Super-SIV" is absolutely hilarious. What an obvious attempt by the f*cked banks to sweep the problem under the rug, mainly so that they can keep making their bonuses today, and let the future be damned.

The fact that Goldman Sachs head (oops, I mean current US Treasury Secretary) Hank Paulson is coordinating this effort makes the stench factor go off the charts. And they're not fooling anyone. This is like getting credit card bills in the mail and throwing them away.

Two words folks: Ponzi Scheme.

Citigroup Inc., Bank of America Corp. and JPMorgan Chase & Co., the three largest U.S. banks, reached an agreement on the structure of an $80 billion fund to help unfreeze the market for short-term debt, a person familiar with the talks said yesterday.

Under the original plan brokered by Treasury Secretary Henry Paulson, the fund would buy some of the $320 billion in assets held by so-called structured-investment vehicles, known as SIVs.

``The whole thing is flawed,''
said Graham Fisher & Co. managing director Josh Rosner, whose New York-based firm analyzes structured finance and real estate investments. ``As opposed to recognizing losses, we're trying to roll those losses into the future, regardless of the sanity or safety and soundness of doing that.''


33 comments:

Anonymous said...

`As opposed to recognizing losses, we're trying to roll those losses into the future, regardless of the sanity or safety and soundness of doing that.''

Was he talking about the U.S. federal budget or the SIV's? haha

Trailer Flipper said...

Housing 59 (16%)

Dollar 179 (50%)

Mortgage 19 (5%)

Stock 14 (3%)

Bank 33 (9%)

Credit 49 (13%)

This poll shows that your readers do not get it yet, some anyway. Well, most.

This is a Credit Crash disguised as an SIV sale.

Anonymous said...

Wall Street, Bracing for More Bad News From Banks, Also Awaits Retail Sales, Price Indexes

NEW YORK (AP) -- The stock market this week is hoping for signs that the economy is surviving the problems in the financial sector -- and that the Federal Reserve will come to the rescue if it's not.

Investors are slowly getting a clearer picture of how much in risky and deteriorating debt securities the world's major financial institutions are holding, and they don't like what they see.

ADVERTISEMENT
Wall Street already expects banks' portfolios to lose at least $20 billion in the fourth quarter, after announcements of anticipated writedowns of mortgage-backed securities and other debt instruments by such financial institutions as Citigroup Inc., Morgan Stanley and Wachovia Corp.

Investors have been bracing for fourth-quarter writedowns for a while, but the amount was larger than many were prepared to hear. As a result, volatility has returned to virtually all corners of Wall Street.

http://biz.yahoo.com/ap/071111/wall_street_week_ahead.html

Andrew Hac said...

I told you once and I will tell you again:

Americano is as toasted as a snapper turtle skewed from head to tail on a stick sizzling hot with all the juices dripping out of its carcass on a bed of hot coal grill.

What else do you need to know ?

AMERICANO IS TOAST. LONG LIVE THE WONTON !!!

pancakes, toast and coffee said...

SIV, SUV or FOX-TV...

all worthless bush-co created neocon crap. Buyers beware.

Anonymous said...

Hey, leave the poor snapping turtle alone, he didn't do anything.

Anonymous said...

"This is like getting credit card bills in the mail and throwing them away."

No, its like paying off one credit card with the balance transfer to another new card with a low introductory rate and hoping that another offer will come in the mail before the introductory rate expires. I do not think there are many card offers for 0% with a 500 billion credit limit, so they might want to get working on a new plan B immediately!!!

Forclosureboy said...

I cant tell the difference between the federal gov or wall street anymore.

Wall Street is in charge of the government now to make sure they 'follow the rules' correct?

Anonymous said...

Forclosureboy said...
I cant tell the difference between the federal gov or wall street anymore.

Wall Street is in charge of the government now to make sure they 'follow the rules' correct?

November 12, 2007 1:30 PM

Thats about the size of it. Allowing bankrupt financiers to run the government is the single biggest risk we face.

FDR baby, FDR. Either we go back to FDR or we die. There is no in between.

Anonymous said...

david tice, uber bear

http://youtube.com/watch?v=l_0pqHzK324

pinky said...

The fix is in for another Fed rate cut. The central banks are whacking gold to make a case for "no inflation". Then there is this tidbit from the Washington Post:

"The Fed wants to be iron-clad sure, as sure as they can be, that inflation will not take hold" before it moves again to lower rates, Schweitzer said. "They need to see evidence of a pullback by consumers or a pullback in business hiring. Either one will do the trick."

So look for "official" numbers that will support these other two criteria needed to give Bernanke cover for another 1/2 point rate cut. Remember, it's bonus time on Wall Street, and baby needs shoes.

Peter T said...

The US seems to follow down Japan's path: Hide losses and let the insolvent banks live on as zombies who drag down the rest fo the economy. Liquidate the insolvent banks now!

Anonymous said...

What choice do they have?

Bankrupt the nation?

I don't mean this as a troll comment - but honestly. Yes they were greedy. Yes they got caught.

So what now? Roll over and die? Did they get to where they are today by doing that?

No... they'll keep going until someone/something drives a stake through their heart.

Think of it as a big vampire that is thirsty. In this case, money is blood. You can either give him your arm, or he's gonna tear your heart out and drink his fill.

I fear however, that this time there will be little difference. He's so thirsty that he'll probably tear your arm off and have his fill anyway.

The question should not be what will he do... but what will you do to save yourself?

Vampires are so predictable... people aren't.

Anonymous said...

This is brilliant actually...this solves the problem with the new legislation on level 3 assets that don't trade much and are hard to value, but now must be marked to market. So, they just trade a few back and forth amongst themselves to create a phony market, and voila, problem solved! (Let's make a deal....you buy this $50 million asset from me for $250 million, and I'll but that $50 million asset from you for $250 million). So this doesn't actually solve the problem at all, but this can buy them more than enough time to cash out some more options before the ship goes down when the people that borrowed the money can't pay it back.

Where'd they get the $ for this fund anyways, the same place they got the trillions to loan out to people that couldn't pay it back? Where was that anyways?

Sigh.....just when you think you've seen it all.....

Anonymous said...

Anonymous said...
This is brilliant actually...this solves the problem with the new legislation on level 3 assets that don't trade much and are hard to value, but now must be marked to market. So, they just trade a few back and forth amongst themselves to create a phony market, and voila, problem solved! (Let's make a deal....you buy this $50 million asset from me for $250 million, and I'll but that $50 million asset from you for $250 million). So this doesn't actually solve the problem at all, but this can buy them more than enough time to cash out some more options before the ship goes down when the people that borrowed the money can't pay it back.

Where'd they get the $ for this fund anyways, the same place they got the trillions to loan out to people that couldn't pay it back? Where was that anyways?

Sigh.....just when you think you've seen it all.....

November 12, 2007 4:09 PM
--------------
They do not even have the money yet!!! Somehow b/t now & the end of the year they are suppose to get 75 billion from all the big bankes of the world. Basically they are going to go beg their uber bank brethren. The big 3 that have bitten off on this initial agreement are kicking in 5-10 billion each, the rest (60-75 billion) is to come from the other banks they panhnadle from. If they just cancelled every swinging richard's bonus from all the banks of the world and tossed it in the hat for this fund they probably would cover all the losses, but that would go agains the banker greed culture!!!

E-trade tanking hard today due to subprime slime!! I see bankruptcy in one of the few survivors of the the dot-com dot-bomb, just illustrating how much bigger and badder this bubble burst is!!!

Buck Doangivafak said...

"This is like getting credit card bills in the mail and throwing them away."


Kuk-kuk-kuk. What's wrong with throwing away credit card statements? That's what I do. After a while they stop sending them. No problemo. No credit police come calling. It's all good!~

consultant said...

For an economy to work there has to be trust. Where's the trust? Will any of us ever look at a home purchase the same way again?
The people who are holding the ugly bags now. Will they ever be able to trust the people who sold them the ugly bags?
This financial fiasco is much like the Iraq fiasco. There are options, but they are all bad.

skelter said...

M3 growth is now beyond ridiculous:

http://tinyurl.com/m7bs7

It's bananna republic time boys and girls.

Anonymous said...

The big banks are now trying to spray air freshners in the toilet to cover up the smell of the massive turds they just let out. However there is a major problem which is that no matter what they do the smell will not go away until they flush the WC (cut their losses) which is something they are not willing to do. Reminds me of an old Indian proverb: Crap has no nails but people who step on it hobble about until they clean their feet.

funk-soul-rubber said...

ANYBODY RECALL A POST FROM AN E*TRADE EMPLOYEE ON HP LAST MONTH WHO SAID "E*TRADE STOCK IS ROCK SOLID"?

I DO!............

BUT WHAM, BOOM, BAM!

Check It Out Now:


NEWS Nov. 12 (Bloomberg) -- E*Trade Financial Corp. lost more than half its market value after the online brokerage forecast a decline in fourth-quarter earnings and a Citigroup Inc. analyst said the company may go bankrupt.

E*Trade dropped $4.59, or 53 percent, to $3.99 at 11:38 a.m. on the Nasdaq Stock Market. The stock has fallen 82 percent, wiping out about $7.9 billion in market value.
********************************

ouch.

Jumper watch is now in effect.

Would somebody please give GW bush a financial leadership medal.

*

Anonymous said...

You're basically a FOOL if you are not positioning yourself in gold and precious metals in general.

A great buying opportunity came after a nice little dip today.
I am starting to hear the odd blip or two in public about gold. Watch and listen to hear how it is becoming more and more of a popular investment. This will gain strength into 2008 and hold steady through 2009.

Just watch and see.

Anonymous said...

I know most of you will find this hard to believe, but it is indeed very true. More true than you'd like to admit.

All of this can be solved by pictures of kids on swings. Take that!

Anonymous said...

In a rare piece of good news, The New York Times reported yesterday that Citigroup, Bank of America and JPMorgan had agreed terms for a $75bn rescue fund - or Super-Siv - to prevent a fresh fire sale of sub-prime debt.

They are now in talks with 60 banks on plans to launch the scheme in December.

If it works, it will allow the lenders to feed out losses slowly, giving the market time to adapt.

Critics say it is merely another attempt to cover the crisis by preventing "price ­discovery".

http://www.telegraph.co.uk/
money/main.jhtml?xml=/money/
2007/11/12/cnfasb112.xml

Anonymous said...

SIV and Financial Accounting Standards 157 the race begins.

How fast can lost be kept of the book by getting the lost sold to third party in the form of SIV before FAS 157 force them to show the lost that can not be sold off.

http://www.financialweek.com/apps/
pbcs.dll/article?AID=/20071022/
REG/71019028

Auditors, regulators refuse to let banks hide bad assets from public

“A lot of people on the board and in the investment community thought it was an important time to provide more transparency around financial instruments,” said Donald Young, one of the four FASB members (including chairman Robert Herz) to vote against delaying the standard.

“With all the turmoil in credit markets, this is valuable information for investors,” Mr. Young said. “I felt we had to push this forward.”

In addition, the biggest auditors—through their new industry trade group, the Center for Audit Quality—are talking tough when it comes to accounting for hard-to-value assets that may be forced back onto balance sheets.

The center recently published three reports discussing measurements of fair value in illiquid markets, consolidation of off-balance-sheet commercial conduits and the accounting for underwriting and loan commitments.

The papers indicate the Big Four auditors won’t be offering much leeway on complicated and controversial valuation issues—some of which may trigger further losses at financial institutions.

All of the Big Four firms declined requests for comment.

The investment banks, most of which have already adopted FAS 157, all reported significant write-downs of assets in their latest quarters, though they gave little detail about the valuation assumptions they used.

Most of the commercial banks, however, apply fair-value methods on a less consistent basis. Many of them took big write-downs in the third quarter—and more write-downs could come on their asset portfolios as well as from their exposure to off-balance-sheet risks through their sponsorship of structured investment vehicles.

The question is whether current market prices for a wide range of mortgage-backed and other asset-backed securities are the result of distressed sales.

As a group, stressed SIV’s have reportedly sold about $75 billion worth of assets in the last several months. The prices realized, if they were applied to investment portfolios elsewhere, would trigger further write-downs. The proposed superfund, if successful, would alleviate the problem by making a market in currently illiquid assets and paying better prices.

“It’s a stopgap measure to buy some time,” said one analyst with a credit rating agency, who asked to remain anonymous. “If the SIVs can avoid selling assets in the next six months, maybe the market comes back and they’ll have other options.”

If the trading volumes and prices of a wide swath of mortgage-backed securities, collateralized debt obligations and other thinly-traded securities don’t recover by then, the marking to market required per FAS 157 could force companies and banks to recognize further large losses.

The accounting for those currently off-balance-sheet SIVs and commercial paper conduits is also at issue. With many of the funds currently unable to roll over short-term commercial paper to finance their estimated $370 billion of assets, the sponsoring banks may be forced to pony up capital to prevent further fire sales of assets. That capital infusion could arguably force a sponsoring institution to bring the assets and liabilities onto their balance sheets—a move that would reduce returns and increase capital reserve requirements.

“If they inject capital [into an SIV or conduit], I would think it should be consolidated,” said Charles Mulford, an accounting professor at the Georgia Institute of Technology. “The party that keeps the vehicle afloat strikes me as more in control than other investors may be.”

The vehicles are currently kept off balance sheet because they are nominally owned by third-party investors. The sponsoring institution, however, is required to regularly compute the expected losses or returns from an SIV or asset-backed commercial paper conduit.

According to Financial Interpretation (FIN) 46R, passed in the aftermath of Enron’s off-balance-sheet escapades, if the sponsoring institution determines that it is on the hook for most of the losses in the entity, it would have to consolidate the investment vehicle.

Anonymous said...

From the Market Oracle...

Despite its higher prices of late, gold's global supply-and-demand fundamentals remain dazzlingly bullish. Worldwide investment demand far exceeds the ability of miners to ramp up their production. And if you adjust gold's early 1980 high by CPI inflation, it works out to about $2300 in today's dollars. So most of gold's bull probably remains ahead of us , not behind us."

Market Oracle

Anonymous said...

Can you file an anti-trust law suit if you are short selling these clowns? Look at all the money that's not being made because they are allowed to keep reality off their balance sheet.

Anonymous said...

Can we create a superfund for distressed clients that get margin calls?

Expat said...

Paulson isn't an idiot. The purpose of the SIV super fund is to delay the financial collapse into the term of the next president.

antonio said...

Unfortunately, our economy is headed for much higher interest rates, 12-15% 30 year mortgage rates. The fed doesn't matter..the treasury rates have been decreasng due to flight to quality but with a declining currency int'l investors will pull back hard from this investment also. It all comes down to this when things get riskier investors demand more return to take that risk. Would you buy mortgage bonds now? At what point would you consider them a buy? I think they are a buy in the 12-15% range.

Additionally, inflation worldwide is climbing. Worldwide economy is headed for big trouble.

Anonymous said...

I think Ponzi's name has been just a litle over-used.

Anonymous said...

Illuminati is a bitch, isn't it?

Anonymous said...

Once and for all peeps--

We can't stop this TRAIN!!

Head for the Fu%#9ing hills.

corvinus said...

Illuminati is a bitch, isn't it?

Amen.

If you really think this mess and all other messes since the Fed was established, and the World Wars, etc. are due to mass stupidity at the top, you're crazy.

Those Freemasonic f*ckers screw and loot everybody else to line their own pockets.

May they all drop dead.