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JimODonnell
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Joined: 07 Feb 2008
Posts: 11
Location: Cullman AL 35055 USA

No Beating Around The Bush - Banks Are All Bankrupt
PostPosted: Mon Apr 14, 2008 6:36 am Reply with quoteBack to top

The recent Citi [see below] "refinancing" is now becomming a new trend. See also the recent Lehman and today Wachova moves.

I have seen it reported NOWHERE but one reporter on TV let the "cat-out-of-the-bag" and verbally reported that the Citi deal was made possible due to the fact that Citi was providing the cash for the group to "buy" their assets from them.

"2008-04-09- Mish Quotes Minyanville: And as more information comes out we quote Mish

The deal was made in this manner specifically to muddy the waters. It appears that Citi is setting up a con game in which they may pretend they got 90 cents on the dollar when they really didn’t. That 20% indemnification clause in the sale is like a PUT option. That option has a value and it’s a huge mistake to pretend otherwise.

–Bloomberg wants you to think everything will be rosy for Citigroup once the bank is able to sell $12 billion of loans at a loss to Apollo Management LP, Blackstone Group LP and TPG Inc. Well Mish quoting Minyanville shows you how wrong they are."


Let's just call this stuff exactly what it really is: REVERSE ENRON ACCOUNTING.

This is how I speculate that it works: Get a group of hedge funds, who are not regulated at all, to buy your stuff and put it on their books and you lend them the money to make this possible. It is better if the bank does not currently finance the particular group of hedge funds but it is not necessary.

The possible uses of this scheme are endless and solve no problem whatsoever. Let's call the loans on the bank's books to these hedge funds: RECL (Reverse Enron C R A P Loans).

This may work for about a month until the market figures out that this accounting slight-of-hand is worthless. I wonder what reason will eventually be given for the FED to buy these loans also?

Jim

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spencer24
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Joined: 26 Mar 2008
Posts: 12

Re: No Beating Around The Bush - Banks Are All Bankrupt
PostPosted: Mon May 26, 2008 8:08 pm Reply with quoteBack to top

Although it's has not been officially admitted yet, there are lots of banks that are very close to insolvency...

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Aristotle
Nitroglycerin


Joined: 05 Dec 2007
Posts: 594
Location: On a sand dune, sipping a cold soda

Back in the Old Days, The FDIC Called It "Trash for Cas
PostPosted: Thu May 29, 2008 6:12 pm Reply with quoteBack to top

Back in the Old Days, the FSLIC called these sorts of structured asset exchanges and loans were called "Trash for Cash" deals. The brokers who put them together for the failing S&Ls were secretly paid their loan commissions in casino chips, so FSLIC wouldn't find out.

Then FSLIC tanked and the Congress merged it into the FDIC. So the FDIC called the deals "Trash for Cash - Part 2" or "close a deal in Vegas baby".

Of course, I am terrified that the FDIC does not have enough reserves to bail out all of the banks doing twenty first century versions of Trash for Cash. What's even more frightening is that "Sheila They Don't Believe Her" is more terrified than me, and the Bush Boys don't care. They're outa' here on their golf carts. The FDIC won't tank (again) on their watch.

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