QUOTE - One commenter sought assurances that Schwab and its subsidiaries would not securitize "predatory" mortgage loans. Schwab stated that it does not originate, purchase, or securitize subprime mortgage loans for itself or other lenders. U.S. Trust, which offers mortgage loans to its high-net-worth private banking customers, has previously securitized one pool of mortgage loans, and it has no current plans to securitize additional mortgages. Schwab stated that Bank would adopt policies and procedures designed to ensure that no high-cost loans would be offered to customers of Bank, and that the mortgage loans originated by or on behalf of Bank would not contain fees or terms that could be characterized as predatory or abusive" - END QUOTE
Sounds good, doesn't it? Maybe Schwab's exposure to mortgages-gone-bad really is minimal after all.
If I understood things right, it seems like the Schwab Bank has been outsourcing it's mortgage lending business to PHH for quite some time now. I believe this is the same PHH that's being bought out by GE and Blackstone. (Blackstone is a hedge fund.)
After reading the article above, it looks to me like GE wants no part of PHH's mortgage business. Apparently, GE only want's the vehicle fleet management part of PHH and will reportedly sell it's share of the PHH mortgage business to Blackstone right away.
Blackstone, of course, has announced it's intention to go public real soon:
I guess what I'm trying to say is, even if Schwab itself is on the up-and-up, if the Schwab Bank's portfolio is loaded with mortgage securities backed by loans made by PHH, then... I gotta wonder if those securities are as solid as Schwab believes they are.
Anyway, it looks to me like Blackstone is cashing out. Looks like PHH is selling out too. Schwab's CFO is retiring in May (at age 47?!) and they announced a stock buyback at about the same time they announced his plan to retire. (I guess maybe someone doesn't want the pps to plummet while someone's shares are being dumped on the market.) And you gotta wonder why GE and Goldman Sachs seem to be steering clear of certain things.
Now you don't suppose the big boys are trying to exit quietly while encouraging small retail investors to hold the mortgage bag, do you? What if they drove the price up a few dollars, and got some analysts to spread around some rosy, upbeat outlooks?
Nah, that sort of thing could never happen, imo. Don't mind me at all. I'm probably totally wrong. So what if only China has more red flags on it than this thing?