There is an FDIC Conference Call for Bankers (and Investors now) discussing Legacy Loans Program under the newly announced Public Private Partnership, scheduled for noon.
1-888-790-3946
Passcode: 9857969
11:51: The hold music is…Tears In Heaven.
11:55: Now it’s the theme song from Trading Places (“Overture, Marriage of Figaro”). No joke.
12:06: Bair: “We don’t have all the answers now, so we want to hear from you. Put your thinking caps on.”
Questions:
Franklin Card: In terms of starting the program, do you have a time range for when you hope to be up and running? A month? Couple months?
FDIC: Not before we get public comments. We put a end date on that of April 10. We’re anxious to get it moving as quickly as possible. We need the input before we give a specific time frame.
Card: Is price discovery here going to impact accounting treatment for similar assets?
FDIC: Only if there are enough transactions to give several data points, and you have to remember that the leverage distorts the pricing to some degree.
Missed questioner’s name: Will participating in the program potentially put a hole in capital to the extent we have to remark assets? How will this effect our regulatory capital requirements? Will the requirements be changed to alleviate this problem?
FDIC: Uh… maybe.
Missed questioner’s name again: Will the FDIC, I don’t want to use the word ‘coerce’, but use this to nudge the bank along to sell the assets?
FDIC: The supervisory process is already there.
Guy: Can you give us a headcount of people you have devoted to this?
FDIC: No, next question.
‘Nother Guy: Has it been determined if there are bidders, and what the qualifications are to bid?
FDIC: We’re soliciting comments on that. There will be qualifications.
Dude from JPMorgan: breathing into phone
Operator: Sir, your line is open.
Dude from JPMorgan: Hello? Hello? Hello?
Operator: Sir, your line is open.
Dude from JPMorgan: Hello?
FDIC: We’re here. Ask your question.
Dude from JPMorgan: Sorry, I’m an analyst at JP Morgan who doesn’t know how to use a phone.
Guy from DE Shaw: What level of interest have you seen from the banks to participate in this process so far. If you’re not seeing a lot of participation, will you force people to?
FDIC: We just started this monday so…but yeah, people have told us they’re interested.
RBC Capital Markets: Will unaccepted bids impact mark-to-market marks?
FDIC: Depends.
RBC Capital Markets: If not enough banks want to get involved, is there something you can do to force encourage them to?
FDIC: We’re seeking comment on that.
THAT is comical
Legacy loans! I have a hunch something exciting is going to happen in the legacy loan market this morning.
put your thinking caps on!
‘trading’ places….geddit???
sell mortimer sell
the situation needs to be fleshed out, er I mean, is fluid…
Will someone on the call please congratulate her for me on the award she recently received…..
CSWTF
yowza, they just shut him down hard!
RE: remarking assets/capital requirements etc.
Geithner got this question from the “gentleman from Texas” this morning and gave, essentially, the same response.
A big issue will little to show for it. Thoughts on where this is headed?
what the hell is an OREO asset. If the dude is trying to say REO, it sounds absolutely nothing like that.
what the hell is an OREO asset. If the dude is trying to say REO, it sounds absolutely nothing like that.
@11/12 – OREO = other real estate owned…
@11/12 – for avoidance of doubt, OREO assets are real estate the banks own that are not part of the bank’s facilities. eg. a bank branch would not be included in OREO.
what’s with all the whispering on this call?
I’d be interested in adding some underpriced legacy assets to my 401k. Will a 440 credit score do?
-Joe Mainstreeter
lots of tap dancing around whether or not the banks will need to take mark downs on their loans if the pricing doesn’t meet expectations. our friends at the fdic seem to be saying that management can continue to keep loans at unrealistically high values because they are held for investment.
we don’t need no stupid mark-to-market accounting (even if we do have price discovery)…
@ Cluzo
I’m not sure (although I bet Francine @ retheauditors is) why the debate about MTM is still going on, the language in the guidelines allows for plenty of leeway (er, “Judgement”) as far as I can tell in when/if/how to value assets.
So, like are any of these the actual answers they gave on the call, or all jokes? Performance art maybe?
@Madmoney– these are the actual questions and answers.
Bess, Great job on this. I linked you and EP. (http://www.theminorityreportblog.com/wire/knight_of_the_mind/2009/03/27/crash_and_burn) Again, excellent work.