Definition Mark to Market
means an investment security, portfolio, or account must be valued on the accounting books at the current value. If an investment has a severe drop in value, the company must writedown the investment as a loss.
Custom Search
Showing posts with label Anthony Landaeta. Show all posts
Showing posts with label Anthony Landaeta. Show all posts
Tuesday, September 30, 2008
Friday, September 26, 2008
Thursday, June 26, 2008
Barack Obama's Offshore Oil Drilling Follies
Written By: theFinancialSkinny
http//anthonylandaeta.blogspot.com/
http//anthonylandaeta.blogspot.com/
You just have to love the Democrats. If they're good at anything it's finding a scapegoat for their failed policies. For more than two decades they've banned drilling for oil in 80% of the U.S. Outer Continental Shelf (OCS) on the alleged grounds that they're trying to protect the environment. More recently, and on the same grounds, they've prohibited oil shale leasing on Federal lands.
There hasn't been a new oil refinery built in this country in thirty years because the Democrats at all levels of government have made the approval process a nightmare. As a result, we now import not only crude oil, but fully refined, much more expensive gasoline as well.
They won't consider the thought of clean-coal technology.
They won't allow the building of nuclear power plants.
They won't permit the construction of a windmill farm in Nantucket Sound because, in the words of Ted Kennedy: "Don't they understand that that's where I sail?" (That notwithstanding, we wish the Senator many more years of sailing there.)
And now that China and India are emerging from the dark ages, their demand for oil has pushed the outer bounds of the world's current ability to produce it.
And whom do the Democrats blame? Why the evil speculators of course.
Are Democrats willfully ignorant of the laws of supply and demand?
What they don't tell you while they're professing their love for the environment is that Cuba, which lies just 90 miles off the coast of Florida, is negotiating with Chinese companies to drill for oil in Cuban waters. Seismic mapping (you know, the kind that drives the whales mad) has already commenced. So Cuba soon will be producing (and probably exporting) oil from waters just south of the Florida Keys, while the United States will be importing petroleum from our good friends in OPEC.
Barack Obama and the Democrats think it's fine for two Communist countries to drill in waters 90 miles off our coast, but not for American companies to drill in our OCS. That puts the lie to their concern for our beaches, don't you think?
It should also tell you just how far out on the loony fringe these people are.
For those of you who are wondering, the U.S. Government's Minerals Management Service (MMS) defines the OCS as consisting "of the submerged lands, subsoil, and seabed, lying between the seaward extent of the States' jurisdiction and the seaward extent of Federal jurisdiction. The continental shelf is the gently sloping undersea plain between a continent and the deep ocean". Generally speaking the OCS extends about 200 miles out to sea.
We love the beach and have spent many vacations in Florida and would hate to see that pristine sand fouled. Consider these facts:
· In August 2005, Hurricane Katrina's top wind speeds reached 175 mph as it moved across the Gulf of Mexico, where there were 4,000 structures, 130 drilling rigs, and 34,000 miles of pipeline on the seafloor.
· Although there were 100 spills from Katrina and 260 from Rita, most of which the U.S. Coast Guard classified as minor, the MMS reports that "there were no accounts of Federal OCS spills that reached the shoreline or oiled birds or mammals. In addition, there were no large volumes of oil discovered offshore to be collected or cleaned up".
· In November 2000 the MMS reported that fish densities in the Gulf around active platforms (which serve as de facto reefs) were 20-50 times higher than in nearby open water.
· As of that date, at the encouragement of the states and the MMS, 151 obsolete platforms had been converted to artificial reefs.
All of that sounds like a pretty good balance between the need to develop energy from the OCS and the importance of protecting the coastal environments. In fact, we've seen college students on spring break make more of a mess at the beach than the petroleum industry did during the hurricanes of 2005.
It's estimated that there are 18 billion barrels of recoverable oil and 77 trillion cubic feet of natural gas in our OCS, or about two years' worth of oil and ten years' worth of natural gas.
We now have the technology to extract oil from shale in an environmentally sound way, and at current prices it would be feasible economically. The Green River Basin of Colorado, Utah, and Wyoming has an estimated 800 billion barrels of recoverable oil, which is roughly equivalent to 100 years of imports at current levels.
Obama says that wouldn't be enough to lower the price. The man must have been absent from economics class on the day they taught economics.
The market is made on the margin, Senator. Get a clue.
As for the alternative sources of energy mantra, the new Honda FCX Clarity has great promise, but it's likely to be 8-10 more years before it goes into mass production.
Wednesday, June 25, 2008
'When John McCain was my captive'
By Andrew Harding
BBC News in Haiphong, Vietnam
Posted by Anthony Landaeta Jr
http///anthonylandaeta.blogspot.com//
Tran Trong Duyet - a sprightly retiree and amateur ballroom dancer - must rank as one of John McCain's more unlikely supporters.
Four decades ago, during the Vietnam war, Mr Duyet was in charge of the notorious Hoa Lo prison - the place where Mr McCain says he was brutally beaten and tortured during five-and-a-half years as an American prisoner of war.
"McCain is my friend," said 75-year-old Mr Duyet as he feeds the caged birds he now keeps in his garden in this coastal city.
"If I was American, I would vote for him."
Informal chats
Navy pilot John McCain was shot down during a bombing raid over the North Vietnamese capital, Hanoi, in 1967.
He ejected from his aircraft and parachuted into a city lake - only to be dragged out by an angry crowd, barely conscious, and with two broken arms and a broken leg.
From there he was taken to Hoa Lo prison, known to its American military inmates as the "Hanoi Hilton".
McCain has since described enduring months of solitary confinement and systematic torture which drove him to try to kill himself.
"I don't know how he'd react if he met me again," said Mr Duyet, flicking through old black and white photographs of himself and his American prisoners at Hoa Lo.
"But I can confirm to you that we never tortured him. We never tortured any prisoners."
Mr Duyet reminisces instead about how he often summoned the future US presidential candidate to his private office for informal chats.
"We used to argue about the war - about whether it was right or wrong," he says.
"He is a very frank man - very conservative, and very loyal to his country and the American ideal.
"He had a very interesting accent and sometimes he taught me words in English and corrected my accent. I have followed his career since he left prison."
Rapprochement
So is Mr Duyet implying that that Senator McCain lied about his treatment at the Hanoi Hilton?
"He did not tell the truth," he says.
"But I can somehow sympathise with him. He lies to American voters in order to get their support for his presidential election."
But Mr Duyet's propaganda-perfect version of events is impossible to verify - and should be treated with caution in a country where the Communist authorities still keep a tight control over the media.
Relations between Vietnam and the United States have improved dramatically in recent years, following the normalisation of ties between the former enemies in 1995.
Mr McCain played a crucial role in bringing about that initial rapprochement - a fact which helps explain Mr Duyet's enthusiastic support for the McCain presidential campaign.
"I wish him success in the presidential election," he says.
"Of course the Americans started the war in Vietnam and killed so many people - but now we want to leave the past behind.
"So now I consider John McCain my friend because he did much to mend relations between our two countries. And if he becomes president he will do more to improve those ties."
Iran Warns West May Face 'Done Deal' on Nukes if Country Is Provoked
Wednesday, June 25, 2008
Associated Press
posted by http//anthonylandaeta.blogspot.com/
TEHRAN, Iran — Iran's powerful parliament speaker on Wednesday warned that the West could face a "done deal" if it provokes Iran, in a rare hint by an Iranian official that Tehran could build nuclear weapons if attacked.
Iran's leaders have long been adamant that the country's nuclear program is and will always be aimed only at generating electricity. Ali Larijani did not directly contradict that stance, but his veiled warning comes amid increased Iranian fears that the U.S. or its ally Israel could strike its nuclear facilities.
Earlier this month, Israel sent warplanes and other aircraft on a major exercise in the eastern Mediterranean that U.S. officials said was a message to Iran — a show of force as well as practice in the operations needed for a long-range strike mission.
Larijani, who was once Iran's top nuclear negotiator with the West, made the comments in a speech to parliament aired on state TV and radio.
He pointed to recent comments by Mohamed ElBaradei, the U.N. nuclear watchdog chief, who said in an interview last week that a military strike on Iran could turn the Mideast into a "ball of fire" and "prompt Iran, even if it didn't produce a nuclear weapon today, to resort to an emergency plan to produce a nuclear weapon."
Iran's leaders have long been adamant that the country's nuclear program is and will always be aimed only at generating electricity. Ali Larijani did not directly contradict that stance, but his veiled warning comes amid increased Iranian fears that the U.S. or its ally Israel could strike its nuclear facilities.
Earlier this month, Israel sent warplanes and other aircraft on a major exercise in the eastern Mediterranean that U.S. officials said was a message to Iran — a show of force as well as practice in the operations needed for a long-range strike mission.
Larijani, who was once Iran's top nuclear negotiator with the West, made the comments in a speech to parliament aired on state TV and radio.
He pointed to recent comments by Mohamed ElBaradei, the U.N. nuclear watchdog chief, who said in an interview last week that a military strike on Iran could turn the Mideast into a "ball of fire" and "prompt Iran, even if it didn't produce a nuclear weapon today, to resort to an emergency plan to produce a nuclear weapon."
"Take Mr. ElBaradei's warnings seriously," Larijani said, addressing the West.
"Don't provoke Iran otherwise you will face a done deal that will block the path of your return to a compromise with Iran," Larijani told an open session of the parliament broadcast live on state radio Wednesday.
The phrase he used in Farsi, "amal-e anjam shodeh," means literally "an accomplished act" or "fait accompli."
Larijani also warned that a "short opportunity is left" for a deal with Iran over its nuclear program.
The West is taking a carrot and stick approach with Iran, trying to push it to suspend uranium enrichment, a process that can produce either fuel for a nuclear reactor or the material for a warhead. Top Western powers have put forward a package of economic incentives for Iran to halt enrichment, while threatening an increase in sanctions.
Iran has yet to reply to the package, insisting it will never suspend enrichment but also mentioning some common ground with its own proposals for a resolution to the standoff.
The U.S. and some of its allies accuse Iran of seeking to build a nuclear bomb. Iran has always said it will never do so — and Iran's supreme leader Ayatollah Ali Khamenei has ruled it out, calling nuclear weapons un-Islamic.
Larijani is a member of the powerful Supreme National Security Council and is close is close to Khamenei. He was careful not to directly state that the country could change its intentions. His vague hint now that Iran could do so appeared aimed at signalling the possible consequences of military action and pressing the West to reach a negotiated solution.
One hard-line newspaper was more overt about the possibility, though it too stopped short of directly threatening a move to build a weapon.
The daily Kayhan said in an editorial that even if Iran's nuclear facilities are destroyed in a strike, they could be rebuilt "within a short period of time, but with the difference that it (a military strike) may prompt a fundamental reconsideration in intentions."
Meanwhile, a top commander of the elite Revolutionary Guards on Wednesday warned that an attack on Iran would draw the U.S. into "a new tragedy."
"If you want to move towards Iran, make sure you will bring artificial legs and walking sticks because you will not have any legs to return on should you come," the television quoted Mohammad Hejazi, a top Guards figure, as saying.
Iran has spread its nuclear facilities over various parts of the large country and has built key portions underground to protect if from possible Israeli or American airstrikes.
In 1981, Israeli jets bombed Iraq's Osirak nuclear facility in an attempt to end then-Iraqi leader Saddam Hussein's nuclear program. Last September, Israel bombed a facility in Syria that U.S. officials have said was a nuclear reactor being constructed with North Korean assistance, a claim denied by Damascus and Pyongyang.
"Don't provoke Iran otherwise you will face a done deal that will block the path of your return to a compromise with Iran," Larijani told an open session of the parliament broadcast live on state radio Wednesday.
The phrase he used in Farsi, "amal-e anjam shodeh," means literally "an accomplished act" or "fait accompli."
Larijani also warned that a "short opportunity is left" for a deal with Iran over its nuclear program.
The West is taking a carrot and stick approach with Iran, trying to push it to suspend uranium enrichment, a process that can produce either fuel for a nuclear reactor or the material for a warhead. Top Western powers have put forward a package of economic incentives for Iran to halt enrichment, while threatening an increase in sanctions.
Iran has yet to reply to the package, insisting it will never suspend enrichment but also mentioning some common ground with its own proposals for a resolution to the standoff.
The U.S. and some of its allies accuse Iran of seeking to build a nuclear bomb. Iran has always said it will never do so — and Iran's supreme leader Ayatollah Ali Khamenei has ruled it out, calling nuclear weapons un-Islamic.
Larijani is a member of the powerful Supreme National Security Council and is close is close to Khamenei. He was careful not to directly state that the country could change its intentions. His vague hint now that Iran could do so appeared aimed at signalling the possible consequences of military action and pressing the West to reach a negotiated solution.
One hard-line newspaper was more overt about the possibility, though it too stopped short of directly threatening a move to build a weapon.
The daily Kayhan said in an editorial that even if Iran's nuclear facilities are destroyed in a strike, they could be rebuilt "within a short period of time, but with the difference that it (a military strike) may prompt a fundamental reconsideration in intentions."
Meanwhile, a top commander of the elite Revolutionary Guards on Wednesday warned that an attack on Iran would draw the U.S. into "a new tragedy."
"If you want to move towards Iran, make sure you will bring artificial legs and walking sticks because you will not have any legs to return on should you come," the television quoted Mohammad Hejazi, a top Guards figure, as saying.
Iran has spread its nuclear facilities over various parts of the large country and has built key portions underground to protect if from possible Israeli or American airstrikes.
In 1981, Israeli jets bombed Iraq's Osirak nuclear facility in an attempt to end then-Iraqi leader Saddam Hussein's nuclear program. Last September, Israel bombed a facility in Syria that U.S. officials have said was a nuclear reactor being constructed with North Korean assistance, a claim denied by Damascus and Pyongyang.
Down payment assistance to risky borrowers $300B Housing Rescue Plan Passes
Commentary By Anthony Landaeta Jr
Posted 06/24/07 http://anthonylandaeta.blogspot.com/
Why would the Government offer loans and down payment assistance to risky borrowers after the collapse of the banking industry, isn't that what got us into too this mess in the first place with 100% financing and adjustable rates. The Government not only what's us to bail out the Bank's that created this mess but they also want to provide $14.5 Billion in a array of Tax Breaks, including a credit of up to $8,000 for first-time homebuyers who buy in the next year. $8,000 Dollars is a lot of money, so if a borrower wants to purchase a home at $265,000 through the Federal Housing Administration (FHA/HUD) there are purchasing that home with no money down which would be 100% financing, FHA requires as much as 3% in down payment so we as tax payers get to help those folks purchase there Dream Home's without any savings. "This is the government at there best" leading the charge Christopher J. Dodd, D-Conn, Rep Pelosi, Nancy D-CA with a set of weak Republicans that have no backbone with low approval ratings.
At the Capitol statement by Sen. Christopher J. Dodd, D-Conn., the Banking Committee chairman, said the lending measure "would allow us to begin to put a tourniquet on the hemorrhaging of foreclosures in this country."
Dictionary meaning:
Tourniquet: Bandied Quick fix
Hemorrhaging: To lose (assets): a company that was hemorrhaging money.
Members of the Congressional Black Caucus call it unacceptable, arguing it doesn't do enough to address the needs of black Americans. (My be we should just give everyone homes for free)
"Owning a home is not a right, it has to be earned"
There estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for government-insured, fixed-rate loans. The Government will aid these borrowers by allowing them to refinance there home into a FHA loan where the Government will share in the portion of any profits they make from selling or refinancing their properties in the future. " Your Tax dollars work "
This is why we need checks and balances on our government having a equal Balance of independent - Democrat - Republican senators will help to ensure bills like this won't go anywhere lets hope President Bush Veto's this bill we all know a President Obama would sign this Bill, and we all know this election belongs to Obama he will be the next President, with that said a Democratic House and Senate with a Democratic President only means a large creation of Government Programs with High Taxes for the next 4 to 8 years, so hold on to your wallets because there is a lot of needy people with there hands out that the democrats have to Feed.
Anthony Landaeta Jr
Posted 06/24/07 http://anthonylandaeta.blogspot.com/
Why would the Government offer loans and down payment assistance to risky borrowers after the collapse of the banking industry, isn't that what got us into too this mess in the first place with 100% financing and adjustable rates. The Government not only what's us to bail out the Bank's that created this mess but they also want to provide $14.5 Billion in a array of Tax Breaks, including a credit of up to $8,000 for first-time homebuyers who buy in the next year. $8,000 Dollars is a lot of money, so if a borrower wants to purchase a home at $265,000 through the Federal Housing Administration (FHA/HUD) there are purchasing that home with no money down which would be 100% financing, FHA requires as much as 3% in down payment so we as tax payers get to help those folks purchase there Dream Home's without any savings. "This is the government at there best" leading the charge Christopher J. Dodd, D-Conn, Rep Pelosi, Nancy D-CA with a set of weak Republicans that have no backbone with low approval ratings.
At the Capitol statement by Sen. Christopher J. Dodd, D-Conn., the Banking Committee chairman, said the lending measure "would allow us to begin to put a tourniquet on the hemorrhaging of foreclosures in this country."
Dictionary meaning:
Tourniquet: Bandied Quick fix
Hemorrhaging: To lose (assets): a company that was hemorrhaging money.
Members of the Congressional Black Caucus call it unacceptable, arguing it doesn't do enough to address the needs of black Americans. (My be we should just give everyone homes for free)
"Owning a home is not a right, it has to be earned"
There estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for government-insured, fixed-rate loans. The Government will aid these borrowers by allowing them to refinance there home into a FHA loan where the Government will share in the portion of any profits they make from selling or refinancing their properties in the future. " Your Tax dollars work "
This is why we need checks and balances on our government having a equal Balance of independent - Democrat - Republican senators will help to ensure bills like this won't go anywhere lets hope President Bush Veto's this bill we all know a President Obama would sign this Bill, and we all know this election belongs to Obama he will be the next President, with that said a Democratic House and Senate with a Democratic President only means a large creation of Government Programs with High Taxes for the next 4 to 8 years, so hold on to your wallets because there is a lot of needy people with there hands out that the democrats have to Feed.
Anthony Landaeta Jr
Tuesday, June 24, 2008
Closing the book on Countrywide
Shareholders of the mortgage lender are expected to approve the sale to Bank of America Wednesday. But it remains to be seen if the deal will pan out for BofA.
NEW YORK (CNNMoney.com) -- Time will tell if Bank of America's purchase of Countrywide Financial Corp. winds up being a bargain or a boondoggle.
Shareholders of the troubled mortgage lender are widely expected to approve Bank of America's (BAC, Fortune 500) all-stock offer at a meeting this Wednesday, effectively removing the final hurdle to the deal and ending Countrywide's days as an independent. Bank of America has said a deal is likely to close in the third quarter, which begins next Tuesday.
But lately, some analysts have suggested that Bank of America may suffer a classic case of buyer's remorse once it absorbs Countrywide's (CFC, Fortune 500) $95 billion loan portfolio.
Last week, equity analysts at Standard & Poor's slashed their rating of Bank of America stock to "sell" from "hold." They fear the Charlotte, N.C.-based bank may be underestimating the impact of rising consumer defaults and delinquencies at Countrywide, especially with option adjustable rate mortgages (ARM).
Last month, Paul Miller, an analyst with Friedman, Billings, Ramsey & Co., warned that Bank of America's purchase could prompt it to take anywhere between $20 billion to $30 billion in writedowns.
"BAC [Bank of America] should completely walk away from the CFC [Countrywide] deal, as CFC's loan portfolio will prove a drag on earnings and could force BAC to raise additional capital," Miller wrote in a note.
Countrywide, the nation's largest mortgage lender, clearly is struggling. The company has reported losses in its last three quarters due to soaring mortgage delinquencies and defaults by borrowers. The stock plunged from about $30 per share last August to less than $6 a share just before BofA announced the deal.
Bank of America's concerns, however, don't just end at Countrywide's balance sheet.
The Senate Ethics Committee is looking into charges that top lawmakers including Senate Banking Committee Chairman Christopher J. Dodd, D-Conn. and Sen. Kent Conrad, D-N.D. got deals on their mortgages through a program for friends of Countrywide CEO and co-founder Angelo Mozilo.
Mozilo, who grew Countrywide from its modest beginnings, will leave the company but will still receive $10 million in stock from Bank of America. That's on top of the $115 million he stood to gain after the deal was announced. He later forfeited $37.5 million in payments tied to the deal.
Countrywide has also become the target of numerous government investigations so far this year, including the state of Florida and the U.S. Trustee's office, a division of the Justice Department. Both are looking into the company's lending practices. And that's not to mention the glut of lawsuits brought by borrowers.
Some analysts think Bank of America most likely took litigation expenses into account when it drafted its offer for Countrywide though.
Still, Bank of America is also going to need to drastically cut back its combined mortgage operations once the deal is done.
To that end, the company has hinted that job cuts lay ahead, saying in January that it planned to trim 11% of the combined mortgage companies' expenses.
"It will be a long time before they need people on the servicing side and they probably will cut a substantial amount on the mortgage origination side," said Malcolm Polley, president and chief investment officer at Stewart Capital Advisors in Pittsburgh, which owns approximately 23,000 shares of Bank of America.
Long-term benefits
When Bank of America first proposed the deal back in January, Wall Street was evenly split about its merits.
Some analysts speculated that the company offered too high an asking price -- the deal originally valued Countrywide at just over $4 billion and is now worth about $2.8 billion as BofA shares have fallen along with the broader financial sector in the past few months.
In addition, the deal would mean that Bank of America, which had largely avoided the subprime mess unlike many of its peers, would now be exposed to Countrywide's risky mortgage portfolio.
Others cheered the tie-up, noting it put Bank of America in a position to expand its already vast footprint in the financial services sector, by making it the nation's biggest mortgage lender and loan servicer.
And some large institutional shareholders in Countrywide, such as the Monaco-based hedge fund SRM Global went so far as to attack top Countrywide management, claiming that the buyout price of $4 billion was not high enough.
So is Bank of America getting Countrywide on the cheap?
Despite all the doubts regarding the deal, Bank of America's management has stood firmly by the transaction since it was first announced.
"I think it could be a combination that really turns out to be very good strategically," said Bank of America chairman and CEO Kenneth Lewis earlier this month at an investor conference.
Lewis added that if his company correctly estimated the number of markdowns they would have to take, the acquisition "could be a very compelling financial transaction."
But if Bank of America expects any payoff from the Countrywide deal, it should be patient, noted David George, senior research analyst at Robert W. Baird & Co. Inc.
When the housing market finally turns around -- and most analysts expect it will at some point -- Bank of America will have a nice head start with Countrywide's well-trained sales staff and mortgage lending technology platform.
"Over the near term, I think the Countrywide deal adds increased credit risk to BofA's balance sheet," said George. "Longer term, it could be a positive transaction."
Shareholders of the troubled mortgage lender are widely expected to approve Bank of America's (BAC, Fortune 500) all-stock offer at a meeting this Wednesday, effectively removing the final hurdle to the deal and ending Countrywide's days as an independent. Bank of America has said a deal is likely to close in the third quarter, which begins next Tuesday.
But lately, some analysts have suggested that Bank of America may suffer a classic case of buyer's remorse once it absorbs Countrywide's (CFC, Fortune 500) $95 billion loan portfolio.
Last week, equity analysts at Standard & Poor's slashed their rating of Bank of America stock to "sell" from "hold." They fear the Charlotte, N.C.-based bank may be underestimating the impact of rising consumer defaults and delinquencies at Countrywide, especially with option adjustable rate mortgages (ARM).
Last month, Paul Miller, an analyst with Friedman, Billings, Ramsey & Co., warned that Bank of America's purchase could prompt it to take anywhere between $20 billion to $30 billion in writedowns.
"BAC [Bank of America] should completely walk away from the CFC [Countrywide] deal, as CFC's loan portfolio will prove a drag on earnings and could force BAC to raise additional capital," Miller wrote in a note.
Countrywide, the nation's largest mortgage lender, clearly is struggling. The company has reported losses in its last three quarters due to soaring mortgage delinquencies and defaults by borrowers. The stock plunged from about $30 per share last August to less than $6 a share just before BofA announced the deal.
Bank of America's concerns, however, don't just end at Countrywide's balance sheet.
The Senate Ethics Committee is looking into charges that top lawmakers including Senate Banking Committee Chairman Christopher J. Dodd, D-Conn. and Sen. Kent Conrad, D-N.D. got deals on their mortgages through a program for friends of Countrywide CEO and co-founder Angelo Mozilo.
Mozilo, who grew Countrywide from its modest beginnings, will leave the company but will still receive $10 million in stock from Bank of America. That's on top of the $115 million he stood to gain after the deal was announced. He later forfeited $37.5 million in payments tied to the deal.
Countrywide has also become the target of numerous government investigations so far this year, including the state of Florida and the U.S. Trustee's office, a division of the Justice Department. Both are looking into the company's lending practices. And that's not to mention the glut of lawsuits brought by borrowers.
Some analysts think Bank of America most likely took litigation expenses into account when it drafted its offer for Countrywide though.
Still, Bank of America is also going to need to drastically cut back its combined mortgage operations once the deal is done.
To that end, the company has hinted that job cuts lay ahead, saying in January that it planned to trim 11% of the combined mortgage companies' expenses.
"It will be a long time before they need people on the servicing side and they probably will cut a substantial amount on the mortgage origination side," said Malcolm Polley, president and chief investment officer at Stewart Capital Advisors in Pittsburgh, which owns approximately 23,000 shares of Bank of America.
Long-term benefits
When Bank of America first proposed the deal back in January, Wall Street was evenly split about its merits.
Some analysts speculated that the company offered too high an asking price -- the deal originally valued Countrywide at just over $4 billion and is now worth about $2.8 billion as BofA shares have fallen along with the broader financial sector in the past few months.
In addition, the deal would mean that Bank of America, which had largely avoided the subprime mess unlike many of its peers, would now be exposed to Countrywide's risky mortgage portfolio.
Others cheered the tie-up, noting it put Bank of America in a position to expand its already vast footprint in the financial services sector, by making it the nation's biggest mortgage lender and loan servicer.
And some large institutional shareholders in Countrywide, such as the Monaco-based hedge fund SRM Global went so far as to attack top Countrywide management, claiming that the buyout price of $4 billion was not high enough.
So is Bank of America getting Countrywide on the cheap?
Despite all the doubts regarding the deal, Bank of America's management has stood firmly by the transaction since it was first announced.
"I think it could be a combination that really turns out to be very good strategically," said Bank of America chairman and CEO Kenneth Lewis earlier this month at an investor conference.
Lewis added that if his company correctly estimated the number of markdowns they would have to take, the acquisition "could be a very compelling financial transaction."
But if Bank of America expects any payoff from the Countrywide deal, it should be patient, noted David George, senior research analyst at Robert W. Baird & Co. Inc.
When the housing market finally turns around -- and most analysts expect it will at some point -- Bank of America will have a nice head start with Countrywide's well-trained sales staff and mortgage lending technology platform.
"Over the near term, I think the Countrywide deal adds increased credit risk to BofA's balance sheet," said George. "Longer term, it could be a positive transaction."
Wednesday, June 18, 2008
Paulson & Co. Says Writedowns May Reach $1.3 Trillion
By Tom Cahill and Poppy Trowbridge
June 18 (Bloomberg) -- John Paulson, founder of hedge fund Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate.
``We're only about a third of the way through the writedowns,'' Paulson, 52, told the GAIM International hedge fund conference in Monaco today. ``There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.''
Paulson, whose company manages about $33 billion, shorted subprime-mortgage debt after he noticed ``bubble like'' prices that made a collapse ``inevitable.'' His Paulson Partners fund has risen about 18 percent a year since it was founded in 1994, while one of his main funds for betting on declines in subprime debt rose 591 percent last year.
The U.S. is heading into a recession as falling home prices weigh on consumer spending, Paulson said. The second half of this year will be worse than the first as the economic slowdown continues into 2009, he said. Signs of stress are ``accelerating'' in the housing market.
``I don't consider myself a bull or a bear,'' he told the audience at Monaco's Grimaldi Forum. ``I'm a realist.''
Ambac Financial Group Inc., the second-biggest bond insurer, is ``the most leveraged, troubled company out there,'' Paulson said. It is at risk of being downgraded to non-investment grade, Paulson said.
The housing and credit-market slump pushed Ambac to three straight quarterly losses after more than a decade of profit. It has written down $5.2 billion since the collapse of the U.S. subprime mortgage market last year.
A spokesman for New York-based Ambac couldn't immediately be reached for comment.
June 18 (Bloomberg) -- John Paulson, founder of hedge fund Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate.
``We're only about a third of the way through the writedowns,'' Paulson, 52, told the GAIM International hedge fund conference in Monaco today. ``There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.''
Paulson, whose company manages about $33 billion, shorted subprime-mortgage debt after he noticed ``bubble like'' prices that made a collapse ``inevitable.'' His Paulson Partners fund has risen about 18 percent a year since it was founded in 1994, while one of his main funds for betting on declines in subprime debt rose 591 percent last year.
The U.S. is heading into a recession as falling home prices weigh on consumer spending, Paulson said. The second half of this year will be worse than the first as the economic slowdown continues into 2009, he said. Signs of stress are ``accelerating'' in the housing market.
``I don't consider myself a bull or a bear,'' he told the audience at Monaco's Grimaldi Forum. ``I'm a realist.''
Ambac Financial Group Inc., the second-biggest bond insurer, is ``the most leveraged, troubled company out there,'' Paulson said. It is at risk of being downgraded to non-investment grade, Paulson said.
The housing and credit-market slump pushed Ambac to three straight quarterly losses after more than a decade of profit. It has written down $5.2 billion since the collapse of the U.S. subprime mortgage market last year.
A spokesman for New York-based Ambac couldn't immediately be reached for comment.
Tuesday, June 17, 2008
NAHB Green Building Legislation Offers Incentives to Lenders
NAHB Green Building Legislation Offers Incentives to Lenders193 Views The National Association of Home Builders (NAHB) urged Congress this week to move forward on legislation to improve energy efficiency and sustainability in housing without driving costs above manageable levels.
Jerry Howard, NAHB executive vice president and CEO testified before a House Financial Services Committee hearing on H.R. 6078, the Green Resources for Energy Efficient Neighborhood Act (or the GREEN Act) of 2008.
NAHB has been involved in voluntary green building since the early 1990s. Currently, the association is working with the International Code Council to complete a rigorous standards-developing process that will produce the first standard approved by the American National Standards Institute (ANSI) for green residential construction and remodeling - the National Green Building Standard�.
The GREEN Act, sponsored by Rep. Ed Perlmutter, (D-CO) provides incentives to lenders to provide lower interest loans and other benefits to consumers who build, buy, or remodel their homes or businesses to improve energy efficiency.
In addition the law would require Fannie Mae and Freddie Mac to finance energy efficient and location efficient mortgages such as buildings located near mass transit.
In prepared remarks for the Committee, Rep Perlmutter said that his bill's goal is to create a market for energy efficient and location efficient mortgages by making the GSE's, FHA and HUD eager to collect them.
This would be accomplished by amending the charters for Fannie and Freddie to buy, sell, service and otherwise deal in energy and location efficient mortgages and amending the Home Mortgage Disclosure Act to require data information for the number of and dollar amount of mortgages of single-family and multi-family housing which meet these standards.
HR 6078 would also require the FHA to insure $1 billion worth of energy efficient homes.
NAHB's Howard spoke to the Committee about ways to improve sustainability and energy efficiency in housing while still supporting housing affordability.
"Because federal housing programs are such a critical component of the nation's housing system, NAHB believes that it is important to ensure that the incorporation of sustainable building practices for these programs is accomplished in a thoughtful and practical manner," said Howard. "Also, it is important to maintain a balance between the goals of affordable housing development and maximizing energy efficiency."
Howard cautioned that setting overly stringent standards or unrealistic goals could boost the cost of building affordable housing to a level that is not sustainable over the long term.
He urged the members of the committee to keep certain principles in mind as they worked to adopt green criteria for federally assisted housing programs:
Avoid naming specific green criteria in federal legislation that may seem sufficient today, but that could become quickly outdated or unworkable in the very near term.
Provide necessary resources, including the additional staff and technology needed to implement the programs, as well as appropriations to help support the additional costs of building green.
Structure new programs in a manner that allows them to be used easily with other housing programs without duplicative rules and regulations.
Provide financial and other incentives to developers and builders of affordable housing to help them meet and even exceed green building goals.
Work with builders, lenders, the GSEs, nonprofits, community groups, appraisers and others to develop attainable goals for supportive financing mechanisms such as energy-efficient and location-efficient mortgages as well as appraisal standards that appropriately recognize the value of green building.
Develop educational materials to communicate best practices and promote sustainable federally assisted housing.
Jerry Howard, NAHB executive vice president and CEO testified before a House Financial Services Committee hearing on H.R. 6078, the Green Resources for Energy Efficient Neighborhood Act (or the GREEN Act) of 2008.
NAHB has been involved in voluntary green building since the early 1990s. Currently, the association is working with the International Code Council to complete a rigorous standards-developing process that will produce the first standard approved by the American National Standards Institute (ANSI) for green residential construction and remodeling - the National Green Building Standard�.
The GREEN Act, sponsored by Rep. Ed Perlmutter, (D-CO) provides incentives to lenders to provide lower interest loans and other benefits to consumers who build, buy, or remodel their homes or businesses to improve energy efficiency.
In addition the law would require Fannie Mae and Freddie Mac to finance energy efficient and location efficient mortgages such as buildings located near mass transit.
In prepared remarks for the Committee, Rep Perlmutter said that his bill's goal is to create a market for energy efficient and location efficient mortgages by making the GSE's, FHA and HUD eager to collect them.
This would be accomplished by amending the charters for Fannie and Freddie to buy, sell, service and otherwise deal in energy and location efficient mortgages and amending the Home Mortgage Disclosure Act to require data information for the number of and dollar amount of mortgages of single-family and multi-family housing which meet these standards.
HR 6078 would also require the FHA to insure $1 billion worth of energy efficient homes.
NAHB's Howard spoke to the Committee about ways to improve sustainability and energy efficiency in housing while still supporting housing affordability.
"Because federal housing programs are such a critical component of the nation's housing system, NAHB believes that it is important to ensure that the incorporation of sustainable building practices for these programs is accomplished in a thoughtful and practical manner," said Howard. "Also, it is important to maintain a balance between the goals of affordable housing development and maximizing energy efficiency."
Howard cautioned that setting overly stringent standards or unrealistic goals could boost the cost of building affordable housing to a level that is not sustainable over the long term.
He urged the members of the committee to keep certain principles in mind as they worked to adopt green criteria for federally assisted housing programs:
Avoid naming specific green criteria in federal legislation that may seem sufficient today, but that could become quickly outdated or unworkable in the very near term.
Provide necessary resources, including the additional staff and technology needed to implement the programs, as well as appropriations to help support the additional costs of building green.
Structure new programs in a manner that allows them to be used easily with other housing programs without duplicative rules and regulations.
Provide financial and other incentives to developers and builders of affordable housing to help them meet and even exceed green building goals.
Work with builders, lenders, the GSEs, nonprofits, community groups, appraisers and others to develop attainable goals for supportive financing mechanisms such as energy-efficient and location-efficient mortgages as well as appraisal standards that appropriately recognize the value of green building.
Develop educational materials to communicate best practices and promote sustainable federally assisted housing.
Monday, June 09, 2008
National Health Care
It would be nice to have a national health care system but we as citizens cannot afford to pay the cost of it, as you know nothing is Free in life all countries like Germany, France, Britain, Canada have some what of a good government plan for all citizens But these folks pay for it in the payroll taxes up to 7% of there income, sales taxes, and gas taxes and that just covers basic health insurance if they want more then the basic they have to pay for it out of there pocket. This is how other countries pay for there state sponsored health Insurance.
Gas Tax Average 70%
State Sales Tax Average 19%
Payroll Taxes 7% and higher for some countries
How about a Television Tax to watch T.V or a Habitation Tax whether you own a property or not this tax is based on location and size of family.Gas Taxes in Germany, France, Britain and Canada are 60% to 75% of the cost of gas per barrel so taking 70% the tax would be $5.60 plus the base price of gas of $3.39 per gallon = $8.99 per gallon.
All I hear is from the candidates is we need too cover all citizens with a National Health Care how do we pay for it.
Canada's Estimated Cost $148 billion per year 10.3 percent of GDP (2006) there population is 33,679,263
All of the other countries populations is smaller then the U.S population and in fact here is the populations of all four countries:
France 64,094,658
Canada 33,679,263
Germany 82,369,548
Britain 60,943,912
Total for all Four 241,087,381
The U.S population 303,824,650
U.S Baby Boomer population of 78,997,409 is bigger then 3 of the 4 countries listed above in population.
I still ask how do we pay for National Health Care when it could cost the tax payer as much as
1 trillion dollars too put into place, that's a lot of money and yes our taxes would go up but maybe nobody would mind paying all of our money towards taxes, its funny how we always talk about other countries and all the great things they do for there Citizens (like making them pay 19% in sales tax and $9.00 a gallon for gas and don't for get the great (Habitation Tax whether you own a property or not this tax is based on location and size of family). Everybody wants a free ride but nobody wants to pay for it.
See link below
http://www.openmedicine.ca/article/view/8/1 (A systematic review of studies comparing health outcomes in Canada and the United States)
We do need to do something, how about trying capitalism instead of socialism
Anthony Landaeta Jr.
Gas Tax Average 70%
State Sales Tax Average 19%
Payroll Taxes 7% and higher for some countries
How about a Television Tax to watch T.V or a Habitation Tax whether you own a property or not this tax is based on location and size of family.Gas Taxes in Germany, France, Britain and Canada are 60% to 75% of the cost of gas per barrel so taking 70% the tax would be $5.60 plus the base price of gas of $3.39 per gallon = $8.99 per gallon.
All I hear is from the candidates is we need too cover all citizens with a National Health Care how do we pay for it.
Canada's Estimated Cost $148 billion per year 10.3 percent of GDP (2006) there population is 33,679,263
All of the other countries populations is smaller then the U.S population and in fact here is the populations of all four countries:
France 64,094,658
Canada 33,679,263
Germany 82,369,548
Britain 60,943,912
Total for all Four 241,087,381
The U.S population 303,824,650
U.S Baby Boomer population of 78,997,409 is bigger then 3 of the 4 countries listed above in population.
I still ask how do we pay for National Health Care when it could cost the tax payer as much as
1 trillion dollars too put into place, that's a lot of money and yes our taxes would go up but maybe nobody would mind paying all of our money towards taxes, its funny how we always talk about other countries and all the great things they do for there Citizens (like making them pay 19% in sales tax and $9.00 a gallon for gas and don't for get the great (Habitation Tax whether you own a property or not this tax is based on location and size of family). Everybody wants a free ride but nobody wants to pay for it.
See link below
http://www.openmedicine.ca/article/view/8/1 (A systematic review of studies comparing health outcomes in Canada and the United States)
We do need to do something, how about trying capitalism instead of socialism
Anthony Landaeta Jr.
Subscribe to:
Posts (Atom)
Posts
