Comments on: How refinancing helps the likes of Bank of America and Wells Fargo http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html a finance news and opinion site Mon, 22 Mar 2010 06:53:58 +0000 hourly 1 By: kfizzlehttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-8108 kfizzle Wed, 27 May 2009 06:23:01 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-8108 I forgot where, but somewhere today there was a post about a report by S&P about expecting up to 75% (!) of mods to fail over the next year. It really just comes back to the same idea of sustainability. I think I'm close to your feeling on this Ed, that the stimulus and general worldwide govt reflation moves will buoy the global economy starting soon, which will be reflected in gdp and trade balances, but once they run dry, we hit a wall. Do we end up in meltdown mode again? Probably not, but it's not like you're going to see 4% gdp growth either. I forgot where, but somewhere today there was a post about a report by S&P about expecting up to 75% (!) of mods to fail over the next year. It really just comes back to the same idea of sustainability. I think I'm close to your feeling on this Ed, that the stimulus and general worldwide govt reflation moves will buoy the global economy starting soon, which will be reflected in gdp and trade balances, but once they run dry, we hit a wall. Do we end up in meltdown mode again? Probably not, but it's not like you're going to see 4% gdp growth either.

]]> By: Edward Harrisonhttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-8107 Edward Harrison Wed, 27 May 2009 05:25:08 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-8107 This is for both Adam and Kyle. I was just listening to Whitney Tilson and he brings home my own fears about a double dip. They are much like yours here Kyle, that the reflation play brings risk back and the unwind process is arrested temporarily to the detriment of everyone involved when economic weakness re-appears.<br><br>40% of those getting loan mods are defaulting, suggesting this whole nonsense is just another opaque way of transferring wealth from taxpayers to banks in order to recapitalize them.<br><br>For the survivors: probably WFC and JPM, great. But, there are going to be some major casualties down the line. I tend to see that time period as later rather than sooner, but we are still not out of the woods in this crisis.<br><br>In the meantime, investors are buying the financials. This is for both Adam and Kyle. I was just listening to Whitney Tilson and he brings home my own fears about a double dip. They are much like yours here Kyle, that the reflation play brings risk back and the unwind process is arrested temporarily to the detriment of everyone involved when economic weakness re-appears.

40% of those getting loan mods are defaulting, suggesting this whole nonsense is just another opaque way of transferring wealth from taxpayers to banks in order to recapitalize them.

For the survivors: probably WFC and JPM, great. But, there are going to be some major casualties down the line. I tend to see that time period as later rather than sooner, but we are still not out of the woods in this crisis.

In the meantime, investors are buying the financials.

]]> By: Adam Sharphttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-8106 Adam Sharp Wed, 27 May 2009 05:18:23 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-8106 All this refinancing will also degrade the quality of existing MBS significantly. Guess who will end up owning all those "legacy assets"? All this refinancing will also degrade the quality of existing MBS significantly. Guess who will end up owning all those “legacy assets”?

]]> By: kfizzlehttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-8105 kfizzle Wed, 27 May 2009 03:44:09 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-8105 100% agree Ed. My question/fear (long-term) is that securitization markets will never come back in their previous form. So if we get a tepid recovery, even a minor rise in rates to still low levels (let's say 6-8%) would be what drops us into the W. Refi's slow, the banks earnings get doubly hammered as the refi-driven revenue drops and the cost of capital rises (again, even slightly). If the Case Shiller keeps going the way its going, presumably even people wanting to refi just to extend would have problems, which would like lead us back to more foreclosures, more write downs, etc. etc. Its a ridiculously viscous cycle, and I honestly have no idea how we get out of it outside of a ZIRP environment like Japan, or a black swan-type positive economic discovery (alt energy or what have you). Scary, really. 100% agree Ed. My question/fear (long-term) is that securitization markets will never come back in their previous form. So if we get a tepid recovery, even a minor rise in rates to still low levels (let's say 6-8%) would be what drops us into the W. Refi's slow, the banks earnings get doubly hammered as the refi-driven revenue drops and the cost of capital rises (again, even slightly). If the Case Shiller keeps going the way its going, presumably even people wanting to refi just to extend would have problems, which would like lead us back to more foreclosures, more write downs, etc. etc. Its a ridiculously viscous cycle, and I honestly have no idea how we get out of it outside of a ZIRP environment like Japan, or a black swan-type positive economic discovery (alt energy or what have you). Scary, really.

]]> By: kfizzlehttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5701 kfizzle Wed, 27 May 2009 00:23:01 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5701 I forgot where, but somewhere today there was a post about a report by S&P about expecting up to 75% (!) of mods to fail over the next year. It really just comes back to the same idea of sustainability. I think I'm close to your feeling on this Ed, that the stimulus and general worldwide govt reflation moves will buoy the global economy starting soon, which will be reflected in gdp and trade balances, but once they run dry, we hit a wall. Do we end up in meltdown mode again? Probably not, but it's not like you're going to see 4% gdp growth either. I forgot where, but somewhere today there was a post about a report by S&P about expecting up to 75% (!) of mods to fail over the next year. It really just comes back to the same idea of sustainability. I think I'm close to your feeling on this Ed, that the stimulus and general worldwide govt reflation moves will buoy the global economy starting soon, which will be reflected in gdp and trade balances, but once they run dry, we hit a wall. Do we end up in meltdown mode again? Probably not, but it's not like you're going to see 4% gdp growth either.

]]> By: Edward Harrisonhttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5700 Edward Harrison Tue, 26 May 2009 23:25:08 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5700 This is for both Adam and Kyle. I was just listening to Whitney Tilson and he brings home my own fears about a double dip. They are much like yours here Kyle, that the reflation play brings risk back and the unwind process is arrested temporarily to the detriment of everyone involved when economic weakness re-appears.<br><br>40% of those getting loan mods are defaulting, suggesting this whole nonsense is just another opaque way of transferring wealth from taxpayers to banks in order to recapitalize them.<br><br>For the survivors: probably WFC and JPM, great. But, there are going to be some major casualties down the line. I tend to see that time period as later rather than sooner, but we are still not out of the woods in this crisis.<br><br>In the meantime, investors are buying the financials. This is for both Adam and Kyle. I was just listening to Whitney Tilson and he brings home my own fears about a double dip. They are much like yours here Kyle, that the reflation play brings risk back and the unwind process is arrested temporarily to the detriment of everyone involved when economic weakness re-appears.

40% of those getting loan mods are defaulting, suggesting this whole nonsense is just another opaque way of transferring wealth from taxpayers to banks in order to recapitalize them.

For the survivors: probably WFC and JPM, great. But, there are going to be some major casualties down the line. I tend to see that time period as later rather than sooner, but we are still not out of the woods in this crisis.

In the meantime, investors are buying the financials.

]]> By: kfizzlehttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5332 kfizzle Tue, 26 May 2009 23:23:01 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5332 I forgot where, but somewhere today there was a post about a report by S&P about expecting up to 75% (!) of mods to fail over the next year. It really just comes back to the same idea of sustainability. I think I'm close to your feeling on this Ed, that the stimulus and general worldwide govt reflation moves will buoy the global economy starting soon, which will be reflected in gdp and trade balances, but once they run dry, we hit a wall. Do we end up in meltdown mode again? Probably not, but it's not like you're going to see 4% gdp growth either. I forgot where, but somewhere today there was a post about a report by S&P about expecting up to 75% (!) of mods to fail over the next year. It really just comes back to the same idea of sustainability. I think I'm close to your feeling on this Ed, that the stimulus and general worldwide govt reflation moves will buoy the global economy starting soon, which will be reflected in gdp and trade balances, but once they run dry, we hit a wall. Do we end up in meltdown mode again? Probably not, but it's not like you're going to see 4% gdp growth either.

]]> By: Edward Harrisonhttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5330 Edward Harrison Tue, 26 May 2009 22:25:08 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5330 This is for both Adam and Kyle. I was just listening to Whitney Tilson and he brings home my own fears about a double dip. They are much like yours here Kyle, that the reflation play brings risk back and the unwind process is arrested temporarily to the detriment of everyone involved when economic weakness re-appears.<br><br>40% of those getting loan mods are defaulting, suggesting this whole nonsense is just another opaque way of transferring wealth from taxpayers to banks in order to recapitalize them.<br><br>For the survivors: probably WFC and JPM, great. But, there are going to be some major casualties down the line. I tend to see that time period as later rather than sooner, but we are still not out of the woods in this crisis.<br><br>In the meantime, investors are buying the financials. This is for both Adam and Kyle. I was just listening to Whitney Tilson and he brings home my own fears about a double dip. They are much like yours here Kyle, that the reflation play brings risk back and the unwind process is arrested temporarily to the detriment of everyone involved when economic weakness re-appears.

40% of those getting loan mods are defaulting, suggesting this whole nonsense is just another opaque way of transferring wealth from taxpayers to banks in order to recapitalize them.

For the survivors: probably WFC and JPM, great. But, there are going to be some major casualties down the line. I tend to see that time period as later rather than sooner, but we are still not out of the woods in this crisis.

In the meantime, investors are buying the financials.

]]> By: Adam Sharphttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5329 Adam Sharp Tue, 26 May 2009 22:18:23 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5329 All this refinancing will also degrade the quality of existing MBS significantly. Guess who will end up owning all those "legacy assets"? All this refinancing will also degrade the quality of existing MBS significantly. Guess who will end up owning all those “legacy assets”?

]]> By: Kylehttp://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5326 Kyle Tue, 26 May 2009 20:44:09 +0000 http://www.creditwritedowns.com/2009/05/how-refinancing-helps-the-likes-of-bank-of-america-and-wells-fargo.html#comment-5326 100% agree Ed. My question/fear (long-term) is that securitization markets will never come back in their previous form. So if we get a tepid recovery, even a minor rise in rates to still low levels (let's say 6-8%) would be what drops us into the W. Refi's slow, the banks earnings get doubly hammered as the refi-driven revenue drops and the cost of capital rises (again, even slightly). If the Case Shiller keeps going the way its going, presumably even people wanting to refi just to extend would have problems, which would like lead us back to more foreclosures, more write downs, etc. etc. Its a ridiculously viscous cycle, and I honestly have no idea how we get out of it outside of a ZIRP environment like Japan, or a black swan-type positive economic discovery (alt energy or what have you). Scary, really. 100% agree Ed. My question/fear (long-term) is that securitization markets will never come back in their previous form. So if we get a tepid recovery, even a minor rise in rates to still low levels (let's say 6-8%) would be what drops us into the W. Refi's slow, the banks earnings get doubly hammered as the refi-driven revenue drops and the cost of capital rises (again, even slightly). If the Case Shiller keeps going the way its going, presumably even people wanting to refi just to extend would have problems, which would like lead us back to more foreclosures, more write downs, etc. etc. Its a ridiculously viscous cycle, and I honestly have no idea how we get out of it outside of a ZIRP environment like Japan, or a black swan-type positive economic discovery (alt energy or what have you). Scary, really.

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