Category Archives: Credit markets

Jurgen Stark = Credit Anstalt 2.0 (and Euromarkets Reacting Accordingly)

It is remotely possible that the EU officialdom will temporarily reverse the train wreck that started last Friday with the resignation of Jurgen Stark from the ECB. That was seen as a sign that Germany has adopted bailout fatigue as official policy. That in turn would mean that Greece will not get any more money lifelines (which as commentators predicted some time ago, means a likely banking crisis, which was the reason for them not to exit the Eurozone).

Mr. Market is giving a big vote of no confidence in European leadership, although the FTSE has reversed some of its early-session losses.

Banks Have Hissy Fit, Cancel Meeting With Attorneys General Due to FHFA Mortgage Litigation

Yours truly has said for months that the negotiations among major banks, state attorneys general, and Federal regulators to reach a settlement of various types of mortgage liability were not going to result in a meaningful deal. Further confirmation of our views came today, via Time’s Swampland (hat tip Lisa Epstein).

The five biggest banks cancelled a session today with the state attorneys general.

Payday Loans Are Dead! Long Live Payday Loans!

In yet another example of finance double-speak, major financial players have moved into that netherworld of the functional equivalent of loansharking known as payday lending.

While in theory short-term loans can be a boon to cash-strapped individuals, in practice, the usurious interest of payday loans result in many borrowers falling into a debt treadmill

More Proof of DoJ Lack of Interest in Enforcing the Law: The Case of the Kickback-Demanding Banks

In this world of rampant banking miscreance, it may seem hard to get worked up about $6 billion in impermissible kickbacks. But this is a case of a clear-cut legal violation, with the particulars sent to the Department of Justice by the HUD Inspector General’s office on a silver platter. And one of the alleged big bad actors was the ever-sanctimonious Wells Fargo.

American Banker has a detailed write-up of a kickback scheme between major banks who were mortgage originators, in particular Wells, Citigroup, Countrywide, and SunTrust and mortgage insurers.

“Welcome to Phase 2 of the Eurozone Crisis”

By Richard Baldwin, Professor of International Economics, Graduate Institute, Geneva. Cross posted from VoxEU

The Eurozone crisis moved into phase 2 this August when the contagion spread to Italian debt, Spanish debt, and most EZ banks. Radical ECB actions prevented a disaster. This column argues that the ECB emergency policies are unsustainable politically and perhaps legally. The only policy combination that EZ leaders could agree on quickly enough involves political cover for ECB bond buying in exchange for national fiscal reforms of the German “debt brake” type.

Quelle Surprise! Partitioning Bank Retail and Wholesale Operations Won’t Cost Much

One of the most annoying aspects of Life After the Crisis is the utter refusal of banks to take responsibility for the costs they have imposed on the rest of us. This is directly related to their efforts to fight any and all interference with their God-given right to loot.

Philip Pilkington: The Irish Establishment – Mad as Goats?

By Philip Pilkington, a journalist and writer living in Dublin, Ireland

Learn to say the same thing
What defeats people is a double confession
One time they will confess one thing
And the next they will confess something else
Talk to them, they will say:
Learn to say the same thing
Let us hold fast to saying the same thing”
– Cat Power, ‘Say’

In Ireland we used to measure our economic performance based on GDP (GNP actually, but we won’t go into that). Pretty standard fare for any advanced economy, really. Not so anymore. These days we measure our economic performance based on the government’s ability to extract tax revenue out of the general populace to pay for extortionate loans to our EU masters.

The More You Look, The More Bank Criminality You Find in Mortgage Land

hate giving such short shrift to two new mortgage stories today, but the news accountscontain a good deal of the critical information.

First is that the Associated Press reports that Guiford County, North Carolina register of deeds Joe O’Brien has found evidence of robosigning in his filed dating back to 1998. This is significant because:

Regulators Ask Bank of America About Contingency Plans

The Feds appear to be taking the risk that Bank of America might go wobbly seriously, but are they taking it seriously enough?

We quoted Tom Adams on the matter of the Buffett investment in the Charlotte bank:

This is being spun as good news for BofA but it is really a sign of just how much trouble they are in. This is step one of their rescue. The powers that be felt they could not wait any longer with BofA so damaged, and that a run or crisis was one bad news day away (earlier this week I predicted some rescue action within 2-3 weeks). Step two, some additional lifeline will show up in September. Step three will be a sale of Merrill.

Some readers rejected the idea that a Merrill separation would ever be in the cards, given that Bank of America has made a great deal of noise about how it has integrated the securities firm. But the fact is that Merrill, or any of the major capital markets players would be well nigh impossible to resolve.

Nevada Lawsuit Shows Bank of America’s Criminal Incompetence

It’s pretty remarkable that Mr. Market shrugged off the devastating implications of the amended lawsuit filed by the Nevada attorney general, Catherine Masto against various Bank of America entities. As we’ve stated before, litigation by attorney general is significant not merely due to the damages and remedies sought, but because it paves the way for private lawsuits.

And make no mistake about it, this filing is a doozy. It shows the Federal/state attorney general mortgage settlement effort to be a complete travesty. The claim describes, in considerable detail, how various Bank of America units engaged in misconduct in virtually every aspect of its residential mortgage business.

More Legal Woes for BofA: Homeowners Opposes $8.5 Billion Settlement; Different Trustee Sues Over Reps and Warranties

Bank of Americas’s stock beat a bit of a retreat today as its so called $8.5 billion settlement came under increased fire. Frankly, the number of objections filed prior to late afternoon yesterday and today meant it was dead in its current form. At best, it would take a two or three years and a bigger price tag for any deal to be concluded (although we are in the skeptics’ camp, particularly as far as the currently overly broad waiver of liability is concerned).

Nevertheless, the latest developments pound more nails into the coffin.

Memo to Ezra Klein: Doing Something Stupid Isn’t Smart

The Administration appears to be gearing up to try to Do Something on the housing and general economy front. Readers have no doubt wised up to the fact that Doing Something, Obama Administration version, generally consists (at best) of largely cosmetic measures accompanied by lots of handwaving. The latest sightings include yet another effort to push the 50 state attorney general settlement over the line by the phony deadline of Labor Day and more chatter among by members of the Democratic hackocracy in favor of an expanded Fannie/Freddie refi program as a way to fix the housing market. That idea appears to be moving front burner, since ~~Baghdad Bob~~ Ezra Klein has decided to weigh in.

FDIC Objects to $8.5 Billion BofA Settlement (Updated)

Ooh, this is getting to be fun. Now the FDIC has weighed in too.

Can’t wait to get my hands on the filing (any readers who can get it are encouraged to provide a link or send a pdf so I can upload it).