Posts Tagged ‘Countrywide’

The Next Financial Crisis Will Be Even Worse

By Brett Arends

The last financial crisis isn’t over, but we might as well start getting ready for the next one.

Sorry to be gloomy, but there it is.

Why? Here are 10 reasons.

1. We are learning the wrong lessons from the last one. Was the housing bubble really caused by Fannie Mae, Freddie Mac, the Community Reinvestment Act, Barney Frank, Bill Clinton, "liberals" and so on? That’s what a growing army of people now claim. There’s just one problem. If so, then how come there was a gigantic housing bubble in Spain as well? Did Barney Frank cause that, too (and while in the minority in Congress, no less!)? If so, how? And what about the giant housing bubbles in Ireland, the U.K. and Australia? All Barney Frank? And the ones across Eastern Europe, and elsewhere? I’d laugh, but tens of millions are being suckered into this piece of spin, which is being pushed in order to provide cover so the real culprits can get away. And it’s working.

2. No one has been punished. Executives like Dick Fuld at Lehman Brothers and Angelo Mozilo at Countrywide , along with many others, cashed out hundreds of millions of dollars before the ship crashed into the rocks. Predatory lenders and crooked mortgage lenders walked away with millions in ill-gotten gains. But they aren’t in jail. They aren’t even under criminal prosecution. They got away scot-free. As a general rule, the worse you behaved from 2000 to 2008, the better you’ve been treated. And so the next crowd will do it again. Guaranteed.

Read the rest here: The Next Financial Crisis Will Be Even Worse – SmartMoney.com.


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Does Our Economy Really Have to Run on Fraud?

Does Our Economy Really Have to Run on Fraud?

Courtesy of MICHAEL HUDSON, writing at CounterPunch 

William Hogarth's print published in 1721, satirising the South Sea Bubble. People queue to enter Devil's shop, while he cuts up Fortune. Clerics of various denominations gamble (1.foreground) People ride on wooden hobby horse. Honour is flogged in the stocks by Villainy and Honesty is broken on the wheel with self-interest acting as confessor. Engraving

What is the difference between today’s economy and Lehman Brothers just before it collapsed in September 2008? Should Lehman, the economy, Wall Street – or none of the above – be bailed out of bad mortgage debt? How did the Fed and Treasury decide which Wall Street firms to save – and how do they decide whether or not to save U.S. companies, personal mortgage debtors, states and cities from bankruptcy and insolvency today? Why did it start by saving the richest financial institutions, leaving the “real” economy locked in debt deflation?

Stated another way, why was Lehman the only Wall Street firm permitted to go under? How does the logic that Washington used in its case compare to how it is treating the economy at large? Why bail out Wall Street – whose managers are rich enough not to need to spend their gains – and not the quarter of U.S. homeowners unfortunate enough also to suffer “negative equity” but not qualify for the help that the officials they elect gave to Wall Street’s winners by enabling Bear Stearns, A.I.G., Countrywide Financial and other gamblers to pay their bad debts?

There was disagreement last Wednesday at the Financial Crisis Inquiry Commission now plodding along through its post mortem hearings on the causes of Wall Street’s autumn 2008 collapse and ensuing bailout. Federal Reserve economists argue that the economy – and Wall Street firms apart from Lehman – merely had a liquidity problem, a temporary failure to find buyers for its junk mortgages. By contrast, Lehman had a more deep-seated “balance sheet” problem: negative equity. A taxpayer bailout would have been an utter waste, not recoverable.

Lehman CEO Dick Fuld is bitter. He claims that Lehman was unfairly singled out. After all, the Fed lent $29 billion to help JPMorgan Chase buy out Bear Stearns the preceding spring. In the wake of Lehman’s failure it seemed to gain the courage to say, “Never again,” and avoided new collapses by bailing out A.I.G. – saving all its counterparties from having to take a loss.

Was this not a giveaway? Fuld implied. Why couldn’t the Fed and Treasury do for Lehman what they did with other Wall Street investment firms and stock brokers: let it reclassify itself as a bank so it could pawn off…
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‘New Deal for Wall Street’ Programs Subsidizing Subprime Lenders

‘New Deal for Wall Street’ Programs Subsidizing Subprime Lenders

trickle downCourtesy of Jesse’s Café Américain

Welfare for Wall Street is just another phase of the ‘trickle down’ approach that seems to be so popular with the financerati.

If "Cash for Clunkers" had involved subsidized loans for cars administered by the banks it would have been touted as the greatest thing since sliced bread by the coporate media and mainstream infomercials, instead of being slammed on a daily basis as a troubled, pointless giveaway program.

So now we have a new "Cash for Criminals" program from the finance friendly folks at the tarnished Treasury and finagling Fed as outlined in the story below, this time for those overpriced housing loans sold to underpaid, over-indebted consumers.

The housing market needs to clear, the losses need to be realized, and the debt must be written down or taken into default by the banks.

The banks do not wish to foreclose because this will force them to start marking down the toxic assets they still hold on their books.

The Obama Administration is doing a fairly good imitation of Japan Inc.

Washington Post
Subprime Lenders Getting U.S. Subsidies, Report Says
By Renae Merle
Wednesday, August 26, 2009

Many of the lenders eligible to receive billions of dollars from the government’s massive foreclosure prevention program helped fuel the housing crisis by issuing risky subprime loans, according to a report to be issued Wednesday by the Center for Public Integrity.

Under the $75 billion program, called Making Home Affordable, lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. Of the top 25 participants in the program, at least 21 specialized in servicing or originating subprime loans, according to the center, a nonprofit investigative reporting group funded largely by charitable foundations.

Much "of this money is going directly to the same financial institutions that helped create the sub-prime mortgage mess in the first place," Bill Buzenberg, executive director of the center, said in a statement.

For example, J.P. Morgan Chase, Wells Fargo and Countrywide, which has been bought by Bank of America, are eligible to receive billions of dollars under the program,…

The report comes as the Obama administration is prodding lenders to do more to help borrowers. Less than 10 percent of delinquent borrowers eligible for assistance through Make Home Affordable have received…
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Countrywide Exec Warned The Fed On Toxic Mortgages

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Countrywide Exec Warned The Fed On Toxic Mortgages

Courtesy of Tom Lindman of But Then What?

Well, this is interesting. If you’ve read the SEC complaint against Countrywide’s Angelo Mozillo and other executives you probably noticed the name John P. McMurray popping up several times. He was the chief risk manager at Countrywide who saw the problems coming, alerted management and was promptly ignored.

It turns out that Countrywide wasn’t the only concern that had the benefit of his analysis and chose to believe in the tooth fairy instead. In 2006 he offered some of the same advice to the Fed.

From Reuters:

At a time when many in the U.S. home loan industry were offering money to almost anyone who walked in the door, John P. McMurray publicly warned about the risks of such lax lending.

McMurray pointed out the risks at the Federal Reserve Bank of Chicago’s annual conference on bank structure and competition on May 18, 2006 — less than a year before the housing sector and mortgage lending industry began collapsing, leading to a credit crunch that spread around the world.

Such lending practices also eventually collapsed Countrywide into a fire sale takeover and led to charges of fraud and insider trading being brought against company co-founder Angelo Mozilo.

McMurray’s presentation on the home lending boom contrasted with comments Federal Reserve Chairman Bernanke had made in the event’s keynote address about 90 minutes earlier.

Bernanke said home finance innovation did carry risk but provided significant net benefits…

At the Fed conference, McMurray gave an almost academic presentation that included 29 slides packed with graphics and charts on the risks and causes of mortgage delinquency.

He explained how larger loans, lower credit scores, higher loan-to-value ratios, and less required documentation from loan applicants were coinciding with greater delinquency, wrote Cabray Haines, who summarized the conference for the Chicago Fed Letter.

“McMurray pointed out that this finding is particularly worrisome, given the recent popularity of loans that require little to no documentation of borrowers’ income and credit history,” Haines wrote…

There is a little bit of “gotcha” in the article which is unfair. It’s always easier to see the error in battle plans after the fight than it is in the middle of it, but that doesn’t alter the


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Countrywide’s Mozillo Charged With Fraud By The SEC

Courtesy of Tom Lindmark at BUT THEN WHAT

Countrywide’s Mozillo Charged With Fraud By The SEC

You are probably aware that the SEC has accused former Countrywide CEO, Angelo Mozillo, and two of his chief lieutenants with fraud. The SEC complaint document makes for fascinating reading. It demonstrates that Mozillo and others were acutely aware and concerned with the risks they were running while steadfastly painting a different picture to investors and regulators.

Here are a few of the passages that I found captivating:

On 100% subprime loans:

Mozilo further stated that the 100% loan-to value (also known as 80/20) subprime product is “the most dangerous product in existence and there can be nothing more toxic and therefore requires that no deviation from guidelines be permitted irrespective of the circumstances.”

 Then, in an April 13, 2006 email, Mozilo informed Sambol, Sieracki, and others that there were numerous issues that they must address relating to the 100% subprime second business in light of the losses associated with the HSBC buyback. One issue in particular that Mozilo identified was the fact that the loans  had been originated “through our channels with disregard for process [and] compliance with guidelines.” Mozilo went on to write that he had “personally observed a serious lack of compliance within our origination system as it relates to documentation and generally a deterioration in the quality of loans  originated versus the pricing of those loan [sic].” Mozilo noted that, “[i]n my conversations with Sambol he calls the 100% sub prime seconds as the ‘milk’  of the business. Frankly, I consider that product line to be the poison of ours.”

On Option ARMs:

[w]e have no way, with any reasonable certainty, to assess the real risk of holding these loans on our balance sheet. The only history we can look to is that of World Savings however their portfolio was fundamentally different than ours in that their focus was equity and our focus is fico. In my judgement, as a long time lender, I would always trade off fico for equity. The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales. (emphasis added)

Finally, on November 4, 2007, Mozi


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ValueWalk

Central Asia: Challenges Ahead For China's Belt And Road Project

By EurasiaNet. Originally published at ValueWalk.

China’s bid to expand its economic presence in Eurasia – embodied in its “Belt and Road” initiative – requires a major upgrade of railway capacity, especially in Central Asia. Planning and implementing the upgrade entails significant challenges involving coordination, both domestically among various Chinese state agencies and entities, and internationally between China and Central Asian states.

christels / PixabayChina Central Asia

The railway component of the Belt and Road is ambitious, with an abundance of moving parts. The concept relies on ...



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Zero Hedge

Larry Fink Lashes Out At Trump Tax Plan: America's On "A Path To Exploding Deficits"

Courtesy of ZeroHedge. View original post here.

The US economy is on "pause" because of the new administration, according to Blackrock's Larry Fink, and Trump's tax proposals are unlikely to spur enough economic growth (due to demographics), leaving America "on the path to exploding deficits."

Just a week after the CEO of the world's largest asset manager said that “the warning signs are getting darker" and pointed to slowing auto ...



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Phil's Favorites

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

The US economy just grew at its slowest pace in 3 years (Business Insider)

The US economy grew by 0.7% in the first quarter, weaker than expected, according to an advance estimate of gross domestic product from the Department of Commerce released on Friday.

Oil's April Rollercoaster Takes It Back to $50 on Supply Dilemma (Bloomberg)

Futures are down 2.4 percent this month in New York after slipping 6.3 percent in March. What’s worrying investors is expanding U.S. crude production, which threatens...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

The US economy just grew at its slowest pace in 3 years (Business Insider)

The US economy grew by 0.7% in the first quarter, weaker than expected, according to an advance estimate of gross domestic product from the Department of Commerce released on Friday.

Oil's April Rollercoaster Takes It Back to $50 on Supply Dilemma (Bloomberg)

Futures are down 2.4 percent this month in New York after slipping 6.3 percent in March. What’s worrying investors is expanding U.S. crude production, which threatens...



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Kimble Charting Solutions

Gold Miners; Largest outflows in history could be bullish, says Joe Friday

Courtesy of Chris Kimble.

Could historical outflows present an opportunity? Yesterday Sentimentrader.com reported that outflows from Gold Miners ETF’s GDX and GDXJ topped $800 million on 4/26, the largest single day outflows in history. 

Below looks at Gold Miners ETF GDX, reflecting where these large outflows took place.

CLICK ON CHART TO ENLARGE

The long-term trend since...



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Insider Scoop

Exclusive: Ritter Pharmaceuticals CEO Talks Stock Scare, Indication Niche

Courtesy of Benzinga.

Andrew Ritter, co-founder and president of Ritter Pharmaceuticals Inc (NASDAQ: RTTR), has found his niche.

There are currently no FDA-approved treatments or reliable over-the-counter remedies for the 40 million Americans suffering lactose intolerance, and to Ritter’s surprise, no biotech firm except his is focusing in on the space.

“I don’t know [wh...



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Chart School

Semiconductors Tick Along

Courtesy of Declan.

It was another quiet day for indices but the Semiconductor index was able to add over 1% on the day. This also helped post gains to the Nasdaq 100, although there was a relative gain for the Semiconductor Index against the latter index.


The Nasdaq 100 registered an accumulation day despite its underperformance against Small Caps. The index remains well placed to make a move to upper channel resistance.

...

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Digital Currencies

Bitcoin Spikes To Record Highs

Courtesy of ZeroHedge. View original post here.

US dollar prices for virtual currencies are soaring. Both Bitcoin ($1343 highs) and Ethereum (as we described previously) are at new record highs as China regulators/exchanges appear to have 'stabilized', fears over the so-called 'hard fork' have abated, and hopes for an ETF have been revived by an SEC review.

Back above the price of gold and at record highs, Bitcoin rallied notably overnight after China's largest bitcoin exchanges introduced a flat 0.2% fee on eac...



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OpTrader

Swing trading portfolio - week of April 24th, 2017

Reminder: OpTrader is available to chat with Members, comments are found below each post.

 

This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...



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Members' Corner

Should I buy that stock?

Courtesy of Phil Stasukaitis (pstas)

I was asked by my local investment club to do a presentation on "how to buy a stock?" As I pondered the question, I began by noting all the elements that I monitor regularly and which come in to play as part of my decision process. As the group is comprised novices to experts, I tried to gear my discussion to cover both basics and more advanced concepts.

Four Part Discussion

  1. Macro Economic Indicators
  2. Market Indexes
  3. Fundamental Analysis
  4. Technical Analysis

1. Macro Economic Indicators

We'll start with reviewing some basic concepts and measurements that have direct effects on the stock market. 

A. Gross Domestic Product (GDP)

...

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Mapping The Market

Bombing - Right or Wrong?

Courtesy of Jean-Luc

I am telling you Angel – makes no sense… BTW:

Republicans Love Bombing, But Only When a Republican Does It

By Kevin Drum, Mother Jones

A few days ago I noted that Republican views of the economy changed dramatically when Donald Trump was elected, but Democratic views stayed pretty stable. Apparently Republicans view the economy through a partisan lens but Democrats don't.

Are there other examples of this? Yes indeed. Jeff Stein points to polling data about air strikes against Syria:

Democr...



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Biotech

CAR-T & CRISPR - the Future is Now

Reminder: Pharmboy is available to chat with Members, comments are found below each post.

PSW Members....it has been a while since my last post, but since many have all been on the board following the chat, it is time for a scientific lesson in a few of the companies we are long.  In addition, another revolution is coming in the medical field, and it will be touched upon as well.

CAR-T - stands for Chimeric antigen receptors (CARs) and the T is for T-cell.  

From the picture above, T-cells are one cell type of our immune system that fight off infection as well as they are one player at keeping rogue cells from becoming cancerous. Unfortunately, cancer somehow evades the immune system and so it begins.

CAR-T came along in the late1980s via a brilliant scientist, Zelig Eshhar...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

Here's a free ebook for you to check out! 

Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

Some other great content in this free eBook includes:

 

·       How 2017 Will Affect Oil, the US Dollar and the European Union

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All About Trends

Mid-Day Update

Reminder: Harlan is available to chat with Members, comments are found below each post.

Click here for the full report.




To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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