Archive for the ‘Lost’ tag
Wachovia Settles One Suit, Confronts Money Laundering Charges
Wachovia Corporation, the rising Charlotte North
Carolina banking star is having a very bad April.
On April 14 the bank announced it had lost $350
million or $0.20 per share during the first quarter of 2008.
Then this past Friday Wachovia got hit with a double whammy.
In the morning it was announced that Wachovia Corp. had agreed to a
settlement with The Office of the Comptroller of the Currency (OCC) of as
much a $144 million to end an 18 month investigation into its role in a
telemarketing scheme that allegedly affected between 350,000 and 500,000
Wachovia customers, many of them elderly.
Then, according to a Wall St. Journal story, federal prosecutors are
investigating the bank as part of “a broad probe of alleged
laundering of drug proceeds by Mexican and Colombian
money-transfer companies…”
The Trillion Dollar Bailout [Blown Mortgage]
If Fannie and Freddie fail the price tag is somewhere between $400 billion and a shade over a trillion of taxpayer money to bail them out. How do you like them apples? A trillion bucks? Big enough to sink the government’s AAA rating. Big enough to make LTCM look like child’s play. This is some scary stuff folks.
Some comparisons shall we?
Clinton’s proposed universal health-care coverage
10-15 years of Obama’s plan @ $50-65 billion per year
Cost of the Iraq war
From CNN’s trillion-dollar mortgage time-bomb:
Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor’s recently placed an estimated price tag on this worst case scenario — $420 billion to $1.1 trillion of taxpayer’s money.
This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980’s and early 1990’s. That cost taxpayers about $250 billion in today’s dollars.
S&P added that saving Fannie (FNM) and Freddie (FRE, Fortune 500) might cost so much that the federal government’s AAA credit rating, the top possible rating, might even be at risk. If that was lost, then all federal government borrowing would become more expensive.
But other experts expect that declining home values will force more borrowers who have a Fannie- or Freddie-backed loan to stop making payments in the coming months, rather than continuing to make payments on a home now worth less than their loan balance.
Rising job losses may also make it difficult for other borrowers who formerly had good credit to stay current on their mortgage payments.
“The real fundamental problem is real estate prices have been falling and they might fall substantially more,” said Robert Shiller, a Yale University economist who argued for years that a bubble was forming in real estate prices. “OFHEO and Fannie and Freddie never considered the possibility of a massive real estate correction.”
Some economists suggest that if investors start to see problems in the performance of loans backed by Fannie and Freddie, they’ll dumping them. And that would force the federal government to step in.
“I would say there’s at least a 50-50 chance of some sort of bailout. I’m not saying it will necessarily cost $1 trillion, but they’ll need some kind of help, and it very well could happen this year,” said Dean Baker, co-director of the Center for Economic and Policy Research
Investors are signaling growing concern as well. The yield premium for securities backed by Freddie and Fannie compared to the yield on Treasury bills has grown to about 2.25 percentage points from 1.7 percentage points at the beginning of the year. That’s a sign that the investors see a greater risk of Fannie and Freddie running into bigger problems.
I’m guessing there’s a school, a child, a homeless person, a neighborhood, a teacher, a firefighter, a veteran that could all use more help - I hope we don’t end up costing them that help by recklessly throwing Fannie and Freddie in front of this train.
And Fannie and Freddie’s role in the mortgage and real estate markets is likely to grow, as Congress recently allowed them to back larger mortgages, up to $729,750, up from the previous limit of $417,000.
The Office of Federal Housing Enterprise Oversight (OFHEO), which regulates both firms, also recently lowered the capital requirements for Fannie and Freddie in an effort to pump $200 billion more into the credit markets.
The new loan limits will increase the risks and losses for Fannie and Freddie, said Wagner and other experts.
Rolling Up the Sidewalks [St. Paul Real Estate]
The Ordway on a Saturday night.
People out enjoying the spring weather and the Minnesota Wild game, they lost. You can’t hear it by looking at the picture but there is a tail gate party on the top of the parking ramp too.
The bars were packed. This is PATi on West 7th, Saturday night. Sports, theater and drinks just seem to go together.
St. Paul, Minnesota is kind of like a big city and kind of like a small town. They say we roll our sidewalks up early in the evening. That has not been my experience. There are places to go and things to do at night. People like me can even wonder around with cameras at night and take pictures. The pictures I can take are like looking at a city but the way people will stop and talk is more like a small town.
I apologize to anyone who might be a shadow in one of my pictures for not asking permission before posting.
