No lesser source of scintillating financial analysis than the New York Post is reporting the suddenly ravenous appetite of Citigroup and Bank of America for mortgage backed securities.
Recently, securities rated AAA have changed hands for roughly 30 cents on the dollar, and most of the buyers have been hedge funds acting opportunistically on a bet that prices will rise over time. However, sources said Citi and BofA have trumped those bids.
The Post, surprisingly, declines to provide details so we are left to wonder. Shrewd public relations? Doubtful. Altruistic financial patriotism? We think not, but BofA claims so:
"Our purchases in [mortgage-backed securities] increase liquidity in the mortgage market allowing people to buy a home," said BofA spokesman Scott Silvestri.
Shameless profiteering? Yes, of course. But we don't suppose anyone would believe us if we said that Citi and BofA are calling an MBA bottom... would they?
Double Dippers [The New York Post]
Posted by guest , Mar 25, 2009 11:45AM
By accepting government money, you are now subject to do government biding. See Freddie and Fannie.
Posted by guest , Mar 25, 2009 11:59AM
how's about yous goin to sell those right back to the gomment at 50 to the dollar after geither's free market 'price discovery'
Posted by guest , Mar 25, 2009 12:00PM
I agree with #2.
Citi and BoA know the gov is going to set an artificially high price for these assets, so why not add more at the "deflated" price? Sounds like easy profit to me.
Posted by guest , Mar 25, 2009 12:03PM
exactly what all banks given tarp money have done...treasury telegraphed that trade before the tarp money was passed out...convential committment rates on mortgages are down 200 bps since halloween...not rocket science and the amplitude has more relevance outside thee agency market
Posted by guest , Mar 25, 2009 12:05PM
So if C, BAC, MS, and GS all make a killing in MBS securities, the type that blew a hole in their balance sheets, will there be hell to pay by Congress? I would include their respective asset management arms as well.
Stay tuned.......it could get real ugly out there again.
Posted by guest , Mar 25, 2009 12:08PM
That is a very complicated issue for Congress to wrap their collective heads around. I can imagine the questions now.
Posted by guest , Mar 25, 2009 12:10PM
Noooooooobody expects the Spanish Inquisition! Our chief weapon is surprise!
Posted by guest , Mar 25, 2009 12:16PM
These purchases will stop if mark to market is suspended. They dont want to own more of this sludge, they want to avoid the need to mark down the similar assets they already have on the books.
Posted by guest , Mar 25, 2009 12:16PM
It's ok b/c the banks are using their own capital...oh wait
Posted by guest , Mar 25, 2009 12:28PM
@7 & @9 youre reading from the same script aren't you?
The other chief weapon is " "
Fill in the blank
A. Mass Terror
B. Mass Greed
c. Mass Idiocy.
Posted by Investorcluzo , Mar 25, 2009 12:28PM
is madoff advising on this plan from cell block 8? this has ponzi written all over it...
Posted by guest , Mar 25, 2009 12:30PM
It is the bottom as home prices have rebounded ... err, nevermind.
Posted by guest , Mar 25, 2009 12:38PM
i don't understand the citi trade flow. we the taxpayer owners of citi and its toxic debt, sell it to us taxpaying guaranteurs of PPIP--losing on the writedown-- where we share 50% of the profits but take 93% of the losses? why on earth would we sell?
it seems anything below a ~10% markdown and we're losers so why bother? why not ride it ok? they are only going to come after us for some more capital anyway. i say we keep it.
Posted by Anal_yst , Mar 25, 2009 12:38PM
@ 12
Home sales were up, unexpectedly, that MUST mean prices, construction, existing are all going to go up up up! too, right?
Posted by guest , Mar 25, 2009 12:47PM
Front running the government with taxpayer money!
Posted by guest , Mar 25, 2009 12:58PM
Does restructuring your current home loan under Obama's plan constitutes a default event in these CMOs?
Posted by guest , Mar 25, 2009 1:02PM
what do they call the TARP at CITI field?
seriously..........
Posted by guest , Mar 25, 2009 1:03PM
How does this affect the minority constitutients in Maxine Waters district?
Actual, come to think of it, how many of those constitutients actually pay federal taxes?
Posted by guest , Mar 25, 2009 1:13PM
@ 18, ok, is racism really necessary?
Posted by guest , Mar 25, 2009 1:36PM
@19 It's only racism if it's not true.
Posted by guest , Mar 25, 2009 1:56PM
@ 19 where's the racism?
Posted by guest , Mar 25, 2009 2:10PM
@18 - Maxine is a dufus but you've got to feel sorry for the younger ones who can't get their Church to sponsor a Catholic school scholarship.
Not to sound like Mother Fucking Teresa here, but my idealistic ass once taught a bunch of 4th graders at a public school in Compton for a year after I finished college. Talk about fucked, with limited opportunities. Sweet kids who didn't do their homework "because my Aunt wasn't home and my brother was watching me last night." Big Brother was eleven. Thirty two per class, one teacher.
An ADD kid stuck in front of Nickelodeon for 20 hours a day does not a Fulbright scholar make.
If someone is uneducated chances are they are not going to figure how to go get the education they need to get out.
What's left? Street smarts and maybe if they're lucky enough, they learn a trade or work as public employee and make $ 50k a year.
I'll bet most DBers here were lucky enough to have two parents and if not private schooling, a nice swanky public one and all the Kaplan tutors your daddy could afford. Sure, you catch your own fish, but it's likely your parents gave you one hell of a fishing pole to start with.
AFDC has messed them up, crack cocaine sentencing laws have messed them up, nearly everything every liberal has done "to help" has messed them up.
Education reform is going to be the only way to reverse this, but Democrats have always been against any competition save for a limited number of charter schools. Since they don't apply much oversight to those, every shithead who comes to town can mess one of those up, which they typically do.
The solution of throwing more money at the problem has failed. Washington, DC spends 15k per pupil per year and it's still a mess. Problem is in the inner cities, there are thousands of corrupt administrators go down there to loot because they know no one wants to get involved and there is little accountability.
Smaller classes, back to basics, fire 80% of the useless admins, get rid of all the public school laws banning disciplinary measures, and these kids might have a shot.
Then, and only then, will we have educated constituents demanding educated representatives.
Almost seems as if this is a calculated and deliberate failure.
Posted by guest , Mar 25, 2009 2:14PM
@18,
The answer is probably not all of them.
Average paid per return in her district is $1,708.
http://www.taxfoundation.org/publications/show/2147.html
Posted by guest , Mar 25, 2009 2:15PM
@ 22 AMEN!
marry me.
-BBW
Posted by guest , Mar 25, 2009 2:57PM
22 agree
also home prices in california doen 41%.. i guess all the little vinny chases of this world bought their mansion before the big hit
Posted by guest , Mar 25, 2009 3:00PM
@ 23
serrano from the bronx is negative?
holy shit
Posted by guest , Mar 25, 2009 3:12PM
@24 (re @22)
Ditto
I just pray O. gets the educational reform done so that we don't lose yet another generation.
Posted by guest , Mar 25, 2009 3:12PM
@24 (re @22)
Ditto
I just pray O. gets the educational reform done so that we don't lose yet another generation.
Posted by guest , Mar 25, 2009 6:29PM
Look Out Krugman, Belief In Keynes Is Belief In Self-Delusion: Peter Schiff Tells The Truth About The Recession And Government Spending (Morning Joe Video)
http://bit.ly/n3rn8
Spank.