Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (81691)	7/17/2008 8:25:31 PM
From: Sr K	Respond to of 116555

A crack in Paulson's plan? Frank Backs Linking Rescue Plan to U.S. Debt Limit (Update1) By Brian Faler July 17 (Bloomberg) -- U.S. Representative Barney Frank, the Democrat who heads the House panel overseeing housing, aims to tie the Treasury's plan to aid Fannie Mae and Freddie Mac to the federal debt limit, placing a potential constraint on the help. It's ``very clear,'' lawmakers won't support exempting the rescue from the debt limit, said Frank, the chairman of the House Financial Services Committee. ``The fact that any expenditure under this bill would be subject to the debt limit is a cap in effect on the amount,'' he said. Such a cap will limit taxpayer liability, he said. The debt limit is $9.815 trillion and the current outstanding public debt subject to that limit is about $9.4 trillion, according to the Treasury Department. . . . bloomberg.com - If there's $400B to the debt ceiling, how much would be for the rescue package, and how much for Fannie and for Freddie? Would Congress give separate guarantees?

To: mishedlo who wrote (81691)	7/17/2008 9:52:42 PM
From: The Reaper	Read Replies (3) \| Respond to of 116555

AS you know, I'm very negative (and short) on California banks and have taken a beating these last 2 days. PACW is my largest short and is up 30% in those 2 days. They released their earnings today and buried deep in their financials I found something very interesting. At the end of last qtr. their allowance for credit losses was $68.8 million with $38 million in non-performing assets. Today their non-performing assets have doubled to $74 million. Their allowance for credit losses went DOWN to $67.4 million. Their allowance for losses now stands at 91% of their non-performing assets. This compares to 181.2% at the end of March and 242% and the end of 2007. Had they provided reserves for just the increase of $36 million in non-performing assets this quarter it would have swung them from a profit of $12.8 million (.47/share) to a loss of $23.2 million (-.82/share). Now I'm no banker, but I do know how to read income statements and balance sheets. How common is it to have allowances reserved for less than your actual non-performing assets? This to me smells like a complete blowup coming down the road. I don't think that California real estate is going to heal itself in the next six months. Somebody enlighten me about where I am wrong. Their non-performing assets in commercial real estate, construction, and land were up 300% since Mar.31. biz.yahoo.com