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from Rolfe Winkler:

Lunchtime Links 12-8

(Reader note: still working on the bugs....please click "continue reading" to see all the links)

Banks, U.S. spar over TARP repayment (David Enrich) This is the kind of thing that gives me a better feeling about Tim Geithner and Ben Bernanke. They are hammering banks to raise equity capital to get out of TARP. They have leverage and are using it productively, forcing bank shareholders to eat losses via dilution so that balance sheets are more stable. Great! Stick to your guns guys!

Questioning the unemployment rate (Kaminska, Alphaville) Dennis Gartman doesn't buy the good news in the jobs report.

FASB wants accounting standards "decoupled" from bank capital rules (Norris, NYT) Can you blame 'em? Seems to me Bob Herz just wants to be left alone. If regulators want to give banks more slack, fine.

from Rolfe Winkler:

Politics and bank regulation don’t mix

The Federal Deposit Insurance Corp tried to seize and sell Cleveland thrift AmTrust last January but local politicians intervened. In the end, the bank still went bust 11 months later - a delay that may have increased losses to the U.S. regulator’s funds. As Congress debates banking reform, AmTrust provides a useful warning that the regulatory apparatus needs to be kept free from politics.

Regulators had known for some time that AmTrust was troubled. AmTrust's chief regulator turned down the bank’s request for TARP money last fall. It also hit AmTrust with a cease-and-desist order, instructing management to change lending practices and boost capital by December 31. When AmTrust missed the deadline the FDIC decided to step in.

from Rolfe Winkler:

Evening Links 12-7

Update from this morning: Neel Kashkari joins PIMCO (Ishmael, Alphaville)

TARP cost estimate falls $200 billion (Somerville, Reuters) Even after this latest reduction, the administration still estimates TARP will cost $141 billion. We may be getting more back than we though, but we're not making money. Remember, the Fed still has north of $1.0 trillion or mortgage-backed securities on its balance sheet, the value of which is not clear.

Moody's links option ARM performance with subprime (Golobay, HousingWire) Option ARMs were generally considered "prime" loans based on the credit scores of borrowers. We learned last year, however, that credit scores are less indicative of default rates than negative equity. Negatively amortizing option ARMs, which allow borrowers to make a minimum payment that doesn't even cover interest, have seen their loan balances explode. With prices down, they're so far underwater it makes little sense to pay their mortgage...

from Rolfe Winkler:

Economic calcification, Japanese edition

Japan's labor market is desperately troubled. For years, the number of temporary workers has been on the rise as Japanese employers find it harder to afford full-timers. Like the rest of the Japanese economy, the labor market needs the flexibility to deflate. But the government won't allow that to happen. The latest example is a proposal to ban manufacturers from hiring temporary workers (Otsuma/Hagiwara, Bloomberg):

The government is preparing legislation “that will stop manufacturing firms from employing temps and encourage them to hire full-timers,” [Health and Labor Minister Akira] Nagatsuma said yesterday on a business program....

from Rolfe Winkler:

MBA: CMBS deterioration continues

From the Mortgage Bankers Association:

Delinquency rates continued to increase in the third quarter for most commercial/multifamily mortgage investor groups, according to the Mortgage Bankers Association’s (MBA) Commercial/Multifamily Delinquency Report.

Here's the not-pretty chart from MBA's report:


from Rolfe Winkler:

Video: The unemployment game show

A clever way to explain the difference between U-3 and U-6. From

from Rolfe Winkler:

Evening Links 12-6

(Reader note: One bug we're still trying to work out is that links in the top line of a post aren't "hot" in the front-page view of the blog. If you click "continue reading" the link is available)

The FBI agent inside the Galleon case (Goldstein, Reuters) More great work from Matt.

from Rolfe Winkler:

Geithner: “none…would have survived”

Secretary Geithner acknowledges what most doomsdayers were saying last fall, that without the government's extraordinary rescue measures, the entire financial system was on the verge of collapse. (Miller/Harper, Bloomberg)

“None of [the big Wall Street insitutions] would have survived” had the government stood aside and let the crisis run its course, he said. “The entire U.S. financial system and all the major firms in the country, and even small banks across the country, were at that moment at the middle of a classic run, a classic bank run.”

from Rolfe Winkler:

Bank failure Friday

More Georgia! Update: And AmTrust!  That's a $2.0 billion hit to the DIF...


    Failed bank: Buckhead Community Bank, Atlanta GA Acquiring bank: State Bank and Trust, Macon GA Vitals: at 11/6, assets of $878m, deposits of $838m DIF damage: $241.1m


    Failed bank: First Security National Bank, Norcross GA Acquiring bank: State Bank and Trust, Macon GA Vitals: at 9/30, assets of $128m, deposits of $123m DIF damage: $30.1m

State Bank and Trust also took down $2.4 billion of assets from the estate of failed Security Bank last summer. Before that the bank had just $36m of assets according to American Banker. Talk about rapid expansion!

Rights and wrongs at Lloyds Banking


If you’ve ever wondered how the big-shot investment bankers “earn” their bonuses, the document launching Britain’s biggest rights issue will give you a clue. Lloyds Banking Group is issuing 36,505,088,579 new shares, to add to the 27,161,682,366 currently in issue.

The new shares will raise 13.5 billion pounds, of which 500 million pounds will disappear in the expenses of the offer. Much of this is paid to the banks which are guaranteeing that Lloyds gets its money, a reward for the risk they are taking that the shareholders will fail to take up their rights.