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To: CalculatedRisk who wrote (211841)	7/22/2009 5:39:00 PM
From: Giordano Bruno	Read Replies (2) \| Respond to of 306849

Subprime-Mortgage Loss Forecast Is Raised by Standard & Poor’s By Jody Shenn July 22 (Bloomberg) -- Standard & Poor’s again boosted its projections for losses from U.S. subprime mortgages backing securities, reflecting increasing delinquencies and defaults amid slumping home prices and growing unemployment. Losses on loans backing 2006 securities will reach an average of about 32 percent of the original balances, while losses for similar 2007 bonds will total about 40 percent, the New York-based ratings firm said in a statement today. In February, S&P said the losses would total an average of 25 percent for 2006 bonds and 31 percent for 2007 securities. Rising defaults on subprime mortgages since 2006 helped spark what Federal Reserve Chairman Ben S. Bernanke today told Congress might have become “the worst global financial crisis since the 1930s and perhaps including the 1930s.” The loans went to borrowers with poor or limited credit records or high debt. Rating companies have cut all but 16 percent of U.S. home- loan securities without government backing to grades below AAA since late 2007, when 80 percent of the debt carried top rankings, according to an investor letter last month from Los Angeles-based TCW Group Inc. To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net Last Updated: July 22, 2009 16:44 EDT

To: CalculatedRisk who wrote (211841)	7/23/2009 5:43:11 PM
From: RockyBalboa	Respond to of 306849

Í respectfully disagree: If the shylocks pony up 2B within days GE could do the same with ease, all it takes is a bunch of skilled laywers and a funds transfer. GE should have enough liquid funds to show 2B. If not then GE must be in trouble as well. The only other possibility is, GE didn´t want to do it. A dead CIT is perhaps better than CIT alive, for GE. But if (and as) CIT is such in a bad shape that it would implode well before the FRNs come due mid august, well, then it should better really fail. As for the FRNs they have a 30-day grace period and so CIT had in theory much more time to settle accounts with bondholders (at par). The shylocks simply could add a few points more down (like 10 instead of 5) and allow the funds to be used for bond repayment if they were so inclined. But, like GE they aren´t really interested either. >>>>>>>>> But per today this is possibly a moot point: CIT creditor advisers seek bankruptcy option: source NEW YORK (Reuters) - Advisers to large bondholders of CIT Group Inc (NYSE:CIT - News) are pushing to allow the company to restructure its debt with a prepackaged bankruptcy option should later debt exchanges fail to attract enough creditors, a source close to the negotiations said on Thursday. The prepackaged option would explicitly open the door for CIT to file for bankruptcy protection if not enough bondholders tendered their notes, said the source, who declined to be named as discussions were private. The lender to 1 million small and middle-size companies clinched $3 billion in emergency financing from large bondholders this week to restructure its debt and avoid bankruptcy, after the collapse of rescue talks with the U.S. government. CIT said estimated funding needs for the year ending June 30, 2010, include $7 billion of unsecured debt. The firm has about $40 billion of long-term debt, according to independent research firm CreditSights. In a first step, CIT is offering 82.5 cents on the dollar for $1 billion floating-rate senior notes due August 17, but the company said it could be forced to file for bankruptcy if it did not get the support of a large number of bondholders. "There are enough incentives for bondholders with notes coming due in August to tender because I would think they would prefer to keep it (CIT) out of bankruptcy," said Michael Taiano, an analyst at Sandler O'Neill. Problems at CIT stem in part from Chief Executive Jeffrey Peek's decision earlier in the decade to expand into subprime mortgages and student loans. Concerns about the company's financial health increased even after CIT in December received $2.33 billion from the government's Troubled Asset Relief Program. The New York-based lender estimated it has lost more than $1.5 billion in the second quarter, hurt by bad loans and writedowns. The company has been denied access to a U.S. Federal Deposit Insurance Corp program to sell government-backed debt, and the U.S. government declined further assistance, forcing the company to turn to private investors for critical cash. "Probably major bondholders ... are trying to get a consensus and put a positive stance (on the company's outlook) -- making sure we all get this debt exchange done and then we can go on to next phase," said William Larkin, portfolio manager with Cabot Money Management in Salem, Massachusetts. But he said some investors were panicking. "In the credit crisis we saw this, that the short end blew up. Individuals hope they will get paid off before there is any trouble, but CIT is an example of what may not happen -- that you may get in trouble." CIT's debt weakened. The company's floating-rate notes due in August slipped to 79.38 cents on the dollar in early afternoon trade from 80.25 cents on the dollar early on Thursday morning, according to MarketAxess data, trading below the company's offer price. CIT's shares fell 16 percent to 73 cents in afternoon trading on the New York Stock Exchange.

To: CalculatedRisk who wrote (211841)	7/24/2009 5:45:07 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 306849

BFF #1 - We travel to NY: Failed Bank Information -------------------------------------------------------------------------------- Information for Waterford Village Bank, Williamsville, NY Evans Bank, National Association, Angola, New York, Assumes All of the Deposits of Waterford Village Bank, Clarence, New York FOR IMMEDIATE RELEASE July 24, 2009 Media Contact: David Barr Office Phone: (202) 898-6992 Cell Phone: (703) 622-4790 Email: dbarr@fdic.gov Waterford Village Bank, Clarence, New York, was closed today by the New York State Banking Department, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Evans Bank, N.A., Angola, New York, to assume all of the deposits of Waterford Village Bank. The single office of Waterford Village Bank will reopen on Monday as a branch of Evans Bank, N.A. Depositors of Waterford Village Bank will automatically become depositors of Evans Bank, N.A. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship to retain their deposit insurance coverage. Customers should continue to use the existing branch until Evans Bank, N.A. can fully integrate the deposit records of Waterford Village Bank. Over the weekend, depositors of Waterford Village Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on the bank will continue to be processed. Loan customers should continue to make their payments as usual. As of March 31, 2009, Waterford Village Bank had total assets of $61.4 million and total deposits of approximately $58 million. In addition to assuming all of the deposits of the failed bank, Evans Bank, N.A. agreed to purchase essentially all of the assets. The FDIC and Evans Bank, N.A. entered into a loss-share transaction on approximately $56 million of Waterford Village Bank's assets. Evans Bank, N.A. will share in the losses on the asset pools covered under the loss-share agreement. The loss-sharing arrangement is projected to maximize returns on the assets covered by keeping them in the private sector. The agreement also is expected to minimize disruptions for loan customers. Customers who have questions about today's transaction can call the FDIC toll-free at 1-800-323-6111. The phone number will be operational this evening until 9:00 p.m., Eastern Daylight Time (EDT); on Friday and Saturday from 9:00 a.m. to 6:00 p.m., EDT; on Sunday from noon to 6:00 p.m., EDT; and thereafter from 8:00 a.m. to 8:00 p.m., EDT. Interested parties can also visit the FDIC's Web site at fdic.gov. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $5.6 million. Evans Bank, N.A.'s acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. Waterford Village Bank is the 58th FDIC-insured institution to fail in the nation this year, and the first in New York. The last FDIC-insured institution to be closed in the state was Reliance Bank, White Plains, March 19, 2004.