Financial collapse and housing: WaMu execs testify before Senate

Update: CSPAN3 livestreaming the hearing here

The Senate seems to have quite a bit of evidence suggesting the WaMu team deliberately securitized bad bad bad loans as ‘great!’ loans..

WSJ live blogging it here

“The worst managed business I had seen in my career.” That is how Washington Mutual’s former president described his company’s home loan division.

The mortgage lending practices at the Seattle thrift take center stage at a Senate hearing this morning.
The Senate Permanent Subcommittee on Investigations says WaMu did little to stop the loan fraud and generally risky and highly defective securitization practices in its mortgage business

WaMu’s defense? Former CEO Kerry Killinger says he reigned in his company’s mortgage business and blames his thrift’s collapse on unfair and biased regulators who were willing to save Wall Street firms, but not his own

  • Levin: Killinger made $11 million to $20 million a year, from 2003 to 2007. He was paid $25 million when he stepped down in 2008, as his thrift was going down the tubes.  Killinger may have complained about not being part of the Wall Street club (see earlier Deal Journal post). But he sure was paid like one of club.

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    April 13, 2010. Tags: , , , , , , , . Economy, FDIC, Finance, Foreclosures, Housing, Wall St. Comments off.

    Housing – Obama and Treasury to add principal writedowns to HAMP program & add plan for unemployed homeowners…

    The principal writedowns are 3 years too late, they will be much larger now. So will losses to taxpayers.  Here at MiM we have been following the housing collapse from the epicenter here in Phoenix, and Obama’s first pathetic sellout HAMP program ‘suggestions’ to the banks has gotten us less than 200,000 mods out of a pool of 5 million, with 50 billion earmarked while they extend and pretend and play head games with families in these homes.

    The thing people still seem to be having trouble grasping is that we taxpayers are ALREADY on the hook for these defaults via FANNIE FREDDIE. So IMO it would have been far better to a, use TARP for its original purpose of buying up the bad MBS products, or b, encouraging principal writedowns a la the BofA/FDIC method of ensuring a 5 yr cash flow…

    We are in the double dip of the housing recession and it will bring the economy down…again…

    WSJ:

    The White House will announce Friday an expansion of its foreclosure-prevention efforts to include reducing the mortgage loan balances for some distressed borrowers and giving temporary help to the unemployed, people familiar with the plans said.

    In the latest overhaul of the year-old mortgage-loan modification program, these people said, the White House will announce plans to allow unemployed borrowers to receive sharply reduced payments—or a break from making any payments—for at least three months and up to six months. The revamp will also require banks to consider writing down loan balances as part of the formula for lowering monthly payments under the federal Home Affordable Modification Program, or HAMP.

    In addition, the administration will introduce a program that uses the Federal Housing Administration to insure new loans for borrowers who are underwater, owing more than the current values of their homes.

    Under that program, investors who reduce loan balances to 96.5% of the current property value would refinance borrowers into an FHA-backed loan. Investors would have to reduce first-lien mortgages by at least 10%. For properties that have second-lien mortgages, the program is designed to reduce the total mortgage debt to no more than 115% of the estimated property value. Banks that hold second-liens will be eligible for incentive payments if they write down those loans so borrowers can qualify….

    Other Resources:
    Making Home Affordable Treasury Program
    e.Fannie Mae.com (servicer updates)
    HUD- Department of Housing & Urban Devlopment
    Fannie Mae mortgage customers call Fannie Mae at  1-800-7FANNIE

    ( 1-800-732-6643         1-800-732-6643) or www.fanniemae.com/homeaffordable
    Freddie Mac mortgage customers call Freddie Mac at  1-800-FREDDIE ( 1-800-373-3343) or www.freddiemac.com/avoidforeclosure
    VA mortgage customers (thank you for your service) vall VA Financial Counselors at  1-877-827-3702 or www.homeloans.va.gov
    FHA –www.fha.gov
    Hope Now Alliance (Hank Paulson’s Plan)

    1-888-995-4673 or www.hopenow.com

    March 25, 2010. Tags: , , , , , , , , , , , , , , , . Economy, FDIC, Finance, Foreclosures, Housing, Obama Administration, Politics, Popular Culture, TARP, Unemployment Statistics, Wall St. 2 comments.

    Gentle Ben on the Hill: Takes Bair’s Position on Uber-Regulator! Agrees Fed should share power with panel on risk oversight!

    Timmeh demonstrates his 'paper beats rock' economic plan to Ben (Reuters Photo / Lucas Jackson)

    Timmeh demonstrates his 'paper beats rock' economic plan to Ben (Reuters Photo / Lucas Jackson)

    WOW! A whole new tone from Ben! He is now on board with Sheila Bair of FDIC and Mary Schapiro of SEC’s positions, that no single regulator should have this power. And MiM totally agrees!!

    See our previous post on Timmeh cursing out Sheila and Mary when they pushed back on his super regulator plan here

    To watch Ben’s testimony LIVE in front of Congress see CNBC Live link here

    CNBC:

    The head of the Federal Reserve adopted a new tone Thursday over a key plank of the Obama administration’s proposed plan for financial regulation reform, saying new oversight powers proposed for the U.S. central bank should be shared with other regulators.

    Fed Chairman Ben Bernanke told a congressional panel that a new council of financial regulators, not just the Federal Reserve, should monitor systemic risk in the economy.Bernanke’s comments came amid growing skepticism in Congress and beyond about an administration proposal to give the Fed the lead role in policing the economy for systemic risk, albeit in coordination with an inter-agency council.

    ..He also told the panel all systemically important financial firms should answer to a consolidated regulator, whether or not the firms own banks.

    But an inter-agency council should be used to monitor the very broadest sorts of risk, he said, placing new emphasis on an idea embraced by increasingly vocal critics of the Fed.

    October 1, 2009. Tags: , , , , , , , , , . Economy, FDIC, Finance, Obama Administration, Wall St. 1 comment.

    Breaking: BofA to pay $33m penalty in settlement…SEC charges BofA with making material false stmts on Merrill deal…CIT Group shares halted for news pending….

    Update 5: BofA Spokesman: Ken Lewis ABSOLUTELY has the full support of the Board…

    Happier Days...

    Happier Days...

    Update 4: BofA to pay $33 million penalty as part of settlement. Gee as a shareholder can I get part of that? Suuuure, after all WE are the wronged parties.. AS IF!

    BofA is settling the charges, “without admitting or denying guilt”. Well now TAXPAYERS will wind up SOL when shareholders sue…after all we will not allow their capital ratios to fall….Pfft.

    Developing via CNBC

    Breaking II: Now SEC is charging BofA with making materially false, misleading statements in connection with the Merrill merger….oh boy….

    We are shareholders. We have covered this extensively see our posts on Thain/Lewis here and here and here and  here

    This is NOT about the failure to use the Material Adverse Change clause to escape the merger, this is the bonus issue Cuomo was on top of…

    From Mary Thompson CNBC:

    SEC: BofA agreed to pay up to $5.8B in Merill bonuses, contrary to statements in the merger agreement…

    Oh Andrew Cuomo must have gotten them in the depositions of Thain and Lewis, oh boy….

    Hope to Good Lord it is news of a buyout or capital infusion of some magnitude and not a bankruptcy….

    Our previous post on CIT Group here

    Okay CIT Group just raised the purchase price on the tender offer.. no biggie.

    August 3, 2009. Tags: , , , , , , , , . Economy, Finance, Politics, TARP. 1 comment.

    Update: CIT Group files bankruptcy; No Government aid for CIT….Thursday Market Mover: Paulson on the Hill…

    Update: 11/2/09:  Bad, sad news, CIT Group went belly-up this weekend despite the 2B taxpayer infusion and the Carl Icahn offer. Bad news for small business. But it is an attempt to dump the debt and live on, so maybe it will live to fight another day.

    WSJ:

    CIT Group Inc. filed for bankruptcy protection Sunday, in a final attempt to restructure and keep the doors open at the century-old commercial lender.

    Now, the lender to nearly a million small and midsize businesses must maintain its customer base as it tries to rehabilitate under Chapter 11 protection. Most financial firms sell off assets or liquidate in bankruptcy amid fears that customers will draw down credit lines and spark a run on the bank.

    But CIT garnered support from about 90% of voting debt holders for a prepackaged reorganization plan that could allow the lender to speed through Chapter 11 and emerge with a new business model by year’s end. Under the plan, bondholders will exchange their debt for new debt that matures later, as well as nearly all the equity in a reorganized CIT.

    The bankruptcy stay would eliminate some $10 billion in debt from the lender’s balance sheet, the company said. CIT has been weighed down by more than $30 billion in bond debt.

    A $2.3 billion taxpayer bailout extended to CIT late last year under the Bush administration will be wiped out in the bankruptcy. Common shareholders will be wiped out, too.

    The plan is among the first attempts to restructure a financial firm in bankruptcy court and have it emerge relatively intact. The board approved CIT’s decision to seek Chapter 11 protection in a meeting Sunday. “The board appreciated that this is a [historic] sort of filing,” said a person close to the lender. “It is clearly unprecedented.”…

    ____________________

    Charlie Gasparino is reporting on CNBC’s Kudlow that Sheila (Bair of FDIC) brought the hammer down and drew the line in the sand saying NO MORE BAILOUTS…shxt it would have to be on small business that the money train dried up eh?

    Well, we love Sheila here at MiM (we wanted her or Jamie Dimon of JPMC for Treasury)and Timmeh was saying from Saudia Arabia that he was confident they would find a way to do the bailout, so we enjoy it when his toes are stepped on, bitter and petty that’s us today fer shure, BWAAAAHAAAA.

    Hope Sheila’s foot met Timmeh’s axx on this one, FDIC should have the too big to fail wipeout authority IMO not the Fed and for Gawds sake not the Treasury….

    CNBC on imminent CIT bankruptcy following FDIC and Treasury decision not to bailout…

    CIT Group, a major lender to small- and mid-sized U.S. businesses, said on Wednesday that talks with the government to bail out the company had ended, a development that could make bankruptcy likely.

    …”Discussions with government agencies have ceased,” the New York-based company said in a statement. “There is no appreciable likelihood of additional government support being provided over the near term.”

    The announcement came after last-ditch talks in which Treasury Department had been concerned about a worsening liquidity crunch at CIT over the last few days, and that government aid would not put the lender on a path to recovery….

    Tomorrow BIG NEWS will be HANK PAULSON testifying on Capitol Hill about the Merrill BofA shenanigans, should be lots of fun. Hanks is the man who handed free market capitalism over to the government and then retired with hundreds of thousands of Golden Slacks shares…..Hank Hank Hank, when he sees whatis happening now how does he feel? He opened this door and TOTUS swagga’d through it….

    Our MANY posts on Hank, Timmeh, AIG, Merrill, BofA, CITIBANK, Sheila, are too numerous to link…

    071025_paulson_0

    Smashing Pumpins fan made video with footage of Tours in France, courtesy of buissonland

    July 15, 2009. Tags: , , , , , , , , , , , , . FDIC, Finance, Music, Obama Administration, Politics. 1 comment.

    Update: Bernanke gets Grilled on the Hill…

    Update: Ben doing very very well in his testimony, Markets are ecstatic about it, Dow up 148…

    83246282CH007_FED_CHAIRMAN_

    Fed Chairman Bernanke under subpoena before Issa and Towns’ House Oversight and Government Reform Panel on BofA/Merrill merger

    CNBC Live Stream Here

    Ben’s prepared statement:

    …Bernanke, in prepared testimony to a House committee investigating the matter, said he did not threaten action against Bank of America’s CEO Kenneth Lewis or the bank’s board members if they decided to abandon the takeover.

    “Neither I nor any member of the Federal Reserve ever directed, instructed or advised Bank of America to withhold from public disclosure any information relating to Merrill Lynch, including its losses, compensation packages or bonuses or any other related matter,” the Fed chief said.It marked Bernanke’s first public comments since the House committee launched an investigation earlier this year into whether he or other government officials bullied Bank of America to stick with its plan to combine the two financial powers after Lewis found out about Merrill’s financial woes….

    FD-MiM are shareholders…a list of our previous posts here

    June 25, 2009. Tags: , , , , , , , , , , , , , . Economy, Finance, Wall St. Comments off.

    Breaking: TARP Repayment by Banks…Teh Roolz…

    Steve Liesman breaking it on CNBC now..Charlie Gasparino has been calling TARP The Roach Motel..

    FED: Supervisors now having discussions with several banks to repay TARP

    Supervisors are requesting supplemental information for TARP repayment (WTH do they need after stress tests!)

    No TARP repayment announcements expected until after June 8th

    Supervisor will make recommendations on TARP repayment to the Treasury in batches (so no bank stands alone)

    TARP repayment recommendations will be made to Treasury on monthly basis

    Source: Treasury to announce process for auctioning TARP warrants in next several days

    Treasury plans to spread out auction of warrants over several months

    TEH ROOLZ TO REPAY TARP:

    1. After repayment, still have to be able to pass stress test

    2. Issue unguaranteed debt (no FDIC backup for you!)

    3. Demonstrate ability to self-fund in the market (raising private capital)

    4. Approval of supervisor

    Dilution from repaying TARP: (Gov’t shares controlled by warrants as % of shares outstanding):

    JPM 2.35%

    Morgan Stanley 5.22%  (OUCH!)

    Golden Slacks 2.42%

    May 19, 2009. Tags: , , , , , , , , , . Economy, FDIC, Finance, TARP, Uncategorized, Wall St. Comments off.

    Bill Seidman passes away…

    God Bless Him…

    FDIC Chairman 1985-1991 through very rough times..

    The first chairman of the Resolution Trust Corporation

    Often a commentator on CNBC especially Kudlow..

    Blessings to his family..

    Bill Seidman with Dylan Ratigan, 6/19/2008

    May 13, 2009. Tags: , , , , , . Economy, FDIC. Comments off.

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