Looks like the bank losses are stopping Goldman Sachs post $1.8bn 1st 1/4 profit.

lostinrates

Really2 wrote: »

They were producing writedowns in quarters before. I can't see them being alowed to change acounting methods.
In the US they have to write down loans to the asset value on the open market as far as I know (simplisticaly).

As I say I don't know exactly, but I do know certain things are being done,I can try and find out though I am most certainly not saying its an attempt to be dishonest or duplicitous, or whether its new or not...although I believe it is new. I'm just saying its happening in some banks,for whatever reasons.

ETA: I understand both sets of figures are made public with a few days inbetween in the examples I'm thinking of

as for the rest, *MF* is pretty much right, lol. There are known unknows that I know next to nothing about

*MF*

Rumsfeld springs to mind

As we know,
There are known knowns,
There are things we know we know.

We also know
There are known unknowns.

That is to say
We know there are some things
We do not know.

But there are also unknown unknowns,
The ones we don’t know we don’t know.

Really2

mbga9pgf wrote: »

That graph simply shows when mortgages reset. it does not predict the scale of the losses. All we have to go on is what has happened before in relation to the graph and correlate what will happen in the future with the graph.



you want to hazard a guess at the reset rates for sub-prime, alt-a (liar loan) and Option ARM mortgages? We aint talking base +1% here!

But your graph shows Alt A as the problem now not sub prime. i would say they could mostly get a rate a lot lower than a few years ago.

Can you prove that Alt-a is liar loans? No.

To Add you can not use the sub-prime lending model to predict what will hapen with other "bands" 130% to a person who could not aford it was always going to be a default and a massive loss.

mbga9pgf

Really2 wrote: »

But your graph shows Alt A as the problem now not sub prime. i would say they could mostly get a rate a lot lower than a few years ago.

Can you prove that Alt-a is liar loans? No.

Really2, read up on option arm on wikipedia and find out how hideously problematic it is going to be.

From wikipedia:

Characteristics of Alt-A

Within the U.S. mortgage industry, different mortgage products are generally defined by how they differ from the types of "conforming" or "agency" mortgages, ones guaranteed by the Government-Sponsored Enterprises (GSEs) Fannie Mae and Freddie Mac.
There are numerous factors that might cause a mortgage not to qualify under the GSEs' traditional lending guidelines even though the borrower's creditworthiness is generally strong. A few of the more important factors are:
Reduced borrower income and asset documentation (for example, "stated income", "stated assets", "no income verification")
Borrower debt-to-income ratios above what Fannie or Freddie will allow for the borrower credit, assets and type of property being financed
Credit history with too many problems to qualify for an "agency" loan, but not so many as to require a subprime loan (for example, low FICO score or serious delinquencies, but no recent charge-offs or bankruptcy)
Loan to value ratios (percentage of the property price being borrowed) above agency limits for the property, occupancy or borrower characteristics involved

i would say they could mostly get a rate a lot lower than a few years ago.

Oh yeah? Prove it. bearing in mind many on Option ARM now have mortgages bigger than their home value, some by a considerable margin. Then factor in the uncertainty of jobs. Then factor in the credit crunch. I think you arent looking at the facts, that real interest rates, as opposed to base rates in the US and the UK for those with low or negative equity are higher than they were before they cut rates. Banks are practically admitting these individuals are lost and are simply waiting for them to go bust.

All of this does not get around the fact that any brief letup in writedowns will come back and come back harder.

some nice piccies here too:

http://www.calculatedriskblog.com/2009/03/march-economic-summary-in-graphs.html

To Add you can not use the sub-prime lending model to predict what will hapen with other "bands" 130% to a person who could not aford it was always going to be a default and a massive loss.

House prices according to case-shiller are down 30% in the US. That is effectively everyone then, on average, who got a 100% mortgage at the top of the market. Not necessarily sub-prime note, but certainly now in deep doo-doo.

Option Arm, not subprime, but negative ammortisation allows the mortgage to grow up to between 110-125% of the original mortgage value (note nothing to do with equity here) before there is a shock reset, the owner needs to fund a mortgage that was 125% higher than it was originally, using a standard repayment model. You have to ask, if he was deferring payments in the first place, as apparently a large percentage of option-arm mortgage owners have been doing, then how the heck will they afford the shock repayments? HE wont, and this is why I believe, option ARM is going to blow subprime out of the water.

Andrew64

When you consider what American banks have been up to for the last few years, you do have to wonder how much of this profit is creative accounting. There are still a lot of US banks to report this month - lets see what they're like.

GucciMane

What Goldman Sachs didn't tell you is they re-adjusted their reporting schedule from Dec to Jan. Hence the 3 months to March made a profit. But the month of December that made a $1bill loss didn't have to be reported! Erased, Vanished, Disappeared! Fraud I say!

These banks are being creative now to fool the public!

ad44downey

Really2 wrote: »

Looks like the US banks have now got there head above the water.

http://news.bbc.co.uk/1/hi/business/7997377.stm


Goldman Sachs has reported a $1.8bn (£1.2bn) net quarterly profit, beating analyst expectations and a day early. In contrast, the previous quarter had seen the firm post its first quarterly loss since going public in 1999.

It's an investment bank so I can't see how you can draw any conclusions from this. Our mortgage lending UK banks are still stuck in the mire.

Really2

ad44downey wrote: »

It's an investment bank so I can't see how you can draw any conclusions from this. Our mortgage lending UK banks are still stuck in the mire.

I presume they would have traded mortgage derivatives markets.

ad44downey

It doesn't matter anyway. As GucciMane eloquently illustrated they just made the profit up; normal bank practice in recent years admittedly.

chucky

GucciMane wrote: »

What Goldman Sachs didn't tell you is they re-adjusted their reporting schedule from Dec to Jan. Hence the 3 months to March made a profit. But the month of December that made a $1bill loss didn't have to be reported! Erased, Vanished, Disappeared! Fraud I say!

These banks are being creative now to fool the public!

where did they do this - do you have a link to it?