Jim Cramer says if bond insurers MBIA and Ambac aren't bailed out, the banks will fail. Quick - someone call the Arabs!

So yes, they'll get bailed out, even if that means wiping out their shareholders. That will stop the banks from having to mark to market their CDO cancer for another few weeks or months.

But eventually, as sure as night turns into day, some of the banks will have a come-to-jesus moment (auditors anyone? SEC anyone? Sarbanes Oxley anyone?), and they will fail or be taken over for a song. And the most toxic of the toxic lenders - Countrywide, IndyMac, WaMu and First Fed - will be amongst the first. (I'm short WaMu and should be short a lot more of these houses of mortgage fraud).

Here's Cramer's highlights. Love him or hate him, he knows what's going on out there, and he's using his platform to try to influence the bail-out-players now (like he did with his Fed rant).

Bottom line - watch for the Saudis, Kuwaitis and hell any old Arab with coin to come riding in on a pale horse to bail out these turds.

ABK, MBI Need -- and Will Find -- Capital

So let's go find some bailout money for the monolines, for the Ambacs and the MBIAs. Let's just get it. Let's hold hands and make sure these don't collapse because they could take us with them.

That's the tenor right now of the banks and brokers as these two institutions threaten to bring down the whole CDO house of cards.

Yet, still, they are in the "too big to fail" category. If you capitalize these companies, then you can maintain the AAA ratings on the higher CDO tranches and not have to take the hit to capital that would force banks to collapse.

These are the epicenter of ground zero. If you had to save one or two institutions to rescue the system, these two are actually more important than WaMu or Countrywide.

That's saying something.

Washington Mutual (finally) under SEC investigation for its role in inflated and bogus home appraisals

Cool.

But what the f*ck took so long?

Wasn't it OBVIOUS that corrupt toxic lenders like WaMu, Countrywide, IndyMac and First Fed were systematically and blatantly encouraging and participating in rampant illegal mortgage fraud?

It sure was to HP'ers.

(Note - I'm short WaMu and don't see any way this pig survives, especially when they're found guilty of mortgage fraud and have to buy back all the worthless crap paper they issued. Tilt. And if you have money in a WaMu account, GET IT OUT NOW!!!)

WaMu Says Cooperating with SEC on Home Appraisals

NEW YORK (Reuters) - Washington Mutual said on Thursday it is cooperating with a U.S. Securities and Exchange Commission inquiry into the handling and reporting of mortgage loans that may have been based on inflated home appraisals.

The SEC is also looking into whether the company, one of the largest U.S. mortgage lenders, properly accounted for its loans in financial disclosures to investors, according to the Journal, which cited people familiar with the situation.

FLASH: Right on schedule, toxic-loan king WaMu melts down, on verge of failure, announces massive write-off, office closures and layoffs

HP'ers knew this toxic lender was on its way to insolvency for some time, along with Countrywide, IndyMac, First Fed and many more. They called them "liar's loans" for a reason folks. The mortgage fraud self-enrichment paper promoted and endorsed by the on-their-way-to-jail bank execs at WaMu and more just simply ain't gettin' paid back. And now they and their shareholders, near-junk bond holders and account holders will pay the price.

Memo to WaMu account holders and bond holders - GET YOUR MONEY OUT OF THIS BANK AS FAST AS YOU CAN. WAMU IS THE US's NORTHERN ROCK. And we're still just getting started.

(yes, I'm still short WaMu via July 08 puts. I don't see how it survives)

Mortgage Crisis Forces Big Cuts at WaMu - Mortgage Problems Force WaMu to Close Offices, Slash Over 3,100 Jobs and Drop Subprime Loans

Washington Mutual Inc., the nation's largest savings and loan, said Monday problems in the mortgage and credit markets are forcing it to close offices, slash over 3,100 jobs, and set aside far more than expected for loan losses in its fourth quarter. The company also said it was slashing its dividend 73 percent.

Why wouldn't the millions of negative-equity, no-down, crashing prices homedebtors just walk away? Sure makes economic sense to me.

People make economic decisions every day. Whether or not to buy that new dress, or to go on that vacation, or to order dessert with dinner, or whether to ask for a raise or look for a new job.

The millions of underwater homedebtors, especially those who put no money down and are therefore simply renters already, are slowly and surely going to make the economic decision that they're MUCH better off getting away from their debt-trap. Morally, it's wrong. But economically, it's right.

Many will try to sell for a price based on what they owe, and not what the property is worth, and they will fail.

Many will stay only as long as their teaser rate stays unchanged, and then they will bolt.

And many have already stopped making payments and will stay until foreclosure.

But the truth remains that economically speaking, these homedebtors will be better off turning in the keys. The Bush/Paulson/Banker plan isn't about helping these homedebtors. It's about helping the banks and bondholders who hold the bag.

If they were truly concerned about the homedebtors, they'd be advising them to stop making payments on the depreciating house they couldn't afford anyway. But they're not - they're concerned about the banks.

Since they won't give the correct financial advice, I will:

HOMEDEBTORS OF AMERICA - IF YOU ARE IN A HOUSE YOU CAN'T AFFORD, AND YOU HAVE NO EQUITY AND A TOXIC MORTGAGE ABOUT TO RESET, AND THE HOME'S PRICE HAS CRASHED, YOU ARE MUCH, MUCH, MUCH BETTER OFF GETTING OUT NOW.

STOP MAKING PAYMENTS, ENJOY A FEW MONTHS OF FREE HOUSING, AND GET READY TO MOVE TO A PLACE YOU CAN AFFORD.

YOU ARE NOT A "HOMEOWNER". THE HOUSE IS NOT YOURS TO LOSE. YOU WERE LIVING A LIE, LIVING BEYOND YOUR MEANS, AND NOW IT'S TIME TO FACE YOUR FINANCIAL REALITY.

FLASH: Sorry boss. My bad. I just lost us $3.4 billion on subprime mortgage CDOs.. UBS announces massive f*ck-up

It's just subprime blowing up and being announced today, but with homes in America crashing, and those AAA CDO's soon to go into default as well, these billion dollar write-downs are just the beginning. The losses will be in the trillions folks. Yes, in the trillions. And banks will fail.

UBS to report $3.4 billion subprime hit - Swiss bank plans management changes; 1,500 jobs to go

LONDON (MarketWatch) -- Swiss banking giant UBS on Monday said it will take a 4 billion Swiss franc ($3.4 billion) hit in the third quarter from its subprime mortgage exposure and plans sweeping management changes and job cuts at its investment-banking division.

The group estimated that it would report a quarterly net loss -- its first in nine years -- of 600 million francs to 800 million francs, compared with profit of 2.2 billion francs in the year-earlier period.