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TraderJoe
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Credit Derivatives & Subprime Crisis

August 1st, 2008, 11:50 am

QuoteCapitalisim will never fail when socialism is there to bail it out! Ralph Nader's father.
 
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Traden4Alpha
Posts: 23951
Joined: September 20th, 2002, 8:30 pm

Credit Derivatives & Subprime Crisis

August 1st, 2008, 12:27 pm

QuoteOriginally posted by: TraderJoeMerrill's meltdown.QuoteAfter the binge comes the purge. Merrill Lynch (MER) announced after the close of trading on July 28 that it had sold $11.1 billion in collateralized debt obligations (CDOs), or nearly 60% of its exposure to mortgage-related securities, to private equity firm Lone Star Capital Management for $6.7 billion as part of its latest effort to repair its tattered balance sheet. The cost, however, was high. The securities Merrill unloaded, known as super-senior asset-backed CDOs, had a face value of $30.6 billion, meaning the company received only 22¢ on the dollar for the toxic assets. Even including prior markdowns totaling roughly $41 billion, Merrill will have to write off another $4.4 billion to get the assets off its books.BusinesWeek. Merrill's maneuver is even worse than it looks because Merrill financed 75% of that sale to Lone Star Capital Management. In essence, Lone Star Capital bought the upside of these CDOs and if they fall more in value, Merrill is left holding the bag (again). This looks like just another off-balance-sheet sleight-of-hand.
 
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TraderJoe
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Credit Derivatives & Subprime Crisis

August 2nd, 2008, 1:37 pm

Dear God, one more bubble before I die.
 
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TraderJoe
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Credit Derivatives & Subprime Crisis

August 4th, 2008, 4:45 pm

QuoteThe Sunday TimesAugust 3, 2008Royal Bank of Scotland poised for biggest loss in UK banking historyBritain's second largest bank expected to reveal it has lost £1 billion in first halfIain Dey THE Royal Bank of Scotland is poised to unveil the biggest loss in UK banking history after taking a hit of almost £6 billion from the credit crisis. Britain’s second-largest bank is this week expected to reveal a pre-tax loss of at least £1 billion for the first six months of the year, with analysts warning it could slide to as much as £1.7 billion in the red. The loss would be roughly five times higher than the deficit racked up by Barclays in 1992 at the height of the last recession. RBS chairman Sir Tom McKillop is already under pressure from investors after the bank’s recent £12 billion rights issue. His chief executive, Sir Fred Goodwin, who marks 10 years at the bank this weekend, also faces shareholder scrutiny. The RBS figures will cap another terrible week for Britain’s biggest banks as the credit crisis continues to take its toll. HSBC is expected to write off almost $7 billion (£3.5 billion) in bad debts at its struggling American business from the first six months of the year. The charge will drag its profits roughly 30% lower to about $10 billion. Barclays is forecast to reveal a 35% drop in profits to £2.6 billion as bad debts around the world, particularly in South Africa, combine with further losses from its exposure to the credit markets. Some analysts believe Barclays could chalk up another £3 billion of writedowns, in addition to the £1.7 billion it recorded in the first quarter. The only bright spot will be results from Standard Chartered, which makes its money in emerging markets, particularly in Asia. The bank is expected to announce a 21% jump in profits to $2.4 billion. Across the banking sector, analysts and investors are fretting about rising bad debts. Figures from HBOS and Lloyds TSB last week revealed that the credit crisis has now worked its way into the real economy, with individuals and companies struggling in almost equal measure. Both banks announced that bad debts had jumped more than 30%. Alliance & Leicester, which is poised to be sold to Spain’s Santander, revealed that its profits had been wiped out by problems caused by the credit crunch. All Britain’s big banks are considering selling parts of their businesses. HBOS confirmed last week that it was reviewing a number of potential asset disposals, and admitted it had begun to wind down its off-balance-sheet funding vehicle, Grampian. Expectations are mounting that the bank’s Australian business could be put up for sale. RBS is in advanced talks with Allstate, the American insurance group, about a sale of its insurance operations, which include Direct Line and Churchill. Allstate is said to be willing to pay substantially less than the £7 billion asking price attached to the business when RBS put it up for auction in April. However, RBS holds the business on its balance sheet at a carrying value of only £3 billion. Even a sale priced at £5 billion may prove tempting to Goodwin, who has promised investors that he will generate £4 billion of capital from disposals before the end of the year. The £3.6 billion sale of Angel Trains, coupled with the £1 billion sale of Tesco Personal Finance and a handful of smaller deals, are thought to have generated about a quarter of the total target. RBS is also thought to be close to selling an Australian corporate-finance business, acquired when it took over ABN Amro, to Commonwealth Bank of Australia. A sale of Saudi Hollandi Bank could also be on the cards.
 
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TraderJoe
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Credit Derivatives & Subprime Crisis

August 5th, 2008, 12:44 pm

Uh oh.QuoteFreddie Mac chief disregarded warning signs: report Tue Aug 5, 4:17 AM ET (Reuters) - U.S. mortgage market giant Freddie Mac's chief executive dismissed internal warnings that could have protected the company from some of the financial problems now engulfing it, the New York Times said, citing more than two dozen current and former high-ranking executives and others. In 2004, Chief Executive Richard Syron received a memo from Freddie Mac's chief risk officer warning him that the firm was financing questionable loans that threatened its financial health, the paper said.Though the current housing crisis would have undoubtedly caused problems at both companies, Freddie Mac insiders say Syron heightened those perils by ignoring repeated recommendations, the NY Times said.In an interview with the paper, Freddie Mac's former chief risk officer, David Andrukonis, recalled telling Syron in mid-2004 that the company was buying bad loans that would likely pose an enormous financial and reputational risk to the company and the country.Syron received a memo stating that the firm's underwriting standards were becoming shoddier and that the company was becoming exposed to losses, the paper said, citing Andrukonis and two others familiar with the document.But Syron refused to consider possibilities for reducing Freddie Mac's risks, the paper cited Andrukonis as saying."He said we couldn't afford to say no to anyone," the paper quoted Andrukonis as saying. Over the next three years, Freddie Mac continued buying riskier loans, the paper said.Citing many executives, the paper said Syron was also warned that the firm needed to expand its capital cushion, but instead that safety net shrank. Syron was told to slow the firm's mortgage purchases, but they accelerated, the paper said.Those and other choices initially paid off for Syron, who has collected more than $38 million in compensation since 2003, the NY Times said.But when housing prices began declining in 2006, those choices at Freddie Mac proved disastrous.Freddie Mac could not be immediately reached for a comment on the report.
 
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ppauper
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Credit Derivatives & Subprime Crisis

August 5th, 2008, 1:07 pm

QuoteOriginally posted by: TraderJoeone more bubble before I die
 
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TraderJoe
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Credit Derivatives & Subprime Crisis

August 7th, 2008, 2:55 pm

Happy birthday credit squeeze!QuoteIn a series of stories thoughout this week, the FT looks at how the world has changed in the past 12 months and the long-term impact on the global financial system and the world economy.
 
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TraderJoe
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Credit Derivatives & Subprime Crisis

August 7th, 2008, 5:26 pm

Insurer AIG reports $5.4bn lossQuoteAmerican International Group (AIG) has reported a another quarterly loss as profits were wiped out by writedowns on mortgage-related investments. For the April to June period, the world's biggest insurer incurred a net loss of $5.36bn (£2.75bn) compared with a profit of $4.28bn a year ago. AIG sacked chief executive Martin Sullivan in June and replaced him with ex-Citigroup banker Robert Willumstad. Mr Willumstad blamed the poor housing and credit markets for AIG's troubles.
 
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TraderJoe
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Credit Derivatives & Subprime Crisis

August 7th, 2008, 5:26 pm

QuoteTOP WRITEDOWNS Billions of dollarsCitigroup 46.40Merrill Lynch 36.80UBS 36.70AIG 20.23HSBC 18.70RBS 16.50IKB 14.73Bank of America 14.60Morgan Stanley 11.70Deutsche Bank 11.40Ambac 9.22Barclays 9.20Wachovia 8.90MBIA 8.41Credit Suisse 8.13Wasington Mutual 8.10HBOS 7.50Source: Reuters
 
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NoelWatson
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Joined: September 14th, 2005, 10:56 am

Credit Derivatives & Subprime Crisis

August 8th, 2008, 8:19 am

QuoteOriginally posted by: TraderJoeQuoteTOP WRITEDOWNS Billions of dollarsCitigroup 46.40Merrill Lynch 36.80UBS 36.70AIG 20.23HSBC 18.70RBS 16.50IKB 14.73Bank of America 14.60Morgan Stanley 11.70Deutsche Bank 11.40Ambac 9.22Barclays 9.20Wachovia 8.90MBIA 8.41Credit Suisse 8.13Wasington Mutual 8.10HBOS 7.50Source: Reuters WDCI page on Bloomberg is showing different numbers
 
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TraderJoe
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Credit Derivatives & Subprime Crisis

August 8th, 2008, 12:51 pm

QuoteOriginally posted by: NoelWatson WDCI page on Bloomberg is showing different numbersPost 'em up.
 
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TraderJoe
Posts: 11048
Joined: February 1st, 2005, 11:21 pm

Credit Derivatives & Subprime Crisis

August 8th, 2008, 12:53 pm

QuoteFannie Mae loses $2.3B in quarter as defaults rise By ALAN ZIBEL, AP Business Writer 1 hour, 11 minutes agoWASHINGTON - Mortgage finance company Fannie Mae swung to a second-quarter loss that was more than triple what Wall Street expected as conditions in the housing market continued to deteriorate. The Washington-based company, the largest U.S. buyer and backer of home loans, said Friday it lost $2.3 billion, or $2.54 a share, for the quarter that ended June 30. The loss compares with profit of $1.95 billion, or $1.86 a share, in the period last year.Analysts surveyed by Thomson Financial had expected a loss of just 68 cents a share.And it appears more bad news is ahead."Volatility and disruptions in the capital markets became even more pronounced in July," Daniel H. Mudd, president and chief executive officer, said in a statement. "In addition, credit performance has continued to deteriorate and, based on our experience in July, we anticipate further increases in our combined loss reserves."Shares fell $1.11, or about 11 percent, to $8.84 in premarket trading.To preserve cash, Fannie Mae slashed its dividend to 5 cents a share from 35 cents a share. The move is expected to preserve $1.9 billion in capital through 2009.The company also said it would hike fees, cut operating costs by 10 percent by the end of next year and stop purchasing so-called Alt-A loans, made to borrowers with solid credit but little proof of their income, or small or no down payments.Fannie Mae and its smaller government-sponsored sibling, Freddie Mac, hold or guarantee nearly half of outstanding U.S. mortgage debt.While the two companies generally had higher standards for lending than the subprime mortgage companies that started to go belly-up last year, they lowered their lending standards during the housing boom and bought securities linked to riskier loans.Freddie Mac on Wednesday wrote down the value of those investments by $1 billion and set aside $2.5 billion for losses from soaring delinquencies and foreclosures while posting a loss of $821 million for the quarter.Worries that Fannie and Freddie will be unable to absorb such losses caused the government to step in last month. Under the housing bill signed by President Bush last week, the government may boost increase lines of credit to Fannie and Freddie or buy their stock.Alt-A's on the block now.
 
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TraderJoe
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Joined: February 1st, 2005, 11:21 pm

Credit Derivatives & Subprime Crisis

August 8th, 2008, 2:16 pm

Hall of Shame.
 
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TraderJoe
Posts: 11048
Joined: February 1st, 2005, 11:21 pm

Credit Derivatives & Subprime Crisis

August 13th, 2008, 1:53 am

Subprime losses deepen.QuoteUBS has underlined its status as one of the biggest losers in the credit crunch by announcing £5.1bn of fresh writedowns and its fourth quarterly loss in a row.The Swiss bank said this morning that it made a net loss of 358m Swiss francs (£173m) in the second quarter of this year. The loss was caused by its continuing exposure to the US housing market, and a huge outflow of funds as wealthy individuals took their money elsewhere.The new writedowns push UBS's total since the crisis started to $42bn, bringing it closer to Citigroup ($47bn) and Merrill Lynch ($46bn).The damage caused by the ongoing sub-prime crisis also appears to have spread beyond UBS's investment bank to other divisions, with a total of SFr43.8bn leaving the business, leaving it with SFr2.7 trillion under management. UBS also said it had set aside $900m to cover the cost of settling legal action brought by US investors who claimed they were wrongly sold auction-rate securities before the market collapsed.Although the bank cut its operating costs by 18% in the quarter, partly by slashing thousands of jobs, it does not expect to see an upturn soon. Instead it issued a grim warning that the rest of 2008 will be just as tough as the last six months"The positive sentiment seen at the end of first quarter 2008 that the credit crisis may be easing was short-lived, as trading conditions deteriorated significantly in the second half of May, in particular for assets related to US residential real estate as well as other structured credit positions," said UBS, in a sign that the credit crunch still has some way to run.Shares in the bank fell by 3% in early trading.In an attempt to recover its fortunes, UBS is splitting its private banking, investment banking and asset management arms into three separate divisions.
 
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TraderJoe
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Joined: February 1st, 2005, 11:21 pm

Credit Derivatives & Subprime Crisis

August 13th, 2008, 1:56 am

QuoteInvestors fear another big financial firm failure.From FT.com Published: August 11 2008 23:30 | Last updated: August 11 2008 23:30Institutional investors expect another big financial firm will collapse within the next six months in the continued fallout from the credit crunch, new research has shown.Nearly 60 per cent of US and European institutional investors surveyed by Greenwich Associates believe there will be such a failure within the next six months. Another 15 per cent think it will happen in six-12 months.
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