FedUpUSA

Well well look what spewed from this guy’s mouth:

Federal Reserve Bank of Kansas City President Thomas Hoenig said banks’ business should be confined to loans and deposits to avert a recurrence of the federal bailouts and near-collapse of the financial system in 2008.

Add one more thing and you’re there Thomas: One dollar of capital.

That is, a bank can only loan against something that actually exists.  It can loan against collateral value (marked to the market in each and every case) or it can loan against capital it either owns (e.g. retained earnings) or has borrowed (e.g. from bondholders.)

Do that and “Too Big to Fail” instantly disappears.  So does systemic risk.  Business risk and the possibility of going bankrupt does not, of course, nor should it.

One simple change Thomas, and we have a safe and sound banking system.

It’s not that tough.

The Market-Ticker

Hoh hoh hoh….

“There’s no solution possible” for Greece other than its austerity program, Noyer, Bank of France governor, told reporters in Paris today. “Restructuring is not a solution, it’s a horror story.” If the country fails to meet the terms of its bailout, Greek government debt will be “ineligible as collateral” at the ECB, he said.

Right.  All those institutions that bought this paper believing they were “too big to fail” would have to face the fact that they’re not, that they can fail, that the government will let them fail.

This is not a bad thing, it’s a good thing.  It’s called “market discipline” and is really important.

“The lengthening of maturities raises very difficult questions,” Noyer said. “There’s a strong chance it will be the equivalent of a default.”

That’s because it is a default.

The ECB last year suspended the minimum credit-rating threshold for Greek bonds after the country’s banks were shut out of credit markets for funding. Banks can borrow as much money as they need for up to three months against collateral.

So the ECB made a decision to take crap.  Now they’re whining that it tastes like, well, crap.

Who’s responsibility is this again?

“The markets are getting impatient, they don’t see a real sort of light at the end of the tunnel,”

There’s a light.

It’s a train.

For Greece ‘to reduce the stock of debt, the only solution is ambitious privatization,” Noyer said. “It is necessary to have the equivalent of an internal devaluation. Cut production costs. There is no other solution.”

Yes there is.  Greece can tell the ECB this:

And they should.

The Market-Ticker

• In Deutsche Bank National Trust Company v. Hansen, 2011 WL 899625 (Ohio App. 5 Dist., 2011), borrowers defending a foreclosure action successfully challenged whether a bank’s representative could testify in an affidavit concerning the amount due based on a screen shot when the bank’s representative could not explain how such information was collected and compiled. Based on such facts, the borrowers argued the bank could not qualify the screen shot under the business record exception to the hearsay rule.
• The borrowers argued that the trial court erred in admitting the screen shot as evidence of the amount due and sought to strike the affidavit of the bank representative, asserting that it was not based on her personal knowledge.
• The bank representative testified at her deposition that she did not know who entered the information into the computer to generate the amount owed, nor did she know how such information was collected and compiled. The borrowers argued that while her affidavit states that it was based on personal knowledge, the bank representative’s deposition testimony reflected that while she saw a screen shot of the balance due, she could not explain how that figure was arrived at by the bank.

***

• The Court of Appeals for Fairfield County determined that the bank’s representative did not have personal knowledge as to how the bank arrived at the balance due as viewed on the screen shot. The borrowers argued the screen shot is hearsay and did not meet the exception for a business record because there is no evidence of its origins or the circumstances surrounding its existence.

For more, see Court erred in admitting screen shot as evidence of amount due for purposes of granting summary judgment (Rule 803(6) of the ohio rules of evidence, business records hearsay exception, construed) (requires paid subscription; if no subscription, GO HERE; or TRY HERE – then click the appropriate link for the story).

For the ruling, see Deutsche Bank Natl. Trust Co. v. Hansen, 2011-Ohio-1223 (Ohio App. 5th Dist. March 10, 2011).

Representing the homeowner were Benjamin D. Horne, Peggy P. Lee, and Luke Feeney of Southeastern Ohio Legal Services,(1) Lancaster, Ohio.

(1) Southeastern Ohio Legal Services is a non-profit law firm that, within its coverage area, gives legal help without attorney fees to people with low income and limited savings and assets, and also serves organizations of low-income people.

Home Equity Theft

Nothing good in here…

Service sector activity slowed in May, according to the latest survey by the Federal Reserve Bank of Richmond. Retail sales dwindled as shopper traffic dropped sharply; big ticket sales remained in decline. Revenues also weakened at non-retail services firms. Looking ahead six months, retail merchants pulled back from their optimism of a month ago. Non-retail services providers maintained a positive outlook, but were less upbeat than in April.

Service sector revenues softened in May, pulling the index to 9 from 28.

Yucko.

The internals were NASTY on retail traffic and sales:

Retail sales cooled in May, as shopper traffic fell sharply. The revenues index slashed twenty-one points from last month’s reading, ending the survey period at 3. The index for shopper traffic plummeted from 34 to -29 in May. In addition, falling big-ticket sales remained a drag on overall sales revenues. The big-ticket index faltered once again, finishing at -27, compared to April’s -31.

That’s outright contraction and not in a small way either.

Recession indicator?  Yep.  Look at the deterioration in the retail indicators:

Revenues down, wage demand up, big ticket sales in the trashcan and shopper traffic collapsed.

“Here it comes”

The Market-Ticker