37% of FHLB Advanced To Countrywide
Humpty Dumpty & All the Eggs in One Broken Basket...
On August 16th Countrywide drew down its $11.5 Billion credit line, then got a $10 Billion stock buy from B of A; and secured another $15 Billion in credit lines.
Sounds like some of the desperate homeowners out there, but did you know...
Lenders have turned to the FHLB banks as two main sources of funding, short term IOUs backed by mortgages and mortgage bond sales, began to dry up in August.
The Atlanta FHLB has made $51.1 billion in advances to Countrywide as of Sept. 30, representing 37% of the bank's total outstanding advances.
In a letter sent yesterday to Ronald Rosenfeld, chairman of the Federal Housing Finance Board, which regulates the 12 regional home-loan banks...
Sen. Charles Schumer said "the loans being pledged by Countrywide to secure these advances may pose a risk to the safety and soundness of the'12 FHLB home loan banks."
Sen Schumer is concerned that mortgages pledged by Countrywide to secure its borrowings...
"may pose a risk to the safety and soundness of the FHLB system as a whole."
Schumer's letter urged Rosenfeld to review the Atlanta bank's collateral evaluation policies and Countrywide's pledged collateral.
The Nattering One muses... shouldn't the collateral have been reviewed under rigorous standards up front?
I know if I went to get a loan, it sure as shit would be. And is the Fed reviewing the collateral pledged at the discount window?
Oh, thats right, I forgot, the Fed is accepting MBS, Credit Card and Consumer Loan Debt, even boat loans.
That puts the Nattering One at ease, we can all rest assured that Countrywides collateral pledged to the FHLB is of the utmost in quality. Oh yeah....
Where's Your Sign? ... Philly Fed Head Plosser expects:
the decline in housing activity to bottom out by the end of Q2 2008 and believes that unemployment may rise to about 5% next year.
"I am anticipating the economy to grow more slowly in the coming months, despite the (FOMC's) latest reduction in the fed funds rate target .
While the inflationary signs in recent months have been encouraging, I do not think we are in a position to be sanguine."
Spillover? Say What? Plosser indicated that the ongoing adjustment of financial markets could lead to "more significant spillovers" to the broader economy.
Here's Your Sign... For the past thirty years, deliveries of motor homes and travel trailers have dropped before each decline in the U.S. economy.
The University of Michigan forecast of a 4.8% decline through 2008 comes on the heels of the industry's best year in three decades.
Winnebago led motor-home sales declines through the first nine months with a 7.1% drop, including a 20% plunge for September.
Motor home sales also fell in 2005 and 2006, while shipments of travel trailers rose enough to offset the decline.
Now sales of trailers, more popular with lower income buyers, are dropping as well.
A Case for Housing Price Shillers & Shivers...
The S&P/Case-Shiller National Home Price Index fell 1.7% since June, marking the largest quarterly decline in the index's 21 year history.
YOY: Prices of existing U.S. single-family homes slumped 4.5% in Q3. 20 metropolitan area index down 4.9%, 10 metropolitan area index down 5.5%.
Good Buy? ... Yesterday Citi shares hit a five year low. Today, the Abu Dhabi Investment Authority (ADIA)...
made a $7.5 billion deal to buy Citigroup shares. Immediately, Punk Ziegel upgraded Citigroup to buy from market perform.
Citi, which could book $17.8 billion in second-half credit-market losses, said ADIA would buy 4.9% of stock...
eventually becoming the largest shareholder of a bank that has lost 42.5% of its market value in the past five months.
In the fine print... the terms of the transaction involve the purchase of equity units, and...
pay a fixed annual rate of 11% and have a mandatory conversion into common shares. The 11% yield underscores the severity of Citigroups SIV & CDO situation.
Or Good Bye?... CDO's have already taken losses of at least $47.2 billion.
JPMorgan Chase analysts predict losses on CDO collateralized debt obligations at the world's biggest banks may double to $77 billion.
Losses marketwide on CDOs linked to U.S. mortgages will reach about $260 billion. How much could they lose?
Merrill $13.3 billion; Citigroup, $10.6 billion; UBS $8.6 billion; Deutsche Bank $5.1 billion; Goldman Sachs $5.1 billion.
CLO Collateralized loan obligations, which repackage LBO buyout loans and other high yield company debt, may have already lost $45 billion of value.
Bond insurers including Ambac Financial and MBIA, which have "taken few reserves," own CDOs that have had $29 billion in losses.
Of Little Reserve with No Takers... Deutsche Bank AG analysts:
SIVs have lost as much as 30% of their net asset value. SIV assets have shrunk by at least $75 billion since July to $320 billion, according to Moody's.
Yesterday, HSBC said it would bail out two SIVs by providing up to $35 billion of financing to avoid a fire sale of their assets.
Today, MBIA, the largest bond insurer, is winding down its structured investment vehicle after failing to find buyers for the SIV's short term debt since August.
MBIA has shrunk its Hudson Thames Capital SIV to about $400 million from $2 billion through asset sales to bondholders. Hattip to Bloomberg, Breifing.com & WSJ.
On August 16th Countrywide drew down its $11.5 Billion credit line, then got a $10 Billion stock buy from B of A; and secured another $15 Billion in credit lines.
Sounds like some of the desperate homeowners out there, but did you know...
Lenders have turned to the FHLB banks as two main sources of funding, short term IOUs backed by mortgages and mortgage bond sales, began to dry up in August.
The Atlanta FHLB has made $51.1 billion in advances to Countrywide as of Sept. 30, representing 37% of the bank's total outstanding advances.
In a letter sent yesterday to Ronald Rosenfeld, chairman of the Federal Housing Finance Board, which regulates the 12 regional home-loan banks...
Sen. Charles Schumer said "the loans being pledged by Countrywide to secure these advances may pose a risk to the safety and soundness of the'12 FHLB home loan banks."
Sen Schumer is concerned that mortgages pledged by Countrywide to secure its borrowings...
"may pose a risk to the safety and soundness of the FHLB system as a whole."
Schumer's letter urged Rosenfeld to review the Atlanta bank's collateral evaluation policies and Countrywide's pledged collateral.
The Nattering One muses... shouldn't the collateral have been reviewed under rigorous standards up front?
I know if I went to get a loan, it sure as shit would be. And is the Fed reviewing the collateral pledged at the discount window?
Oh, thats right, I forgot, the Fed is accepting MBS, Credit Card and Consumer Loan Debt, even boat loans.
That puts the Nattering One at ease, we can all rest assured that Countrywides collateral pledged to the FHLB is of the utmost in quality. Oh yeah....
Where's Your Sign? ... Philly Fed Head Plosser expects:
the decline in housing activity to bottom out by the end of Q2 2008 and believes that unemployment may rise to about 5% next year.
"I am anticipating the economy to grow more slowly in the coming months, despite the (FOMC's) latest reduction in the fed funds rate target .
While the inflationary signs in recent months have been encouraging, I do not think we are in a position to be sanguine."
Spillover? Say What? Plosser indicated that the ongoing adjustment of financial markets could lead to "more significant spillovers" to the broader economy.
Here's Your Sign... For the past thirty years, deliveries of motor homes and travel trailers have dropped before each decline in the U.S. economy.
The University of Michigan forecast of a 4.8% decline through 2008 comes on the heels of the industry's best year in three decades.
Winnebago led motor-home sales declines through the first nine months with a 7.1% drop, including a 20% plunge for September.
Motor home sales also fell in 2005 and 2006, while shipments of travel trailers rose enough to offset the decline.
Now sales of trailers, more popular with lower income buyers, are dropping as well.
A Case for Housing Price Shillers & Shivers...
The S&P/Case-Shiller National Home Price Index fell 1.7% since June, marking the largest quarterly decline in the index's 21 year history.
YOY: Prices of existing U.S. single-family homes slumped 4.5% in Q3. 20 metropolitan area index down 4.9%, 10 metropolitan area index down 5.5%.
Good Buy? ... Yesterday Citi shares hit a five year low. Today, the Abu Dhabi Investment Authority (ADIA)...
made a $7.5 billion deal to buy Citigroup shares. Immediately, Punk Ziegel upgraded Citigroup to buy from market perform.
Citi, which could book $17.8 billion in second-half credit-market losses, said ADIA would buy 4.9% of stock...
eventually becoming the largest shareholder of a bank that has lost 42.5% of its market value in the past five months.
In the fine print... the terms of the transaction involve the purchase of equity units, and...
pay a fixed annual rate of 11% and have a mandatory conversion into common shares. The 11% yield underscores the severity of Citigroups SIV & CDO situation.
Or Good Bye?... CDO's have already taken losses of at least $47.2 billion.
JPMorgan Chase analysts predict losses on CDO collateralized debt obligations at the world's biggest banks may double to $77 billion.
Losses marketwide on CDOs linked to U.S. mortgages will reach about $260 billion. How much could they lose?
Merrill $13.3 billion; Citigroup, $10.6 billion; UBS $8.6 billion; Deutsche Bank $5.1 billion; Goldman Sachs $5.1 billion.
CLO Collateralized loan obligations, which repackage LBO buyout loans and other high yield company debt, may have already lost $45 billion of value.
Bond insurers including Ambac Financial and MBIA, which have "taken few reserves," own CDOs that have had $29 billion in losses.
Of Little Reserve with No Takers... Deutsche Bank AG analysts:
SIVs have lost as much as 30% of their net asset value. SIV assets have shrunk by at least $75 billion since July to $320 billion, according to Moody's.
Yesterday, HSBC said it would bail out two SIVs by providing up to $35 billion of financing to avoid a fire sale of their assets.
Today, MBIA, the largest bond insurer, is winding down its structured investment vehicle after failing to find buyers for the SIV's short term debt since August.
MBIA has shrunk its Hudson Thames Capital SIV to about $400 million from $2 billion through asset sales to bondholders. Hattip to Bloomberg, Breifing.com & WSJ.
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