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bdc63
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Re: What does $7.49 buy you?
PostPosted: Thu Aug 11, 2011 12:43 pm Reply with quoteBack to top

Ut oh.

Quote:
Aug 11 (Reuters) - One bank in Asia has cut credit lines to major French lenders while five other banks in Asia are reviewing trades and counterparty risk as worries about the exposure of French banks to peripheral euro zone debt mounts, banking sources told Reuters on Thursday.

Rumors on Wednesday that France was to lose its AAA rating, later denied by ratings agencies, helped trigger the biggest widening in the European credit default swap index since the credit crunch in 2008.

That sudden rise in risk perception, combined with sharp share price falls in French banks, prompted some banks in Asia to speed up reviews of counterparty risk and look at whether they should cut exposure to European lenders, sources at each of the six banks in Asia said.

Contacted about the moves by the banks in Asia, a spokeswoman for top French lender BNP Paribas (BNPP.PA) in Paris said: "We never comment on market rumors."

Societe Generale (SOGN.PA) had no immediate comment to make while a spokeswoman for Credit Agricole (CAGR.PA), which will publish its second-quarter earnings later in August, said the bank would not make any comment.

The banks in Asia and the sources -- a mix of risk officers, senior traders and loan bankers -- could not be identified because of the sensitive nature of the information.

The head of treasury risk management for Asia at one bank in Singapore -- which has a significant presence across the region -- said their credit lines to large French banks had been cut because of the perceived risks in lending to these counterparties.

"We've cut. The limits have been removed from the system. They have to seek approval on a case-by-case basis," the treasury risk official said. The official declined to name the French banks.

Societe Generale put out a statement on Wednesday denying rumors about its financial health after its shares fell by as much as 21 percent.

The statement failed to fend off much of the market's concern with its shares ending the day 15 percent lower, taking losses since early July to more than 50 percent.

A senior credit trader in Singapore said that when a bank's shares fall that sharply their risk officer will automatically look at how much exposure they have to that lender.

SocGen shares were down 4 percent by 6:30 a.m. EDT on Thursday. BNP was down 5 percent while Credit Agricole (CAGR.PA) was largely flat.

Banks' heightened responses could exacerbate the market strains if they all acted simultaneously with portfolio-at-risk modeling, analysts said.

"The thing is if they all use it at the same time they will all sell at the same time when risk goes up, and that will drive prices down and it is like a snowball because then the prices go down and then your value-at-risk ratio will tell you 'oh, I must reduce my risk even more'," said Mark Matthews, head of research at Julius Baer.

WIDESPREAD REVIEWS

Several of the traders and bankers in Asia said that while they had not cut all exposure to any particular institution, they were very cautious about taking on new trading positions with them.

A senior risk officer at a bank in Singapore said "obviously we are having a review," when asked if they were reassessing their positions with European counterparties.

Bankers and risk officers at the five institutions in Asia that were still dealing with French banks said that while short-term lending of up to 30 days was still taking place, they were conducting a thorough review of longer-term credit lines regardless of the type of transaction.

"It's all in relation to (our) take on a French bank's credit risk, regardless of whether it's a swap or interbank lending transaction," said a senior loan banker at a Japanese bank.

Criteria banks are reviewing include looking at whether parts of the credit lines they have in place with their French financial counterparties are as yet unused, and if so if they can be reduced. The term lengths of loans they've granted are also under review, with a view to cutting them if they can.

Lenders are also considering imposing a larger haircut on the European government bonds posted as collateral by the euro zone banks they lend to, the treasury risk official from the bank that has cut credit lines said.

CAUTION RULES

These practices already look to be constraining European lenders' access to longer term funds, given that banks had to tap the European Central bank for 50 billion euros worth of six-month cash this week.

"They went on (credit) watch late last week for us. We can't extend further counterparty risk on French banks," said a senior trader at another financial institution in Singapore.

The restrictions, put in place on Friday, limited trading across financial asset classes that would increase the institution's exposure to the French banks, the senior trader said.

A compliance officer at another European bank in Singapore said banks are responding to changes in the risk outlook much more quickly than during the 2008 financial crisis.

"We have a dedicated unit not just going through our exposures on a name by name basis but looking at the broad portfolio of assets the whole bank is exposed to and the risks it contains," he said.

"People are flagging much earlier if they think there's counterparty risk we need to reassess."

Chris Matten, a financial services partner at PricewaterhouseCoopers in Singapore and a former CFO of OCBC Bank (OCBC.SI), said reviews of European lenders would have been happening regularly.

"The smarter banks would have gone through the exercise a while ago. We've seen sharp falls in shares this week but the debt problems in the euro zone have been a train crash in slow motion," Matten told Reuters.

"I know of at least a few smart banks that went through all their exposure to south European banks six months ago and have since cut that exposure quite substantially."


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bdc63
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Re: What does $7.49 buy you?
PostPosted: Tue Aug 23, 2011 2:23 pm Reply with quoteBack to top

We may just see a 5 handle later week (BAC trading around $6.25/share right now)

But riddle me this batman -- how is the DOW up 300 points on a day when Bank of FreakinAmerica is on the brink ... again ...

Rumors of Massive Equity Raise at BofA (BAC) Making the Rounds10:12 am ET 08/23/2011- Street Insider

Monday Research firm Jefferies said Bank of America (NYSE: BAC) may need to raise $40 to $50 billion in fresh capital to keep going. But that's silly.

Reports Tuesday suggest BofA needs waaayyy more.

Business Insider chief Henry Bodget said BofA is falling faster than a stone, sinking more quickly than a ship, diving more wholly than an international soccer star.

Taking notes from ZeroHedge and sans-clothing Capitalism's Yves Smith, Blodget points out subtracting BofA's stated assets from its liabilities amounts to about $222 billion of book value. But those are stated numbers -- what BofA management thinks they should be at. The Street is taking a different view, saying BofA is basically insolvent.

Blodget, with outside research, lists four things which should be subtracted from BofA's stated book value (in no particular order):Mortgage-litigation reserves of about $15 to $20 billion;

About $48 billion of "second mortgages";

Something slightly less than the $182 billion in stated commercial real estate loans;

About $17 billion or more in exposure to European banks and sovereign debt.All told, BofA needs anywhere from $100 billion to $200 billion in capital to "clean up" its balance sheet and keep chugging along.

The market's taking notice Tuesday morning: BofA shares last traded at $6.22, down more than 3 percent from Monday's closing price.
.

_________________
"Socialism only works in two places: Heaven where they don't need it and h*ll where they already have it." -- Ronald Reagan
"Everybody, sooner or later, sits down to a banquet of consequences." -- Robert Louis Stevenson
“Gold is money. Everything else is credit.” -J.P. Morgan, testifying to Congress in 1912
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bdc63
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Re: What does $7.49 buy you?
PostPosted: Thu Aug 25, 2011 1:15 pm Reply with quoteBack to top

Berkshire Hathaway just bought $5 billion of BofA prefered stock - trading up 26% on the news in about 60 seconds (pre-open). The DOW rallied about 100 points.

... can you say "short squeeze"? ...

hmmm, didn't Moynihan just say that they were well capitalized and were not going to be needing to raise capital? So, why then cut a sweetheart deal with Buffett?

_________________
"Socialism only works in two places: Heaven where they don't need it and h*ll where they already have it." -- Ronald Reagan
"Everybody, sooner or later, sits down to a banquet of consequences." -- Robert Louis Stevenson
“Gold is money. Everything else is credit.” -J.P. Morgan, testifying to Congress in 1912
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dreamer
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Re: What does $7.49 buy you?
PostPosted: Thu Aug 25, 2011 11:33 pm Reply with quoteBack to top

Obummer supposedly called and spoke with da Buffet and entreated him to do it...talk about the ultimate insider trading...Yo Buffet buddy...put in $5 B and we'll kill da shorts and the ESF will be there and U ain't neva gonna lose nuttin and man U be like rolling in da dough...do it fur Amerika.

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bdc63
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Re: What does $7.49 buy you?
PostPosted: Mon Sep 12, 2011 2:16 pm Reply with quoteBack to top

BofA is now alluding to the idea of cutting the CountryWide Unit free via a bankruptcy filing.

hmm ... a Countrywide bankruptcy ... well that's taken about 3 years longer than I expected it to. The tan man is probably still laughing at BofA for buying that turd.

_________________
"Socialism only works in two places: Heaven where they don't need it and h*ll where they already have it." -- Ronald Reagan
"Everybody, sooner or later, sits down to a banquet of consequences." -- Robert Louis Stevenson
“Gold is money. Everything else is credit.” -J.P. Morgan, testifying to Congress in 1912
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bdk
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Re: What does $7.49 buy you?
PostPosted: Mon Sep 12, 2011 11:38 pm Reply with quoteBack to top

thats 30000 more on UE to compete with for the next to nothing jobs out there... man we are screwed. Need mfg'ing brought back how we do that when we have to deal with corp taxes, regs, epa, unions etc etc not to mention foreign competitors utilizing slave labor is beyond me.

I mean if we remove the tax, regs etc factor how do we still deal with labor cost issue? If bottom of the barrel cost of a widget is $6 US vs $1.50 China and the widgets are identical what do you do?

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bdc63
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Re: What does $7.49 buy you?
PostPosted: Thu Sep 22, 2011 8:09 pm Reply with quoteBack to top

BAC traded down as low as $6.00 today, closing at $6.06 ... a "5" handle tomorrow perhaps? ...

Im sure the FED or Treasury has something up their sleeve to "help" the banks ... wonder what it will be this time ...

... A government sponsored mortgage refi program (where the government ends up taking all the risk)?

... A ban on all those evil double and triple short ETFs?

... A surprize QE3?

_________________
"Socialism only works in two places: Heaven where they don't need it and h*ll where they already have it." -- Ronald Reagan
"Everybody, sooner or later, sits down to a banquet of consequences." -- Robert Louis Stevenson
“Gold is money. Everything else is credit.” -J.P. Morgan, testifying to Congress in 1912
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dreamer
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Re: What does $7.49 buy you?
PostPosted: Thu Sep 22, 2011 8:35 pm Reply with quoteBack to top

I do wonder. The only thing that I'm sure of is it will suck for the sheeple.

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achtung
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Re: What does $7.49 buy you?
PostPosted: Fri Sep 23, 2011 4:05 am Reply with quoteBack to top

BDC,
It is funny that the actions of the Fed on Weds is causing the plunge in Bank stocks, now that the banks will find it harder to make money of the short termer's ... what is the solution when the banks can't make the easy money?

Can't see anything the Fed can ease, the banks are being forced to lend (imagine that) despite zero demand for loans (at least from a quality standpoint).

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bdc63
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Re: What does $7.49 buy you?
PostPosted: Fri Sep 23, 2011 12:00 pm Reply with quoteBack to top

achtung wrote:
BDC,
Can't see anything the Fed can ease, the banks are being forced to lend (imagine that) despite zero demand for loans (at least from a quality standpoint).


Yep, and a parallel to this is that retirees are being forced to "invest" in the stock market because they can't get any yield in treasuries. You know, AARP is always out there flexing their muscles on other political issues, why are they so absent on this one I wonder. I'm truly surprised that there is not a circle of wheel chairs and walkers parading around the Federal Reserve building in DC every single day.

Pre-open BAC is trading at $5.95 -- not sure why I take so much pleasure in watching them falter, but I do.

"Mr. Moynihan -- Mr. Buffett is on line 1" Wink

Time for them to move EVERYTHING (and everyone) that's stink'in up the joint over to the Countrywide unit and then let them declare BK.

_________________
"Socialism only works in two places: Heaven where they don't need it and h*ll where they already have it." -- Ronald Reagan
"Everybody, sooner or later, sits down to a banquet of consequences." -- Robert Louis Stevenson
“Gold is money. Everything else is credit.” -J.P. Morgan, testifying to Congress in 1912
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