Rolfe Winkler

Bank failure Friday

March 5, 2010

Sheila Bair has said publicly that more banks will fail this year than last (140), so we can expect bank failures to stay elevated.

Evening Links 3-5

March 5, 2010

Analyst: Fannie and Freddie will force banks to eat $21 billion of soured loans this year (Keoun) Very interesting thread to follow. Remember, Fan and Fred guarantee loans meeting their underwriting standards that are originated by banks. Bad underwriting often means these loans are pushed back to the originating bank. Why care? Because banks have literally trillions of off balance sheet exposure to Fan and Fred loans. Wells Fargo alone has over $1 trillion (see page 52 of its 10-k). Of course the vast majority aren’t going to be put back to them, but only a fraction need be to cause material losses. There are even vulture funds in the market looking for loans they can push back to banks. Meanwhile, the new accounting standard that forced banks to bring off B/S items back on balance sheet — FAS 166 and 167 — allows them to avoid all recognition of their Fan/Fred loan exposure.

Not till they’ve nothing left to lose?

March 4, 2010

Those calling for financial reform aren’t being upfront about its costs, making it impossible to achieve. This was again evident at the Roosevelt Institute’s otherwise very good conference at Time Warner Center yesterday.

Live-blogging the Pandit hearing

March 4, 2010

Hi folks….Vikram Pandit is scheduled to testify for Congress starting at 10AM. We’re live-blogging it here on, but you can also watch it yourself on C-Span 3.

Lunchtime Links 3-2

March 2, 2010

Larry Fink’s $12 trillion shadow (Andrews, Vanity Fair) One of the most powerful men on Wall Street that most have never heard of.

Lunchtime Link 3-1

March 1, 2010

Buffett’s ’09 letter to shareholders — pdf (Berkshire Hathaway)

Kohn retiring from Fed in June (Hilsenrath/Wessel, WSJ) The Economist once wrote a leader that Don Kohn should have been the guy to replace Greenspan…

Bank failure Friday

March 1, 2010

Reader note: Some Internet troubles over the weekend delayed this post. Apologies.

Afternoon Links 2-26

February 26, 2010

Existing home sales/more existing home sales (Calculated Risk) Existing homes sales were down sharply from November, but the Nov number was high because of folks rushing to take advantage of the first time homebuyers tax credit, which has since been extended. Anyway, existing home sales were actually up versus January ’09.

Afternoon Links 2-25

February 25, 2010

The Euro’s final battleground: Spain (Fidler, WSJ) The folks at Variant Perception warned the world about the impending disaster in Spain last August. Here’s a copy of their report, which they’ve graciously allowed me to share. (Though they’re famous for that one, they do write about more than Spain.) Anyway, Spain’s economic problems are prompting mainstream discussion that the euro could actually collapse. Greece is small enough that it can be rescued by Germany and France. Spain not so much.

Lunchtime Links 2-24

February 24, 2010

Rogoff says China crisis may trigger regional slump (Ito/Rial, Bloomberg)

Fed to get $200 billion boost (Hilsenrath, WSJ) The Treasury will borrow the money and put it on deposit at the Fed. Bernanke could use that money to fund Fed interventions in the economy instead of printing more money.

CoreLogic: 24% of residential properties upside down

February 23, 2010

You don’t keep paying for something that you own.

From FirstAmerican Core Logic:

…more than 11.3 million, or 24 percent, of all residential properties with mortgages were in negative equity at the end of the fourth quarter of 2009, up from 10.7 million and 23 percent at the end of the third quarter of 2009. An additional 2.3 million mortgages were approaching negative equity at the end of last year, meaning they had less than five percent equity. Together, negative equity and near-negative equity mortgages accounted for nearly 29 percent of all residential properties with a mortgage nationwide.

Night of the living dead banks

February 23, 2010

Cross-posted from today’s NYT.

Killing zombies isn’t just a job for horror-movie heroines. It’s also one of Sheila Bair’s primary tasks. And the Federal Deposit Insurance Corp chief’s challenge has increased as the number of scary banks on the regulator’s watch list has spiked. Thankfully, there’s no financial excuse to keep FDIC from quickly exterminating the industry’s living dead.

Lunchtime Links 2-23

February 23, 2010

FDIC has $66 billion in cash (FDIC) The quarterly banking profile was released today. The headline in some press will be that the DIF’s net worth is -$20.9 billion, but that ignores $46 billion of new cash recorded as deferred revenue, along with FDIC’s contingent loss reserve. Still not enough to swallow a major bank, were one to fail. But FDIC has cash to deal with the problem bank list, which now stands at 702 institutions (up from 552 last quarter and 252 a year ago) and $403 billion of assets…

Bank failure Friday

February 20, 2010

Reader note: As always, this post will be updated as bank failures are announced. One large one so far tonight…and it was acquired by OneWest, the former IndyMac, which was the subject of a controversial web video a week ago. The video went viral and FDIC was forced to respond. Though the video was badly misguided, the episode highlighted the fact that FDIC doesn’t provide as much disclosure as it could about loss-share agreements. But before getting to bank failures, a note on upcoming FDIC news.

And so tightening begins?

February 19, 2010

No, not really.

Raising the discount rate a quarter point is a start, but as the Fed went to pains to explain, it doesn’t indicate broader tightening of credit. For that we have to wait for some combination of the Fed shrinking its balance sheet along with a hike in the Fed funds rate and, perhaps more importantly, a hike in the rate paid on banks’ excess reserves.