Mr. Joe Garrett

GLG News by Mr. Joe Garrett, Principal Consultant

It's the loans, not the deposits

October 13, 2008

Analysis of:Wells Fargo scuppers Citigroup's takeover of Wachovia | www.guardian.co.uk

Sometimes you don't want to get what you've been hoping for.  Wachovia has a top deposit gathering franchise, and they clearly help complete much of the Wells Fargo footprint.

China investment in U.S. bank first of many yet to come

October 15, 2007

Analysis of:Chinese bank in landmark US investment | www.ft.com

Asian-American banks, most of which are in California, are very cheap, small enough to be easily acquired, and will likely be acquisitions targets for Chinese banks looking to diversify and expand.  The biggest of these banks are UCBH, in which an investment has just been announced, and East-West Bank, with market caps of $1.9 billion and $2.2 billion respectively.  They get smaller from here, the point being that these would be bite-sized deals. 

Kazahk banking system relatively heathy

October 1, 2007

Analysis of:Could Kazakhstan suffer a credit crisis? | www.financeasia.com

There just was, and to an extent still is, a global credit crisis, and financial system in Kazahkstan seems to have weathered it.

What is their plan?

September 24, 2007

Analysis of:Accredited, Lone Star amend merger deal | www.reuters.com

What a strange marriage, with Lone Star refusing to come to the wedding ceremony, Accredited sueing them, and the two eventually tieing the knot.  Lone Star must have some vision for what to do with Accredited, but at the moment, there is almost no market for sub-prime loans. The only logical plan is that Accredited will be the Last Man Standing when the sub-prime sector comes back to life.  It's actually a valid business, but one that was trashed with lax credit standards and financial engineering that allowed sub-prime loans to end up in securities, some of which now had triple-a ratings. Sub-prime works when you limit the loan-to-value ratios.  It worked just fine when the max LTV was 70%.  It didn't workwhen these moved up to 95% or even 100%. At some point, new, tighter standards will emerge, and investors will tip-toe back in.  The yield requirements will be higher and the loan-to-value ratios will be lower, and 3-5 years from now, people will have forgotten 2007.

A win-win for BofA and Countrywide

August 27, 2007

Analysis of:Bank of America to Invest $2 Billion in Countrywide | online.wsj.com

It's good for the industry.  Sends a signal that there will be winners, that there will be money to be made in this business.  It does seem, however, like very expensive capital for Countrywide, especially when you compare it to their preferred converts last year or earlier this year which were in the 2-3% range and out of the money.  This seeminlgy implies how desperate Countrywide must have been.

It's not Alt-A v. Sub-prime v. A-paper

August 27, 2007

Analysis of:Capital One to Close Its GreenPoint Unit | online.wsj.com

When the history of the Mortgage Crisis of 2007 is finally written, it won't be about subprime or Alt-A. I believe it will be all about layered risk and Loan to Value ratios. All of these products worked and performed well - up until the LTVs started rising. 100% LTVs justs don't make sense.

"New Century Closes Its Pipeline": Investors Should Not Be Shocked

March 12, 2007

Analysis of:New Century Closes Its Pipeline | www.americanbanker.com

 Investors should not at all be shocked. When you peel back the curtain, the tightening of credit standards that New Century and others have been bragging about have been, essentially meaningless.

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