UBS subprime losses now at $40 billion, fires its CEO, announces it will dilute its shareholders by $15 billion, stock goes up 10%

Yup, we're in la-la land

Their stock is still down 51% and the chart is ugly, but it always amazes me when a company pretty much announces they're the antichrist and the stock pops (for a few hours) on the news.

Meanwhile, $40 billion in 9 months. $40 billion. Man, that's a lot of coin. You'd have to be REALLY REALLY stupid to lose that kind of money.

And just wait until they get around to marking down their Alt-A, HELOC and Option Arm crap. Good luck issuing more shares after that debacle. And, uh, you might want to get your money out of UBS - QUICK!

What, did these banks all think that Casey Serin was good for it?

ZURICH, Switzerland (AP) — UBS AG's chairman abruptly resigned Tuesday as the Swiss bank reported a first-quarter loss of $12.1 billion and said it would seek $15.1 billion in new capital.

UBS revealed more serious damage from exposure to the U.S. subprime crisis and said it expects write-downs of approximately $19 billion.

It was the latest indication of how far the severe plunge in U.S. housing prices and a credit crisis triggered by rising mortgage defaults has reached.

UBS write-downs have reached a staggering $40 billion in the past nine months, the largest reported by any bank to date.

Jim Cramer from 2007 - Subprime mortgage blowup will have "no impact", "meaningless", will "not notice". Uh, Jimbo, kinda f*cked up that call, eh?

Bush Administration new 2008 slogan (c/o Henry Paulson): "The worst is just beginning"

Thank you Hank Paulson for saying what we all know was true anyway.

I can't wait to see the bumper stickers!

Thanks doom for the vid

It's not just subprime that's melting down - it's ALL OF IT (negative-am, alt-a, prime, seconds, auto, revolving, student, etc)

I hate reading "the subprime problem", "the subprime meltdown" and "the subprime crisis" in the lazy MSM. Note to the MSM and to the world:

CREDIT IS MELTING DOWN. ALL IF IT. SUBPRIME WAS JUST THE TINY FIRST WAVE. AND TRILLIONS WILL BE LOST. IT WAS A BIG HOUSE OF CARDS BUILT ON FRAUD AND GREED, AND IT AIN'T GETTIN' PAID BACK.

Should be obvious, but for some reason it ain't gettin' through to 'em yet. But it will.

Subprime losses to date – Merrill Lynch – $22.1bn
Citigroup – $18.1bn
UBS – $13.5bn
Morgan Stanley – $9.4bn
HSBC – $3.4bn
Bear Stearns – $3.2bn
Deutsche Bank – $3.2bn
Bank of America – $3bn
Barclays – $2.6bn
RBS – $2.5bn
Freddie Mac – $2bn

FLASH: Merrill Lynch, on the verge of failure, admits to ANOTHER $15 billion in subprime poo

Its fun to see all the investment bank idiots admitting to their subprime losses - like Chinese water torture, a drop at a time.

Just wait until they start admitting to their Alt-A liar's loan exposure, their option-ARM exposure and god forbid their prime 30-year fixed exposure.

And it's also fun to see these strong and powerful American companies running around Asia and the Arab world begging for dollars.

Actually, that's not fun. That part is really kinda sick.

Giant Write-Down Is Seen for Merrill

Merrill Lynch is expected to suffer $15 billion in losses stemming from soured mortgage investments, almost double its original estimate, prompting the firm to raise additional capital from an outside investor.

Merrill, the nation’s largest brokerage firm, is expected to disclose the huge write-down when it reports earnings next week, according to people who have been briefed on its plans. The loss far exceeds the $12 billion hit many Wall Street analysts had forecast.

To shore up its deteriorating finances, Merrill is now in discussions with investors in the United States, Asia and the Middle East, including American private equity firms, to raise about $4 billion in the coming days, these people said.

Merrill is hardly alone in seeking capital from overseas. United States financial institutions have raised more than $29 billion from foreign governments and their related investment entities, according to the market research firm Dealogic.

HousingPANIC calls for a Congressional investigation of Alan Greenspan and the US Federal Reserve Bank and their role in the subprime mess

Nice to see the MSM doing their job, evidenced by this amazing expose in the New York Times. Now I wonder if Congress will start doing theirs.

This is serious stuff HP'ers. Banks and lenders will fail, the US economy will be decimated, millions will lose their homes and our entire financial system will fall into disrepute. All because Alan Greenspan was either too incompetent or too corrupt to do anything about the out-of-control REIC that he was supposed to be regulating, while at the same time keeping interest rates too low for too long.

HousingPANIC again calls on our corrupt Congress to open an investigation into the housing bubble and crash, with a particular focus on Alan Greenspan and the US Federal Reserve Bank. I don't know what the f*ck Schumer, Frank and Dodd are waiting for - more money or direction from Goldman Sachs perhaps? Let's get it on boys - I want subpoenas flying NOW! And the first one should be to Greenspan - the #1 cause of the Great Housing Bubble & Crash.

Fed Shrugged as Subprime Crisis Spread

WASHINGTON — Until the boom in subprime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.

Edward M. Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.

But when Mr. Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.

Today, as the mortgage crisis of 2007 worsens and threatens to tip the economy into a recession, many are asking: where was Washington?

An examination of regulatory decisions shows that the Federal Reserve and other agencies waited until it was too late before trying to tame the industry’s excesses. Both the Fed and the Bush administration placed a higher priority on promoting “financial innovation” and what President Bush has called the “ownership society.”

"The level of terror that must exist in the boardrooms of the banks and regulators that peered into Pandora's box this summer must be extreme."

Great rant from Fleckenstein on the Paulson/Banker "Super SIV" house of cards

No need to beat around the bush. The banks (and US Treasury) are trying to create this SIV super-fund in order to avoid or delay a significant "mark to market" of the mortgage cancer they have on their books. Period. The losses are real, the cancer is spreading, and they're doing all they can to keep the truth from their shareholders and the financial community.

Even Alan Greenspan and Warren Buffet think this whole thing stinks. And it does. To high heaven.

Here's Fleck. And get ready for the crash when this whole deceptive plan caves in, and even the bankers rush to the exits.

This week I have another entity of entitlement to add to the list: "SIV Mae" (SIV = structured investment vehicle). That seems a fitting description of the super-duper bailout put together by the Goldman Sachs (GS, news, msgs) subsidiary known as the U.S. Treasury Department. (Goldman itself doesn't appear to be participating in the bailout, which is interesting.)

When I first heard about this, I was outraged, disgusted and slightly depressed. I thought, here we go, another bailout.

Barney Frank and friends are trying to bail out the homeowners. Wall Street, the Treasury Department and the Bank of England appear determined to do whatever it takes so that we have absolutely no price discovery on any mortgage-related assets that may have gone bad -- thereby giving a pass to the folks who've made obscene amounts of money conceiving and marketing them.

To quote a knowledgeable friend of a friend: "How anyone can look at the creation of this fund as anything other than a cynical way of moving an existing pile of crap from one place to another is beyond me. The fact that no one seems to think there is anything wrong with it (and I include the regulators) tells you just how 'fixed' the markets' problems are.

"The level of terror that must exist in the boardrooms of the banks and regulators that peered into Pandora's box this summer must be extreme."

RTC2? Banks in desperate $80 billion scramble to avoid "mark to market" meltdown. Just delaying the inevitable

I love how everyone (especially Wall Street and CNBC) thinks the credit crunch is over, and all will be just fine. The banks reporting of billions in write-downs last week was greeted as good news. Too bad those write-downs were just a fraction of the truth.

The news this morning will also be spun as good news. Hopefully some in the MSM will do their jobs and dig a bit deeper. This is the banks trying to save themselves, but the problem still remains - trillions are being lost on the housing crash and someone is holding the bag.

We've only just begun HP'ers. This isn't a $80 billion problem. No, it's in the trillions. Many trillions. And the worst is yet to come. And when the truth finally comes out, it will shock you.

Banks to set up $80 bln fund to limit credit crunch

NEW YORK/WASHINGTON (Reuters) - Major banks including Citigroup Inc are looking at setting up a roughly $80 billion fund to buy ailing mortgage securities and other assets, in a bid to prevent the credit crunch from further hurting the global economy, sources familiar with the matter said.

Representatives from the U.S. Treasury have organized conversations among top global banks, sources said, as financial institutions grow increasingly concerned that a certain type of investment fund linked to banks may have to dump billions of dollars of repackaged loans onto financial markets.

A fire-sale of assets could lift borrowing costs globally, trigger big losses from investors and force banks to further write down some holdings on their balance sheets. Such sales could trigger huge losses for banks, and in the worst-case scenario tip the U.S. or Europe into recession.

"We are coming off the greatest lending bubble ... in U.S. history. We will feel its impact for a very long time," said Robert Arnott, Chairman of Research Affiliates LLC in Pasadena, California, earlier this month.

More here...

“For me, this is more of a P.R. blitz,” he said. The banks are “saying, it’s not just that we are doing this on an ad hoc, individual basis. Rather, we have a plan and consortium in cooperation with Treasury, which gives it a veneer of respectability.”

Mr. Stracke said that by serving as another buyer of the highest-rated securities, the banks are hoping to ease the immediate strain on SIVs, which could be forced to sell billions of dollars worth of assets in a fire sale if they are not able to raise new financing and when their capital falls below certain thresholds. The effort, however, will not resolve the longer-term problem many SIVs face with more risky mortgage bonds, he said.

The Bank of England, understanding it's not their role to bail out mortgage gamblers, holds tight [UPDATE - BofE DOES 180, BAILS OUT NORTHERN ROCK]

[FLASH - UPDATE - 180 DEGREE REVERSAL FROM EARLIER POST: MERVYN KING AND THE BofE JUST HAD TO BAIL OUT A FAILING BANK HERE IN ENGLAND - YES, IT'S THAT BAD. THIS IS WHY BANKS AREN'T LENDING TO EACH OTHER RIGHT NOW - THEY DON'T KNOW WHO'S ABOUT TO GO UNDER. NOW WE'RE FINDING OUT, AND NOW ALL CENTRAL BANKS ARE IN PANIC MODE]

[UPDATE #2 - BANK RUN NOW UNDERWAY ON NORTHERN ROCK LOCATIONS IN ENGLAND... NEW PHOTO ABOVE]

The amateur-hour ECB and we-love-bubbles-US Fed are lending could-fail-soon banks hundreds of billions of dollars and Euros on demand, with (get this) toxic mortgage CDO's serving as collateral. Oh, man, is this gonna end badly. But cheers to Marvin King at the BofE for holding tight thus far, and here's hoping Ben Bernanke doesn't have his head up his ass on Monday and cut rates. Discount window, OK, mess with rates, Moral Hazard.

As one observer said about King and the BofE:

"The Bank is right in taking this position and the other central banks are wrong in apparently encouraging moral hazard."

Never have truer words been spoken. [UPDATE - NEVER HAVE SUCH BALD-FACE LIES BEEN TOLD]

And never have the risks of Moral Hazard been greater than they will be on Monday. If Ben cuts, gamblers and bubble-blowers will know that the Fed will always be there if things go wrong, so the next bubble will be even bigger. And even more hurtful. Just look what happened when Greenspan f*cked up and bailed out the dot-com gamblers. The housing bubble was the worst bubble in human history.

Here's more on the Bank of England holding rates tight, although give him a few English bank failures (they'll come) and we'll see if he can stand the heat from No. 10. [UPDATE - MERVYN KING COULDN'T STAND THE HEAT FROM NO. 10, AND KNOWS THAT IF HE DIDN'T DO A 180 TODAY, NORTHERN ROCK WOULD HAVE FAILED. MEANWHILE MERVYN KING LOOKS LIKE A LIAR, HYPOCRITE AND A JACKASS WHOSE WORD IS WORTHLESS]

No time for drastic measures, says King

Bailing out commercial banks would “sow the seeds of a future financial crisis”, Mervyn King, Bank of England governor said on Wednesday.

In making clear that the Bank of England had no intention of following in the steps of the European Central Bank in lending billions to financial institutions for three months, Mr King pointedly distinguished the Bank’s strategy from that of its central bank peers.

In a letter to the Treasury select committee, the famously unflappable Mr King acknowledged that the path ahead was “uncertain”, but made clear this was no time for drastic measures.

FLASH: Toxic lender Washington Mutual sees "perfect storm" in housing, expects home prices to keep falling in most markets, billions in WM losses

The perfect storm. Surprising for bank CEOs and sheeple. Fully expected and predicted by HP'ers. Note - I'm short WM... They did call them "liar's loans" for a reason ya know...

NEW YORK, Sept 10 (Reuters) - Washington Mutual Inc., the largest U.S. savings and loan, may set aside $500 million more than it had previously forecast for loan losses in 2007, amid what Chief Executive Kerry Killinger called a "near perfect storm" in U.S. housing.

The Seattle-based thrift had in July projected setting aside $1.5 billion to $1.7 billion for loan losses.

Speaking at a Lehman Brothers Inc. financial services conference, Killinger said the housing market is struggling with stagnant home prices, rising borrowing costs, tighter underwriting standards, and tough capital markets conditions.

"Most housing markets appear to be weakening, to us," he said. "We would not be surprised to see declines in housing prices in many regions of the country ... for the next few quarters."

Why is Countrywide possibly going bankrupt? Well, for starters, they're now have $2.5 BILLION in "Countrywide-Owned Homes" and growing

Here's three ugly charts - Mozilo 2007 stock dumping, CFC stock price last 90 days (I'm short CFC) and "Countrywide-Owned Home" inventory since January. Anyone see any trends?

Oh dear god, does Orangelo have a mess on his hands. Nice move dumping hundreds of millions in CFC shares before he ENRON'ed, eh? Here's the full list at Angelo's "Properties Owned by Countrywide" page.

Anyone wanna guess how many BILLIONS of dollars of taken-back homes Countrywide (and their partners and receivers) will end up with when it's all said and done? And anyone want to guess if CFC had to mark to market what these homes are REALLY worth today? Someone do us a favor and get a hold of Countrywide on one of these and see what % off they're willing to go!

Wow. Nice work Angelo. Great business ya got there. Sucker born every minute.

Hattips to themessthatgreenspanmade and countrywide-foreclosures for the data...

HousingPANIC nominee for quote of the year

"It is just unbelievable how many people were conned
into taking these mortgages,"

- Walter Hahn, a real estate economist and consultant in Irvine, July 2007

And then the dominos started to fall, one by one...

PIMCO's Gross: Subprime crisis not 'isolated'

NEW YORK (Reuters) -- Bill Gross, manager of the world's largest bond fund, said Tuesday the subprime mortgage crisis gripping U.S. financial markets was not an isolated event and will eventually take a toll on the economy.

Gross said there are hundreds of billions of dollars of subprime residential mortgage-backed securities (RMBS), derivatives on subprime RMBS and collateralized debt obligations (CDOs) that buy subprime RMBS and/or the derivatives on the RMBS - all of which he considers "toxic waste."

Gross, who manages the $104 billion PIMCO Total Return Fund, said the subprime crisis "may be just what the Fed has been looking for - easy credit becoming less easy; excessive liquidity returning to more rational levels," he added.

According to Gross, the subprime crisis will unfold in these resets. The ultimate impact they will have will be on the impaired prices of homes - "the collateral that's so critical in this asset-backed, and therefore interest-rate-sensitive, finance-based economy of 2007 and beyond."

PBS NOW report on housing crash: Past Due

Take the time to watch this easy-credit housing crash video. Very thorough, very timely, and very spot-on. Living in England, I can tell you I miss PBS - quality TV in a land of mind-numbing stupidity.

My one criticism is the continuing "victimization" of people who signed on to ARMs and interest only loans. They are not "victims". They chose to do that of their own free will. And they made their own bad decision. Nobody was holding a gun to their head.

About the Show
Video: Past Due and Pay Day

Housing in the United States is taking a big hit as "too-good-to-be-true" home loans fail, refinancing dries up, and foreclosures surge. How did the market plummet so quickly -- and are current homeowners paying the price? NOW revisits a California town whose real estate fortunes have taken a hard turn for the worse.

FLASH: OC Register exposes that true subprime ARM default rate is 21.1%, NOT the 13% reported in MSM

Every day it seems another REIC lie is being being exposed. Watch the floodgates really open up now that the MSM has jumped off the REIC tank, put down the rolodex of realtors, and is (finally) doing their damn job.

Bravo to Mathew Padilla at the OC Register. Keep digging! Especially when it comes to the bigger story of Alt-A liar's loans. With 60% of applicants on those loans committing blatant mortgage fraud by overstating their income by 50% or more, that disaster will unfold soon enough. Plus the feds should review every liar's loan taken out and prosecute every one of 'em for mortgage fraud.

Subprime delinquencies higher than reported

Forget that 13% subprime delinquency number you heard about so much in the press and which some politicos and real estate folks turned on its head pointing out 87% of subprime borrowers are paying their mortgage.

I took another look at the transcript from the first-quarter conference call of IndyMac Bancorp, and caught this statement from CEO Michael Perry:

On subprime loans, one of the things that I think people aren’t aware of is that the Mortgage Bankers Association basically classifies the lender as a prime lender or a subprime lender. So for example, they classify IndyMac and Countrywide as prime lenders, and they classify New Century or whoever as a subprime lender. And all of their servicing portfolio is considered prime or subprime for the MBA. Ok? And so when you see that delinquency number in the press of 13% subprime delinquencies, it’s hugely understated. It is absolutely hugely understated. And the prime delinquencies are overstated.The subprime delinquencies are more like 18, 20, 22% delinquencies and that’s where I think you’re going to see the problems."

To see if Perry had it right, I quizzed the MBA and got this in response from Jay Brinkmann, vice president of research and economics:

"Mr. Perry is correct that we have to differentiate by the type of servicer rather than the type of loan. This may not be a major issue because our latest subprime numbers are 14.4% delinquent by at least one payment, plus another 4.5% in foreclosure, for a total of 18.9% either delinquent or in foreclosure.

For just subprime ARMs that number is 21.1%, so we agree with Mr. Perry's estimates of the current state of the market."

HousingPANIC Stupid Question of the Night

What is the American Dream now that housing is dying?

FLASH: New Century Mortgage Exposed: Lies. Cheating. Intimidation. Baseball bats. And a corrupt REIC spinning out of control.

Great expose in the Washington Post on the now-bankrupt former #1 independent mortgage lender New Century.

Why do I have such dot-com deja-vu?

The housing crash and REIC fraud will be the biggest domestic issue of the 2008 campaign. Look for hearings, politician posturing, bailouts, regulation, investigations, arrests and frog-marches. The biggest bubble in human history also produced the most financial corruption ever seen. New Century is just the tip of the iceberg. And the stench is worldwide.

Too bad the media was asleep when it was happening.

Pressure at Mortgage Firm Led To Mass Approval of Bad Loans

Maggie Hardiman cringed as she heard the salesmen knocking the sides of desks with a baseball bat as they walked through her office. Bang! Bang!

" 'You cut my [expletive] deal!' " she recalls one man yelling at her. " 'You can't do that.' " Bang! The bat whacked the top of her desk. As an appraiser for a company called New Century Financial, Hardiman was supposed to weed out bad mortgage applications. Most of the mortgage applications Hardiman reviewed had problems, she said.

But "you didn't want to turn away a loan because all hell would break loose," she recounted in interviews. When she did, her bosses often overruled her and found another appraiser to sign off on it.

Hardiman's account is one of several from former employees of New Century that shed fresh light on an unfolding disaster in the mortgage industry, one that could cost as many as 2 million American families their homes and threatens to spill over into the broader economy.

New Century has become the premier example of a group of companies that grew rapidly during the housing boom, selling working-class Americans with questionable credit huge numbers of "subprime" loans with "teaser" rates that typically rose after the first two years.

This business transformed the once-tiny New Century into a lending powerhouse that was held up as a model of the mortgage industry's success.

But now, with home values falling and adjustable loan rates rising, record numbers of homeowners are failing to make their payments. And a detailed inquiry into the situation at New Century and other subprime lenders suggests that in the feeding frenzy for housing loans, basic quality controls were ignored in the mortgage business, while the big Wall Street investment banks that backed these firms looked the other way.

New Century, which filed for bankruptcy protection last month, has admitted that it underreported the number of bad loans it made in its financial reports for the first three quarters of 2006. Hardiman and other former employees of New Century interviewed said there was intense pressure from bosses to approve loans, even those with obviously inflated housing appraisals or exaggerated homeowner incomes.

"The stress in that place was ungodly. It was like selling your soul," said Hardiman, who worked for New Century in 2004 and 2005. "There was instant notification to everyone as soon as you rejected a loan. And you dreaded doing it because you paid for it. Two guys would come with a bat, and they were all [ticked] off because you cut their deals."

Salespeople were supposed to be the "first line of defense" against fraud and bad loans, said Steve Krystofiak, president of the Mortgage Broker Association for Responsible Lending, a group that is trying to retool practices in the industry.

But salespeople worked on commission -- meaning the more loans they sold, the more bonus money they received. "That's a bad business model. It's absolutely contradictory," Krystofiak said, adding that he has witnessed salespeople tweak numbers in mortgage applications to ensure that the loans would be approved.

Victims?

The mainstream media and our blow-hard congressmen are portraying people losing their homes to foreclosure as "victims" of "predatory lenders".

I'm sorry, who was it that signed the paperwork?

Should we consider any consenting adult who freely enters into a contractual agreement a "victim" if things don't turn out how they planned?

Here illegally? No income? No credit? No problema - here's a $500,000 loan for a new house you'll never pay back!

No, this is not an April Fools joke.

FLASH: Senate subprime fiasco hearing on Thursday (after Sen. Dodd is done blowdrying hair)

HP'ers know we've predicted Senate hearings for over a year now, but I thought they'd take off in 2008, as a way for incompetent and corrupt congressmen to show the voters that they're on top of things.

Which is humorous, as we know now that not only were they complacent as the out-of-control REIC gamed the system, not only were they bribed by the NAR and homebuilder lobbies, but that their incompetence was directly responsible for the housing bubble and now resulting crash.

Now "presidential hopeful Dodd" (say that a couple of times without laughing) is having hearings on Thursday to "investigate" the subprime bomb.

Oh, won't this be fun!

WASHINGTON, March 19 (Reuters) - U.S. Senate Banking Committee Chairman Chris Dodd said on Monday he asked executives at the top five subprime mortgage companies to testify at a Thursday hearing and explain their lending practices.

Dodd said he asked executives from HSBC Holdings Plc, New Century Mortgage Corporation, Countrywide Financial Corp., General Electric Co's WMC Mortgage unit and First Franklin Mortgage.

Federal and state banking regulators and consumer advocates have also been asked to testify at Thursday's hearing, Dodd said in a statement. Dodd, a Connecticut Democrat, is a U.S. presidential hopeful.