T-minus ? until Countrywide goes under.. . .

NEW -> Contingent Buyer Assistance Program
if the letters aren't that important, i would encourage you to take the hit and spend the time on just the reading. the material is not super hard to understand, the time commitment is the toughie. i counted the number of books and number of pages i had to read, and realized it was the equivalent of 10 college courses, for each level.





i'm not a portfolio manager, but the ones i know never mention it. the only time i realize they have it is when i read their marketing material, which is usually written by someone else anyway. it's become a big deal to the junior analysts/trade assistants, but the old school pm's would just say "good job" when they hear someone passes, and never bring it up again. they acknowledge it takes hard work to get it, but their gold standard has been and will remain, "can you achieve a good return?"
 
<p>Great and you thought I didn't get much sleep now.</p>

<p>So what you are saying is I should sit down with the PM and say "My education isn't in finance, I've read the CFA materials and never took the tests but (slapping down) here are over five years of my brokerage statements. Are those good returns?". Sit back with a confident but somewhat clueless smile and wait.</p>

<p>I don't know if I would like to do the things I do with other peoples money. But I think I would like to learn what people are doing with other peoples money.</p>
 
that's funny, graphrix...





we usually don't worry about beating a benchmark. we may, after the fact, look back and say, "well i had a good year, made 20% on my money, and beat the pants off of the s&p which only returned 9%." but as long as your goal is absolute return (20%) and not relative return (+11%), then you're more like a hedge fund manager and not a traditional portfolio manager. traditional pm's goal is to provide alpha (excess return). implied in that is that the risk taken to get the excess return should be proportionately less than the expected return.





<em>"I don't know if I would like to do the things I do with other peoples money. But I think I would like to learn what people are doing with other peoples money."</em> -> me too, but the good ones don't offer classes on late night tv
 
<p><em>"the good ones don't offer classes on late night tv" </em>Now that comment is funny. But Tom Vu said that I would get rich if I followed his guaranteed time tested system. </p>

<p>It is way too late to get into absolute or relative returns and if we get into alpha's we will have to get into the gamma risk levels. Throw in some time velocity of money with a topping of arbitrage and I will be face down into the keyboard. </p>

<p>I will say hedgefund manager sounds more like me. At least my fund would be profiting from the credit crunch and not getting hosed like so many. I wonder if Paulson Co. (not related to Hank) could use another ubernerd?</p>
 
<p>Interestingly, there are a few banks that may be in even worse condition than Countrywide. WaMu is one of these. As in the credit market, it's too difficult to tell how bad things are because events have not yet been fully played out. But at least it gives one insight into the exposure of each bank.</p>

<p><img alt="" src="http://images.thestreet.com/newsanalysis/ratings/42208.jpg" /></p>
 
Reason,





It's criminal how the regulatory agencies have caved to the banks regarding the amount of reserves they must have. By cutting that amount down over the years, we're in a precarious position. And I think I just saw the ghost of Charles Keating.
 
I'll try and dig into the filing to see what the actual numbers are, but I expect someone else will beat me to the answer
 
<p>>>>In other words, WAMU doesn't have enough in reserves to cover the potential lost?<<<</p>

<p>That question is much too difficult to answer. </p>

<p>For example, deposits in a bank can change very quickly as we saw last week when some people were panicking and taking their money out of Countrywide. Also, it's tough to tell how much of the NPL loans will go into foreclosure, and how much of the loan will be recovered once homes do go into foreclosure.</p>

<p>But basically, yes, you don't want to be on this ship if things do spring a leak. There are safer ships in the night.</p>

<p>disclosure: I have money in their 6-month 5.5% CD. (yikes!)</p>
 
<p>According to WaMu's last 10-Q filing with the SEC, their total Nonaccrual Loans were $3.275 Billion and they had $1.56 Billion in Allowance for Loan and Lease Losses. I'd dig deeper but I'm already far past my high school economics class level of understanding. But it looks like they don't even have half of their potential losses covered in reserves.</p>

<p>Edit: I just checked the FFIEC website, and WaMu's latest filing there (and with more recent information) shows that they now have $987 million in the Allowance for Loss column. the search link is <a href="https://cdr.ffiec.gov/public/SearchFacsimiles.aspx">https://cdr.ffiec.gov/public/SearchFacsimiles.aspx</a></p>

<p> </p>
 
<p>I emailed the FDIC and here's their response regarding how fast you can get your FDIC monies:</p>

<p>______________________________________</p>

<p>Thank you for contacting the FDIC. </p>

<p>Federal law requires the FDIC to pay deposit insurance "as soon as possible" after an insured bank fails. The FDIC places a very high importance on ensuring that depositors have quick and easy access to their insured deposits immediately after a bank fails. Historically, the FDIC pays insurance within a few days after a bank closing, usually the next business day, by either (1) providing each depositor with a new account at another insured bank in an amount equal to the insured balance of their account at the failed bank, or (2) by issuing a check to each depositor for the insured balance of their account at the failed bank. </p>

<p>The FDIC is required by law to pay 100% of the amount of insurance for which a deposit account qualifies. The basic amount of insurance coverage provided to depositors of an FDIC-insured bank is $100,000, including principal and any accrued interest. This $100,000 limit is applied separately to funds that a depositor has in different ownership rights and capacities. A depositor who holds deposits in different ownership rights and capacities can have deposits well over $100,000 at the same bank and be fully insured by the FDIC. </p>

<p>If a deposit account exceeds the insurance limit, the depositor receives 100% of the insured portion of the account. For the uninsured portion of the account, the depositor has a claim against the receivership for the failed bank. The amount that an uninsured depositor will recover for his uninsured funds is based on the sale of the failed bank's assets. Depending on the quality and value of these assets, it may take several years to sell the assets. As assets are sold, uninsured depositors receive periodic payment on their uninsured deposit claims. BUT, REMEMBER, THESE PROCEDURES ONLY APPLY TO ANY DEPOSITS THAT EXCEED THE INSURANCE LIMIT; ALL DEPOSITS UNDER THE INSURANCE LIMIT ARE PAID BY THE FDIC WHEN THE BANK FAILS, AS DESCRIBED ABOVE. </p>

<p>If you have would like to discuss your insurance coverage further, you may want to call the FDIC Call Center at 1-877-275-3342 Monday to Friday from 8 AM to 8 PM. </p>
 
<p>Countrywide's line of credit may have been less voluntary than I guessed:</p>

<p><a target="_blank" href="http://www.marketwatch.com/news/story/countrywides-115-bln-loan-poorly/story.aspx?guid=%7BC3ACE6C6%2D5099%2D474E%2DAFDA%2D06311B44E0A4%7D&dist=TQP_Mod_mktwN">http://www.marketwatch.com/news/story/countrywides-115-bln-loan-poorly/story.aspx?guid=%7BC3ACE6C6%2D5099%2D474E%2DAFDA%2D06311B44E0A4%7D&dist=TQP_Mod_mktwN</a></p>

A group of 40 of the world's largest banks lent Countrywide Financial Corp. $11.5 billion this week under credit agreements that they committed to as far back as 2006. The loans may help relieve a credit market squeeze on the nation's largest provider of home mortgages. But they come at a tough time for the banks involved. Countrywide didn't disclose which banks lent the money and a spokeswoman didn't immediately respond to a request for a list of lenders.

However, regulatory filings that Countrywide had provided the Securities and Exchange Commission show that J.P. Morgan Chase , Bank of America, Citigroup Inc. , Lehman Brothers , Merrill Lynch and Morgan Stanley were among the banks that signed up to the loan commitments. <u>Because these were so-called committed credit facilities, the banks couldn't back out of the loans</u>, as long as Countrywide complied with all the conditions of the agreements, Christopher Wolfe, an analyst at Fitch Ratings, said in an interview on Thursday. Countrywide met these conditions, so the loans went through. <u>But if the lending agreements hadn't been committed, the banks probably wouldn't have lent the money, Wolfe said. "Most of the banks already have enough issues and concerns with mortgages," Wolfe said. "I don't think that they would be looking to increase their mortgage exposures at this point."</u>





SCHB
 
<p>Looks like CFC is in the clear for the time being (and check their stock price after hours, up nearly 4 bucks a share).</p>

<p><a href="http://biz.yahoo.com/prnews/070822/law112.html">http://biz.yahoo.com/prnews/070822/law112.html</a></p>
 
<p>Regarding FDIC insurance. This is what my finance professor told me. And he teaches future bankers. FDIC makes the depositors feel confident in the banking system. </p>

<p>If every depositors decide to run to their bank tomorrow and withdraw all their funds. FDIC will not be able to oblige. </p>

<p>It's like in that old movie where Jimmy Stuart was the main character. What's the darn movie name?</p>
 
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