Whitney: “I haven’t been this bearish in a year”

Nov 16, 2009 21:48 UTC

Bartiromo asks some good questions, including “are banks adequately capitalized today?”

“No way” says Whitney.

She adds: “I don’t know what’s going on in the market right now ‘cuz it makes no sense to me.” The fundamentals aren’t there.

(ht Alexis N.)


Here’s what I don’t understand… the banks own VERY little of what they service… most everything I’m seeing that’s in default is GSE or FHA… how much of the mortgage market is owned/controlled/backed by the federal government now?

And with the HAMP incentives, Fannie and Freddie buying most of what they originate(d), and the Fed buying their toxic loans, federal takeover of the GSE’s, billions in TARP stimulus, 4 lenders now control over 80% of all new originations- which are virtually all Fannie/Freddie/FHA, they get reimbursed in full for advances once a property sells REO… and they still can’t make a buck?

They’ve been given EVERY advantage and they still can’t function…

What, exactly, do they own?

Posted by robert | Report as abusive

Meredith Whitney asks the tough questions

Oct 15, 2009 21:37 UTC

—-Not to beat a dead-horse here, but I thought I’d blog one last interesting thing on Goldman. This from today’s conference call. (Transcript via Thomson Street Events, no link)—-

Guarantees for certain liabilities aren’t the only way Goldman has benefited from government largesse. They’ve also made money handling trading volume that is driven by the Fed…

Meredith Whitney, Analyst: I have a few questions. The government purchase program was supposed to end this quarter. They’ve extended it to next quarter. How much of that us a driver of velocity of flows? And how are you positioned when they exit, if they exit, for any type of principal risk? And what do you think that impact is going to be in the larger market? That is my first question. Start off with an easy one.

Is MW on to something here? Perhaps: Note the non-answer answer.

David Viniar – Goldman Sachs Group, Inc. – EVP, CFO: Not a problem. Look, I think, as you know and I think the Fed knows this, exiting their support of various markets is a very tricky thing. I think that they are going to do it carefully. They are going to do it slowly and over time. I think they are signaling the market. I think they are doing a very good job of letting people know they are going to continue for a while, but they aren’t not going to continue forever. As far as our positioning, I don’t think it really matters at all. As you know, as I said, most of what has happened has been the velocity, not the positioning. And I think that they are going to slowly extricate themselves for that as the markets get healthier and can pick up slack.

MW: Okay, but in terms of the flow volume, right — so you have been the greatest beneficiary of increased flow volumes. How are the flow volumes going to be influenced as they exit?

DV: I think that they will try to time their exits for the market being healthy enough to pick up that flow. And so I think the flow will continue.

Another non-answer. But MW persists…

MW: And then who would you imagine would be the substitute buyers?

DV: The various market participants. I think it will be the various financial institutions, funds. I think the whole variety of buyers. And there is a lot of cash out there to buy.

MW: Okay. And then just a last one. I was teasing when I said it’s the easiest one. But it was easy for you. The last one, of the principal revenues, almost $1 billion, how much of that was cash sales, and how much were markups?

DV: Oh, I would say that it was much more markups than sales…I don’t have the exact number, but it would be much more markups than sales.


Who’s on first?

Posted by StevenKs | Report as abusive

Whitney: Home prices could fall another 25%

Sep 11, 2009 15:43 UTC

Apologies to readers for being a day late to this.

Whitney notes that “core fundamentals” inside the banks are terrible, that they’re still very much on “life support,” and that they’re “kicking the can down the road.”

Besides house prices, she also sees the stock market falling back from here.

There’s much more in the clip.