Where did $700B Figure come from? Treasury: "We just wanted to choose a really large number." - (www.forbes.com) "It's not based on any particular data point," a Treasury spokeswoman told Forbes.com Tuesday. "We just wanted to choose a really large number."
More city apartments facing foreclosure - (www.crainsnewyork.com) Issues are spreading to NY real estate. advocates say a minimum of 580 buildings, containing 40,000 units, have one or more factors that could lead to default. Over the past four years, private equity firms have gobbled up at least 90,000 affordable-housing units in the city at inflated prices and in highly leveraged deals with the hopes of raising rents and maximizing profit, according to the Partnership to Preserve Affordable Housing. But the debt service on many of the buildings is not being supported by rental income because the apartments are still governed by regulations that limit rent increases. In many cases, owners envisioned unrealistic rent growth, but lenders—caught up in the same free-flowing credit frenzy that led to rampant single-family home foreclosures—made the loans anyway. They sold the loans to investment banks, which packaged them into mortgage-backed securities.
Fiddling While Wall Street Burns - A Good Thing! - (www.huffingtonpost.com) There's still a ferocious fire in financial firms on Wall Street. How did it get so big before people started panicking? It was an inside job. The syndicates on Wall Street - like embarrassed children caught with matches in their pockets - didn't want to admit they set the fire that is now threatening the rest of the country. Enter Hank Paulson - Chief Fireman/Treasury Secretary and former Overlord of Goldman Sachs - the biggest alleged arsonist of all the Wall St. firms. Paulson's initial strategy was Prevention by Denial. America's short-sellers, knowing a good lie when they see one, kept driving the bank stocks down. To stem this unpatriotic behavior, Hank had short-selling banned from the kingdom, slapping his Happy Face Band-Aid on the hemorrhaging situation of Bush's "sound economy". For Crisis Part B, Hank threw buckets of billions at Bear Stearns until they melted away. Sparks travel fast in a high wind; the inferno spread to AIG- Worlds Largest Insurer Of Everything. Since no one expected the Secretary to be able to walk AND chew gum at the same time, Lehman Brothers, unfortunately for them a former competitor of Goldman Sachs, was allowed to slowly burn to the ground. Distracted, Hank hallucinated, yelling "Jump" to Merrill Lynch who already had their fire under control. Chomping at the bit to benefit from a shotgun wedding-sweetheart-deal was the soon to be renamed Only Bank Of America! (Note From The Treasury To B of A: "Favor for overpaying for Countrywide repaid....Love, Hank") Something is happening, or about to happen, but exactly what that is nobody seems sure - because Hank Paulson won't tell. He just needs $700 Billion, he needs it now, not tomorrow - don't ask why. The last time a guy on TV was that nervous and desperate for a large amount of money, he owed it to Tony Soprano.
Cramer: FDIC Should Move ... or Dow Loses 2,500 - (www.cnbc.com) The Federal Deposit Insurance Corp. needs to increase its guarantee limit right now, Cramer said during Monday’s Stop Trading!, to stop a collapse in banking. The Mad Money host has said before that the FDIC’s $100,000 deposit insurance might have been suitable for the Great Depression era, but not the 21st century. Cramer’s calling for that limit to be increased to $1 million. He also wants to see corporate accounts, which carry with them much more money, insured for a fee, even if it’s as small as 0.1%. This, Cramer thinks, would “temporarily freeze” the massive withdrawals that are hurting so many U.S. banks. The move could serve as a much-needed crutch until the market’s main problem – mortgages – is worked out. Apparently, that won’t be today, as Congress voted down the proposed bailout bill Monday afternoon. Otherwise, Cramer said, “we’re going to go down another 2,500 points, and we’ll go down that 2,500 points rather quickly.”
Financial Crisis Shock Waves Reach Municipalities - (www.businessweek.com) Jefferson County, Ala., may be headed for the largest municipal bankruptcy ever. With the economy shrinking, it may not be alone It's not just on Wall Street where dubious financial decisions are creating casualties. Municipalities, many of which made enormous financial promises when the economy was strong, are now confronting heavy fiscal burdens. When the last major bank crisis hit public coffers in the late 1980s, 33 municipalities declared bankruptcy. And despite only eight municipal bankruptcies since 2005, some experts believe that Wall Street's troubles could soon squeeze a growing number of municipalities, which will be forced to cover bond payments and outlays to retirees. One prime example of this problem is Jefferson County, Ala., where the state's largest city, Birmingham, is located. The county is now saddled with $3.2 billion in debt from sewer upgrades and finds itself on the brink of becoming the largest municipal bankruptcy in U.S. history.
Lehman's `100% Principal Protection' Means Pennies for Notes - (www.bloomberg.com) A brochure pitching $1.84 million of notes sold by Lehman Brothers Holdings Inc. in August, a month before the firm filed for bankruptcy, promised ``100 percent principal protection.'' Buyers had ``uncapped appreciation potential'' pegged to gains in the Standard & Poor's 500 Index, the brochure said. In the worst case, they would get back their $1,000-per-note investment in three years. Only the last in a list of 15 risk factors mentioned the biggest danger: ``An investment in the notes will be subject to the credit risk of Lehman Brothers.'' Lehman's Sept. 15 bankruptcy leaves holders of the notes waiting in line with other unsecured creditors for what's left of their money. The collapse has rattled Wall Street's $114 billion structured-notes business, which Lehman, Merrill Lynch & Co., Morgan Stanley and Goldman Sachs Group Inc., all based in New York, used to raise cheaper funding as the credit crisis drove bond yields higher. About three-fifths of the $68.1 billion sold this year were bought by individual investors, according to data compiled by mtn-i, a London-based firm that tracks the market.
Crisis Hits Europe's Banks As U.S. Seals Bailout Deal - (online.wsj.com)
· Icelandic government takes control of Glitnir - (www.ap.com) The Icelandic government said Monday that it has taken control of the struggling Glitnir bank, marking the first major banking nationalization for the country in the current turmoil. The government said it bought a 75 percent stake in Glitnir, the country's third largest bank, for 600 million euros ($878 million) to ensure broader market stability after it suffered liquidity issues. Shortly after that announcement, Stodir Hf., an Icelandic investment company with major stake in Glitnir, said it was applying for temporary protection from its creditors.
· Bradford & Bingley Is Seized; Santander Buys Branches - (www.bloomberg.com) Bradford & Bingley Plc, the U.K.'s biggest lender to landlords, was seized by the government after the credit crisis shut off funding and competitors refused to buy mortgage loans that customers are struggling to repay. Banco Santander SA, Spain's biggest lender, will pay 612 million pounds ($1.1 billion) for Bradford & Bingley's 197 branches and 20 billion pounds of deposits, the company said in a statement today. The Santander, Spain-based bank said it also got 18 billion pounds to insure those deposits. ``The bank's deposit base has value in this market, but you'd have to have a different name over the door,'' said Alex Potter, a London-based banking analyst at Collins Stewart Plc. Bradford & Bingley became the second British bank after Northern Rock Plc to be nationalized this year as survivors of the global credit crunch balk at swallowing all the risks facing weaker competitors. Governments around the world are stepping in to prevent bank failures, with regulators in Belgium, the Netherlands and Luxembourg injecting 11.2 billion euros ($16.3 billion) to save Fortis. Regulators in the U.S. seized Washington Mutual Inc. on Sept. 26 and sold assets to JPMorgan Chase & Co.
· Fortis Gets $16.3 Billion Rescue - (online.wsj.com) Fortis will receive a $16.37 billion injection from the Netherlands, Belgium and Luxembourg, after BNP Paribas and ING Groep walked away from talks to acquire the company.
· Germans Discuss Hypo Rescue - (online.wsj.com) German bank Hypo Real Estate Group, an important real-estate lender in the U.S., is in difficulty because of the international credit-market turmoil, and German banks and authorities are in talks about a possible rescue of the Munich-based lender, according to a senior German official. The official said the outcome of the talks and the shape of a rescue plan weren't clear late Sunday. Several state-sector German banks have needed bailouts or suffered heavy losses since 2007. But Hypo Real Estate would be the first listed, private-sector bank to face a bailout in the current banking crisis.
· MKM to liquidate its flagship fund - (www.ft.com) MKM Longboat is to liquidate its $1.5bn (£816m) flagship hedge fund after the London manager was hit by heavy client withdrawals and caught in the collapse of Lehman Brothers. MKM, formed three years ago by the European partners of Sagamore Hill, a US hedge fund, had already paid out $400m of redemptions this month and decided to wind down the fund after Lehman failed. The fund is at the larger end of those closing this year and is likely to raise the level of concern in the industry about redemptions, which have been high since the end of last year. Next Tuesday is the last day for many investors in the industry to lodge requests to have their money back by the end of the year, and redemptions are being closely monitored by funds worried they may be forced to sell assets to repay clients.
· U.K. Officials in Talks on Bradford & Bingley Rescue - (www.bloomberg.com) The U.K. government is in talks with banking executives over a possible rescue of Bradford & Bingley Plc, the mortgage lender whose shares have tumbled 93 percent this year after late loan payments surged. Treasury, Financial Services Authority and Bank of England officials are working ``closely'' with the company and executives of other banks, said a Treasury spokesman who asked not to be identified because of ministry policy. The options for Bradford & Bingley include a takeover by the government, acquisition by a rival bank or a break up and purchase by several buyers. Bradford & Bingley, the U.K.'s largest lender to landlords, may join HBOS Plc and Northern Rock Plc among British banks that couldn't survive the worldwide credit crisis. In the U.S., regulators seized Washington Mutual Inc., America's biggest failed bank, this week and sold assets to J.P. Morgan Chase & Co.
NOTICE ALL THE INVESTMENT FAT-CATS MAKING MONEY OFF PREVIOUS CRISIS NOW BEGGING FOR BAILOUT AND FOR CONGRESS TO ACT:
· Wilbur Ross: Stop Pointing Fingers and Do Something - (www.cnbc.com) Congress Should Stop Pointing Fingers and Do Something. The U.S. Congress needs to get out of 'pointing fingers' mode and pass legislation that is sensible and addresses the problem of impact of the financial crisis on the economy, Wilbur Ross Jr., chairman and CEO of WL Ross & Co. told CNBC's Asia Squawk Box. And it needs to be done quickly. "I think the people who voted against it should be ashamed of what they did. In order to save a $700 billion investment -- not spending, but investment --they caused investors a trillion dollars. That means for each of the guys that voted against it, it cost the investing public $4 million today," Ross said.
· Pimco's Gross: We Need Another Vote and Passage - (www.cnbc.com) Of course, those with the most to gain (or lose) are making calls for the bailout.
· BlackRock CEO: Congress 'Playing with Fire' - (www.cnbc.com) Another arguably corrupt CEO who has raped and pillaged many a company. Laurence Fink, who heads the largest U.S. asset management company, BlackRock, expects a proposed bailout plan ultimately to be profitable, but said Congress was "playing with fire'' by voting it down. Fink, an expert in the asset backed securities that lie at the heart of the recent problems of many banks, worried that banks are not able to lend at the moment and that a bailout plan must be approved quickly to restore confidence. He also said there is deleveraging in financial markets, which has been accelerated by fears of heavy losses at hedge funds. "I'm disappointed,'' Fink told CNBC after the U.S. House voted to reject the Treasury's proposed bailout. "I think Congress is playing with fire. Hopefully, this is just politics.''
AdFreak: Ed McMahon raps for FreeCreditReport.com - (adweek.blogs.com) Forget Freddie Mac. It's Eddie Mac who needs a bailout—and fast, because he's really hitting the skids! Swimming in debt and faced with losing his Beverly Hills home, 85-year-old Ed McMahon is shooting viral rap videos for FreeCreditReport.com. The late Johnny Carson's former second banana and ex-Star Search host tells the AP: "I knew I could sing the blues, but I didn't know I could rap." The lyrics fall into the so-bad-they're-good-no-actually-they're-bad! category, with references to "a ninja swinging nunchucks," "media chumps," "playing gin rummy" and a "wife with bad credit." (Sure, blame the trophy wife.) Oddly, McMahon does have some street cred, having gone gansta old-school as a violent pimp in the blaxploitation classic Slaughter's Big Rip Off.
Petition: No More Bailouts! - (www.ga1.org)
Americans Shouldn't Bailout Henry Paulson's Best Friends! - (www.youtube.com)
Big European bank, Fortis, fails - (money.cnn.com)
Home Depot Refusing WaMu Cards - (patrick.net)
New WaMu CEO to get at least $12.65M pay - (www.businessweek.com)
The Swedish Model: Lenders Paid for 1990's Crisis - (www.hispanicbusiness.com)
Renting better than buying - (realestate.yahoo.com)
The U.S. mortgage game: How should it change? - (www.csmonitor.com)
What's at stake for the economy - (money.cnn.com)
A picture of the Apocalypse - (optionarmageddon.ml-implode.com)
The Default Phenomenon Comes to N.Y. - (www.nysun.com)
Can Taxpayers Actually Expect a Profit on the Bailout? - (Charles Hugh Smith at www.oftwominds.com)
Federal Reserve Board Abolition Act of 2007 - (www.sourcewatch.org)
Rep Kaptur: They want mama to make it all better! - (www.youtube.com)
How far does 700 Billion go, really? - (www.appleseedsorchard.com)
AIG Bailout Saved Goldman From Major Loss - (www.ml-implode.com) Goldman and no other Wall Street firm was involved in the AIG rescue talks and an AIG failure would have created a hole as big as $20 billion in Goldman's balance sheet
Throw Them All Out - (throwthemallout.synthasite.com)
Making a Deal with the Devil - (www.financialsense.com)
U.S. House Rejects $700 Billion Financial-Rescue Plan - (www.bloomberg.com)
Fed Expands Swap Agreements to $620 Billion to Aid Bank Funding - (www.bloomberg.com)
Economy's Dim Prospects Grow Darker - (online.wsj.com)
U.S. Consumer Spending Unchanged in August, Less Than Forecast - (www.bloomberg.com)
Bailout Gives Fed, Bernanke Key Roles - (online.wsj.com)
Tight credit becomes problem for small-business owners - (www.usatoday.com)
Wall Street Woes May Cost New York $3.5 Billion - (www.bloomberg.com)
FDIC loss-sharing in Wachovia deal is biggest ever - (www.ap.com)
Economy worsening, small business survey says - (www.reuters.com)
Citigroup Agrees to Buy Wachovia's Banking Business - (www.bloomberg.com)
Morgan Stanley Gets $9 Billion From Mitsubishi UFJ - (www.bloomberg.com)
PMI Insurer Seeks Cover - (www.cfo.com)
Freddie, Fannie subpoenaed; SEC opens probes - (www.marketwatch.com)
Tighter Terms for Car Loans Promise To Deepen Troubles for Sluggish Sales - (online.wsj.com)
Northern Trust will take $328 million in charges - (www.ap.com)
Treasury Would Emerge With Vast New Power - (www.nytimes.com)
U.S. Stocks Plunge After House Votes Against Bailout Plan - (www.bloomberg.com)
Gold Advances on Demand for Haven as Governments Prop Up Banks - (www.bloomberg.com)
U.S. Corporate Bond Risk Jumps as House Defeats Bailout Bill - (www.bloomberg.com)
Oil, Metals, Crops Tumble After Financial Rescue Plan Defeated - (www.bloomberg.com)
Treasuries Soar as House Rejects $700 Billion Bank-Bailout Plan - (www.bloomberg.com)
For Stocks, Worst Single-Day Drop in Two Decades - (www.nytimes.com)
Redemption fears encircle industry - (www.ft.com)
Commodity falls sharpest for half century - (www.ft.com)
Lehman's Demise Triggered Cash Crunch Around Globe - (online.wsj.com)
Governments rescue Fortis but bank woes spread - (www.reuters.com)
Money-Market Rates Rise as Bank Rescues Stoke Lending Concern - (www.bloomberg.com)
Market Drop Pressures Hedge Fund Managers - (online.wsj.com)
Repos Show Credit Freeze Approaching March Level - (www.bloomberg.com)
Bank of China open to Wall Street buys - (www.financialweek.com)
Europe bank woes freeze money markets - (www.marketwatch.com)
Gold May Reach Record on Investment Demand, GFMS Says - (www.bloomberg.com)
Buyout deals plummet as leverage seen elusive - (www.washingtonpost.com)
European Lenders Get Bailouts as U.S. Crisis Spreads - (www.bloomberg.com)
Crisis Hits Europe's Banks As U.S. Seals Bailout Deal - (online.wsj.com)
Sharp fall in UK mortgage lending - (www.ft.com)
European Retail Sales Fell Fourth Month in September - (www.bloomberg.com)