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Reply #14: Another Bankster Bailout? Sure sounds like it [View All]

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Ichingcarpenter Donating Member (1000+ posts) Send PM | Profile | Ignore Wed Jun-01-11 06:03 AM
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14. Another Bankster Bailout? Sure sounds like it
Falling Home Prices Hit Big Banks, Fannie, Freddie

So what about the banks? Sure, they took huge write-downs already, but there is clearly more pain to come, especially given that this report out today is actually a three month running average based on home sale closings in March, so really you could say the whole thing is based on sales contracts signed around six months ago. We've seen considerably more housing weakness since then.

"All will have to take new markdowns if these price pressures continue, which everything points to the fact that it will," says Peter Boockvar at Miller Tabak. "Bank balance sheets are still cluttered with mortgage loans, and they are still being asked to take back bad mortgages from those that bought them, like Fannie Mae and Freddie Mac, so the lower home prices go, the risk rises that another round of balance sheet write downs may be necessary."

And speaking of Fannie and Freddie (and I'll throw in private label and FHA), when you consider the enormous volume of bank-owned (REO) inventory of foreclosed properties they're holding....

"If we do not see a meaningful recovery in home prices by the end of the year, we may need to contemplate impairment charges on first liens owned by banks and wholesale write-downs of second lien exposures. This implies solvency issues for BAC , WFC , JPM and C , and big losses for the U.S. government and private investors," says Chris Whalen of Institutional Risk Analytics.

Solvency issues eh? You mean mark-to-market suspension was just another way to lie?


Exactly as I've noted - this sort of lying is not only pernicious it's ridiculously dangerous, as eventually the truth always shows up. When you get to the point that you can't pay the light bill any more the lies are not only exposed but the damage you allowed to accrue by pretending and dissipating further value during that time makes the eventual losses worse.

Everyone remembers that Committee Meeting in 2009 with Kanjorski, right? I sure do. It marked the bottom in the stock market nearly to the day.

And if, as I have repeatedly said I believe since, it proves to have been nothing but a pack of BS and game-playing for the benefit of those banksters, then the former value at 666 was in fact too high as the dissipation since will have to be accounted for as well.

Buckle up folks.

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