Banks strategically default

But remember, it’s immoral, wrong, and VERY bad for a homeowner to execute his contractual right to relinquish property to a lender:

Morgan Stanley, the securities firm that spent more than $8 billion on commercial property in 2007, plans to relinquish five San Francisco office buildings to its lender two years after purchasing them from Blackstone Group LP near the top of the market.

If you’re underwater on your mortgage, strategically defaulting and walking away from your property is not only your legal and contractual right, in many cases it is the financially responsible thing to do.  Worrying about impaired credit hardly makes sense when the banks don’t want to lend to anyone regardless of how good their credit is.  And recent history demonstrates that once the banks decide they want to start lending again, they’ll lend to anyone with a pulse.


Betraying the betrayers

The City belatedly realizes that when they sold out the British people, they sold themselves too. Chancellor Darling’s desperate plea for Brussels to leave London’s financial sector alone has a distinct “please don’t hit me” tone to it and is certain to fall on stone-deaf Franco-German ears:

It is too simplistic to argue that financial centres in Europe are just competing among themselves. The reality is the real competition to Europe’s financial centres comes from outside our borders. And that London, whether others like it or not, is New York’s only rival as a truly global financial centre. No other centre in Europe offers the same range of services: banking, insurance, fund management, law and accountancy. It is in all of Europe’s interests that they prosper alongside their close European partners.

Oh, it is too simplistic? Yes, surely that sophisticated argument will convince the unelected EU ruling class, who are openly drooling at the thought of taking their cut of great river of money flowing through the City, to leave London’s financial firms untouched. Meanwhile, French President Nicolas Sarkozy lost no time in declaring what the end of British sovereignty yesterday would mean for the City: “Do you know what it means for me to see for the first time in 50 years a French European commissioner in charge of the internal market, including financial services, including the City [of London]? I want the world to see the victory of the European model, which has nothing to do with the excesses of financial capitalism.”

In every revolution and betrayal, there is that intriguing moment when the now-useless revolutionary or traitor suddenly realizes that he’s been used and is about to be discarded. I think there are more than a few staunchly Europhilic politicians and bankers who are astonished today at the realization that they are not to be included among the masters of Eutopia.


Dubai cuts loose Dubai World

Since Dubai has announced it is going to blow off the Dubai World debt, it would seem rather obvious that Abu Dhabi isn’t about to volunteer to pay it either.

Dubai revealed last week that it would seek a standstill on debt repayments for Dubai World, a sprawling company that includes property developers, investment funds and a ports operation. Dubai had previously included Dubai World’s debts within its own total sovereign debt of $80 billion but it has said it has no obligation to the company’s lenders….

Abdulrahman al-Saleh, director-general of Dubai’s Department of Finance, said: “Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the Government, which is not true.”

That has sparked anger among some creditors, who believe that Dubai had given an implicit guarantee that its companies were state-backed.

But… but creditors are never supposed to take responsibility for anything! Don’t those backward sheikhs understand how a modern financial system works? It’s heads the banks win, tails the taxpayers lose! I imagine there are many people facing foreclosure that can recall promises and implicit guarantees they were made by their real estate agents and mortgage bankers too. Isn’t it interesting how banks always insist that it’s only the fine print on the contract that matters, right up until that fine print doesn’t serve their interests anymore. Dubai’s actions are particularly interesting in light of how the Federal Reserve and the U.S. Treasury have repeatedly covered the non-guaranteed debt of Fannie Mae and Freddie Mac at the expense of the U.S. taxpayer.


Banking Oct 2009 update

Bank failures: 115
Total Deposits: $7,566 billion
Failed Deposits: $107.2 billion
Failed Assets: $129.5 billion
Estimated Losses: $29.4 billion
Actual Losses est: $52.4 billion

Failed Deposits/Total Deposits: 1.42 percent
Estimated Losses/Failed Deposits: 27.4 percent
Actual Losses/Failed Deposits: 48.8 percent
Total loans & leases: -6.8 percent (6720.3, 10/14/09)

DIF balance Q3 reported: negative
DIF balance FDIC est: -7.7 billion
DIF balance actual est: -20.3 billion
FD/TD 1929: 0.47 percent
FD/TD 1930: 1.65 percent
FD/TD 1931: 3.60 percent
FD/TD 1932: 1.99 percent
FD/TD 1933: 8.55 percent
AL/FD 1929-1933: 25.66 percent

FD/TD 2008: 3.21 percent
AL/FD 2008: 14.99 percent

September’s figures


Banking 2009 update

Bank failures: 98
Total Deposits: $7,566 billion
Failed Deposits: $90.1 billion
Failed Assets: $108.2 billion
Estimated Losses: $26.4 billion
Actual Losses est: $51.2 billion

Failed Deposits/Total Deposits: 1.19 percent
Estimated Losses/Failed Deposits: 29.3 percent
Actual Losses/Failed Deposits: 56.8 percent
Total loans & leases: -6.3 percent

DIF balance Q3 reported: negative
DIF balance FDIC est: -4.8 billion
DIF balance actual est: -15.3 billion
FD/TD 1930: 1.65 percent
FD/TD 1931: 3.60 percent
FD/TD 1932: 1.99 percent
FD/TD 1933: 8.55 percent
AL/FD 1930-1933: 28.88 percent

FD/TD 2008: 3.21 percent
AL/FD 2008: 14.99 percent

September’s figures


Banking 2009 update

Bank failures: 92
Total Deposits: $7,566 billion
Failed Deposits: $85.0 billion
Failed Assets: $102.3 billion
Estimated Losses: $24.4 billion
Actual Losses est: $47.2 billion

Failed Deposits/Total Deposits: 1.11 percent
Estimated Losses/Failed Deposits: 28.7 percent
Actual Losses/Failed Assets: 46.6 percent
Total loans & leases: -4.6 percent (6,882.9, 08/19/09)

DIF balance Q2 reported: $10.4 billion
DIF balance FDIC est: -2.7 billion
DIF balance actual est: -11.8 billion

FD/TD 1930: 1.65 percent
FD/TD 1931: 3.60 percent
FD/TD 1932: 1.99 percent
FD/TD 1933: 8.55 percent
AL/FD 1930-1933: 23.77 percent

FD/TD 2008: 3.21 percent
AL/FD 2008: 14.99 percent