Posts Tagged ‘Sheila Bair’

FDIC’s Bair: “Bury the Losses”

FDIC’s Bair: "Bury the Losses"

Courtesy of Bruce Krasting

Sheila Bair has turned a corner in her support of the bankers. On the critical issue of accounting clarity she made these remarks today to a bunch of CPA’s. I hear she got a standing ovation from that audience. Her words:

Fair Value Accounting
Another ongoing regulatory process is FASB’s proposal to substantially revise the accounting standards for financial instruments. Under the proposed rule, banks would be required to measure substantially all of their financial instruments at fair value on the balance sheet.
 
While we understand that the objective of the rule is to make financial statements more transparent, we believe that its effect could be to undermine financial stability by making bank performance more procyclical. In short, we do not believe that a bank – whose business strategy is to hold loans and deposit liabilities for the long term – should be required to measure them at fair value on the balance sheet.

70% of all Americans own some stocks. It is hard to avoid the financials if you’re in a fund, so the consumer’s new champion, Elizabeth Warren, should take up the issue of clarity on bank financial statements. That would be a cat-fight I would like to see.

 


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SOME BAILOUT QUESTIONS FED CZAR ‘BERNANKE THE MAGNIFICENT’ STILL HASN’T ANSWERED (BEATDOWN)

MUST READ: Some Bailout Questions FED Czar ‘Bernanke The Magnificent’ STILL Hasn’t Answered (Beatdown)

Courtesy of The Daily Bail 

Fed Chairman Bernanke

Ben Bernanke

Hank Paulson Ben Bernanke Bailout TARP Cartoon

Why were bank bondholders made whole, while taxpayers got shafted?  That’s the most important question of all, yet no one has ever asked him.

Two exceptional editorials from the WSJ earlier this week.  Reprinted with permission.

On the key facts behind the bailouts of 2008, regulators have stonewalled the public, the press and even the inspector general of the Troubled Asset Relief Program. On Wednesday, we’ll find out if they can also stonewall the Financial Crisis Inquiry Commission.

Chairman Phil Angelides and his panel will begin two days of hearings on the subject of "Too Big to Fail," featuring testimony from Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corporation Chairman Sheila Bair.  Across bailouts from Bear Stearns to AIG, the government has refused to release its analysis of the "systemic risks" that compelled it to mount unprecedented interventions into the financial system with taxpayer money.  Two years after the crisis, Mr. Angelides and his colleagues should finally let the sun shine on this critical period of our economic history.

A year ago we told you about former FDIC official Vern McKinley, who has made a series of Freedom of Information Act requests.  He wanted to know what Fed governors meant when they said a Bear Stearns failure would cause a "contagion."  This term was used in the minutes of the Fed meeting at which the central bank discussed plans by the Federal Reserve Bank of New York to finance Bear’s sale to J.P. Morgan Chase.  The minutes contained no detail on how exactly the fall of Bear would destroy America.

He also requested minutes of the FDIC board meeting at which regulators approved financing for a Citigroup takeover of Wachovia.  To provide this assistance, the board had to invoke the "systemic risk" exception in the Federal Deposit Insurance Act, and it therefore had to assert that such assistance was necessary for the health of the financial system.  Yet days later, Wachovia cut a better deal to sell itself to Wells Fargo, instead of Citi.  So how necessary was the assistance?

The regulators have been giving Mr. McKinley the Heisman, but two weeks ago federal Judge Ellen Segal Huvelle made the FDIC show her the Wachovia documents. She is still…
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Seniors Need Yield But Nowhere Good To Go; FDIC Moral Hazard Yet Again

Seniors Need Yield But Nowhere Good To Go; FDIC Moral Hazard Yet Again

Courtesy of Mish

Senior Couple Taking Stroll

One of the many massive distortions caused by the Fed’s miserable policies is hitting hard on senior citizens who cannot afford stock market losses but need fixed income to live on.

"California Banker" writes

Hey Mish

During the past several weeks we’ve had a lot of seniors coming to the bank as their certificate of deposits of mature. They are very disgruntled about the rate environment in general as bank rates are much lower than a year ago.

Many of these seniors are 70 and up and are using the interest to live on in retirement, so their interest income has taken a hit. I imagine most of those living off their interest will likely need to burn net worth to maintain living expense.

Some are moving their deposits to banking institution that a paying a slightly higher rate, which is typically an institution that is struggling and needs the deposit.

"California Banker"

To make a few extra pennies, senior citizens pull money out of rock solid institutions in favor of pathetically undercapitalized, troubled banks. But hey, it’s FDIC insured. Why not?

Hello Sheila Bair, can’t you see what’s happening?

Mike "Mish" Shedlock

 


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BAIR MUST RESIGN: Conflict Of Interest

BAIR MUST RESIGN: Conflict Of Interest

Courtesy of Karl Denninger at The Market Ticker

Financial Crisis Inquiry Commission Holds First Public Hearing

What the hell is THIS?

Sheila Bair, one of the chief regulators overseeing Bank of America’s federal rescue, took out two mortgages worth more than $1 million from the banking giant last summer during ongoing negotiations about the bank’s bailout and its repayment.

It gets better…

Mortgage documents for that 14-room home include a provision, known as a second-home rider, stating that Bair and her husband must keep the house for their “exclusive use and enjoyment” and may not use it as a rental or timeshare.

Yet the couple has been renting out part of the house since they left for Washington, with Bair listing income from the “rental property” in Amherst as between $15,000 and $50,000 a year on her most recent financial disclosure form as head of the FDIC.

Oh yeah, there’s no conflict of interest here cough-friends-of-angelo-cough!

Of course the FDIC retroactively gave her a waiver from its conflict of interest rules – AFTER The Huffington Post started snooping around.

And of course the FDIC’s ethics officer says there was nothing wrong with what went on – even though it appears that Bair’s use for the property did not qualify for the loan she got, and that the programs that would qualify would and did carry a higher rate.

If, as the FDIC claims, this was an "innocent mistake" then Bair should immediately demand (and accept) a re-price on that paper to conform with her intended and actual use, retroactive to the issue of the loan, and immediately pay all accrued arrears.

We know that won’t happen though, right?

 


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Seven Banks Fail, 140 YTD total, Sheila Bair “prepared to handle an ever-larger number of bank failures next year”

Seven Banks Fail, 140 YTD total, Sheila Bair "prepared to handle an ever-larger number of bank failures next year"

bank failureCourtesy of Mish 

A total of 140 banks have failed year to date and FDIC Chairman Sheila Bair is adding staff, prepared for even more failures next year.

Please consider Seven U.S. Banks Are Seized, Raising Year’s Failure Toll to 140

Seven U.S. banks were seized by regulators today, bringing this year’s total of failed lenders to 140 as financial companies are tested by the recession and the Federal Deposit Insurance Corp. anticipates more shutdowns.

Banks with $14.4 billion in total assets were closed in six U.S. states, the FDIC said in statements on its Web site. The agency is overseeing the dissolution of banks at the fastest pace in 17 years.

Earlier this week, the FDIC boosted its 2010 budget by 56 percent to $4 billion to manage further shutdowns. The total budget will increase from $2.6 billion and the set-aside for bank failures doubles to $2.5 billion over this year, according to a proposal approved by the FDIC board. The agency staff will increase to 8,653 next year from 7,010 this year.

The budget “will ensure that we are prepared to handle an ever-larger number of bank failures next year, if that becomes necessary,” FDIC Chairman Sheila Bair said in a statement. Today’s bank closings will cost the agency about $1.8 billion, according to the FDIC statements.

U.S. lenders are buckling under the weight of loans tied to commercial real estate, which is plummeting in value. Prices have dropped 43 percent from their peak in October 2007, Moody’s Investors Service said last month.

Sheila Bair, tooting Obama’s horn, complains banks aren’t lending enough.

Looking for a reason banks aren’t lending? Here is one reason in pictorial form.

Assets at Banks whose ALLL exceeds their Nonperforming Loans

The above chart courtesy of the St. Louis Fed.

Because allowances for loan losses are a direct hit to earnings, and because allowances are at ridiculously low levels, bank earnings (and capitalization ratios) are wildly over-stated.

Here is an interesting note from the Fed. "For each size category, the sum of all assets held by banks where this ratio is greater than one is divided by the sum all assets held by banks in the class."

In other words, banks whose allowances are
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The FDIC Must Be Indicted

The FDIC Must Be Indicted

Courtesy of Karl Denninger at The Market Ticker

The 2009 Women's Conference - Day 2 - Long Beach, California

Yeah, ok, the title is dramatic and will never happen.

Nonetheless, if we were truly a nation of laws, it would happen.

The LA Times notes regarding IndyMac depositors over the insurance limit:

The head of the Federal Deposit Insurance Corp. delivered some bad news personally to uninsured depositors who lost money last year when IndyMac Bank crashed and burned, saying an act of Congress is their only hope for recovering their funds.

“When a bank fails, we have to do what’s least-cost to our deposit insurance fund,” FDIC Chairman Sheila Bair said during a public appearance Wednesday in Los Angeles.

Sheila is correct as far as she goes, but like most government employees, it is what she didn’t say that is the problem, not what she did.

The problem lies with the willful and intentional refusal to enforce black-letter law, in this case Title 12, Chapter 16, Section 1831o which says in part:

Each appropriate Federal banking agency and the Corporation (acting in the Corporation’s capacity as the insurer of depository institutions under this chapter) shall carry out the purpose of this section by taking prompt corrective action to resolve the problems of insured depository institutions.

"Shall" is a specific term of art in legislation.  It allows no discretion and mandates action.  "May" and "Can" are two other words of course, and mean what they say – as does "shall."

This section of the law goes on to define capitalization "buckets," each of which represents a level above water, or above zero, of the excess of assets .vs. liabilities for depository institutions.

It also contains plenty of other "shall" directives such as:

Each appropriate Federal banking agency shall—
(A) closely monitor the condition of any undercapitalized insured depository institution;
(B) closely monitor compliance with capital restoration plans, restrictions, and requirements imposed under this section; and
(C) periodically review the plan, restrictions, and requirements applicable to any undercapitalized insured depository institution to determine whether the plan, restrictions, and requirements are achieving the purpose of this section.

and plenty more.

Everyone should go read…
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FDIC: The Lady Doth Protest Too Much

Visit with Kenneth Bell, President of Aspera Financial, LLC, at Market Rubbernecker - Ilene

FDIC: The Lady Doth Protest Too Much

Courtesy of Ken Bell

Investment rule: The more they tell us not to worry, the more there is to worry about.

link to video
 

Video: The Button

I like to think of the cast as follows:

  • Mr. Mathison is Goldman Sachs
  • "Someone somewhere in the world…" is the American taxpayer
  • The button is Congress
  • The million dollars is the bailout

The Button – watch more funny videos

 


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Infamia e Disgrazie: Is Sheila Bair an Unsophisticated Hick?

In defense of "unsophisticated hicks,"

Infamia e Disgrazie: Is Sheila Bair an Unsophisticated Hick?

Sheila BairCourtesy of Jesse’s Café Américain

"Flagrant evils cure themselves by being flagrant; and we are sanguine that the time is come when so great an evil…cannot stand its ground against good feeling and common sense…" John Henry Newman

The reporter on Bloomberg television just mentioned as a snide, smirking editorial aside, that Sheila Bair feels that a million dollars is a lot of pay for one year, and that ten million is excessive for a deposit taking institution. He noted that she is obviously a Washingtonian, and not a New Yorker.

That’s right. A million dollars annual pay is ‘nothing.’ Even ten million is not much pay for an average Wall Street banker that is taking billions in public funds and gaming the financial system.

The obvious implication is that Ms. Bair is some hick regulator who is not as sophisticated as, let’s say, Larry Summers, Tim Geithner, or Ben Bernanake when it comes to rewarding their Wall Street cronies for allowing the economy to continue unimpaired.

Perhaps he was attempting to sneak a bit of irony into the propaganda that passes for news in the States these days, but it was not obvious.

But he might be right. When the monetary inflation from all this financial corruption hits, a million dollars per year might yet be a ‘livable wage.’

And so goes the "downward spiral of dumbness." Keep these metrics in mind when you look at your next credit card bill, mortgage payment, and paycheck, rubes, and send your tribute to Caesar.

Bair Says U.S. Regulators Should Set Pay Standards for Banks

By Alison Vekshin and Erik Schatzker

Aug. 5 (Bloomberg) — Federal Deposit Insurance Corp. Chairman Sheila Bair said regulators should set pay standards for U.S. banks to ensure incentives encourage long-term performance without setting specific dollar limits.

Banking agencies should “become more active” in using existing authority to set compensation standards that are “principles-based,” Bair said today in an interview with Bloomberg Television in Washington.

“We do need to revamp the system to make sure that the incentives are long-term,” Bair said. “I do wish some of these firms would exercise better restraint and common sense on what they’re paying their folks.”

Bair echoed concerns of House Financial Services Committee Chairman Barney Frank and other lawmakers…
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Cramer Bair’ed

Courtesy of Tyler Durden at Zero Hedge

Cramer Bair’ed

Sheila Bair on Cramer today. Instead of pandering her flawed policies in front of a small (if any) cable audience, with such pearls as "insured depositors have nothing to worry about", maybe Ms. Bair can finally get back to Zero Hedge in its FOIA request attempting to obtain some/any information on just what is the compensation/fee structure for FDIC’s advisor, and the real man behind the curtain, Perella Weinberg. How is this private investment bank/hedge fund, whose succumbing to Ratner’s bullying attempts recently was the main reason for the non-Tarp lenders to abandon their fight to block the Chrysler 363 asset sale, incentivized to advise Sheila and her henchmen when it comes to deciding which bank(s) to close. And not just that, but one would be interested in finding out just what role did Perella Weinberg play in the negotiations between Carlyle, Blackstone and Ross when they acquired BankUnited, and, more relevantly, what fee did P-W get out of that deal.

Please Ms. Bair – at least a flat out refusal to our FOIA request would be sufficient. In the meantime, if readers would like to join this effort, the FDIC’s FOIA submission page is here.

Listen to the interview below and focus on the language about economists and examiners (~2 minutes into the interview): these are the people on whom the fate of the financial system lies.

 

 

 


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Zero Hedge

Recession Concerns Grow After Gasoline Demand Slides Most In 16 Years

Courtesy of ZeroHedge. View original post here.

Two weeks ago, we reported that when Goldman observed the latest gasoline demand data, it said that either something must be wrong with the data, or the US is in a recession: as the firm's commodity analyst Damien Courvalin put it, such a steep drop in in US gasoline demand "would require a US recession." He added that "implied demand data points to US gasoline demand in January declining 460 kb/d or 5.2% year-on-year. In the absence of a base effect, such a decline has only occurred in four periods since 1960 during which time PCE contracted."

Bloomberg's ...



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ValueWalk

Remembering Kenneth Arrow

By The Foundation for Economic Education. Originally published at ValueWalk.

Yesterday, Nobel Prize winning economist Kenneth Arrow died. Many first-rate appreciations of him have been published and I won’t try to duplicate what they have said.

Rather, I’ll give my own recollections of Arrow.

And I’ll lead with one joke told my someone on Facebook. I won’t quote him by name because I don’t have permission. To get the joke, you need to read the first paragraph of my bio of Arrow in The Concise Encyclope...



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Phil's Favorites

Cincarious Research's outdated note on FireEye, posted at Zero Hedge

Note: Cincarious Research contributed the article LifeLock Willing To Give FireEye $16 Per Share In Takeover Offer - Sources to Zero Hedge. It appears to be fake - or at least old - news.

Read this: Who or what is “Cincarious Research?”

Cincarious Research writes,

LifeLock is looking to revamp itself with a purchase of FireEye according to a few of our sources in the security space that are privy to the on-going conversation. We were told the company is seeking to expand offerings and the added cyber-security depth from FireEye on the government level is what LifeLock wants, badly. The deal is set for $16 per share for a total va...



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Kimble Charting Solutions

Gold & Silver; Knocking on breakout door again!

Courtesy of Chris Kimble.

Silver and Gold have continued to head lower since highs reached back in 2011. Is the 6-year bear market nearing an end?

Below looks at the Silver/Gold ratio over the past decade. To be long and strong Silver and Gold, the preference would be for this ratio to be heading higher.

CLICK ON CHART TO ENLARGE

The ratio has formed a clean falling channel (series of lower highs and lower lows) inside of (1). Three different times it knocked on the underside of falling...



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Market News

News You Can Use From Phil's Stock World

 

Financial Markets and Economy

Oil Sands Batter Major Explorers' Reserves as Rout Sinks Value (Bloomberg)

Oil-sands investments in Western Canada that gobbled tens of billions of dollars over the past decade are proving an Achilles heel for some of the world’s biggest energy producers.

A definitive breakdown of the gloomy state of Wall Street (Business Insider)

Don't be fooled by the strong rebound in Wall Street trading revenues at the end of 2016: Investment banks still had a lousy year.

...



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Chart School

Market Pause

Courtesy of Declan.

Nothing really to add to yesterday. Markets took minor hits, but there was little intraday spread. The biggest spread was in the Russell 2000 which was underperforming heading into today's session. It reversed most of yesterday's gains, but it has some way to go before it begins challenging the breakout


The New Lows and Highs is in a secular bullish pattern, and it will take continued pressure in spike lows to generate a sustained sell off - none of which is happening here.

...

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Digital Currencies

It's Time To Beat Up On Credit Suisse and Their Woefully Misinformed Bitcoin Advice

Courtesy of Reggie Middleton at Zero Hedge

Credit Suisse has been posting cryptocurrency advisories over the last few weeks. They are quite one-sided, although couched in the appearance of objectivity. To explain why it's couched in the appearance of objectivity, and not actually objective, let me give you some background. 

The Obama administration enacted a law known as the Fiduciary Rule, as per Investopedia

The Department of Labor’s definition of a fiduciary demands that advisors act in the best interests of their clients, and to put their clients' interests above their own. It leaves no room for advisors to conce...



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Members' Corner

Lumber Liquidators Leukemia?

Courtesy of The Nattering Naybob

Phil – LL –   "I can see the ad campaign now: "Our lumber hardly kills you!" 

We Nattered... Today Feb 23, 2016 down -19.5% premarket from $14.21 to $11.27.   

Somebody forgot to convert feet to meters. The CDC said it made an ERROR in the Feb 10th report and had used an incorrect value to calculate ceiling height, which meant its estimates of the airborne concentration of cancer-causing formaldehyde were about three times lower than they should have been. 

Considering myeloid leukemia, some cancers and formaldehyde are linked at the hip, wonder if overexposure had anything to do with the CEO's leukemia?  

LL subsequently went to $19.67 on Sept 30th and has since cooled down to $15....



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OpTrader

Swing trading portfolio - week of February 20th, 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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Mapping The Market

NSA May Be Withholding Intel from President Trump

By Jean Luc

These GOP guys were so worried about Hillary's email server and now we find out that we had something close to a Russian mole in the White House. In the meantime, Trump keeps on using his unsecured phone, had high level conversation in his resort in front of dinner guests! It's getting so bad that rumors are now circulating that the NSA is not sharing information with the WH:

NSA May Be Withholding Intel from President Trump

By 

….Our spies have had enough of these shady Russian connections—and they are starting to push back….In light of this, and out of worries about the White House’s ability to keep secrets, some of our spy agencies have begun withholding intelligence fro...



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Promotions

Phil's Stock World's Las Vegas Conference!

Learn option strategies and how to be the house and not the gambler. That's especially apropos since we'll be in Vegas....

Join us for the Phil's Stock World's Conference in Las Vegas!

Date:  Sunday, Feb 12, 2017 and Monday Feb 13, 2017            

Beginning Time:  9:30 to 10:00 am Sunday morning

Location: Caesars Palace in Las Vegas

Notes

Caesars has offered us rooms for $189 on Saturday night and $129 for Sunday night but rooms are limited at that price.

So, if you are planning on being in Vegas (Highly Recommended!), please sign up as soon as possible by sending...



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Biotech

The Medicines Company: Insider Buying

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

I'm seeing huge insider buying in the biotech company The Medicines Company (MDCO). The price has already moved up around 7%, but these buys are significant, in the millions of dollars range. ~ Ilene

 

 

 

Insider transaction table and buying vs. selling graphic above from insidercow.com.

Chart below from Yahoo.com

...

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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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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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Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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