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UNCONFIRMED – Internal Bank of America Memo on Subprime and Alt-A Loans
August 29th, 2007For your Not-News-to-Cryptogon-Readers file…
The music has stopped and all the chairs are taken.
Via: Calculated Risk:
Bank of America’s RMBS Desk has a research note out (not publically available) that attempts to estimate the realistic refinance options, if any, for outstanding subprime ARMs that are facing reset in the immediate future.
The analysis looks at both credit standards and current interest rates on alternative loans, and concludes that refinancing into a new subprime loan or, for those borrowers whose credit profile has improved since loan origination, a new Alt-A loan, is essentially not an option. The interest rates on new subprime and Alt-A, given the current environment, are simply too high to offer any improvement in the monthly payment.
Inside the Countrywide Swindle
August 28th, 2007Via: New York Times:
ON its way to becoming the nation’s largest mortgage lender, the Countrywide Financial Corporation encouraged its sales force to court customers over the telephone with a seductive pitch that seldom varied. “I want to be sure you are getting the best loan possible,†the sales representatives would say.
But providing “the best loan possible†to customers wasn’t always the bank’s main goal, say some former employees. Instead, potential borrowers were often led to high-cost and sometimes unfavorable loans that resulted in richer commissions for Countrywide’s smooth-talking sales force, outsize fees to company affiliates providing services on the loans, and a roaring stock price that made Countrywide executives among the highest paid in America.
Countrywide’s entire operation, from its computer system to its incentive pay structure and financing arrangements, is intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers, according to interviews with former employees and brokers who worked in different units of the company and internal documents they provided. One document, for instance, shows that until last September the computer system in the company’s subprime unit excluded borrowers’ cash reserves, which had the effect of steering them away from lower-cost loans to those that were more expensive to homeowners and more profitable to Countrywide.
Witnesses in Army Trial Killed in Crash
August 28th, 2007Via: UPI:
Several U.S. Army soldiers killed in a helicopter crash in Iraq last week were to be witnesses in the homicide trial of their former superior.
Honolulu’s KITV reported Sunday that some of the soldiers who died in the crash had been scheduled to testify in the trial of Sgt. 1st Class Trey Corrales, who is accused of orchestrating the death of an Iraqi detainee this year.
Corrales, who was in the same Hawaii-based platoon as the soldiers killed in Wednesday’s crash, allegedly shot the detainee repeatedly June 23. He is accused of then ordering his subordinate and fellow defendant, Spc. Christopher Shore, to continue shooting the man. The detainee died from those wounds.
Retired military lawyer Earle Partington said the loss of the witnesses could prove detrimental to the prosecution’s case against the pair.
“If these witnesses are no longer alive, there is no way for the accused or their counsel to question them. Unfortunately, it could mean that there is no trial,” Partington told the TV station. “Obviously, it depends on what witnesses the government still has.”
Sydney’s Ring of Steel Security Plan for APEC: “Madness”
August 27th, 2007Via: Australian Broadcasting Corporation:
This Saturday, construction will start on a three-metre high, five-kilometre long fence in Sydney’s CBD to protect leaders attending next week’s Asia-Pacific Economic Cooperation (APEC) conference.
The fence will cause major traffic disruptions throughout the city and local workers and residents will have to go through special ID checks at access points.
But Sydney’s Deputy Lord Mayor is appalled by the security measures being taken to protect officials attending the conference and wants to hang a huge banner from the city’s Town Hall saying, “Cage Bush, not Sydney”. The council will vote on the proposal.
The city’s chamber of commerce has attacked the idea as “madness”, saying such a decision would be rude and could affect businesses all over Australia.
Just last week, New South Wales police unveiled a new $600,000 water canon, warning that if APEC demonstrators got wild, they would get very wet.
Another visible part of security will be a five-kilometre long, three-metre high steel fence separating the Opera House, Botanic Gardens and a large part of the CBD from public access.
Workers will start building the fence this weekend.
Research Credit: Mark
Saudis Set Up 35,000 Strong Force to Guard Oil Infrastructure
August 27th, 2007Support the Troops!
Via: Financial Times:
Saudi Arabia has begun setting up a 35,000-strong security force to protect its oil infrastructure from potential attacks.
The move underlines the kingdom’s growing concern about its oil installations after threats from al-Qaeda to attack facilities in the Gulf, as well as rising tensions between Iran and the US.
The force already numbers about 5,000 personnel, a Saudi adviser said on Sunday. They are being trained in the use of new surveillance equipment, countermeasures and crisis management under a programme managed by US defence group Lockheed Martin, according to the Middle East Economic Survey in Nicosia.
The recruits are learning about laser security and satellite imaging from Lockheed on behalf of the Sandia National Laboratories’ Defense Systems and Assessments Unit – a US government run unit in New Mexico, said MEES.
Lockheed said it did not have information on the initiative.
The kingdom, which is the world’s biggest oil exporter and has 25 per cent of the world’s proven oil reserves, is investing an estimated $4bn-$5bn in the new equipment and the force.
The force is expected to reach 35,000 within two or three years.
Saudi Arabia has a 75,000-strong army, an air force of 18,000, a navy of 15,500 and an air defence force of 16,000. Its oil installations are protected from within by 5,000 agents employed by Aramco, the state oil company. It has more than 80 oil and gas fields and an estimated 11,000 miles of pipeline.
Members of the new force, responsible for external and internal security, are being heavily vetted and largely recruited from outside the security forces because of the nature of its task, but it will include members of the existing forces.
Fed Bends Rules to Help Citigroup and Bank of America
August 27th, 2007Via: CNN:
In a clear sign that the credit crunch is still affecting the nation’s largest financial institutions, the Federal Reserve agreed this week to bend key banking regulations to help out Citigroup and Bank of America, according to documents posted Friday on the Fed’s web site.
The Aug. 20 letters from the Fed to Citigroup and Bank of America state that the Fed, which regulates large parts of the U.S. financial system, has agreed to exempt both banks from rules that effectively limit the amount of lending that their federally-insured banks can do with their brokerage affiliates. The exemption, which is temporary, means, for example, that Citigroup’s Citibank entity can substantially increase funding to Citigroup Global Markets, its brokerage subsidiary. Citigroup and Bank of America requested the exemptions, according to the letters, to provide liquidity to those holding mortgage loans, mortgage-backed securities, and other securities.
This unusual move by the Fed shows that the largest Wall Street firms are continuing to have problems funding operations during the current market difficulties, according to banking industry skeptics. The Fed’s move appears to support the view that even the biggest brokerages have been caught off guard by the credit crunch and don’t have financing to deal with the resulting dislocation in the markets. The opposing, less negative view is that the Fed has taken this step merely to increase the speed with which the funds recently borrowed at the Fed’s discount window can flow through to the bond markets, where the mortgage mess has caused a drying up of liquidity.
Research Credit: Oli
Pentagon’s New Drug Weapons: “Calmatives”
August 26th, 2007It sounds like they’re looking for drugs to create more docile Americans. Will it make enemy forces want to watch TV and shop at WalMart, too?
Via: Wired:
In fact, it looks like the military are all set to start deploying a new generation of – well, as the report points out, they carefully avoid calling them chemical weapons. The preferred terms are nonlethal techniques, riot control agents, or, more commonly, calmatives.
How’s that? Calmative originally meant something quite specific, but researchers at the Army’s Edgewood Chemical Biological Center have started using their own definition:
A calmative agent can be defined as an antipersonnel chemical that leaves the victim awake and mobile but without the will or ability to meet military objectives or carry out criminal activity.
Mystery Trader Bets Market Will Crash by a Third
August 26th, 2007Hedging or foreknowledge?
Via: Financial News U.S.:
An anonymous investor has placed a bet on an index of Europe’s top 50 stocks falling by a third by the end of September, as world equity markets plunged for a third day and volatility hit a three-year high.
The mystery investor has bought put option contracts on the DJ Eurostoxx 50 index that will result in a profit if it plunges to 2,800 or below by the end of September. Based on the 2,800 strike price, the position covers a notional €6.9bn, and potentially even more using a market price of about 4,100 when the trades were done on Tuesday and Wednesday.
The identity of the investor is unknown but market sources speculated it was either a large hedge fund hedging itself against deepening losses, or a long-only fund manager pressing the panic button to protect its gains.
The investor has bought a total of 245,000 put options on the index.
GOP Consultant, 2 Men Found Dead in Florida Home
August 26th, 2007So… What is it this time? More of the down home Republican family values? You know: Gay sex, man-boy love, narcotics trafficking, guns running, money laundering?
In lieu of a Florida category on Cryptogon, please see madcowprod.com. Daniel Hopsicker hasn’t had a chance to cover this one yet, but he almost certainly will.
Via: Guardian:
A Republican political consultant and two other men were found dead in a home in an apparent double-murder and suicide, authorities and relatives said.
Authorities have not determined a motive for the deaths of Ralph Gonzalez, 39, his roommate, David Abrami, 36, and a friend, Robert Drake, 30.
Investigators found weapons and signs of a struggle in the house, but they did not say what the weapons were or which man they believe was the killer. The men are believed to have died several days before the bodies were discovered Thursday.
Gonzalez was executive director of the Georgia Republican Party from 2001-2002. He managed U.S. Rep. Tom Feeney’s 2002 campaign and was president of Strategum Group, an Orlando-based political consulting firm that represents Republican candidates.
“He was a born political consultant. He had bravado, he was intense, and he lived and breathed tactics and strategy,” Feeney said. “He was an adviser and strategist for me and became a very good friend.”
Abrami, an attorney, was active in Republican politics as well.
Gonzalez, the son of Cuban immigrants, was devoted to politics even as a youth, said his father, Rafael Gonzalez of Miami. He graduated from Florida International University and received his master’s degree in campaign management at the University of Florida.
“He was a smart person who built a business by himself,” Rafael Gonzalez said. “He traveled all over the world.”
