WaMu Sinking in Dead Pool
What does he know? Wells Fargo #5 US Bank, #2 US Home Lender, Chairman Richard Kovacevich thinks the Fed will cut Fed funds 25bps and the discount window rate by 50 to 75bps.
Answer: The Fed is owned and controlled by the member banks. Kovacevich is the San Francisco Fed bank's appointee serving on the Federal Advisory Council.
Bitter Cup O Joe... Shares of the world's largest chain of coffee shops, Starbucks...
were downgraded to neutral from buy at Goldman Sachs on concern over U.S. competition and consumer demand.
WaMu crumbling... WaMu said it will write down the value of its home lending unit by $1.6 billion...
slash its dividend by 73% or $1.4 billion. and sell $2.5 billion of convertible stock to raise desperately needed reserve capital.
Provisions for bad loans will be $1.6 billion vs $1.3 billion previously predicted, with Q1 projections rising to $2 billion.
The biggest US S&L forecast a loss for Q4 and plans to close 190 of 336 home loan centers, laying off 2600 (22% of the home loan unit) or 6% of total workforce.
Stock down 10% on the news, YTD -60%, the worst performer in the KBW Bank Index.
Fitch's & Moody's downgraded WaMu's credit rating from A to A-, citing deteriorating mortgage assets. Citibank downgraded the stock to sell.
Moody's: "Credit losses from WaMu's mortgage operations will be noticeably higher than previously estimated,'and the company's profitability won't begin to recover until 2010."
Washington Mutual estimates that industrywide home loan originations will shrink 40% in 2008 to $1.5 trillion vs $2.4 trillion this year.
The S&L plans to cease lending through its subprime mortgage channel. The usual suspects, Lehman Brothers, Morgan Stanley, Credit Suisse and Goldman Sachs are managing the $1 billion convertible stock sale.
The Tax Man DOH!!! H&R Block said the results for Q2 were preliminary...
as it had to delay the official release of its financial report after hiring a new accounting firm, Deloitte & Touche.
H&R Block expects its Q2 net loss to widen to $502.3 million vs $156.5 million on the sale of $3 billion in mortgage loans by the company.
The company said shareholders' equity, or net worth, now stands at $544.3 million, down from $1.4 billion at the end of April.
The company's bank credit lines require it to maintain an adjusted net worth of at least $650 million. Read again slowly.
The delay is convenient because it gives the company a few more days to figure out what to say...
about the fact that it is evidently in violation of its own bank covenants.
The Nattering One muses... FNMA, FHLMC, UBS, BofA, Citibank, Countrywide, WaMu, soon to be joined by Wells Fargo.
All scrambling to raise capital to meet rising reserve requirements, while hoarding non performing loans on the books to erode stockholder equity.
Speaking of shrinking stockholder equity...
As reported previously, the REO departments and the realtors handling the bank owned properties for these lenders are doing the stock holders no favors.
The best analogy I can give is, the default and foreclosure flood waters are rising.
The realtors and REO depts are screaming forget the boots (shareholder's equity), save the watches (real estate prices).
The lenders have both arms raised in the air, full of foreclosed properties.
They are desperately clutching these plunging knives for fear of cratering real estate price levels further.
The water is rising higher, the number of watches is growing as is their weight, the lenders sink further.
One of two things can happen, the weight pushes them under water and either drowns them or breaks their back, or the lenders reach the price point of capitulation.
Thats when they say, forget the watches, lets save the boots and ourselves, and they let go of all those REO's at whatever price the market will bear.
We see that occuring sometime after the new year as Q1 and Q2 internal audits reveal the carnage and shareholder lawsuits, force the CEO's hands.
Revised Dead Pool #1 Citibank, #2 Countrywide, #3 WaMu, #4 FNMA or FHLMC, #5 Wells Fargo.
Answer: The Fed is owned and controlled by the member banks. Kovacevich is the San Francisco Fed bank's appointee serving on the Federal Advisory Council.
Bitter Cup O Joe... Shares of the world's largest chain of coffee shops, Starbucks...
were downgraded to neutral from buy at Goldman Sachs on concern over U.S. competition and consumer demand.
WaMu crumbling... WaMu said it will write down the value of its home lending unit by $1.6 billion...
slash its dividend by 73% or $1.4 billion. and sell $2.5 billion of convertible stock to raise desperately needed reserve capital.
Provisions for bad loans will be $1.6 billion vs $1.3 billion previously predicted, with Q1 projections rising to $2 billion.
The biggest US S&L forecast a loss for Q4 and plans to close 190 of 336 home loan centers, laying off 2600 (22% of the home loan unit) or 6% of total workforce.
Stock down 10% on the news, YTD -60%, the worst performer in the KBW Bank Index.
Fitch's & Moody's downgraded WaMu's credit rating from A to A-, citing deteriorating mortgage assets. Citibank downgraded the stock to sell.
Moody's: "Credit losses from WaMu's mortgage operations will be noticeably higher than previously estimated,'and the company's profitability won't begin to recover until 2010."
Washington Mutual estimates that industrywide home loan originations will shrink 40% in 2008 to $1.5 trillion vs $2.4 trillion this year.
The S&L plans to cease lending through its subprime mortgage channel. The usual suspects, Lehman Brothers, Morgan Stanley, Credit Suisse and Goldman Sachs are managing the $1 billion convertible stock sale.
The Tax Man DOH!!! H&R Block said the results for Q2 were preliminary...
as it had to delay the official release of its financial report after hiring a new accounting firm, Deloitte & Touche.
H&R Block expects its Q2 net loss to widen to $502.3 million vs $156.5 million on the sale of $3 billion in mortgage loans by the company.
The company said shareholders' equity, or net worth, now stands at $544.3 million, down from $1.4 billion at the end of April.
The company's bank credit lines require it to maintain an adjusted net worth of at least $650 million. Read again slowly.
The delay is convenient because it gives the company a few more days to figure out what to say...
about the fact that it is evidently in violation of its own bank covenants.
The Nattering One muses... FNMA, FHLMC, UBS, BofA, Citibank, Countrywide, WaMu, soon to be joined by Wells Fargo.
All scrambling to raise capital to meet rising reserve requirements, while hoarding non performing loans on the books to erode stockholder equity.
Speaking of shrinking stockholder equity...
As reported previously, the REO departments and the realtors handling the bank owned properties for these lenders are doing the stock holders no favors.
The best analogy I can give is, the default and foreclosure flood waters are rising.
The realtors and REO depts are screaming forget the boots (shareholder's equity), save the watches (real estate prices).
The lenders have both arms raised in the air, full of foreclosed properties.
They are desperately clutching these plunging knives for fear of cratering real estate price levels further.
The water is rising higher, the number of watches is growing as is their weight, the lenders sink further.
One of two things can happen, the weight pushes them under water and either drowns them or breaks their back, or the lenders reach the price point of capitulation.
Thats when they say, forget the watches, lets save the boots and ourselves, and they let go of all those REO's at whatever price the market will bear.
We see that occuring sometime after the new year as Q1 and Q2 internal audits reveal the carnage and shareholder lawsuits, force the CEO's hands.
Revised Dead Pool #1 Citibank, #2 Countrywide, #3 WaMu, #4 FNMA or FHLMC, #5 Wells Fargo.
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