{"id":2145,"date":"2008-07-14T08:27:01","date_gmt":"2008-07-14T15:27:01","guid":{"rendered":"http:\/\/seattlebubble.com\/blog\/?p=2145"},"modified":"2010-01-18T19:53:16","modified_gmt":"2010-01-19T03:53:16","slug":"who-gives-a-ra-about-the-banks-anyway","status":"publish","type":"post","link":"https:\/\/seattlebubble.com\/blog\/2008\/07\/14\/who-gives-a-ra-about-the-banks-anyway\/","title":{"rendered":"Who gives a RA about the banks, anyway?"},"content":{"rendered":"

I thought we could use a thread to discuss the insanity that reigns in the financial world today. You all already know the news. IndyMac taken over by the FDIC in the third-largest bank failure in US history<\/a>. The bailouts of Fannie & Freddie have begun<\/a>.<\/p>\n

Here’s another take on the weekend news<\/a>:<\/p>\n

Now here’s the problem – while Fannie and Freddie are claimed<\/strong> to be all 80\/20 full-doc loans this is in fact a lie.<\/strong><\/em> <\/p>\n

In fact, a huge percentage of the loans they took on or guaranteed in the last five years were packed with fraud or serious deficiencies in underwriting in some form, whether it be appraisal fraud, claimed income fraud, LTVs as high as 100%, or all three! <\/p>\n

So how bad could this get?<\/p>\n

Very bad.<\/strong><\/em>
\n…
\nIn reality I believe that Fannie and Freddie could suffer as much as $900 billion in losses as this all plays out. This assumes that 10% of their portfolio turns out to be essentially worthless and 20% is impaired by at least 10%, with the rest being 100% “money good.” <\/p>\n

Frankly, I think that’s a bit optimistic…<\/strong><\/em>
\n…
\nSee, there are reportedly 75 (or more) banks on the “troubled” list. The FDIC doesn’t publish that list. Gee, I wonder why, especially after Friday, when IndyMac went under. <\/p>\n

Not that this should have been a surprise to anyone, given that it was trading at well under a buck for about a week. Do ‘ya think that’s a good stock price?<\/p>\n

No, the real 900lb Gorilla is that IndyMac was not on the FDIC’s “troubled bank list”!<\/strong><\/em><\/p><\/blockquote>\n

So here’s a thread to talk about the banks. Was the IndyMac failure the worst of it, or have we just seen the tip of the iceberg?<\/p>\n

P.S. (RE: the title of the post – original comment (#10)<\/a> \/ ongoing conversation<\/a> \/ Sorry Ardell, I just couldn’t resist.)<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

I thought we could use a thread to discuss the insanity that reigns in the financial world today. You all already know the news. IndyMac taken over by the FDIC in the third-largest bank failure in US history. The bailouts of Fannie & Freddie have begun. 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