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TranceAddict Investors Club @ Marketocracy (pg. 163)
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| Krypton |
"Don't increase entitlements; cut costs"
All should start with defense spending. Get out of Iraq and Afghanistan, and get rid of a lot of these bases around the world. |
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| Capitalizt |
| quote: | Originally posted by Krypton
"Don't increase entitlements; cut costs"
All should start with defense spending. Get out of Iraq and Afghanistan, and get rid of a lot of these bases around the world. |
The anti-war party has had its hands on the government's purse strings since 2004 when they took both parties of congress..and they've owned all three branches of government since January. Whats the problem? |
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| Krypton |
| quote: | Originally posted by Capitalizt
The anti-war party has had its hands on the government's purse strings since 2004 when they took both parties of congress..and they've owned all three branches of government since January. Whats the problem? |
They aren't so anti-war are they? This is the problem with a plurality voting system. The entire political apparatus gravitates towards only two parties. I bet if Congress was proportionally representative, we'd get a lot more things done. |
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| occrider |
| quote: | Originally posted by Shakka
Perhaps to clarify, there is nothing that the Fed did during the entire crisis that physically reduced the money supply in any way, shape or form. The sources of credit that froze were not traditional sources of credit. The "Shadow Banking System" essentially disappeared. So while I readily acknowledge that vast amounts of credit have been pulled, I think we can all agree that it was not a traditional tightening of money supply which would result in a traditional disinflation/deflation that I (perhaps incorrectly) interpreted Krypton to be inferring. The money supply that the Fed controls was not lowered. Yes, they stepped in and provided credit where credit disappeared, but we never saw a decrease in the money supply, rather we saw a massive increase in the adjusted monetary base reflected by the Fed's balance sheet.
I don't know if we're even having a constructive dialogue or if we're just arguing minutiae.
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I would actually argue that the fed increased the money supply which was its intent the entire time. Someone had to pick for the slack in the shadow banking system.
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As much as I hate to say it, I even take some issue with the statement that "rampant deregulation" was a major contributor to the whole thing as I would argue it's more of a case where there were plenty of regulations in place, rather the regulators were not doing their jobs. It's amazing how lax people and institutions can become when everyone is living high on the hog and feeling euphoric. |
Were CDSs or OTC derivatives regulated? Regulation is clearly not adequate when we have to resort to TARP because of TBTF institutions. |
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| Shakka |
| quote: | Originally posted by occrider
I would actually argue that the fed increased the money supply which was its intent the entire time. Someone had to pick for the slack in the shadow banking system.
Were CDSs or OTC derivatives regulated? Regulation is clearly not adequate when we have to resort to TARP because of TBTF institutions. |
As I said, I take some issue with the statement. There's a difference between "rampant deregulation" and a lack of regulation on a few (albeit critical and massive) financial innovations that contributed to the morass. You have to admit it is kind of mind bottling that there are still some pretty prominent folks out there who will try to argue that the CDS market shouldn't be more regulated and transparent. I think Ace Greenberg must just be a bit senile.
I'll never forget when a fixed income trader at Bear Stearns called me up one day trying to sell my firm CDOs (probably late '06ish). We laughed him off the phone and to this date refuse to do business with him, let alone even talk to him on the phone. |
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| Shakka |
| quote: | Originally posted by Shakka
As much as I hate to say it, I even take some issue with the statement that "rampant deregulation" was a major contributor to the whole thing as I would argue it's more of a case where there were plenty of regulations in place, rather the regulators were not doing their jobs... |
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FDIC Failed to Limit Commercial Real-Estate Loans, Reports Show
2009-10-19 04:00:30.0 GMT
By Alison Vekshin
Oct. 19 (Bloomberg) -- The Federal Deposit Insurance Corp.
failed to enforce its own guidelines to rein in excessive commercial real estate lending by at least 20 banks that later collapsed, reports by the agency’s watchdog show.
The FDIC’s Office of Inspector General analyzed 23 lenders taken over by regulators from August 2008 to March and found that for 20, the agency’s examiners didn’t identify the issue early enough or should have taken stronger supervisory action after recognizing the banks had dangerously high levels of the loans before they failed. The findings are in separate reports posted this year on the inspector general’s Web site.
“It’s often we’ll see in our reports that the FDIC detected problems in the bank in a timely fashion, but in some cases forceful corrective action wasn’t required by the FDIC to be taken quickly enough,” Jon Rymer, the FDIC’s inspector general, said in a telephone interview.
The failure to follow up on the 2006 recommendation, that banks avoid letting commercial real-estate holdings exceed 300 percent of capital, has emerged as FDIC Chairman Sheila Bair steps up her effort to expand the agency’s role in regulating the financial-services industry.
Bair, a 55-year-old appointed by President George W. Bush, is lobbying the Democratic-led Congress to give the FDIC the authority to unwind any failing bank holding companies. The FDIC’s powers are limited to disassembling commercial banks and thrifts, and it lacks authority to unwind Federal Reserve- regulated holding companies such as New York-based Citigroup Inc. and Bank of America Corp. in Charlotte, North Carolina, that have businesses beyond taking deposits and making loans.
‘Stopped It’
“We should ask the prudential regulators why they did not do more to push banks to pay attention to their guidance,”
Representative Brad Miller, a Democrat from North Carolina, said in an interview. “If they thought their conduct was unsafe, it’s unsound, they certainly should have stopped it.”
Miller sits on the House Financial Services Committee, which oversees the FDIC and the banking industry.
“We are in process of addressing any existing gaps in supervisory policy with respect to commercial real estate lending,” FDIC spokesman Andrew Gray said in a prepared statement. “The FDIC has also stepped up our off-site surveillance program to assist our examiners in targeting those institutions with elevated risk profiles so that corrective action programs are instituted in a timely and constructive manner.”
‘Rising Substantially’
Regulators have closed 99 financial institutions this year, the most since the 179 in 1992 during the savings-and-loan crisis. Matthew Anderson, a partner with Oakland, California- based Foresight Analytics LLC, a real-estate market consulting firm, said the number of failed banks will climb rapidly in part because delinquency rates on commercial real estate mortgages are “rising substantially.”
Defaults on commercial real estate loans totaled $110 billion, or 6 percent of all such loans, in the second quarter.
That’s 11 times the level in the fourth quarter of 2006 when the guidelines were released. Defaults may rise to $170 billion by the fourth quarter of 2010, Foresight Analytics said.
The risks are greater for community banks with assets of $10 billion or less, Anderson said, because commercial real estate loans make up a bigger percentage of their business.
Smaller banks don’t have the capital to compete with large banks for mortgages and consumer loans, so they turn to local-market lending, where they have an advantage.
Commercial real estate loans will pose the biggest risk to banks for several quarters, Bair told Congress on Oct. 14.
Vacancies, Rates
Declining real-estate values caused by rising vacancies, falling rental rates and weak sales are contributing to losses, Comptroller of the Currency John Dugan, the regulator of national banks, said at the same congressional hearing.
Along with Dugan and the Federal Reserve, the FDIC in 2006 set a threshold -- 300 percent of a bank’s capital -- for safe levels of commercial real estate loans. The guidance was aimed at helping regulators identify banks with high loan concentrations that warranted greater supervisory scrutiny.
At the time, smaller and mid-sized banks opposed the guidelines. Bankers said they feared federal examiners would treat the thresholds as absolute limits, threatening a lucrative business for community lenders.
The regulators said the thresholds were not limits and that federal bank examiners would use the guidelines to identify lenders with risky levels of such loans.
“The guidance was put out in boom times,” said Kevin Petrasic, a lawyer at Paul, Hastings, Janofsky & Walker LLP in Washington and former special counsel at the Office of Thrift Supervision. “Profits were very high. There wasn’t a full realization of what we were staring at.”
March 2008 Letter
The FDIC reiterated the importance of strong capital and risk-management practices for banks with high concentrations of commercial real-estate loans in a March 2008 letter.
By September 2008, commercial real-estate loans represented
1,329 percent of total capital at Security Pacific Bank in Los Angeles, a bank that collapsed two months later. The level “far exceeded the capital criteria thresholds for additional supervisory oversight,” according to a review in May by the FDIC inspector general.
The bank’s failure cost the FDIC fund about $210 million.
In December 2007, FirstBank Financial Services of McDonough, Georgia, had concentrations of 645 percent, more than double the recommendation.
The FDIC didn’t take any enforcement action until 2008 “when there were significant and quantifiable losses in the bank’s loan portfolio,” the inspector general found. The bank failed in February, costing the FDIC fund about $111 million.
New Frontier
The FDIC and state regulators were slow resolving banks with other issues. It took almost two years to shut New Frontier Bank, the largest lender in northern Colorado with $2 billion in assets, after agencies identified in mid-2007 a rise in soured loans, increased reliance on volatile funding and weak management. State regulators shut the bank April 10.
Bair, Dugan and Timothy Ward, the Office of Thrift Supervision’s deputy director of examinations, supervision and consumer protection, said last week they are planning to issue guidelines on how to modify troubled commercial real-estate loans to reduce defaults.
U.S. banks held $1.8 trillion in commercial real-estate loans as of the second quarter, representing 24 percent of outstanding bank loans, according to Foresight Analytics.
Commercial real estate loans represent 39 percent of the $4.7 trillion in total real-estate loans.
Of 95 U.S. bank failures before September, 71 were caused by non-performing commercial real-estate loans, said Chip MacDonald, a partner specializing in financial services at Atlanta-based law firm Jones Day.
‘More Consistency’
“The supervisory process has to have more consistency in the good times and not just in the bad times,” said John Bovenzi, a partner at Oliver Wyman, a New York-based management consulting firm, and FDIC chief operating officer until this year. “It’s historically been harder to show effectively that changes need to be made when times are good.”
A surge in bank closings pushed the FDIC deposit insurance fund, which pays the cost of unwinding failed institutions, into a deficit, requiring the FDIC to replenish the reserve without overburdening hobbled banks. Last month, it proposed that banks prepay three years of premiums to raise $45 billion.
Bair told a Senate subcommittee on Oct. 14 that bank failures will continue to rise, reaching a peak next year, while costing the fund $100 billion through 2013.
Some analysts are more pessimistic. Christophrer Whalen, managing director of Institutional Risk Analytics, a Torrance, California, firm that evaluates banks for investors, said the deposit insurance fund will run a deficit of $300 billion to $400 billion and about 1,000 banks will fail or be merged through 2012.
‘More Strict’
The FDIC examines and supervises about 5,160 banks for safety and soundness, according to the agency’s Web site. The FDIC and state regulators share oversight for the banks, and each sends examiners to the banks on average every other year.
“We should have been more strict,” Joseph Smith, North Carolina’s bank commissioner and chairman of the Conference of State Bank Supervisors, said in a telephone interview. Two banks have failed in Smith’s state this year.
“Had we required the reduction of CRE lending, it would have been thought of as an intrusion by regulators into the businesses of banks and to the operations of local economies,”
Smith said. “Yes, it would have been the right thing to do. It would have caused a firestorm then. That might have been better than a firestorm now.”
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| Krypton |
| Only when SLV falls belows the 50 moving average. And never more than 10% of the portfolio. |
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| Capitalizt |
I have zero faith in technicals of any kind.. Isn't it funny krypt how some chart people will say (about any stock) "oooh it looks toppy here...stay away"..yet if it breaks higher the next week to go through some man-made construct like a moving average, they say "ZOMG it broke through resistance..It's got STRENGTH! BUY BUY BUY!"
Such nonsense. Fundamentals FTW. |
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| Lews |
| Considering my portfolio is at +75% for the year, I'll probably get into this soon. |
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| Krypton |
| quote: | Originally posted by Capitalizt
I have zero faith in technicals of any kind.. Isn't it funny krypt how some chart people will say (about any stock) "oooh it looks toppy here...stay away"..yet if it breaks higher the next week to go through some man-made construct like a moving average, they say "ZOMG it broke through resistance..It's got STRENGTH! BUY BUY BUY!"
Such nonsense. Fundamentals FTW. |
I don't look to charts to decide where a security is going. I look to charts to gauge a good buy price, if and when I have already decided to buy. You know I'm a fundamentals guy. And I only really use charting if I decide to buy silver or gold. Never for stocks. I have different methods of gauging buy prices then. |
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