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The Past Two Weeks Were A Preview Of The ‘Horror Movie’ Coming To The Bond Market This Summer Over the past few weeks, attention in financial markets has once again turned to the prospect of the Federal Reserve tapering back its monetary stimulus, spurred on by public speeches from Fed presidents and articles fromWSJ reporter Jon Hilsenrath, who is viewed as close to the central bank. As concerns that the Fed may begin [...] Three Federal Reserve regional bank presidents called for phasing out the Fed’s monthly purchases of $40 billion in mortgage-backed securities as the housing recovery shows signs of gaining momentum. Dallas Federal Reserve Bank President Richard Fisher said today buying mortgage bonds risks disrupting the market, while Philadelphia Fed President Charles Plosser said, “it’s not good for the bank to be holding lots of mortgage paper.” Jeffrey Lacker of Richmond said to reporters yesterday the Fed should “get [...] Published on May 21, 2012 by CapitalAccount Follow us @ Welcome to Capital Account. Bloomberg reports investors are worried JP Morgan is planning to pull back in the European mortgage bond market in the wake of the CIO disaster, causing significant volatility. JP Morgan is the biggest buyer of European home-loan bonds. Is this just one of many examples of how JP Morgan’s reckless 2 billion dollar trading loss may be felt most by [...] via Bloomberg: JPMorgan Chase & Co. (JPM)’s holdings of home-loan bonds from outside the U.S. soared 35-fold in the past three years. Now, with its chief investment office facing scrutiny after a $2 billion trading loss, investors are raising concern the European market’s biggest buyer will pull back. The largest U.S. bank by assets accelerated its purchases last quarter, adding $8.5 billion to lift its total to $74.5 billion, according to regulatory [...] by ZH While Morgan Stanley only recently became a second derivative for everything European-related (thank you financial short selling ban in Europe, and also thank you Mr. Gorman for updating investors on your firm’s $39 billion gross derivative exposure to French banks (not France the country). What’s that? You didn’t provide one? Oh, our bad, just as it is “anonymous bloggers” bad that your CDS blew out this quarter and generated over [...] Wow!! The billboard signals of extreme crisis are overwhelming. Three years of near 0% with no recovery. A full year of ample USTreasury and mortgage bond monetization with no recovery. Tons of cash aid deliveries to the big US banks with no recovery. Some key corporate nationalizations with no recovery. Oodles of errant stimulus programs with no recovery. Some important misdirection in home loan aid [...] by ZH Oops: FDIC OBJECTS TO BANK OF AMERICA MORTGAGE-BOND ACCORD Time to sell the other half of that China Constricution Bank stake… And Merrill… and Countrywide (goodluck), and pretty much anything else that is not nailed down. But don’t worry: it’s a liquidity, not a capital issue, or something. In other news, [...] From Reuters: (Reuters) – JPMorgan Chase & Co (JPM.N) could be forced to repurchase thousands of home equity loans, after a judge ruled in favor of a bond insurer that argued it could build its case based on a sampling of loans. The ruling against EMC Mortgage Corp, once a unit of Bear Stearns Cos, comes amid many lawsuits seeking to force banks to buy back tens [...] (Reuters) – A spike in commodity costs is making consumers expect higher prices in the short-run, and Federal Reserve officials must make sure longer-run expectations remain under control, a top central bank official said on Thursday. At the same time, U.S. unemployment remains far too high, and the economic recovery still needs plenty of help from the Fed’s accommodative monetary policy, Atlanta Fed President [...] From Bloomberg: Banks Face Two-Front War on Bad Mortgages, Foreclosures Shoddy mortgage lending has led bankers into a two-front war, pitting them against U.S. homeowners challenging the right to foreclose and mortgage-bond investors demanding refunds that could approach $200 billion. While federal regulators and state attorneys general have focused on flawed foreclosures, a bigger threat may be the cost to buy back faulty loans that banks bundled [...] by Sunny For crying out LOUD, back then there was NO SECURITIZATION or MORTGAGE Bonds based on Home loans! There was NO MERS to screw up things! The enormous mortgage-bond scandal (apart from Foreclosure Fraud!) Excerpts: “You thought the foreclosure mess was bad? You’re right about that. But it gets so much worse once you start adding in a whole bunch of parallel messes in the world of mortgage bonds. For instance, as [...] by Sunny More tales of Crooked and Greedy Investment Banks and their EVIL acts of Trickery and Deceit in the Housing Mortgage Industry! The enormous mortgage-bond scandal – (apart from Foreclosure Fraud!) Excerpts: “You thought the foreclosure mess was bad? You’re right about that. But it gets so much worse once you start adding in a whole bunch of parallel messes in the world of mortgage bonds. For instance, as Tracy Alloway says, mortgage-bond [...] http://blogs.reuters.com/felix-salmon/2010/10/13/the-enormous-mortgage-bond-scandal/ You thought the foreclosure mess was bad? You’re right about that. But it gets so much worse once you start adding in a whole bunch of parallel messes in the world of mortgage bonds. For instance, as Tracy Alloway (of FT Alphaville) says, mortgage-bond documentation generally says that if more than a minuscule proportion of notes in a mortgage pool weren’t properly transferred, then the [...] by ZH We received something troubling in the tip box. I contacted several real estate agents today to buy real estate in Florida only to be told that all sales (including properties that have been foreclosed and are actively for sale/auction) are on hold. I asked the agents for how long. They said it appears until January 2011. Are fellow readers seeing this across other states as well? It hasn’t [...] |
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