and the leaks go on…
..The exact roster of banks needing to build their capital positions is still unclear. Banks are expected to be briefed on the official results on Tuesday.
The Federal Reserve and Treasury Department also will tell them how policymakers plan to publicly unveil the market-sensitive results, the source said, speaking anonymously because the discussions are private….
..Fed Chairman Ben Bernanke and Treasury Secretary Timothy Geithner are scheduled to present the findings of the regulatory stress tests on Thursday in a 150-page document, the source said.
Who Who Who!?!
Citigroup and Bank of America are expected to be among the companies needing to boost their reserves, Fred Dickson, chief market strategist at D.A. Davidson & Co said on Friday. Wells Fargo and JPMorgan also are among the banks likely to need more capital, Dickson said.
Oh okay, it’s just all our biggest banks….and the market rallied in the face of this sending the S&P into the black for the year yesterday…D-E-N-I-A-L….
I have an idea, let’s subject the TOTUS Budget Forecasts to the SAME stress test scenarios and see what happens to the deficit! Pffft!
Update: BofA refutes FT report, says not raising capital: Market Mover Monday: red-headed stepchildren of Stress Tests try to raise capital and save themselves from Government….goin’ down…
Update: 8:57am EST: CNBC Becky Quick live now talking to Buffett reporting BofA issued statement denying FT report that they are raising 10b in capital…..the fact that the banks are fighting it out with Team TOTUS bean-counters IN THE MEDIA is frightening..yeah I sold in May baby and I would go away could I afford a vacation in this economy, HA!!!
Here they come, walking down the street, they get the funniest looks from the Treasury agents they meet..
Hey Hey they’re the Zombies, people say their capital’s down…
yada yada…they managed to get everyone but JPMC under their thumb here, they nabbed Wells Fargo and PNC too….
Bank of America is working on plans to raise more than $10 billion in fresh capital, even as it and Citigroup launch last-ditch attempts to convince the U.S. government they do not need to bolster their balance sheets, the Financial Times reported.
Citing people close to the situation, the paper said that Citi, Bank of America and at least two other lenders will on Monday attempt to convince the U.S. Treasury and Federal Reserve that the findings of “stress tests” into their financial health were too pessimistic.
Bank of America, which has had $45 billion in government aid, was found to need well in excess of $10 billion, the Financial Times reported on its website on Sunday, citing sources.
Regional lenders Wells Fargo and PNC Financial were also among the banks that would need to raise more capital unless they could persuade the authorities their findings were wrong, the paper reported, citing people close to the situation.
*Monkees courtesy of OrangeTabbyCat3
Housing Update: Team Obama to unveil New, Additional Incentives for servicers/lenders to modify, includes second liens…
They are moving to address second liens, ie Home Equity Loans finally. Sadly it appears we will be paying off the banks who made the dopey decisions that got us here. And no word on WHO will be paying to extinguish these second loans down the road…and of course no journOlist follows up with questions on that aspect..
The good news is perhaps we can get the mortgages modified in the hard hit areas, cough cough, Sunbelt, cough cough….
Under a new program, the government will pay mortgage servicers $500 upfront and $250 a year for three years for successfully modifying a second mortgage, such as home equity loan. Separately, the administration will unveil a schedule of incentives for holders of second mortgages to extinguish those liens voluntarily, the official said.
Some of the largest U.S. banks, including Bank of America, Wells Fargo and J.P. Morgan Chase, have already agreed to sign on to the program, the official said. …
…Under the program, servicers must agree to modify all second mortgages where the first mortgage has already been modified. To qualify for payment, servicers must extend the term of the second mortgage and reduce the interest rate to match the first mortgage. Then, the government will share the cost with the servicer of reducing the rate down to 1% for amortizing loans and 2% for interest-only loans.
Borrowers will receive payments of up to $250 per year for as many as five years if they stay current on the loan. The payments will be applied to pay down principal on the first mortgage…
…The administration will announce Tuesday a $2,500 upfront payment to servicers that refinance borrowers into the program. Meanwhile, lenders that originate the new loans will receive $1,000 a year for three years, if the loans stays current.
Not bad so far, but wait there’s more, they plan to EXTINGUISH ie FORGIVE the second loans completely down the road…
Legislation to revamp the program is currently pending in Congress. Once those legislative fixes are made, HUD will work on creating a program to extinguish the second liens, the official said.
You read that right, legislative FIXES and a program to EXTINGUISH second liens. Man, here I am with only one loan. Silly silly MiM. This will pixx people off.
How is it fair or equitable to EXTINGUISH second liens for some people while others struggle along to pay their mortgage on time every month who did not take a second loan?
The ole dichotomy still a problem IMO, we cannot get a bottom in housing until we address these issues but it is not fair the way this is shaping up. Why can’t these borrowers have their first and second rolled into one and then modify/refi that? That is what most people do when their payments are too high…
I await word on WHO is paying for the EXTINGUISHMENT of the second liens, ie home equity loans…not the taxpayer surely..sorry Shirley…
Will it be ‘voluntary’ ie done through GOVERNMENT controlled CITI or BofA? Is that why we are waiting for HUD to roll it out? and is that why HUD is waiting for ‘legislative fixes’? Is that cramdown as a stick and this is the carrot?
Man shoes keep dropping left and right, a regular Dr Seuss Foot Book happenin’ here…
Fri. Apr. 24 2009 | 4:29 PM ET
Discussing the bank stress tests and more, with Robert McTeer, fmr. Dallas Fed Bank president; Bill Isaac, Secura Group of LECG; and CNBC’s Larry Kudlow
The cheese stands alone…but who is the cheese? DOW futures are down sharply, 141…
I say it’s CITI, any takers? The notion that our entire banking system is infected with TARP b/c Paulson and Geithner wanted to shield CITI by injecting capital into everyone, and now CITI is still a problem, if it is indeed CITI, well it sucks….
…if only the REGULATOR of CITI back then had KNOWN… who was that masked man? it was Geithner in NY as head of the NY FED…..
CITI CEO Vikram Pandit, who has been cooperating like crazy, even agreeing to cramdowns with Durbin…well WOTS is his head will roll as the sacrificial lamb…yet Dick Parsons somehow got promoted out of it, this after he presided over the TimeWarner stock tanking, go figure…
One of the 19 financial institutions that received a government stress test would require additional capital, based on the initial findings, according to an industry source…Though the source did not identify the company, the government in its report Friday said results were “conveyed” to the participating firms at the end of April, so the bank in question would be aware of the Federal Reserve’s assessment….
…Banks found to have inadequate capital, will have six months to raise the money, through a variety of means in the private sector. If unsuccessful, the government has said the institutions will be eligible for a capital infusion through its Capital Access Program….
“There are two things that are terribly wrong,” former FDIC Chairman Bill Isaac told CNBC.com. “First, that was publicly announced. I can’t imagine what Treasury was thinking when it made that move. It has been causing incredible angst in the markets … The second big problem is that the Treasury is directing the stress testing, apparently with direct involvement of the White House at the highest levels. Bank regulation by law is supposed to be carried out by the independent banking agencies without any political interference.”..
Update: From WSJ:
For release at 2:00 p.m. EDT
A white paper describing the process and methodologies employed by the federal banking supervisory agencies in their forward-looking capital assessment of large U.S. bank holding companies was published on Friday.
The white paper is intended to assist analysts and other interested members of the public in understanding the results of the Supervisory Capital Assessment Program, expected to be released in early May. All U.S. bank holding companies with year-end 2008 assets exceeding $100 billion were required to participate in the assessment, which began February 25. These institutions collectively hold two-thirds of the assets and more than half the loans in the U.S. banking system.
More than 150 examiners, supervisors and economists from the Federal Reserve, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation participated in this supervisory process. Starting from two economic scenarios–a consensus estimate of private-sector forecasters and an economic situation more severe than is generally anticipated–they developed a range of loss estimates and conducted an in-depth review of the banks’ lending portfolios, investment portfolios and trading-related exposures, and revenue opportunities. In doing so, they examined bank data and loss projections, compared loss projections across firms, and developed independent benchmarks against which to evaluate the banks’ estimates. From this analysis, supervisors determined the capital buffer needed to ensure that the firms would remain appropriately capitalized at the end of 2010 if the economy proves weaker than expected.
Released now, the parameters were apparently already out there, they used Case Shiller Housing Value Futures in their projections…CITI already tested itself against that same metric…
they are not giving the Tangible Common Equity number they want from the banks is it 3%? 4%? and they are also not giving out the specific projected losses or the size of the capital buffer the regulators want…..meanwhile the NY Post is reporting Vikram Pandit is out as CITI CEO shortly….
They gave the categories of loans they looked at and the counterparty risk but not the other parameters, reporters asked on the conference call…..
Will get up the CNBC clip as soon as it’s available
It’s managing expectations they say..a whole lotta nothin’ just came out…they Put on the Ritz for us…they don’t want anyone running the numbers before the banks shore up capital..
Next words will be the results of the stress tests on May 4th, I think the banks will begin to leak their own inner results before that..
The markets are turning down now, were up over 100 now up 50 on the Dow….
Tim Geithner is about to speak to Congress about the Obama Budget plan..market flat right now post Bernanke….
In expectation of Timmeh falling flat, I nominate a salesman and showman for the spot going forward….
Who can inspire confidence? Who has the energy? Who who who?
You haven’t seen a real showman until you see DLR come flying in over your head on a surfboard singing California Girls…..