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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Phil's Favorites

Ray Dalio Is Kinda, Sorta, Really Wrong, Part 3

 

Ray Dalio Is Kinda, Sorta, Really Wrong, Part 3

Courtesy of John Mauldin, Thoughts from the Frontline 

Two weeks ago I started a mini-series in the form of an open letter responding to a series of essays by Ray Dalio, the founder of Bridgewater Associates. I wrote here and here that he was kinda, sorta wrong in Why and How Capitali...



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Zero Hedge

Exposing The Fed's False QE/QT Narrative With Its Own Data

Courtesy of ZeroHedge. View original post here.

Authored by Daniel Nevins via FFWiley.com,

“The fact that financial markets responded in very similar ways... lends credence to the view that these actions had the expected effects on markets and are thereby providing significant s...



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ValueWalk

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

 

Beyond Meat vs Impossible Burger: Comparing The Vegan Meat Burgers

Courtesy of Vikas Shukla, ValueWalk

Pexels / Pixabay

The trend of vegan food has been gathering momentum in the last few years as people become more health conscious. They have also begun to realize the environmental impact of raising meat for human consumption. According to PETA, it takes an estimated 1...



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Insider Scoop

Wedbush Steps To The Shopify Sidelines

Courtesy of Benzinga.

Shopify Inc (NYSE: SHOP) ha introduced multiple new initiatives to spur growth, but the stock's valuation is already full at current levels, according to Wedbush.

The Analyst

Wedbush's Ygal Arounian downgraded Shopify from Outperform to Neutral with a 12-month price target lifted from $270 to $305.

The Thesis

Shopif...



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Kimble Charting Solutions

Wilshire 5000 Creating A Triple Top? An Important Breakout Test Is In Play!

Courtesy of Chris Kimble.

The stock market has been on fire of late, rallying up to the edge of price resistance on several indexes. Today, we look at one of those stock market indexes: the Wilshire 5000.

The Wilshire 5000 tracks all of the stocks in the US market, so it is a broad-based index that carries significant importance when gauging the health of the overall US stock market.

Looking at the long-term “weekly” chart above, it is pretty clear that the index is at an important price juncture.

The Wilshire 5000 spent the last 25 years trading within a rising price channel (1)...



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Chart School

Formula for when the Great Stock Market Rally ends

Courtesy of Read the Ticker.

When valuations for the boring water company or the boring electric company is trading like your Facebook, Apple, Amazon or Netflix or Google (ie FANG) you know something is wrong.

This is when a seriously over valued market is screaming at you.

Of course the reader must understand in a world where money printing goes super nuts (Zimbabwe style) the stock market may go hyper inflationary and picking a time frame for a top is never a good idea, but we are not there yet. There is no Ben Bernanke helicopter money to the masses yet (ie MMT). 

To see when water company's (and such like) are nearing the crazy FANG like valuations a review of the Dow Jones Utility Index channel shows us how history can repeat. The c...

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Digital Currencies

Cryptocurrencies are finally going mainstream - the battle is on to bring them under global control

 

Cryptocurrencies are finally going mainstream – the battle is on to bring them under global control

The high seas are getting lower. dianemeise

Courtesy of Iwa Salami, University of East London

The 21st-century revolutionaries who have dominated cryptocurrencies are having to move over. Mainstream financial institutions are adopting these assets and the blockchain technology that enables them, in what ...



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Biotech

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

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

 

Consumer genetic testing customers stretch their DNA data further with third-party interpretation websites

If you’ve got the raw data, why not mine it for more info? Sergey Nivens/Shutterstock.com

Courtesy of Sarah Catherine Nelson, University of Washington

Back in 2016, Helen (a pseudonym) took three different direct-to-consumer (DTC) genetic tests: AncestryDNA, 23andMe and FamilyTreeDNA. She saw genetic testing as a way...



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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Mapping The Market

It's Not Capitalism, it's Crony Capitalism

A good start from :

It's Not Capitalism, it's Crony Capitalism

Excerpt:

The threat to America is this: we have abandoned our core philosophy. Our first principle of this nation as a meritocracy, a free-market economy, where competition drives economic decision-making. In its place, we have allowed a malignancy to fester, a virulent pus-filled bastardized form of economics so corrosive in nature, so dangerously pestilent, that it presents an extinction-level threat to America – both the actual nation and the “idea” of America.

This all-encompassing mutant corruption saps men’s souls, crushes opportunities, and destroys economic mobility. Its a Smash & Grab system of ill-gotten re...



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OpTrader

Swing trading portfolio - week of September 11th, 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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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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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.

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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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