Panic stopped BUT who holds the toxic loans?

harryhound

With our taxes pledged to the depositors, for the moment, the panic is easing down.

Now is the time for a rational investigation:

Which banks are holding the mortgages that are at such low interest rates that they will never be profitable?

Which banks are holding recent mortgages with a loan to value ratio of more than 80%?

Who is holding the SIV packages of mortgages that have already slumped in value due to the falling dollar? What is the chance of the mortgage ever being repaid, even in devalued dollars?
(Am I right in thinking that these dodgy packages are shown in accounts as "assets", at their purchase price, not a balance between deposits and mortgages? and there is no legal obligation to revalue them, when they are obviously not worth their purchase price ?).

Which banks have the big delinquent credit card loans on their books?

There is money out there that has gone to money heaven - we need to know now, who is hiding the bad news.

Harrry

[Deleted User]

Well find out at the next round of shocks to be released.

This may take years to come out in the wash. No doubt people are busy with their paper cross-shredders destroying the evidence. Lots of arrests in america too, also investment banks stating they aint going to make any profits at teh moment.

You just need to watch TV debt help progs to see how stupid the banks have been.

harryhound

The Yanks have a bank quarterly reporting season coming up.
Remembering that over there the rules are very strict, the investors will sue at a moments notice in what is called a class action.
Remembering that one of the big firms of auditors went out of business in the Enron etc. scandals and the rest of them had to put their consultancy business at arms length (A friend of mine got flogged off to IBM) THEN:

It will be a brave auditor who lets lots of toxic loans go through at their face value ?

EdInvestor

Lehman Bros reported today that losses were lower than expectations, so the market has risen.Three more such banks reporting later this week.

Any minute now we ought to hear whether the US is lowering interest rates as well, which would help a lot.

mroller

no one actually know who is holding the toxic waste.
these mortgages have been securitizes and sold as ABS (asset backed securities) and then sliced and repackaged as CDOs (collateralized debt obligation) and further repackaged...

Few holders have emerged though, like the 2 hedge funds managed by Bear Stearns which lost 100% and 91% of their value:rotfl: :rotfl: :rotfl:

Browntrout_2

Look for the hockey stick shaped share price graph, as per NRK heading up to £12, anything that looks to good to be true probably is.

dunstonh

With our taxes pledged to the depositors, for the moment, the panic is easing down.

What taxes do you pay towards the FSCS?

The FSCS is paid for by financial services companies. Not the taxpayer.

EdInvestor

Don't worry Dunstonh.I don't think Mr Darling is expecting the IFAs to pay the cost of guaranteeing the banks.

Could be wrong of course.

dunstonh

Don't worry Dunstonh.I don't think Mr Darling is expecting the IFAs to pay the cost of guaranteeing the banks.

Could be wrong of course.

In reality, the FSCS seems to be more reactive. i.e. problem occurs, Govt pays it and then gets us (as in financial services companies) to pay them back. The levies are in part for the expectation for the year and in part catch up for past years.

With the endowments issue drying up, nothing else on the cards to replace it and the chance of a retail bank going under highly unlikely, I still think the FSCS levy could drop next year. They have doubled in the last 3 years so a drop would be nice.

harryhound

EdInvestor wrote: »

Any minute now we ought to hear whether the US is lowering interest rates as well, which would help a lot.

I agree that 1/2% off should make future USA mortgages easier to pay BUT aren't most of the mortgages over the pond fixed ? The toxic ones have accelerator clauses more or less intended to repossess the homes of the "sub prime" communities?

Put together with the danger of the dollar falling further (the Euro is up ?), this cut is hardly reassuring from a City of London perspective.

Harry.

purch

Who is holding the SIV packages of mortgages that have already slumped in value due to the falling dollar?

As usual no one seems aware that Hedging FX risk is cheap and easy and normal practice.