FedUpUSA

Archive for January 19th, 2010

Here We Go Again!

Submitted by Reggie Middleton

From Bloomberg: Mortgage-Bond Leverage Reaches 10-to-1, Markets Heal

Jan. 19 (Bloomberg) — Wall Street firms are loosening terms of their lending to mortgage-bond investors as markets heal, an RBS Securities Inc. executive said.

Repurchase agreement, or repo, lending against the debt has expanded so much since freezing in late 2008 that some banks now offer as much as 10-to-1 leverage and terms as long as one year on certain securities backed by prime jumbo-home loans, said Scott Eichel, the Royal Bank of Scotland unit’s global co-head of asset- and mortgage-backed securities.

“It’s getting very competitive,” Eichel said in a Jan. 14 interview at Bloomberg headquarters in New York. “We’re at the point where I don’t think we would feel comfortable if things go too much further.”

Increasing availability of leverage for mortgage-bond buyers was among the reasons that JPMorgan Chase & Co. and Barclays Plc each said in analyst reports this month that a record rally in U.S. home-loan securities without government- backed guarantees may continue even amid record foreclosures and further declines in home prices.

Stamford, Connecticut-based RBS Securities was the second- largest underwriter of structured-finance securities worldwide last year, according to newsletter Asset-Backed Alert.

 It is interesting that article can state that the mortgage bond markets are healing while the property markets continue to drop and the foreclosures behind them continue to rise. The increased use of leverage against this backdrop make it clear that this market is about short term trading profits and have absolutely nothing to do with fundamentals. Additionally, it shows we have learned nothing from the last 3 years and are quite comfortable being set up for another crash as long as some short term profit can be had. And where are the regulators while all of this is going on??? See It’s HELOC Deja Vu,All Over Again,  A Fundamantal Investor’s Peek into the Alt-A Market and If Anybody Bothered to Take a Close Look at the Latest Housing Numbers… to see how well suited the macro and fundamental backdrop is in the application of 10x leverage in this market.

Gee, More Duplicity (Is Someone’s Nomination In Trouble?)

Posted by Karl Denninger

Bernanke has apparently changed his tune on AIG and The Fed:

Jan. 19 (Bloomberg) — Federal Reserve Chairman Ben S. Bernanke said the central bank would welcome a “full review” of its aid to American International Group Inc. by congressional auditors and make all necessary records and personnel available to them.

“To afford the public the most complete possible understanding of our decisions and actions in this matter, and to provide a comprehensive response to questions that have been raised by members of Congress, the Federal Reserve would welcome a full review by GAO of all aspects of our involvement in the extension of credit to AIG,” Bernanke said today in a letter to Gene Dodaro, acting head of the Government Accountability Office. The Fed released the letter.

So what’s the difference between this and a full audit of The Fed?

Nothing, right?  After all, to afford the public the most complete possible understanding of our decisions and actions in this matter Bernanke now asserts that it is “ok” for the GAO to audit The Fed.

Oh wait – isn’t that what Ron Paul’s bill has been seeking since this entire thing began and in fact prior to that time?

Better go talk to Lacker about this – remember, he’s been issuing threats…

Lacker criticized legislation before Congress that would rescind an exemption on government audits of monetary policy and give politicians a greater say over the appointment of Fed bank directors and presidents.

“Such moves would present very serious risks to the effectiveness of monetary policy and ultimately to economic growth and stability,” Lacker said in a speech today to the Risk Management Association in Richmond, Virginia.

So let’s see, we can’t have the public find out what sort of mistakes we made, but it’s ok if the GAO performs an audit after, and only after, Congress issues SUBPOENAS for all of the information anyway.

What a load of crap.

IF Bernanke truly had no problem with Congress (and the people) knowing what they had done when AIG was rescued they would not have waited until there were SUBPOENAS already on their desk that COMPEL them to release the information!

This sort of two-faced forked-tongue BS is outrageous. 

Instead of saying “oh ok” the proper response is for Congress to turn around and issue a subpoena for ALL DOCUMENTS in any form whatsoever related to any and all bailout, handout, and policy decisions from 2000 onward when this mess began so that, as Bernanke has now said, WE THE PEOPLE can have the most complete possible understanding of The Fed’s decisions.

After all, Bernanke now says that we the people have the right to know.

A Warning To The Washington DC Establishment

Posted by Karl Denninger

Tonight the Republican Party rejoices at that which was just a month ago thought to be impossible: Senator Kennedy’s former seat in The Senate is now held by a Republican – a state that is so blue you may think the entire state is choking to death when you cross its border.

Tonight the Democratic Party is busy pointing fingers (I saw it on “mainstream TV”) over what went wrong, blaming everything from a sports faux pax to the President showing up and performing a negative campaign act by attempting to tie Coakley’s prospects to “the need to keep the agenda on track.”

Neither party should be doing any of this.

Let me point out that in the summer and fall of 2008 I sent a letter to the McCain campaign in which I outlined the facts for him on the ground at that time.  It was and always is the economy stupid!

The McCain campaign ignored me, of course.

And lost.

Tonight the message that should be taken from Brown’s victory is not “President Obama sucks” or “The Democrats’ policies suck” or even “we don’t want the Democrat Health Bill.”

Nope.

The message that should be taken from Brown’s victory is simple, succinct, and clear:

• Ramrodded policies are not going to be tolerated.  It doesn’t matter if its The Fed doing it, President Obama doing it, or Congress doing it.  PUT THE FACTS ON THE TABLE, DEBATE OPENLY, AND MAKE NO MORE CLOSED DOOR DEALS IRRESPECTIVE OF THE SUBJECT MATTER!
  
• President Obama said he was NOT an agent of the banksters and fraudsters on Wall and K Streets alike.  HE LIED.  Neither party has been willing to address this problem but it must be addressed right here and now.  Those who committed fraud during the bubble years, and this includes most particularly those on Wall Street, must be held to account.  Each and every firm on Wall Street must be subjected to a full forensic audit with all indications of criminal wrong-doing turned over to a Grand Jury – NO EXCEPTIONS. 

• Start listening to The American People.  NOW.  America will NOT tolerate a ramrodded health care bill.  America will NOT tolerate being ripped off with 30% credit card rates while banksters rake in billions in bonuses – “earned” through phony accounting and government handouts.  America will NOT tolerate being ignored when they tell Congress by 100:1 margins (or more) to NOT PASS TARP.  America will NOT tolerate so-called “trading partners” who exploit effective slave labor conditions and then rob our nation’s secrets and her corporations blind, then sell us poison toys and costume jewelry.  And America will NOT tolerate any more of the BS from Washington, Wall Street and foreign nations that are in Congress’ pocket – and that got us into this mess.  WE DEMAND JUSTICE NOW. 

• One last time, and one last chance: STOP THE LOOTING (and spending) AND START PROSECUTING!

Politicians cannot take from this win that either party is “safe” or “has favor” with The American People. 

This win was about one thing above all others:

WE THE PEOPLE HAVE HAD ENOUGH OF THE DUPLICITY, LIES AND CON JOBS, AND IF YOU DO NOT LISTEN TO US AND STOP IT – BOTH IN WASHINGTON DC AND ON WALL STREET WE WILL THROW YOU OUT ON YOUR ASS.

Did you get the message Washington?