Jump to content
House Price Crash Forum
Sign in to follow this  
Guest Shedfish

The Next Shoeshop To Fall?

Recommended Posts

Guest Shedfish

i can't believe something like this can slide off the front page so fast

http://www.housepricecrash.co.uk/forum/ind...showtopic=83309

- the portents for the other holders of this toxic waste are surely not good?

22 cents on the dollar, marked to market.

Banks pressed to follow Merrill debt sale

Leading global banks including Citigroup and UBS on Tuesday faced renewed pressure to write down or sell billions of dollars in toxic assets following Merrill Lynch’s disposal of $30bn in mortgage-related securities at a cut price.

Huge writedowns forecast for banks after Merrill Lynch’s cut-price sale of debt

The banking industry will be forced to take hundreds of billions of dollars of further writedowns on mortgage-backed securities after Merrill Lynch sold $30.6 billion of collateralised debt obligations (CDOs) for only 22 per cent of their face value on Monday, according to a leading US ratings expert.

Freddie Mac and Fannie Mae, the financing groups that underpin America's housing market and, in turn, its broader debt infrastructure, will be hit worst, as they are forced into a combined writedown of about $100 billion (£50.5 billion), the Egan Jones Ratings Company believes.

Share this post


Link to post
Share on other sites

...seems maybe auditors elsewhere at other lenders have a new line in dealing with these write-downs....praying the market returns.....?....but even the 'big man' himself threw out the money lenders.....time for a re run..?..... <_<

Share this post


Link to post
Share on other sites
i can't believe something like this can slide off the front page so fast

http://www.housepricecrash.co.uk/forum/ind...showtopic=83309

- the portents for the other holders of this toxic waste are surely not good?

22 cents on the dollar, marked to market.

Even worse. They have backed 75% of the liablity for this so it has essentially been 5c in the dollar. Thanks to Tickerforum for highlighting this..... :o

http://www.tickerforum.org/cgi-ticker/akcs-www?post=54462

Share this post


Link to post
Share on other sites

http://www.independent.co.uk/news/business...nks-880338.html

Merrill Lynch's decision to sell mortgage derivatives with a face value of $30bn for less than $7bn has raised fears of more write-downs to come across the troubled banking sector.

And as investors debated whether the fire sale marks the bottom of the credit crisis, there was evidence yesterday that US house prices are continuing to fall, further reducing the value of the collateral that underlies hundreds of billions of dollars of these derivatives.

Wall Street has so far lost more than $400bn on investments in so-called collateralised debt obligations (CDOs) and the final tally will not become clear until the housing market stabilises. However, Merrill's sale does put a current market price on securities that have not been changing hands since the credit crisis began.

At 22 cents on the dollar, that is a lower price even than many had feared. Sceptics also pointed out that Merrill had lent the buyer, the private equity firm Lone Star, 75 per cent of the money to do the deal.

Meredith Whitney, the bearish banking analyst at Oppenheimer & Co, called Merrill's sale a "capitulation", while Prashant Bhatia, analyst at Citi, said it would have consequences across the sector. "This is a watershed transaction that provides price transparency. This is the first large-scale CDO transaction that is not a distressed sale."

Analysts said Citigroup, the US banking conglomerate, would now be forced to recalculate the value of its remaining holdings in mortgage derivatives known as collateralised debt obligations, which were valued at its last results at $22.5bn. Deutsche Bank estimated that this could lead to a write-down of another $7bn.

After Citigroup, UBS has the next largest exposure to CDOs, most recently valued at $15.6bn.

In the UK, shares of Barclays and Royal Bank of Scotland were hit, since both have significant holdings of CDOs. Barclays shares fell as much as 9.5 per cent but closed down 4.1 per cent, while RBS stock closed down 2.7 per cent after dropping more than 7 per cent earlier. Barclays has taken smaller write-downs than most other banks, insisting that its assets are of higher quality than those held by rivals. It wrote down £1.7bn on credit holdings in the first quarter and didn't take further significant charges in the second quarter. RBS has already flagged £5.9bn of write-downs on sub-prime related assets and leveraged loans this year.

Whether Wall Street has written down the value of CDOs by enough, or perhaps even by too much, will depend on the numbers of US homeowners who default on mortgages and the price fetched for repossessed homes.

This news just gets even better.

So the bank sold debt which was bought with credit from itself!!!!!

Can this really be legal what the hell are the regulators doing????

Share this post


Link to post
Share on other sites
But the Dow rockets today because the price of oil falls. This confuses me because the reason oil is falling is because USA is in the sh!t - but this is seen as good news.

Not really it's quite easy to understand, they are solely focussed on making a short term profit. That's the name of the game. Manipulate prices enough to boost them, make a quick profit then dump the shares.

Share this post


Link to post
Share on other sites

i think the purchaser will likely recover enough to make the purchase profitable, its not armageddan just a hosuing correction at a certain point houses are worth buying.... most of you would probably be buyers at 50% off some may not you will probably not buy till we are half way up the otherside!!!!

if you want to trade you have to learn how to pull the trigger and to sell.....

Share this post


Link to post
Share on other sites
- the portents for the other holders of this toxic waste are surely not good?

I would expect the accountants for the other holders would be pressuring them to mark to market now that it has been shown that a market does in fact exist. Expect more writedowns and rights issues to follow. Looks like the system is trading whilst insolvent to me.

On the other hand, it could all be good news. AAA is supposed to be a 1:10000 default risk. This must have been the 1 so the other 9999 must now be ok. :lol:

VMR (following the path to price discovery enlightenment)

Share this post


Link to post
Share on other sites
http://www.independent.co.uk/news/business...nks-880338.html

This news just gets even better.

So the bank sold debt which was bought with credit from itself!!!!!

Can this really be legal what the hell are the regulators doing????

Kind of like the bank that sold the building in which it is resident, to a property company to which it lent the money. Again Legality and Impartiality issues from hell spring to mind.

Share this post


Link to post
Share on other sites
http://www.independent.co.uk/news/business...nks-880338.html

This news just gets even better.

So the bank sold debt which was bought with credit from itself!!!!!

Can this really be legal what the hell are the regulators doing????

UBS did something similar a few months back (sold at a discount and loaned the buyers the cash to buy). It's all about getting the losses off the book and some extra money on it, even if in reality they are in almost as much s**t as before.

It shows you how desperate some of the banks are.

Share this post


Link to post
Share on other sites

http://www.telegraph.co.uk/money/main.jhtm...equestid=142952

The decision by National Australia Bank to make drastic provisions on its US mortgage debt could have ramifications in the US itself. It opted for a 100pc write-off on a clutch of "senior strips" of collateralized debt obligations (CDO) worth £450m - even though they were all rated AAA. No US bank has admitted to such fearsome loss rates.

... try that on for size.

Edited by ParticleMan

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 395 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.