Sen. Mike Johanns (R-NE) on FoxBiz on his legislation in re Congressional Oversight of TARP takeovers of private firms…
Senator Mike Johanns (R-NE) is interview on Fox Business on June 4, 2009, on his proposed legislation to assert Congressional oversight over the nationalizatoin of companies using TARP funds.
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!
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.”..
Between AIG and CITI, damn right they are Zombies, they keep coming back for more…
Citigroup and the U.S. have reached a deal to give the government a bigger stake in the troubled banking giant, by converting its preferential shares to common stock, a Treasury official tells CNBC.
The agreement will see the Treasury’s Citi stake rise to between 30 to 40 percent and in return, the government is demanding a boardroom shakeup. The exact details of this shakeup are not known. However, CEO Vikram Pandit is expected to keep his job under the agreement.
The Treasury official also said the government will be offered the lowest price given to any private investor to convert preferred shares into common equity. The Treasury will match the private investors’ conversions dollar-for-dollar up to $25 billion.
Like Tom (and Stevie!!) says, Hey! Dont Come Around Here No More !!!
Other key details of the Citigroup-U.S. pact remain unclear.
As previously discussed, when comparing Citigroup’s market capitalization with the number of preferred shares the government currently owns, if these shares were converted right now to common stock, they would worth more than 100 percent of Citi’s total market capitalization.
CNBC: Citigroup is in talks with U.S. officials about the federal government taking a larger stake in the troubled institution, according to people familiar with the situation.
The aid would involve a new capital injection that would increase the government’s stake in the troubled bank, but would not constitute nationalization, which has been a major concern for investors.
Sources say bank executives are hoping the govenment stake will top out at about 25 percent, athough it is possible it could be as high as 40 percent. In either case, if the govenment converts its current preferred-stock status to common shares, Citi shareholders would see their stakes diluted and the government would potentially have a much larger influence over Citi.
And yes it would be nationalization, despite the semantics of Team Obama, you just cannot be slightly pregnant:
Any additional money that Citi receives from the government automatically means a further stock dilution. While Obama Administration officials say this isn’t nationalization, markets may interpret the situation differently and see it as de facto nationalization.
The move likely would make the U.S. government the biggest shareholder of Citigroup, owning a majority of its stock. This is de facto government ownership, or nationalization. What this ownership means at this point, nobody knows
What can CITI do? Nothing they are frakked, with the governments giant feet coming down everyplace NO ONE wants to get in front of them, and no private equity will come in as a result….
Citi could also try to raise fresh equity with a public share offering, the Financial Times reported. The aim would be to keep the government stake to no more than 40 percent or at least below 50 percent, it said, citing people familiar with the plan.
Message to Pandit, you don’t sit down to dinner with the Devil and leave the table unscathed my friend…..
Update 2: Secretary of HUD Shaun Donovan said today he thinks he has 100 days to get the housing plan rolled out, I have news for him he has three weeks per the banks holding the foreclosure notices:
…Obama administration’s housing recovery plan will accelerate loan modifications for distressed homeowners and will reform the bankruptcy system for foreclosures, Housing Secretary Shaun Donovan said today.
The U.S. Department of Housing and Urban Development wants to create a “comprehensive foreclosure response” before the first 100 days of the new administration is concluded, Donovan said in a speech in New York today.
The new plan will make use of interest-rate reductions, loan extensions and so-called principal forbearance, in which part of a mortgage’s principal is deferred to the end of the loan’s term.
Update: Working families need to be addressed in the Obama Plan, help the middle class too:
“I tried to refi but they won’t give me a new mortgage because I bought at the peak of the market and my house has depreciated,” says Connecticut homeowner James McCusker. “I don’t have the 20 percent equity in the house I need. When they turned me down, they said to me to qualify for any government-related loan program, I need to lose my job.”
“For now, homeowners are stuck,” says McBride. “I think one thing that would be nice to see, is a government program designed to facilitate refinancing for people that have been current on their loans for at least two years.”
CNBC Diana Olick has it: JPMC signs on in a letter to Barney Frank, saying it will hold off on any new foreclosures for three weeks to give Geithner time to announce and implement their mortgage modification/foreclosure mitigation plan…
TICK TOCK TEAM OBAMA….
Home, home again
I like to be here when I can
When I come home cold and tired
It’s good to warm my bones beside the fire
CNBC Breaking Chyron: JP Morgan Chase Announces 3-Week Foreclosure Moratorium; Citigroup Also Announcing Moratorium
Floyd Video Courtesy of Spellitic: This is Time (The Dark Side of the Moon, 1973), from Pink Floyd, live at P.U.L.S.E; recorded at Earls Court, London, in 1994. Roger Waters, one of the the composers of Time, is not in this show.
Current members of Pink Floyd are: David Gilmour (guitars, lead vocals) • Richard Wright(keyboards, secondary vocals, backing vocals) • Nick Mason(drums, percussion);