All GLG News Analyses Filed Under: Mortgages, Consumer & Specialty Finance
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
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January 9, 2009
CompuCredit in $116 Million FDIC Subprime Settlement | goliath.ecnext.com
Government is moving to destroy the dominant US subprime credit card business model. Regulations curbing credit card fees mean subprime credit card specialists such as CompuCredit, First Premier and CreditOne and deep subprime product lines within full-credit spectrum issuers such as HSBC, will have to radically overhaul their business models to remain economically viable. Subprime consumers will find unsecured revolving credit almost impossible to come by.
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Why Banks Are Agreeable to Cramdown Legislation
January 9, 2009
Citigroup, Senators in Talks to Let Judges Modify Mortgages | online.wsj.com
Banks are dropping their opposition to cramdowns because they: (1) recognize loan modifications are essential in this market to reduce their losses; and (2) are themselves substantially restricted in being able to make modifications on the vast majority of loan mortgages that have been securitized. The proposed bankruptcy legislation is suboptimal as voluntary loan modifications, if banks are freed up to provide them, can be a more potent solution as it has wider applicability which is what is needed for the market to heal. Because of its limited applicability, by itself, this legislative amendment will have little impact on the housing market.
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Morgan Stanley to raise cash or to withdraw before storms come
January 8, 2009
Morgan Stanley's China property head resigns | www.reuters.com
Morgan Stanley had been very aggressive in Asia's real estate market in the past 5 years. The resignation of its star dealmaker in China either sends us a signal that real estate bubble in Asia may burst or that Morgan Stanley is trying to raise quick cash.
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December 22, 2008
Financial Gravity, Needs to be accepted again. | daviddephillips.wordpress.com
Option ARM will save the borrowers from grief with adjustable monthly payment options. Mortgage life appears easy going initially but the difficuly period is yet to come whcih may be a blow when indexes are more and tend to change the face of economy.
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"Financial Gravity" The Science of Lending.
December 22, 2008
Financial Gravity, Needs to be accepted again. | daviddephillips.wordpress.com
Lets get back to financial gravity as a rule of lending. No more no loan docs. or liar loans or no credit FICO reports. Resets are not the answer to the cascade of mortgage failure. Pouring Capital on the problem is not the answer, getting back to basic laws of lending will heal the wounds of this credit amputee.
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December 18, 2008
Subprime Mortgages and Loans | expertwitness.lawinfo.com
Subprime loans are the root cause of the country's current economic and financial problems. In order for the country's financial problems to be corrected, the problems with these loans will have to be resolved. Resolution of these problems involves structuring loans that can be paid by the borrowers and that provide some return for the lenders.
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Credit crunch- Corporate size not a virtue any more
December 16, 2008
Waiving or drowning? | www.economist.com
The conventional perception that large corporates can well tide over a Credit crisis by their sheer size does not hold any more in the face of the present Economic downturn that threatens to uncover every unhedged risk that these corporates were probably exposed to. In the current crisis it is not the size but the substance that would enable the corporates to sail through. In case of large corporates the problems are not only large they are very complex too. The Lenders are therefore bound to be reluctant to commit or continue with large exposures on such corporates which don’t stand through their stringent scrutiny.
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" An Uneasy Truce"! Companies and Lenders are at a Competitive Stand-Off.
December 16, 2008
Waiving or drowning? | www.economist.com
1. How much influence will Government Agencies Affect the Credit Crisis. Participation at a high level May Not make a viable contribution. 2.Hard choices are evident - Many will not be able to draw down on credit lines and, hence stagnate the operational capacity. 3.A Survival rate , under the circumstances may be as low as twelve (12) months. An enhanced Capitalization Rate is unattainable. 4." At Risk" is the breaching of Loan Covenants. The cost of such a breach will have a Dramatic Affect on all Long Term financial Activity. 5.Many Institutions MUST forge NEW relationships , in order, to explore alternative methods of financing - Not a Likely Alternative. 6.Default rates are extended to the year 2010 and are not avoidable, in many cases, by liquidation. 7.The reality between Financial Distress and Financial Disaster , now, becomes a reality to all players!!!!
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Shinsei Bank-A victim of misplaced business strategies
December 15, 2008
Wilting flower | www.economist.com
The old quote "While in Rome do what Romans do” applies to the Banking industry as well. The Shinsei Bank set up with much fan fare with American capital & expertise failed to live up to the expectations of its stake holders because of its Management’s inability to blend well with the psyche of the Japanese business environment. It was speculative on part of Shinsei Bank to have followed in Japan what some big brothers were doing in USA, trying to achieve Fast forward results by venturing into Consumer loans, Sub-prime mortgage backed securities & loans & bonds of the likes of Lehman Brothers. The Bank may need to drastically reorient its business policies & strategies to emerge out of its current problems.
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"Quantitative Healing: The Rescue of the U.K. Economy. "Risk or Return"!
December 11, 2008
HSBC to Increase U.K. Mortgage Loans by 20%, Boost Small Business Lending | bloomberg.com
Implications: 1.Risk vs Return - Close the Door to Consumers; Unlikley! 2.A Bank that answers the call for "Help" does the same Without Tapping the Bailout PLan. 3.HSBC uses a Unique Capitalization by funding the venture by way of it's own Resources and, not, that of the Gonernment! 4.A Prime example - small and medium sized firms' in the Far East havw received loans from the mentioned Bank: Recourse or Non-Recourse? 5.A Term coined as "New Money" may well be a prime example for other like-kind Insitutions and a representation of future capitalization. 6.A BRASH comment - " The British Government Bailout has been given to "" FAILED Managements""! No value added to over-all welfare of the System!!!!!!
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