Comments on: On Q2 Bank Earnings and IRA Ratings, Very Briefly

By: Eeeiliza

Eeeiliza — Wed, 26 Aug 2009 08:31:50 +0000

Check the rating scales at http://www.bank-ratings.net they’ve got some different but similar ones.

By: New Mortgage Info » Blog Archive » On Q2 Bank Earnings and IRA Ratings, Very Briefly | The Big Picture

Sun, 16 Aug 2009 12:26:54 +0000

[...] Chris Whalen wrote an interesting post today onOn Q2 Bank Earnings and IRA Ratings, Very Briefly | The Big PictureHere’s a quick excerpt [...]

By: emmanuel117

emmanuel117 — Fri, 31 Jul 2009 14:52:32 +0000

CR on defaults on Option ARMs reducing the potential number of recasts:

http://www.calculatedriskblog.com/2009/07/option-arms-good-news-bad-news.html

The new Credit Suisse chart:

http://3.bp.blogspot.com/_pMscxxELHEg/ShQKBEyAORI/AAAAAAAAFTM/03RNGrH9sEA/s1600-h/CreditSuisseResetMarch09.jpg

Though that chart has a flaw:

http://healdsburgbubble.blogspot.com/2009/05/reset-chart-from-credit-suisse-has.html

By: Wes Schott

Wes Schott — Fri, 31 Jul 2009 14:16:57 +0000

………is WBS toast?

By: Chris Whalen

Chris Whalen — Fri, 31 Jul 2009 12:18:31 +0000

To comment on HSBC, remember that the Stress Index ratings are just for the US units, so with RBS it is mostly First Citizens. HSBC has several units but remember that they have a heavy consumer focus like Citi. In fact, Citi and HSBC are good peers in terms of defaults, Loss Given Default and Exposure at Default (unused lines).

To the comment about money centers, they are zombies yes but the recovery values will vary greatly. WFC and BAC are toxic waste sites, but different. JPM is also very different. C is in process of resolution. Thus is does matter a great deal.

I have been saying that the debt-equity swap is going to be the flavor of 2010. Maybe Citi is the first test of this. We restructure Citi Holdings, where there are no banks please notice, and invite the bond holders to convert to recap the clean bank. Lower interest expense, higher TCE and a nice, clean utility that will hopefully have equity volatility < 100%.

By: Wes Schott

Wes Schott — Fri, 31 Jul 2009 12:05:02 +0000

@July 30th, 2009 at 9:52 pm, ben22-

we agree

perhaps my wording was ambiguous @July 30th, 2009 at 9:00 pm

the mortgage resets will occur continuously between now and Q1/Q2 2011. we are kinda at a lull right now, but resets will accelerate during the last half of this year, continuing through 2010 and climaxing in the first half of 2011 with the option ARMS (the dirtiest of the bad boy mortgages)

By: jc

jc — Fri, 31 Jul 2009 11:57:21 +0000

whoops forgot the site
http://www.jnkventures.com/images/MortgageRateResets.jpg

By: jc

jc — Fri, 31 Jul 2009 11:56:52 +0000

Patfla,2009 is the eye of the storm between subprimes 2007/8 and options and AltAs 2010/11. I personally think the AltAs are the worst of a bad lot and if the 2010/11 vintages reflect purchases at the highest prices 2006/7 that is problematic too

By: matt

matt — Fri, 31 Jul 2009 11:16:32 +0000

@ben22: “not according to the schedule I have, 2010 Option ARM and Alt-A resets begin, they get bigger in 2011″

Didn’t CR post something about how a large portion of those scheduled to reset in 2010/2011 have already entered default? If that’s the case, the losses will move forward.

Mr. Whalen:

This is very interesting. It’s too bad it doesn’t matter for the money center banks.

By: patfla

patfla — Fri, 31 Jul 2009 04:02:52 +0000

No it didn’t. This is wonderful.