I swear to Gawd I'm going to murder somebody by beating them to death with a bag of small animals. If this is what passes for an informed voter the Dodds, Franks, Reids, Pelosis, Waters et al come from:
CoffeeCat (1000+ posts) Thu Apr-02-09 11:55 AM
Original message
Banks Given More Leeway in How They Value Toxic Assets
Edited on Thu Apr-02-09 11:58 AM by CoffeeCat
Source: CNBC
(snip)
The changes will allow the assets to be valued at what they would go for in an "orderly" sale, as opposed to a forced or distressed sale. The new guidelines will apply to the second quarter that began this month.
The mark-to-market rules have forced banks to take steep write-downs on some assets, especially securities tied to high-risk subprime mortgages, as the industry has reeled from the housing market slump and banks have foundered and failed.
The banking industry and lawmakers of both parties have been pushing for the rules to be relaxed. An estimated $2 trillion in soured assets is gumming up banks' books.
In an ironic twist, the new leeway for banks could undercut the government's new financial rescue program in which it is joining with private investors to buy up about $500 billion in toxic assets from banks, some experts say.
The fear is that companies will use the leeway to boost the value of the assets on their books to "unrealistic levels," Robert Willens, an expert on tax and accounting issues for Wall Street clients, told The Associated Press last week.
Read more: http://www.cnbc.com/id/30009862
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Remember, these are the same banks that:
---Contributed to political campaigns so they could get the deregulation that they wanted.
---Used that deregulatory environment to make billions selling us vulnerable mortgages
---Packaged these bad mortgages into toxic financial instruments--making billions AGAIN by selling them to secondary markets.
So, these same banks have been given "more leeway in how they value these toxic assets."
In effect, these banks will purposely overvalue these toxic assets.
So, guess what? This couldn't happen at a more opportune time for these banks, because the government is about to purchase
these toxic assets with YOUR tax dollars. Now the banks can value this CRAP higher and get more money
for it.
Wow---does this horrendous, perverse scam EVER end--and does our government EVER stop helping these criminals
steal, again and again and again, from average Americans?
Oregone (1000+ posts) Thu Apr-02-09 12:30 PM
Response to Reply #2
6. They have incentive to over-value them, and investors have incentive to purchase them
The banks incentive being profit, and the investors incentive being that the purchase is almost entirely financed by the government (who is assuming an 85% liability).
The banks face zero risk with this plan, despite what they do. The government is essentially taking on all the risk (negating any free market mechanism) so this could potentially get really out of control.
Why would investors have an incentive to purchase over-value assets? The old maxim for investors is "buy low, sell high" not "buy high, sell for whatever"...unless of course you're a democrat donor looking forward to government bailouts.
rfranklin (1000+ posts) Thu Apr-02-09 01:02 PM
Response to Reply #6
9. I value my house at $3 million, can I refinance with govt. dollars?
Of course, it's only worth one tenth of that, but the investors are backed up by government guarantees and they can keep any profits.
You're a democrat that voted for democrats, so: YES
But in the real world any rational buyer would laugh at your $3 million demand and you would find out real fast how much your government subsidized hovel is NOT worth.
Tansy_Gold (1000+ posts) Thu Apr-02-09 12:03 PM
Response to Original message
3. If they over-value their assets, does that mean they don't get
any more bail-out money?
Fine with me!
Tansy Gold
Fine with me as well except you have a false premise with your categorical imperative OVER value. The asset need not be over-valued, simply VALUED to cease being a toxic asset.
You see, what we have at the heart of the matter is a real asset: houses. These homes will have value but currently there are a high number of mortgage defaults thanks to a government regulation that says you must loan money to people regardless of their likelihood of repaying said loan.
When they default the home must be sold immediately thanks to another government regulation. But who will buy a home if yet more mortgage defaults are in the offing. As the supply of foreclosed homes increases their current market price decreases as with any commodity. The banks are not allowed to hold on to the properties until the foreclosures bottom-out because so saith the government which means no one is going to buy today what will be worth less tomorrow thus the absence of buyers creates the zero-value toxic asset from which TARP is derived.
Yet, these properties do have value...in the future. By relaxing--yet another government regulation--that says the asset can only be sold at TODAY'S value (which is zero, see above) the property can be sold at an assumed future value. Investors have every reason/incentive to buy on what something will be worth in the future and no incentive to pay more than what they can recoup; and unlike banks they are free of the regulations that say they cannot hold on to the property, must sell it at current value only nor are they obligated to sell to people with no money to buy.
In other words, the unregulated are needed to rescue those who are over-regulated. The assets will not be over-valued but instead they will be free from artificial devaluation imposed by regulations. It's amazing how the absence government regulation alleviates the need for government bailout. Perhaps there is a correlation.
CoffeeCat (1000+ posts) Thu Apr-02-09 12:11 PM
Response to Reply #3
4. But it's the BANKS who get to decide...
This move allows the banks to value these assets. They get to decide.
The value is what the banks say. PERIOD.
No, dumbass. The buyer has input as well. The only way someone can fabricate a price and send the bill to the government is if YOUR elected officials gave them legal avenues to do so.
Try peddling you @$$ for $1,000/hour and see how quickly you learn how little you're actually worth in the eyes of cognizant people.
blueworld (326 posts) Thu Apr-02-09 12:44 PM
Response to Original message
7. repost of my snark at McClatchy (who has a great article on this)
I have a fine collection of assets (in a shoebox) called "Beanie Babies", which I bought during the BB bubble. They currently have no market & therefore no value, making my financial health look much worse than it is. Especially since I'm unemployed & living off my 401K contributions.
I'd planned to hold these assets to maturity & retire on the proceeds.
So, I would like to revalue them to what I THOUGHT they would be worth at maturity & use that figure to buy an annuity to live on in my golden years.
This allows me to raise my own capital, and relieves me of stupidity because my distressed assets will no longer be temporarily depressed by this financial crisis.
Must...
...not...
...kill....
...again
CoffeeCat (1000+ posts) Thu Apr-02-09 12:59 PM
Response to Reply #7
8. That's exactly what they're doing...
...and I am so outraged right now.
My biggest fear is that people won't understand what is happening. They won't get it.
I wish sometimes that I didn't get it.
Hold me!
Hold
this.
napi21 (1000+ posts) Thu Apr-02-09 01:39 PM
Response to Reply #8
13. I don't thinl that's a valid comparrison. Disregarding the homes that
have been vandalized and stripped of wiring, appliances etc., the homes that are existing do have value. When the job market improves, they will sell. Beanie babies is totally different, and there may never be any value. I would more compare the housing market today to the gold market. Not so long ago gold was selling at $300+ an ounce, now it's $800+, but it never completely lost it's value.
Biy, are you hanging-out at the wrong site.
CoffeeCat (1000+ posts) Thu Apr-02-09 01:50 PM
Response to Reply #13
15. He's not comparing Beenie Babies to sub-prime mortgages...
He's drawing a parallel between the sub-prime mortgage owners and himself as a Beenie Baby owner.
The nut of his argument
You shoudl stop there.
is that it's wrong for the holder of an asset--to determine the worth of that asset.
The market determines the worth. Not the asset holder.
That is the comparison.
And nowhere is that comparison substantiated by an examination of the facts. You fags catch a few lines from an article and flew into histrionic hysterics like the girly fag men that you are with an almost pathological desire to be outraged and misinformed.
Tansy_Gold (1000+ posts) Thu Apr-02-09 03:05 PM
Response to Reply #15
20. Beanie Babies have more value than "toxic assets."
It's not the sub-prime mortgages that anyone is really worried about. At least there's a home or some real estate.
The real toxic assets are the imaginary "instruments" that got concocted by some financial geeks who have no concept of reality. These are IMAGINARY MONEY. IT HAS NO VALUE WHATSOEVER. It's a bet that can't be collected because one party (AIG) is bankrupt but everybody else wants their winnings anyway.
Beanie Babies are at least cute and cuddly. They're worth a helluva lot more than a parimutuel ticket on an also ran.
No, those derivatives are based on sub-prime mortgages bundled together with AAA mortgages. Hence, they are based on genuine, tangible assets. Statistically speaking even if the SP went tits-up the remaining AAA's would have proven profitable for the derivative holder. Alas the confluence of regulations noted above, seeded by deliberate laxity at the dem feeding troughs at Fannie & Freddie allowed enough bad SP's into the mix to the point they broke the statistical model so that AAA's A) were unable to support the bust and B) the bleed-over effected enough of the economy depriving AAA mortgage payers to suffer loss of income.
mbperrin (1000+ posts) Thu Apr-02-09 11:06 PM
Response to Reply #20
29. But shouldn't I be able to take my also ran parimutuels and value them at
what I thought they were gonna be when my horse won? The trifecta!
Good gawd, I've got to get to the track before they empty the trash! There's a FORTUNE in those cans!!!!!!!!!!!!!!!!!
Hey, and don't forget those losing lottery tickets! I thought they would be worth MILLIONS, so surely I can value them at that and have the taxpayers pick it up!
All I gotta do is change my name to MBPerrin Bank Hedge Fund Insurance Group Brokers Savings, Inc. YIPPPEEEEEEE!!!!!
This is the kind of non-sense you get when socialists, i.e. people who believe economies can be commanded, are allowed to
speak vote breathe.
Vidar (1000+ posts) Thu Apr-02-09 01:18 PM
Response to Original message
10. Just more power given to the thieves.
Not to be confused with the idiots in DC using the power of the state to compel writing bad mortgages, telling citizens how to exchange fairly earned property and for how much, what they may earn, how much must be surrendered or jacking the rest of us to pay for when their tyranny yields its inevitable consequence.
Dreamer Tatum (1000+ posts) Thu Apr-02-09 01:18 PM
Response to Original message
11. This actually will encourage banks to lend money again
But by all means, feel free to flail away in blind rage.
Hush you, you're ruining my anuerysm.
marketcrazy1 (699 posts) Thu Apr-02-09 01:37 PM
Response to Reply #11
12. how exactly will this encurage banks to lend more money?
these guys are not stupid, in fact they are quite brilliant, the got the taxpayers to assume hundreds of billions if not trillions of their losses, they kept their cushy jobs, they will show a "profit" now, so they get their bonuses. but they are NOT blind... unemployment continues to rise, home values continue to fall, credit losses on consumer lines ( credit cards, auto loans and small business ) are at historically high levels, corporate bankruptcy's are high and accelerating and tax revenues are falling. consumer credit worthiness is declining. so who will they lend to and why should they! it is much safer for them to minimize lending until a real turnaround takes place. I dont think we will see any significant increase in lending any time soon..............
First of all: if the assets have value they cease to be toxic by defintion and thus are disqualified from TARP.
Second: the only thing that could inhibit more lending--which would primarily be business loans--would be if the capitalists of the world are worried your idiot representatives will fire them and reject their business plans and tax the sdog-shit out of their profits while piling-on unfunded, uncreditied mandates.
CoffeeCat (1000+ posts) Thu Apr-02-09 02:34 PM
Response to Reply #17
19. Well, with everyone screaming....
..."The banks!! The banks!! We must save the banks or the world will collapse!!" that paves the
way for the bailouts and the billions funneled to the banks.
I'm thinking that the focus has been on the banks--in order for the banks to steal our money.
What about the soaring unemployment in this country? Is that not a crisis?
Why aren't we helping people who don't have jobs and have no health insurance?
Doesn't our entire economy (which is 70 percent consumer spending) totally tank if people squirrel
away every dollar they make because they're afraid to buy even a pack of gum--for fear they'll soon
have no income???
And people think that these fearful Americans (millions of whom are unemployed) are in the market
for a loan right now????
This heist and the propaganda being used to rationalize and explain it--is getting absurd.
It's like a Blake Edwards movie!
Including the part about being unfunny.
And why the hell would the banks want to steal Geitner's rubber stamp money when real businesses and real people would love to bring them real money?
Zhade (1000+ posts) Thu Apr-02-09 04:30 PM
Response to Reply #19
23. It's extortion, plain and simple. "Nice economy ya got, shame if someone were to wreck it..."
Who is staeling control of private markets again?
CoffeeCat (1000+ posts) Thu Apr-02-09 05:38 PM
Response to Reply #23
24. LOL!
That's exactly what has happened...in Tony-Soprano-like fashion.
Just ask GM & Chrysler.
TheWatcher (1000+ posts) Thu Apr-02-09 06:17 PM
Response to Reply #22
25. Whatever that is is on my Ignore list so Thankfully I missed whatever deluded
Edited on Thu Apr-02-09 06:18 PM by TheWatcher
Proclamation they spewed out.
In fact I think I have the whole "Thank God It Passed!!!!!!!!!11111111111111" Brigade on my Ignore list, so at least some of the Zombie Noise is missed.
Some of our population is just acting brainwashed when it comes to what is going on with the economy.
And some of the justification and apologist nonsense I have been reading regarding this particular issue today is denial/Good German to a level that borderlines on mental illness.
The country is going down by the head economically, and some people actually think we should be GRATEFUL for it.
Ignore, the root word for ignorance, a pre-emptive refusal to deal with facts.
Dreamer Tatum (1000+ posts) Fri Apr-03-09 01:09 AM
Response to Reply #11
32. OK, I will explain it. And thanks for proving me right re: shrillness.
I'M NOT SAYING IT'S RIGHT, BUT...
Banks have bad assets on their balance sheets. If they had to mark them to market, the "market" would assign unreasonably low values to those assets in light of the difficult capital environment. Banks' credit ratings depend on certain financial ratios; fully marking to market would cause those ratios to bug out and would cause liquidity problems for banks.
By giving the banks a little room, it would be possible to unfreeze some of the cash that is captive on the balance sheet, so that more normal economic activity can occur, which would then justify the higher valuations placed on troubled assets.
Feel free to burst a blood vessel, though.
Stop mellowing my harsh!
closeupready (1000+ posts) Thu Apr-02-09 01:52 PM
Response to Original message
16. I'm not sure how much more of this theft of taxpayer money people are going to tolerate.
Especially since the middle class has gotten virtually NOTHING to help them during their own financial struggles.
This has got to stop.
What @#$%ing theft you @#$%ing paint chip eating hemrrhoid lapping sack of hammered $#!+? This won't cost the taxpayer one damn dime, it only effects people who voluntarily elect to sell and purchase real property.
primavera (1000+ posts) Thu Apr-02-09 02:00 PM
Response to Original message
18. Oh, goodie
Just what banks need - still more leeway with which to defraud the country out of even more money. What a relief! I was worried for an instant there that a crumb or two might escape unstolen. I should have had more faith in the American system.
Oh fuk it. I'm done with these idiots. Read the rest for yourselves:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3811726
