As most readers probably know, subprime mortgage broker/lender Countrywide Financial’s CEO Angelo Mozilo, which posted a massive loss for its third quarter, predicted a return to profit this quarter. Not only did the stock rise 32% that day, but CFC’s announcement was perceived to be such good news that it gave the stock market a […]
Read more...Monoline insurers, such as MBIA, Ambac, and FGIC, are in the business of providing financial guarantees. And one of the products they got involved in guaranteeing was mortgage-related structured credits, much to their peril, as we noted back in August. As subprime losses have mounted, so too have worries about the ability of these guarantors […]
Read more...Nouriel Roubini is a bit self-congratulatory in his latest post, and one can’t begrudge him. He took a lot of heat for his early prediction that the housing market would deteriorate badly and pull down the broader economy. So far, since growth has slowed only somewhat, some economists still hold out hope that the impact […]
Read more...At this juncture, the question of “Whither Merrill?” is largely rhetorical. We won’t know for certain until the fourth quarter results come in, and for all firms, those are likely to be telling. However, consider the following: Some securities analysts already estimate that based on further deterioration in the mortgage markets since September 30, Merrill […]
Read more...Even though I have said some unkind things about the Economist, once you get outside the world of politics, it is a very good guide to leading edge conventional wisdom. What do I mean by “leading edge conventional wisdom?” It is the sort of thinking dispensed by well regarded think tanks and private sector experts […]
Read more...The New York Times got a hold of a hum-dinger: that Merrill Lynch’s CEO Stanley O’Neal had called G. Kennedy Thompson, the CEO of America’s fourth largest bank, Wachovia, last week to feel out a possible merger. Thompson’s reaction was cool, and his stated reason was that the Charlotte, NC bank was still digesting earlier […]
Read more...So this is how oligopolies are maintained, via extortion and threats. From the Wall Street Journal: Connecticut’s attorney general said Friday that he has subpoenaed the nation’s three largest debt-rating agencies as part of an investigation into possible anticompetitive practices. Attorney General Richard Blumenthal confirmed that his office issued subpoenas Oct. 10 to Standard & […]
Read more...I am beginning to feel like announcer at a prizefight where it’s obvious that one boxer is hopelessly outmatched, but the contest will still go a full twelve rounds due to the stubbornness of the underdog and the failure to land a knock-out punch. The SIV plan continues to take body blows, the supporters appear […]
Read more...The inner and even not-so-inner workings of the Beltway frequently escape me. Nevertheless, a complaint made by Charles Schumer, chairman of the Joint Economic Committee, in an interview with the Financial Times, seems truly bizarre. Schumer moans that Paulson isn’t doing enough to help with the subprime crisis because his hands have been tied by […]
Read more...Bloomberg reported that an SIV, called Hudson-Thames Capital Ltd., operated by a subsidiary of MBIA, the world’s largest bond insurer, was having trouble securing funding. Note that Hudson-Thames has not yet breached any financial tests. MBIA has only a modest financial exposure, $15.8 million of capital notes; the bigger issue is the possible damage to […]
Read more...We’ve been having too much fun on other fronts to spend much time on Merrill’s stunning announcement of $8.4 billion in losses for the quarter, which came from a combination of operating losses and writedowns. The reason we’ve taken particular interest in this earnings announcement, aside from the magnitude of the red ink, is that […]
Read more...This invaluable consumer information comes to us courtesy Katie Porter Credit Slips. I think I know what most readers would rather buy…. From Credit Slips: Question: What do phone sex and mortgage servicing have in common? Answer: They both cost $9.99 a minute. This isn’t a joke. It’s a real-life example of the difficulties that […]
Read more...We noted yesterday that we had reservations about Countrywide’s announcement that it was launching a program to modify terms on up to $16 billion of mortgages, However, the stock market appears to believe the initiative will have some impact, since its stock fell 4% today. CNBC (hat tip gaius marius), the Wall Street Journal, and […]
Read more...Hank Paulson must be very unhappy with the Wall Street Journal. While the newspaper briefly fell into line and issued one story that reported that the his pet project, the structured investment vehicle rescue plan, was getting traction, pretty much all its news coverage coverage has been skeptical, and its editorial comments have been downright […]
Read more...The Financial Times reports that rates in the interbank money market are well above normal levels, indicating considerable lender worry, and that the effect of the announcement of the SIV rescue plan appears to have more than offset the anticipation of further interest rate reductions by the Fed. From the Financial Times: The cost of […]
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