60 min piece last night shows how bad it really is for banks.
All the bad banks with toxic assets which were purchased by the good banks like BBT... NOW have made themself toxic as well... Loan losses will keep adding up.. They are very light in thier loan loss reserves.
60 min Piece on World Bank et Golden West... which Wachovia purchased for $25 Bill which made them All the Toxic waste in Wachovia.
Wistle blower at world bank talks about how bad the bank lending pactices were. this goes for 80% of the banks making loans in 2004-2007
There are Billions of $$$ in toxic assets they now own, and as the housing and commecial real estate mkt continue to fall and crash WFC like BBT, USB, PNC JPM BAC etc will have to keep taking billions of $$$ in losses!! Unfortunetly. The worst is yet to still come.
All these Banks including BBT will have steep losses and the stock will keep falling as the Dividends will have to be cut in trying to save $$$ for losses and reserves as the housing and commercial real estate mkt decline.
Very sad. Gov has no answers at all.
option mkt's has a lot of PUT buying on BBT. because of the area of the country they gave out loans. $12-$13 range... Scary to see, what does someone know we don't.
The stimulus bill sounds very suspicious to me. BO, Reid and Pelosi were in the headlines all last week hollering how critical it was to vote and pass the bill immediately. Sounds like a lot of fraud in it they did not want exposed by giving delegates time to study it. They passed it last week, BUT THE PRESIDENT WILL NOT SIGN IT UNTIL TOMORROW. Again looks suspicious to me.
The estimates as early as last summer on the total losses due to the excessive lending practices were around 1.4 trillion. The best early work came from a highly reputable fund in Switzerland. I think 60 minutes may be a little late with the "news" and maybe a decimal point off.
If the entire economy becomes derailed then BBT gets derailed along with it.
However, the possible saving grace for BBT is that it did not make the loans that were characterized by features such as "no documentation of borrower's income", "no research into borrower's credit history", and "no down payment".
But if BBT has mortgage loans to people for 80% of a house's value in 2006 or 2007 and the borrower lost his/her job, then we have that problem. The combination of job loss and house value loss is a killer.
But a person with the 20% downpayment coming from his/her own $ in a property who is still working probably has enough on the line to keep paying the mortgage and wait, with the rest of us, for inflation to come back and make the house worth what they are paying.
Here's where "mark to market" could come into play for BBT and strangle it. Assume they have 100 units of mortgage loans on the books with some reserve for losses already made. The "stress test" regulator shows up and says "You can't sell your 100 units for what you have them booked at. Take a 30 unit charge." KK says "I don't want to sell them. They are performing. They are worth what I value them at becuse they are current on their payments and will continue that way."
The regulator wins the argument. If BBT gets forced to sell the loans, BBT gets screwed even if KK is right. The purchaser makes the $.
Obama and the stimulus plan have nothing to do with this except to possibly stimulate employment but it won't change the "stress test".
In response to your intended panic inducement I might mention that the company that bought Wachovia (the purchaser of Golden West) is Wells Fargo. Wells Fargo knew what they were getting when they purchased Wachovia.
The critical component of analyzing the quality of a banks loans is the percent of nonperforming assets. In the fourth quarter BBT had 1.34% nonperforming whereas WFC had 2.69%. It would seem that painting BBT and GDW with the same brush is not deserved.
how bout the truth. BBT i think is one of the good banks however it has come out the past few day's that BBT does not have near enough loan reserves put a side. and the area of the country they have a lot of thier loans is going south very quickly.
BBT will have to cut thier divy to preserve capital... they will have much larger losses on construction, housing HELOC, & commercial real estate. CNBC fast money Karen Finerman has said all along BBT is very light on thier loan lose resreves. The entire Mkt is starting to spiral down we closed at DOW 7850 Fri. just look at DOW futures they are down to 7690's
there is no magic fix. Heck, we could see DOW 6000 by next wk. damn scary