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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: ChanceIs who wrote (138615)	8/2/2008 11:16:36 AM
From: Jim McMannis	Read Replies (1) \| Respond to of 306849

Merrill `Co-Opted' Analysts Backed Auction-Rate Debt bloomberg.com Aug. 1 (Bloomberg) -- Four days before Merrill Lynch & Co. stopped supporting the auction-rate securities market and left thousands of individual investors stuck with securities they couldn't sell, the firm's analysts recommended clients buy. ``Reports of the imminent demise of the auction market seem to be greatly exaggerated, again,'' analyst Kevin Conery wrote in a Feb. 8 research note. ``We continue to be impressed by the auction market's resiliency.''

To: ChanceIs who wrote (138615)	8/2/2008 11:18:18 AM
From: Jim McMannis	Respond to of 306849

LEHMAN SHOPPING MORTGAGE SECURITIES nypost.com In a move similar to what Merrill Lynch has done, Lehman Brothers' CEO Dick Fuld is trying to shop tens of billions of dollars in mortgage securities on its balance sheet in order to reduce leverage at the embattled investment bank, The Post has learned.

To: ChanceIs who wrote (138615)	8/2/2008 6:56:21 PM
From: RockyBalboa	Respond to of 306849

Yes this is indeed a very interesting piece from Pollock and he mentioned some points which I missed out here Message 24774284 It is about "cash realisation" of losses; but otherwise the idea has a lot of merit: The IRA: So a 10% haircut on all underwater mortgage loans or more? Pollock: No, no, whatever haircut it takes to get that loan from par to 90% LTV. That could be a lot more than a 10% haircut. We could see 30% haircuts on some loans. The IRA: Does the banking industry have sufficient capital to sustain these losses? Pollock: Well, remember first that the losses have already occurred. Economically speaking, the losses already exist. Second, in accounting terms, many of these assets have been written down by investors. What has not happened is a cash realization of the loss, so you just have a dead asset, written down but still sitting on a bank's books and illiquid. It seems like a big advantage to me for the financial system to make these economic losses realized cash losses, so that the markets can begin to function again. Maybe the lenders take a 30% loss from par, but at least the lender has the 70 cents back in cash so that they can make new loans to keep the market and the economy functioning. And the old asset is now restated on a sustainable basis for the borrower. The Home Owners Loan Corp only approved about half of the loans presented to them, so they did a serious job in terms of evaluating the situations.