Financial topics

[gerald]

A sign of the times? This quote is from a blog devoted to knitting -- scarves and sweaters.

Is this a variation of the shoeshine boy giving stock tips, like 1929 - but in reverse?

Interesting-- from http://queerjoe.blogspot.com/

Tuesday, August 07, 2012
More Change!

For over 2 decades, I've had my checking and savings account at the same bank...or should I say the same bank building. In total, my accounts have been at four separate banks in those 20 or so years. I decided it was time to change my accounts over to a local bank (who have NO plans to sell, merge, acquire, etc.).

Worth Doing
It was a pain changing banks from one of those huge, to-big-to-fail national banks (which is the latest iteration of the bank where my money used to reside), to a local bank, owned and run by local banking professionals, but in my estimation, it is still worth doing.

In fact, I would highly recommend that everyone consider doing it.

The switchover required a number of changes:

Changing direct-deposit accounts with both mine and Thaddeus' work
Switching over direct-debit billing for a couple of accounts
Changing my PayPal direct access
Changing the account for my reitrement investments to interface with the new account
Learn a new on-line bill-paying system
It was also a bit more expensive in some ways to have my bank be local instead of huge...
I had to maintain a higher minimum balance to get free accounts with on-line bill-paying (honestly, for me, this had no impact, but it might have impacted some)
My checking account is no longer interest-bearing (VERY little loss on this one)
No nationwide availability of ATM machines, so I may have to pay fees more often to take out cash whilst traveling
And despite all this change, I still think it was a good idea. In my own small way, I feel as though I'm telling the BoA's and Wells Fargos that their policies suck, and they need to advocate for more regulation of the banking industry.

I know I'm slow to the punch on this issue...most of the folks that were fed up with the free-wheeling national banks have already moved their money to local banks. But I'm still quite glad I was able to do my part.

[Reality Check]

...
Agencies are the mortgages issued by Fannie Mae, etc., whereas MBS are the securitized mortgages issued by private financial institutions.
...

My original impression on reading the balance sheet was also that the 8 tenths of a Trillion dollars was commercial bank Mortgage-backed securities, and not guaranteed by the agencies. But note 4 was what made me believe they were limited to agency guaranteed MBS and I assumed the "Federal agency debt securities" (agencies) were in fact bonds issued by the agencies to raise working capital.


Federal agency debt securities (2) 91,029 0 21,406 91,029
Mortgage-backed securities (4) 853,490 +67 43,795 853,493

1. Includes securities lent to dealers under the overnight securities lending facility; refer to table 1A.
2. Face value of the securities.
3. Compensation that adjusts for the effect of inflation on the original face value of inflation-indexed
securities.
4. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Current face value of the securities, which is the
remaining principal balance of the underlying mortgages.
5. Cash value of agreements.


**********************************************************************************************************************
http://www.federalreserve.gov/releases/h41/Current/
FEDERAL RESERVE statistical release
H.4.1
Factors Affecting Reserve Balances of Depository Institutions and
Condition Statement of Federal Reserve Banks
August 9, 2012

1. Factors Affecting Reserve Balances of Depository Institutions
Millions of dollars
Reserve Bank credit, related items, and Averages of daily figures Wednesday
reserve balances of depository institutions at Week ended Change from week ended Aug 8, 2012
Federal Reserve Banks Aug 8, 2012 Aug 1, 2012 Aug 10, 2011

Reserve Bank credit 2,834,809 + 1,450 - 19,909 2,838,891
Securities held outright (1) 2,593,989 + 175 - 59,631 2,596,938
U.S. Treasury securities 1,649,469 + 107 + 5,569 1,652,416
Bills (2) 0 0 - 18,423 0
Notes and bonds, nominal (2) 1,570,529 + 133 + 20,059 1,573,484
Notes and bonds, inflation-indexed (2) 69,086 0 + 3,443 69,086
Inflation compensation (3) 9,855 - 25 + 490 9,846
Federal agency debt securities (2) 91,029 0 - 21,406 91,029
Mortgage-backed securities (4) 853,490 + 67 - 43,795 853,493
Repurchase agreements (5) 261 + 261 + 261 600

...

1. Includes securities lent to dealers under the overnight securities lending facility; refer to table 1A.
2. Face value of the securities.
3. Compensation that adjusts for the effect of inflation on the original face value of inflation-indexed
securities.
4. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Current face value of the securities, which is the
remaining principal balance of the underlying mortgages.
5. Cash value of agreements.
6. Includes credit extended by the Federal Reserve Bank of New York to eligible borrowers through the Term
Asset-Backed Securities Loan Facility.
7. Refer to table 4 and the note on consolidation accompanying table 9.
8. Refer to table 5 and the note on consolidation accompanying table 9.
9. Refer to table 6 and the note on consolidation accompanying table 9.
10. Refer to table 7 and the note on consolidation accompanying table 9.
11. Dollar value of foreign currency held under these agreements valued at the exchange rate to be used when
the foreign currency is returned to the foreign central bank. This exchange rate equals the market
exchange rate used when the foreign currency was acquired from the foreign central bank.
12. Includes other assets denominated in foreign currencies, which are revalued daily at market exchange
rates, and the fair value adjustment to credit extended by the FRBNY to eligible borrowers through the
Term Asset-Backed Securities Loan Facility.
13. Estimated.
14. Cash value of agreements, which are collateralized by U.S. Treasury securities, federal agency debt
securities, and mortgage-backed securities.
15. Includes the liabilities of Maiden Lane LLC, Maiden Lane II LLC, Maiden Lane III LLC, and TALF LLC to
entities other than the Federal Reserve Bank of New York, including liabilities that have recourse only
to the portfolio holdings of these LLCs. Refer to table 4 through table 7 and the note on consolidation
accompanying table 9. Also includes the liability for interest on Federal Reserve notes due to U.S.
Treasury. Refer to table 8 and table 9.

Sources: Federal Reserve Banks and the U.S. Department of the Treasury.

[Higgenbotham]

My original impression on reading the balance sheet was also that the 8 tenths of a Trillion dollars was commercial bank Mortgage-backed securities, and not guaranteed by the agencies. But note 4 was what made me believe they were limited to agency guaranteed MBS

4. Guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. Current face value of the securities, which is the remaining principal balance of the underlying mortgages.

I wasn't aware of this footnote and did some investigation by going back to when the program started to see if the footnote has always existed. It has.

The Board's H.4.1 statistical release, "Factors Affecting Reserve Balances of Depository Institutions and Condition Statement of Federal Reserve Banks," has been modified to include information related to Federal Reserve System purchases of mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae.

On November 25, 2008, the Federal Reserve announced a program to purchase mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. The goal of the program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets. Purchases of these securities began on January 5, 2009. Outright transactions in mortgage-backed securities have settlement dates that can extend several months into the future. Federal Reserve purchases that settled during the week ended January 14, 2009, are reflected on this release. Additional information on System transactions in mortgage-backed securities is available at http://www.newyorkfed.org/markets/mbs/.

The current face value of the System's holdings of mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae appears in table 1, table 8, and table 9. The current face value represents the remaining principal balance of the underlying mortgages. The maturity distribution of these holdings based on the stated maturity date appears in table 2.

http://www.federalreserve.gov/releases/h41/20090115/

http://www.newyorkfed.org/markets/mbs_faq.html

Reading through the FAQ, it's not clear to me exactly who issued these mortgages or why they ended up in the hands of primary dealers for purchase by the Fed.

[aedens]

Old news for a new day. Red and Blue voting records do matter. http://clerk.house.gov/evs/2011/roll858.xml

[aedens]

As we know to date the best way to predict the way forward in Europe, as a whole is to look at the political process in the North
of the confederations. Merkel ends her summer vacation and travels to Canada Aug. 15-16
As we may see soon some are starting to convey to ignore the chickenshit donations. If markets fall significantly
between now and November — 1300, 1200, 1100, 1000 — the powers that be on Wall Street want a Romney presidency.
I think they want to be nuetral for obvious reasons. We mentioned the 17th as a look around point. I do not think it matters at this point.
As we do here we try to frame it out and if we have any bias at all, it's that we're pro-American.
The only thing we are watching is the burn rate and the red and blue destruction of a fiat in the annals to the dust bin of history.
H, what do you feel about TBT until 2013 closes for a percentage term play?
There is a agenda playing out and the trail is certain to the design. We all know this...cripple the incoming administration
like we have seen before. America is that last issue for the other issue we are aware of.

[aedens]

My original impression on reading the balance sheet was also that the 8 tenths of a Trillion dollars was commercial bank Mortgage-backed securities, and not guaranteed by the agencies. But note 4 was what made me believe they were limited to agency guaranteed MBS

http://www.federalreserve.gov/releases/h41/20090115/

http://www.newyorkfed.org/markets/mbs_faq.html

Reading through the FAQ, it's not clear to me exactly who issued these mortgages or why they ended up in the hands of primary dealers for purchase by the Fed.

Bill Clinton conveyed if he thought he got bad advice on regulating complex financial instruments known as derivatives from his former Treasury Secretaries, Robert Rubin and Larry Summers. He acknowledged that he was wrong to take the advice of those advising him against regulating derivatives.
It is pointless to debate the color of the cool aid because it is just that. Carrol Quigley molded Bill which is not a bad thing but the only thing Bill needed to remember is free will is never an excuse to not allow it to be applied. As we note it just has to be cleaned up later.

They knew exactly what they had done. Same as Enron it took five years to as they say "find it".

They already knew from 1983 the CCI program policy framework existed and before also. Is it a coin toss to coruption?
Whats the reality when looking at the problem gives them more time to shread documents they say.
I have been following the deevalution of Western Institutions fron the origins to the state of affairs we are in today.
Astounding on the decent rate since 1833 of the so called modern mind tenets.

[Trevor]

Except at one time, people were punished. Enron was the last time where anyone even bothered holding them accountable for their actions.

[aedens]

Enron was the last time where anyone even bothered holding them accountable for their actions.

Some time ago I tracked all the "players" and guess were it all started. As soon as a document hit a file another replaced it
from the shredder from that point on. They had to reregulate with sarban oxley later to know any thing to date.
With that came the smoke "our money" to its own destruction on mark to market I feel we note as fact ongoing.
I remember some well meaning who said it is just to muct cost to honest businesses. I was rather
curious why they consider the twenty percent who are eighty percent of the problem exempt.
My point is if they consider a granual view enough in management as all tbtf business do, why then do they consider
the taxpayer the solution to moral hazzard. That is why we cannot stop needing them sized to reality.
It eliminates the hard right and left from destroying what is left of any institution funded from
those like us who are having a hard go of it as we are.

[Reality Check]

I found this interesting.

Between 2009 Q4 and 2010 Q1 $4.3 Trillion in Mortgage Back Securities (MBS)
disappeared off the books of the FED's Mortgage Debt Outstanding Report

See line 55 and note 5 here: http://www.federalreserve.gov/econresda ... 101231.htm

It appears this maybe responsible for the FED reporting change:

Fannie Mae’s 2010 First Quarter -- Impact of New Accounting Standards on Fannie Mae’s 2010 First Quarter Form 10-Q
Overview of the Adoption of New Accounting Standards
"The Financial Accounting Standards Board last year issued new accounting standards governing the transfer of financial assets and the consolidation of variable interest entities (“VIEs”). We have interests in various entities that are considered VIEs, most notably securitization trusts that we created to hold whole loans that back Fannie Mae mortgage-backed securities (“MBS”). We prospectively adopted these standards, resulting in the majority of our single-class securitization trusts being consolidated by us on-balance sheet, and we are reporting under them for the first time in our first quarter 2010 consolidated financial statements. ..."
http://www.fanniemae.com/resources/file ... ew_faq.pdf

These accounting changes appear to explain the changes between 2009 Q4 and 2010 Q1
for lines 22, 44, 50, 55, 59 and 62 on the FED Mortgage Debt Outstanding report:
http://www.federalreserve.gov/econresda ... 101231.htm

My take on this is that the third party ( bank and other third party ) MBS insured by the
agencies in Q1, 2010 breaks down like this.

Ginnie Mae: $932 Billion ( pools of FHA / VA and other US Gov. guaranteed only mortgages ).
Fannie Mae: $30 Billion ( pools of conventional mortgages )
Fredie Mac: $40 Billion ( pools of conventional mortgages )

The $4.3 Trillion of MBS that disappeared off the Mortgage Debt Outstanding FED Report,
were MBS issued by the Agencies, with the Mortgages held in trust by the Agencies,
in addition to being insured by the agencies.
The remaining 932, 30, and 40 Billion respectively were the MBS issued by third party Financial Institutions and Guaranteed by the Agencies.

The actual 8 tenths of a Trillion shown on the FEDs Balance Sheet as MBS could be any part of the
5.2 Trillion of Agency insured MBS shown in 2009 Q4, which breaks down as:

Ginnie Mae Insured: $880 Billion ( pools of FHA / VA and other US Gov. guaranteed only mortgages ).
Fannie Mae Insured: $1838 Billion ( pools of conventional mortgages )
Fredie Mac Insured: $2653 Billion ( pools of conventional mortgages )

See this link for MBS assumptions:
http://generationaldynamics.com/forum/v ... =14&t=1515

[aedens]

We covered that. Rubin based the bonus "his" on the book opened. The CCI was the clean up crew. It roots to are the red and blue less, or more honest than the market of 80% trying to keep all the idiots alive since the 20% have more rights than us. A interesting fact of nature is when
one percent of a critical part fails the probability increases to total demise. The polarity syndrom of extremes distance appears to root this thought disengagement. We have a base acount on the mischeif of groups to draw from and the conseqeunces noted, also the gatekeepers sole duty.