Check Out Chris Whalen’s Terrifying Presentation On The 2011 Foreclosure Crisis
by ilene - October 9th, 2010 6:42 pm
Check Out Chris Whalen’s Terrifying Presentation On The 2011 Foreclosure Crisis
Courtesy of Gus Lubin at Business Insider
The biggest bear in foreclosure-gate is Institutional Risk Analytic’s Chris Whalen.
At a conference Wednesday, Whalen said the foreclosure crisis would make 2008 look like a cakewalk (via Prag Cap):
"The U.S. banking industry is entering a new period of crisis where operating costs are rising dramatically due to foreclosures and defaults. We are less than ¼ of the way through the foreclosure process."
Whalen says subprime losses never really showed up on balance sheets. But a coming wave of foreclosures will make them a reality. At a time when banks are already stressed, these rising operational costs will cause bankruptcy.
Even without foreclosure-gate banks were screwed. As the government stalls the clear out of toxic assets, bank liabilities will rise even more.
Click here to see Whalen’s presentation >
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Bank Of America To Stop Charging 31,200% Interest
by ilene - March 10th, 2010 12:24 pm
Karl asks why do we let Congress and the Federal Reserve continue their reign of assault against us. - Ilene
Bank Of America To Stop Charging 31,200% Interest
Courtesy of Karl Denninger at The Market Ticker
No, that’s not a misprint.
Let’s say you went to Starbucks and bought a $5 Latte. You swiped your debit card and didn’t have the $5 in your account.
Bank of America would charge you a roughly $30 overdraft fee, amounting to 600% of your purchase for a loan of that $5 for as little as one day. That’s bad enough.
Let’s assume you paid that overdraft fee (and the $5) in one week. There are 52 weeks in a year and the bad news is that when computing the annual percentage rate you must divide the interest charged by the percentage of a year you held the money to get the APR. Thus, 31,200% interest on an "annualized" basis, assuming you pay it in one week (it’s 218,400% if you pay it off the next morning!)
The bank will soon stop doing this, and in fact is mandated to do so without getting permission first for each transaction, as of June 1st.
The question that should be asked is why we should have to wait until June 19th for new accounts, or August 1st for existing accounts, never mind why this sort of outrageous behavior has been permitted in the first place.
Guido on the corner typically will charge you something obscene like 500% interest over the course of a year.
The banksters put Guido to shame.
How much do the banksters make off this? Some $1.77 billion annually, at last count. None of which, I might add,…
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Bad C’s
by ilene - October 31st, 2009 2:04 pm
Bad C’s prompts me to recycle my introduction to George Washington’s Blog’s "The Ongoing Cover Up of the Truth Behind the Financial Crisis May Lead to Another Crash":
Our freedom depends on our government enforcing and abiding by the law. It’s apparent that we are headed down the slippery slope Justice Louis Brandeis describes in Olmstead v. United States (1928):
"In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. Crime is contagious. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself. It invites anarchy."
We have the Federal government’s massive and flagrant display of lawlessness, and population somewhere on the way from apathy to dependency in the Fatal Sequence cycle of civilization. – Ilene
Michael Panzner elaborates on this theme:
Bad C’s
Courtesy of Michael Panzner of Financial Armageddon
Before the era of Frankenstein Finance and the fanatical focus on fee-based income, lenders tried to hold themselves out as models of probity (for the skeptics out there, I did say "try."). Those responsible for making credit-granting decisions and looking after the interests of shareholders also demanded that borrowers meet certain standards before they would see even a dime of their employers’ money. These criteria are known as the "5 C’s of Credit," which are the
key elements a borrower should have to obtain credit: character (integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy).
In an interesting twist of fate, the firms that have traditionally decided who should get credit have been put in the position of needing extraordinary amounts of other people’s money just to stay alive. Unfortunately, based on what we’ve seen so far, including reports like those that follow, it’s doubtful whether most, if not all, of today’s troubled financial institutions would even qualify for a loan based on traditional measures of suitability — like "character," for example — if their friends in high places weren’t so intimately involved in the process.
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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...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site