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Show-me
Well-known member
Geithner's Stress Test "A Complete Sham," Former Federal Bank Regulator Says
Posted Apr 06, 2009 10:00am EDT by Aaron Task Related: UBS, C, BAC, XLF, SKF, FAS
The bank stress tests currently underway are “a complete sham,” says William Black, a former senior bank regulator and S&L prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri - Kansas City. “It’s a Potemkin model. Built to fool people.” Like many others, Black believes the “worst case scenario” used in the stress test don’t go far enough.
He detailed these and related concerns in a recent interview with Naked Capitalism. But Black, who was counsel to the Federal Home Loan Bank Board during the S&L Crisis, says the program's failings go way beyond such technical issues. “There is no real purpose [of the stress test] other than to fool us. To make us chumps,” Black says. Noting policymakers have long stated the problem is a lack of confidence, Black says Treasury Secretary Tim Geithner is now essentially saying: “’If we lie and they believe us, all will be well.’ It’s Orwellian."
The former regulator is extremely critical of Geithner, calling him a “failed regulator” now “adding to failed policy” by not allowing “banks that really need desperately to be closed” to fail. (On Saturday, Geithner said on Face the Nation, if banks need "exceptional assistance" in the future "then we'll make sure that assistance comes with conditions," including potentially changing management and the board, but did not say they'd be shut down.)
Black says the stress test must also be viewed in the context of Geithner’s toxic debt plan, which he calls “an enormous taxpayer subsidy for people who caused the problem.” The fact bank stocks have been rising since Geithner unveiled his plan is “bad news for taxpayers,” he says. “It’s the subsidy of all history."
http://finance.yahoo.com/tech-ticke...,FAS?sec=topStories&pos=9&asset=TBD&ccode=TBD
Posted Apr 06, 2009 10:00am EDT by Aaron Task Related: UBS, C, BAC, XLF, SKF, FAS
The bank stress tests currently underway are “a complete sham,” says William Black, a former senior bank regulator and S&L prosecutor, and currently an Associate Professor of Economics and Law at the University of Missouri - Kansas City. “It’s a Potemkin model. Built to fool people.” Like many others, Black believes the “worst case scenario” used in the stress test don’t go far enough.
He detailed these and related concerns in a recent interview with Naked Capitalism. But Black, who was counsel to the Federal Home Loan Bank Board during the S&L Crisis, says the program's failings go way beyond such technical issues. “There is no real purpose [of the stress test] other than to fool us. To make us chumps,” Black says. Noting policymakers have long stated the problem is a lack of confidence, Black says Treasury Secretary Tim Geithner is now essentially saying: “’If we lie and they believe us, all will be well.’ It’s Orwellian."
The former regulator is extremely critical of Geithner, calling him a “failed regulator” now “adding to failed policy” by not allowing “banks that really need desperately to be closed” to fail. (On Saturday, Geithner said on Face the Nation, if banks need "exceptional assistance" in the future "then we'll make sure that assistance comes with conditions," including potentially changing management and the board, but did not say they'd be shut down.)
Black says the stress test must also be viewed in the context of Geithner’s toxic debt plan, which he calls “an enormous taxpayer subsidy for people who caused the problem.” The fact bank stocks have been rising since Geithner unveiled his plan is “bad news for taxpayers,” he says. “It’s the subsidy of all history."
http://finance.yahoo.com/tech-ticke...,FAS?sec=topStories&pos=9&asset=TBD&ccode=TBD
Show-me
Well-known member
Meredith Whitney: Bank Profitability Is an Illusion
Posted Apr 06, 2009 09:27am EDT by Joe Weisenthal in Investing, Newsmakers, Recession, Banking Related: xlf, c, bac, wfc, ^dji, ^gspc
From The Business Insider, April 6, 2009:
In an interview with Steve Forbes, red hot bank analyst Meredith Whitney runs down her standard litany of thoughts and concerns about the economy, including cut credit card lines and the need to strengthen tiny banks, rather than the big ones.
One new things she discusses is the question of bank profitability in Q1. This has been a controversial question -- some investors obviously believe that the industry has turned the corner, as bank shares have been bid up significantly. Others think it's all a matter of defining profit, or perhaps nefariously, some accounting tricks courtesty of AIG.
Here are Meredith's feelings:
Now, in January and February, it seemed, at least to an outsider, that even regardless of what the books said, the banks seemed to be doing very well on a cash-operating basis, the rollover alone. You were paying fees. You are paying fees. You were paying 10,000 points above LIBOR. Do we have a disconnect here? Where on a cash basis, the banks are doing well; where in a statutory, regulatory basis, they're still not out of the woods?
Well, on a cash basis and on a trading basis, they're doing, facilitating transactions. January and February, it's all relative, right?
[05:45] Shun Bank Stocks
Right.
Relatively good months. On an accrual basis, that's where you get into problem areas. Because your loan is only as good as it pays you back. And so, the loans are paying back less. As I said, one of the two main assumptions that goes into valuing any of your loans, accrual-based loans, is home price appreciation, but also unemployment.
A lot of the banks were carrying seven-and-a-half to eight percent unemployment. We're already over 8%. So, there are going to be big true-ups this quarter. Some parts of the business are OK. And what's interesting, for a Goldman Sachs, 70% of the capital markets competition has gone away, or dramatically pulled in their horns.
So, it's a smaller pie. But you're getting more of a market. And the government actually is churning a lot of fees for Wall Street. So, there's trading activity there. I don't know how sustainable it is because bank revenues, cash-based revenues on the non-accrual-based loans, should correlate to some multiple of the GDP and global GDP. And as we know, the global GDP is coming down.
For the full report, see Forbes.com.
Posted Apr 06, 2009 09:27am EDT by Joe Weisenthal in Investing, Newsmakers, Recession, Banking Related: xlf, c, bac, wfc, ^dji, ^gspc
In an interview with Steve Forbes, red hot bank analyst Meredith Whitney runs down her standard litany of thoughts and concerns about the economy, including cut credit card lines and the need to strengthen tiny banks, rather than the big ones.
One new things she discusses is the question of bank profitability in Q1. This has been a controversial question -- some investors obviously believe that the industry has turned the corner, as bank shares have been bid up significantly. Others think it's all a matter of defining profit, or perhaps nefariously, some accounting tricks courtesty of AIG.
Here are Meredith's feelings:
Now, in January and February, it seemed, at least to an outsider, that even regardless of what the books said, the banks seemed to be doing very well on a cash-operating basis, the rollover alone. You were paying fees. You are paying fees. You were paying 10,000 points above LIBOR. Do we have a disconnect here? Where on a cash basis, the banks are doing well; where in a statutory, regulatory basis, they're still not out of the woods?
Well, on a cash basis and on a trading basis, they're doing, facilitating transactions. January and February, it's all relative, right?
[05:45] Shun Bank Stocks
Right.
Relatively good months. On an accrual basis, that's where you get into problem areas. Because your loan is only as good as it pays you back. And so, the loans are paying back less. As I said, one of the two main assumptions that goes into valuing any of your loans, accrual-based loans, is home price appreciation, but also unemployment.
A lot of the banks were carrying seven-and-a-half to eight percent unemployment. We're already over 8%. So, there are going to be big true-ups this quarter. Some parts of the business are OK. And what's interesting, for a Goldman Sachs, 70% of the capital markets competition has gone away, or dramatically pulled in their horns.
So, it's a smaller pie. But you're getting more of a market. And the government actually is churning a lot of fees for Wall Street. So, there's trading activity there. I don't know how sustainable it is because bank revenues, cash-based revenues on the non-accrual-based loans, should correlate to some multiple of the GDP and global GDP. And as we know, the global GDP is coming down.
For the full report, see Forbes.com.
For more coverage, see The Business Insider.
http://finance.yahoo.com/tech-ticke...gspc?sec=topStories&pos=8&asset=TBD&ccode=TBD
http://finance.yahoo.com/tech-ticke...gspc?sec=topStories&pos=8&asset=TBD&ccode=TBD
Show-me
Well-known member
Very nice bear market rally but I do not think the bear is over. Profits are critical and defaults continue in the mortgage and revolving credit arena. The jobs numbers are a lagging indicator and until I see jobs starting to be created instead of lost, people will continue to default on their loans. Savings accounts only go so far and we are not a Nation of savers.
hessian
Member
Meredith Whitney Video Interview today - Bearish on Banks (and Housing) -watch especially the video middle to end - SCARY!...:blink:
http://www.cnbc.com/id/15840232?play=1&video=1084876450
Or, is Cramer right on Banks today?...:worried:
http://www.cnbc.com/id/15840232?play=1&video=1085134438
http://www.cnbc.com/id/15840232?play=1&video=1084876450
Or, is Cramer right on Banks today?...:worried:
http://www.cnbc.com/id/15840232?play=1&video=1085134438
Show-me
Well-known member
Hi everyone,
Just wanted to stop in and say hello. I struggling with a ton of "that's life" issues that have me stomping out fires like the troop of River Dance. Now that's bad!
My son is back to school full time but will still have to take it very easy for a year.
My cancer may or may not be back, I go in for a exam tomorrow. Nothing life threatening, I just have a new ache and new lump in my neck. Scalpel!
Honeybee's are working hard and I am building onto the house. Will it never end? Better to be busy and alive than dead.
On top of that I had to put a family pet down today. Feline leukemia.
It has been a very trying first four months of the year. Can't wait for the next 8 more so that this year can be over.
And, I have been notified that I am in the Jury Duty pool, brilliant.
So I will not be real active until I get ................... sane again.:laugh::blink:
I did get out of a photo enforce stop light ticket today. It was the day I took my son home from the hospital. The prosecutor dismissed the charge after I wrote her a nice letter and sent my son's discharge papers and the explanation of benefits statement. No slamming on the brakes with a freshly filleted son in the back.
Just wanted to stop in and say hello. I struggling with a ton of "that's life" issues that have me stomping out fires like the troop of River Dance. Now that's bad!
My son is back to school full time but will still have to take it very easy for a year.
My cancer may or may not be back, I go in for a exam tomorrow. Nothing life threatening, I just have a new ache and new lump in my neck. Scalpel!
Honeybee's are working hard and I am building onto the house. Will it never end? Better to be busy and alive than dead.
On top of that I had to put a family pet down today. Feline leukemia.
It has been a very trying first four months of the year. Can't wait for the next 8 more so that this year can be over.
And, I have been notified that I am in the Jury Duty pool, brilliant.
So I will not be real active until I get ................... sane again.:laugh::blink:
I did get out of a photo enforce stop light ticket today. It was the day I took my son home from the hospital. The prosecutor dismissed the charge after I wrote her a nice letter and sent my son's discharge papers and the explanation of benefits statement. No slamming on the brakes with a freshly filleted son in the back.
CountryBoy
Well-known member
It's real good to here from you and that things are progressing as most of the travails of normal life do. Some good, some bad. Good luck and hang in there, cause you've been on my mind and thoughts about how things are going.
CB
and that things are progressing as most of the travails of normal life do. Some good, some bad. Good luck and hang in there, cause you've been on my mind and thoughts about how things are going.CB
XL-entLady
Well-known member
Show-me, thanks so much for the update. Take care of yourself, our prayers are with you and yours!
Lady
Lady
love-to-bike
Member
Hope the best for you and your family!
Show-me
Well-known member
Exam was uneventful. The lump is so small that the Doctor has difficulty pin pointing it but it is there. Did yet another CT scan with contrast to document it and it is so small the CT may not pick it up. The Doc is not too concerned as my disease is very slow but the mental anguish is always there.
XL-entLady
Well-known member
That's good news, thanks for keeping us updated! Sending best vibes [:cheesy:],
Lady
Show-me
Well-known member
I made a trade yesterday, I see the 50 crossing the 200 dma and we were near the lower bollinger band. Actually ended up on it at the end of the day but I could not have known that four hours before the market closed. My good luck.
Will try to get a bounce. I hate being in this late in the game. Charts look toppy and we are in the summer doldrums.
My plan is to hang in there day by day. Quadruple witching and end of the month window dressing are a factor.
Good luck!
Will try to get a bounce. I hate being in this late in the game. Charts look toppy and we are in the summer doldrums.
My plan is to hang in there day by day. Quadruple witching and end of the month window dressing are a factor.
Good luck!
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