Comments on: America’s Mark-to-Model Banking System (revisited)

By: Free of State » Blog Archive » DIGGING INTO THE MAIN COURSE AT THE BANQUET OF CONSEQUENCES — MORAL DISINTEGRATION FLAMBE

Sun, 07 Dec 2008 07:49:38 +0000

[...] the article entitled “America’s Mark-to-Model Banking System (revisited)” (Read here). He points out that everybody is focused on Level-3 assets, which are the obscure asset backed [...]

By: In The News Today | Credit Debt Report

In The News Today | Credit Debt Report — Fri, 21 Nov 2008 10:19:48 +0000

[...] More… [...]

By: BertDilbert

BertDilbert — Fri, 21 Nov 2008 05:09:17 +0000

Loren Said:

“So how does one survive (maybe even thrive) the 2008 Meltdown?”

Find a company that makes razor wire or one that does board ups.

By: Armando Solano

Armando Solano — Fri, 21 Nov 2008 04:20:08 +0000

Great spreadsheet about Level 1, 2, and 3 assets for the major banks! Please update and re-publish quarterly as this mess is far from over and people need to be reminded of the problem frequently. For a good record, keep the data for all banks even when they have gone bankrupt or been bought out; perhaps add a “Bank Status” column. Also, add totals for all columns in the spreadsheet. Keep up the good work!

By: Richard Estes

Richard Estes — Thu, 20 Nov 2008 22:37:34 +0000

yes, this was one of the most compelling Mr. Mortgage posts ever

By: Partyboy

Partyboy — Thu, 20 Nov 2008 22:28:50 +0000

Invest in the vice fund (ticker VICE). It is comprised solely of alcohol, tobacco and guns. Rock solid investment as people enjoy these things when times are good and when times are tough. Check it out.

By: Loren

Loren — Thu, 20 Nov 2008 22:18:14 +0000

So how does one survive (maybe even thrive) the 2008 Meltdown?

Short the XLF, specific banks? If I’m reading the tealeaves quasi-correctly, A high percentage of people will be upside down on their home? Their mutual funds will take a 50% haircut, and they or someone they know will loose their job.

What is the winning strategy?

By: Aaron Krowne

Aaron Krowne — Thu, 20 Nov 2008 21:07:54 +0000

Note that BofA’s equity has plummeted from $162B to around $50B. And that now INCLUDES Merrill (as well as Countrywide). Hmm…

Also note that Wells has done capital raises and is on that basis in a stronger position. However, I suspect they don’t mark any of their “held to maturity” portfolio to L2 or L3 (can anyone confirm?) We know Wells has probably enough second-lien loans and commercial/construction loans that, if classified as tradable, there would be a serious valuation hit.

By: Aaron Krowne

Aaron Krowne — Thu, 20 Nov 2008 20:59:23 +0000

Mr. Mortgage,

You aptly mention that the L2/L3 assets probably haven’t fallen much and may have even grown. However, there’s something just as important and in plain view that you don’t mention: their equity has plummeted!

Just real quick, the chart still has Citi at $136B of equity, when it is more like $24B now! Ambac is at $1.9B of equity, when it is more like $330M!

So the ratios are almost certainly way way worse now!

By: JAllen

JAllen — Thu, 20 Nov 2008 19:26:57 +0000

Mr. Mortgage,

Spread that chart around and invest in the producers of antacids and insomnia remedies.

JAllen