>>Incidentally, the bank responsible for buying up these loans from the FDIC (at a clearing price of 59%) is Beal Bank, which is headed up by prolific poker player Andy Beal. Beal doesn’t think much of Geithner’s PPIP. The problem, of course, is price. Beal echoes what we’ve been saying for weeks here at Notes: the nation’s banks are insolvent when you mark their dodgy loans at fair-market prices. This again from ZH:
He thinks the government is going to be “disappointed” by its various programs to revive lending. He says Treasury Secretary Timothy Geithner’s new plan to guarantee loans to buyers of toxic assets won’t lead to many sales because the problem isn’t liquidity but price. They are not low enough. Half the country’s banks – 4,000 in all – would be bust, he says, if they marked their loans to what the loans would fetch in an auction. He says banks are fooling themselves by refusing to mark busted assets down.
“Banks are on a prayer mission that somehow prices will come back and they won’t have to face reality,” Beal says. And that reality, according to Beal, is going to get a lot worse. “Unemployment is going over 10%, commercial real estate hasn’t even begun collapsing and corporate credit defaults are just getting started,” he says. His prediction: depression, without bread lines this time, thanks to the government safety net, but with equal cost to society.<<
Anyone else think it's funny that Beal shares the same name with the "Mad Prophet of the Airwaves" in Network?
He's mad as HELL and he's NOT gonna take this anymore! |
