Mr Mortgage's Guide to the TRUTH!

CDO BACK IN THE SPOTLIGHT- FRONT & CENTER

One of our friends, let's call him 'R' for short, sent some good info on Wachovia below so I thought I would talk about the monolines again.

Monolines, as if it is any surprise, are surviving on fumes. The CDO story is breaking once again (as if defaults ever got better) but this time maybe the final blow.  Very few, other than the monolines themselves, believe they actually have the capital to support future claims levels and news like we are getting today should make that apparent to even them. Just remember, every time you see a press release such as 'housing values drop x% nationally', 'S&P downgrades 300 AAA tranches from 100  Alt-A deals', 'foreclosures jumped last month', even 'existing home sales down more than anticipated', etc, that ultimately, it weakens the the infrastructure of the security leading to more losses.

I still think the monolines going down is a large threat to the financials and credit market in general. It could literally happen at any time or never.

By the way....why such focus on the CDO anyway? The CDO universe is small compared to the whole loan and mortgage-backed security (MBS) universe. And whole loans and MBS are owned by a much wider investor base. MBS make up CDO's for Pete's sake. It seems that all this hoopla over a few banks taking big hits on CDO's is hiding the much greater exposure and losses that must be occuring on the CDO components in order for the CDO itself to sustain a loss. -Best, Mr Mortgage

FROM WACHOVIA THIS MORNING (will get charts up soon but data below speaks for itself)

As a supplement to our CDO Collateral and CDO Tranche Downgrade Reports, Wachovia CDO Research presents our summary of ABS CDO Default Statistics.

Exhibit 1 shows the count and volume of ABS CDO events of default by vintage, along with total ABS CDO and total CDO issuance, for the years 2004–2007. Our volume statistics represent USD CDO issuance, (based on original liabilities and equity), as reported by Intex. We classify CDOs according to collateral pools; ABS CDO issuance in Exhibit 1 displays the volume of CDOs with structured finance collateral and excludes CRE and TruP CDOs.

Using S&P data, we currently track 165 ABS CDOs totaling $185.9 billion that have tripped their event-of-default triggers between October 2007 and April 21, 2008. ABS CDOs in default represent 27% by count and 32% by volume of total ABS CDO issuance since 2004. In addition, these defaults equal 11% by count and 17% by volume of total CDO issuance. For vintage 2007, 59% by count and 63% by volume of ABS CDOs issued have tripped EOD triggers.

LIBOR Manipulation by the Banks? This is a BIG ONE

This could be an ultimate 'Black Swan Event' if true. THE PLOT THICKENS... This MEGA NEWS, reported this morning in the Journal, is being blown off for all intents and purposes by the financial press today. Probably because the ramifications are so great they don't understand how to report it. Entire financial systems and infrastructures are based upon LIBOR! If we find out the reported LIBOR pricing is being jacked-around by banks that are afraid to report how much they are paying for short-term loans and how desperate they are for cash and that LIBOR pricing is deemed unreliable, the consequences could be devastating. It essentially means that everyone with a loan based upon LIBOR is paying artificially lower rates! No puny Fed or ECB cuts or new auction facilities would be able to fix this problem.

The exposure is in the TRILLIONS and this is something that is NOT ON THE RADAR of the financial markets until now. Scott Peng at CITI said "the long-term psychological and economic impacts on the financials markets are incalculable and if banks told the truth about their borrowing costs, the 3-month LIBOR would be as much as 0.3% higher."  Millions of mortgages around the world are based on LIBOR...talk about resets!

Very few knew or even considered that this may have been happening. Banks lying because they are scared to tell how much they have to pay for cash would be a mega-event that would have swift and immediate consequences. If proven true, it could create an event and ripple effect that would make the Bear Stearns event look like just another day...on scond through the Fed made it seem that way anyway. Stay tuned, I have a feeling this story will grow large in the next couple of days. - Best, Mr Mortgage

Or, in this brave world of 'the Fed will fix everything',  will they just blow this off as well.

http://online.wsj.com/article/SB120831164167818299.html

WELLS FARGO & GOLDMAN SUCHS WARN OF STOCK 'BLOODBATH'

HEY!! Finally, these two companies are telling the truth. Maybe there is hope after all. We will see if this new-found honesty holds when Wells reports its earnings scheduled for Wed, prior to the opening of the US market. Banks telling the truth about their holdings and their value (transparency) is the only shot at reviving the credit markets. -Best, Mr Mortgage

Goldman Sachs and Wells Fargo Warn "DELUSIONAL" Investors on Stock By Ambrose Evans-Pritchard, International Business Editor - Last Updated 1:158am BST 15/04/2008

Wall Street faces the growing risk of an equities bloodbath in coming months as the credit crunch spreads to the wider economy and earnings crumble, according to a pair of grim reports issued by Goldman Sachs and Wells Fargo.

	Goldman Sachs said the key for equities will be the full-year guidance offered by companies

David Kostin, the chief US investment guru for Goldman Sachs, expects the S&P 500 index of Wall Street equities to plummet a further 15pc over the "near term" as companies scramble to lower their outlook for this year.

"Although only a few firms have reported first quarter results, early signs are awful. We expect a swath of lowered profit guidance," he said in a research note published today, entitled 'Fasten Seatbelts'.

Mr Kostin, who replaced the ever-bullish Abby Cohen as chief strategist in December, expects the S&P index to reach 1,160, which would amount to a fall of 27pc from the bull market peak of 1,576 in September and enter the annals as a relatively severe bear market.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/04/14/bcngold114.xml&CMP=ILC-mostviewedbox

INVESTMENT BANK'S LIES IN BLACK & WHITE

this is a killer. Below are write-down covering all categories including subprime. We know full well these are a SMALL FRACTION of what lies ahead. Wells Fargo is not even on the list despite owning $84 BILLION in Home Equity lines/loans that are presently worth pennies on the dollar. Look at Lehman! Haha. Look at Chase...they have more Home Equity Lines/Loans than Wells Fargo. So does Bank of America. Funny, the CNBC crowd was pushing that it was the 'kitchen sink quarter' just like they tried to do in Q3. -Best, Mr Mortgage

UBS (UBS): $37.4 billion
Citigroup (C): $21.2 billion (expected further loss of $18 billion in Q1, 2008)
Merrill Lynch (MER): $19.4 billion
Morgan Stanley (MS): $12.9 billion
Deutsche Bank (DB): $7.1 billion
Bank of America (BAC): $5.7 billion
Royal Bank of Scotland (RBS): $5.6 billion
Credit Suisse (CS): $4.7 billion
Goldman Sachs (GS): $3.7 billion
Lehman Brothers (LEH): $3.3 billion
Barclays PLC: $3.3 billion
JP Morgan (JPM): $2.9 billion
Bear Stearns (BSC): $2.75 billion
HSBC Holdings: $2.1 billion

http://freundinvesting.com/2008/04/12/a-tally-of-bank-and-ibank-write-downs/

ALSO -this, from a friend regarding Erin Callan, CFO of Lehman, and her earnings call recently. She used the following words the respective times. She is the best spinner out there (no pun intended).

STRONG 24
GREAT 13
INCREDIBLY 8
ATTRACTIVE 6
DIFFICULT 7
CHALLENGING 5
TOUGH 1

CITI & MER to Write-Down Another $15 Bil...FOR NOW

NOT SO FAST! I thought last quarter was it...so now more write-downs and they are calling it the 'trough'. We all know that is not the case. The operative statement in this story is 'subprime', because these write-downs only are on their subprime boo. What about other mortgage types such as alt-a, prime and home equity lines/loans? What about commercial paper, leveraged loans, auction rates, and the multitude of acronyms used by the financials alchemists over the past several years to peddle their trash off as treasure.   -Best, Mr Mortgage

CITIGROUP and Merrill Lynch will heap further pain on Wall Street this week as they reveal additional sub-prime write-downs totalling $15 billion (£7.6 billion) or more. In another sign of the intense pressure on leading banks, Deutsche Bank is attempting to offload some of its €35 billion (£28 billion) of toxic debt to a consortium of private-equity firms. Huge exposure to American mortgages is expected to result in Citi taking a $10 billion hit to its accounts, dragging the bank to a first-quarter loss of almost $3 billion. Some analysts believe Citi’s write-downs could stretch to as much as $12 billion. Merrill will suffer $5 billion of write-downs, analysts say, which would push the bank $2.7 billion into the red.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3671568.ece

DAVID EINHORN SPEECH (4/8) ON THE BROKERS - A MUST READ

David Einhorn's speech, Private Profits and Socialized Risk' attached here is riveting. Lehman, Merrill, Goldman, Morgan, the ratings agencies, SEC, Fed etc tricks are exposed. I guaranty, you will read this several times. I did.

I will be doing a YouTube video on this shortly but wanted to get it out there. I got this a couple of days ago and was told by Mr Einhorn, himself, this morning "it is a free country and you are free to agree or disagree.  The letter is public in my mind."

So here ya go...This needs to be read by everyone. -Best, Mr Mortgage

Download david_einhorn_private_profits_socialized_risk_40808.pdf

Morning's Economic Data a Total Disaster

My o' my what a disaster on the economic data front. Even without the huge GE miss, these data on their own could have caused the same reaction in the markets. Good thing is, they are buying Bonds pushing yields lower. In the 'good 'ol days', this would have driven mortgage rates lower, as mortgage bonds more closely tracked the 10-year Note. While today's Bond rally may cause rates to move lower, the opposite could happen if investors shun anything but US Treasuries due to the obviously worsening US economic situation and sell Fannie/Freddie mortgage backed assets like they did last month. We will see. You know things are not 'contained' when Bonds rally and mortgage rates do not fall. -Best, Mr Mortgage

IMPORT/EXPORT PRICES
Month-over-month 2.8% vs 2.0% expected
Year-over-year +14.8% vs 13.7% expected
(these numbers will likely rise, because components of the numbers above reflect prices on orders done months in the past)

APRIL PRELIMINARY UNIVERSITY OF MICHIGAN CONFIDENCE
63.2 actual vs 69 expected (A 26 YEAR LOW)
1-year inflation expectations at 4.8% vs 4.3% expected in March

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Lehman, S&P & Moody's Gaming ("testing") the Fed...

My only thought other than 'disgust' is that LEH is such a financial train-wreck they need to do everything they can, despite how desperate it is and looks, to stay alive. Isn't this type of financial engineering what got them all in trouble in the first place? Got to hand it to them though, if the Street won't buy your trash, make it look slightly different and pawn it off on the Fed. -Best, Mr Mortgage

NEW YORK (Reuters) - Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research) repackaged unsold debt and used the Federal Reserve's new borrowing facility to convert loans that investors mostly rejected into cash to finance its business, the Wall Street Journal reported.

According to the Journal, Lehman transferred $2.8 billion in loans that included some risky leveraged buyout debt into a new investment entity called Freedom.

Freedom then issued debt securities backed by the loans, and $2.26 billion of the securities got investment-grade credit rankings from Moody's and Standard & Poor's, according to the report.

The bank used some of those securities as collateral for a low-interest, short-term cash loan from the Federal Reserve, the Journal said, citing people familiar with the matter.

The move was meant as a test to see what the Federal Reserve would accept, and the size of the loan was not material, the Journal added, citing a person familiar with the matter.

Lehman representatives and the Federal Reserve could not be reached immediately for comment.

(Reporting by Aarthi Sivaraman; Editing by Erica Billingham)

Bear Stearns FINIALLY Tells The Truth

I guess better late than never. This should be a proxy for what the other broker's earning should have looked like if it was not for their fraudulent accounting practices. My o' my, were those quarterly reports a fun read...especially GS and MS (the good guys). HAHA! As it turns out they may have more to hide than LEH and MER. Don't get me wrong, they are likely all insolvent but the balls of GS and MS are of extremely large size. This is a great read...especially what the dopey reporter said in the last sentence "The stock has been trading in a range of $2.84 to $159.36 for the past twelve months," BWHAHAHA. That is quite a 'trading range'. - Best, Mr Mortgage

4/10/2008 8:36:37 PM New York-based investment banking firm Bear Stearns Companies, Inc. (BSC) Thursday said it currently expects first quarter profitability to be substantially lower than the prior-year results. The company also announced a delay in filing its financial reports for the first quarter.

http://www.rttnews.com/apps/deskalert/article.asp?date=04/10/2008&item=1461

2pm EST - Morgan Stanley & Wells Fargo Falling Apart

Morgan (MS) - under performing the market is a big way...could it be THE $8.4 FREAKING BILLION GAIN ON DERIVATIVES CONTRACTS, disclosed in its Q. THE FRAUD HAS TO STOP NOW! Lehman, Merrill and Goldman are also weak today but MS is the stand-out as of now. If we are lucky, they all roll over hard into close, which is a distinct possibility.  Higher than normal volume today vs. this week.

Wells (WFC) - Stock price acting like Morgan. I smell some ugly news...this is just a hunch but people know how to read Q's alot better now, as evidenced by how quickly the Lehman, Goldman and Morgan lies were uncovered. Much higher than normal volume today vs. this week.

Annaly (NLY) - Have a seller at/around $16 in the past few days. I still think there is news here to.  9:1 leverage does not work anymore. They have not said a word.  Too quiet. Much higher than normal volume yesterday and today vs. this week.

-Best, Mr Mortgage

ECB's Trichet Not Ready To Cut Rates...'Inflation Concerns'

Finally, some responsible Central Banking. He gets a free look into the mess the Fed made and doesn't want the same heat. It will be interesting to watch this unfold. The English caved last night but that doesn't matter much in the grand scheme other than to those who believe a global interest rate decrease in coordination with all the world's Central Banks will start soon. I guess Trichet didn't get the fax. This news should be perceived negatively for US equities although it was widely expected. -Best, Mr Mortgage

Trichet Not Ready to Cut Rates Even as Risks Mount (Update3)    

By Christian Vits

                                                             

 

April 10 (Bloomberg) -- European Central Bank President Jean- Claude Trichet signaled he's still not ready to cut interest rates even as the credit squeeze poses a greater threat to economic growth than policy makers anticipated.           

``We are experiencing a rather protracted period of temporarily high annual rates of inflation,'' Trichet said at a press conference in Frankfurt today after the ECB kept its key rate at 4 percent. While financial-market tension may have ``a broader than currently expected impact on the real economy,'' ensuring price stability is ``very serious for us,'' he said.    

The Bank of England lowered its benchmark rate a quarter- point today and the Federal Reserve has slashed its benchmark after the U.S. housing slump pushed up the cost of credit worldwide. With euro-region inflation running at the fastest pace in almost 16 years, the ECB is reluctant to follow suit.

http://www.bloomberg.com/apps/news?pid=20601087&sid=armg9RkeRAII&refer=home

    

MORE LEHMAN TROUBLE...CLOSED 3 FUNDS. Sounds Like Bear Stearns!

I am fed up with all the bullshit and lies. Today's Level 3 growth reported by LEH, GS and MS was just beyond belief and now more trouble. If you remember, this is how Bear began it's fall from the peak...by closing down 3 funds and taking the 'assets' back on the balance sheet. Well, there goes 25% of the $4 Bil LEH raised. It won't be long now folks. This is all coming to a  head quickly.  -Best, Mr Mortgage

Company Takes  $1 Billion in Assets Onto Balance Sheet

By PETER EAVIS and SUSANNE CRAIG April 10, 2008

Lehman Brothers Holdings Inc. liquidated three investment funds after stressed markets caused the funds' assets to decline in value, according to a quarterly financial filing Lehman made Wednesday with the Securities and Exchange Commission.

The New York investment bank ended up taking onto its balance sheet $1 billion of assets as part of the three funds' liquidation and purchased an additional $800 million of assets from other funds, according to the filing.

In an interview, a Lehman executive said the assets were from two money-market funds and one enhanced-cash fund, a type of vehicle designed to give investors more yield than simple money-market funds.

Lehman's shares took a beating after the filing was released. Its stock tumbled 7.2% to close at $40.54 in 4 p.m. New York Stock Exchange composite trading. Morgan Stanley and Goldman Sachs Group Inc. saw their stock drop 2.6% and 2.7%, respectively.

Lehman, which raised $4 billion in capital to bolster its balance sheet this month, said in the filing the three funds were "liquidated" and the assets of those funds were bought by the bank and put on its balance sheet.

http://online.wsj.com/article/SB120779771018904281.html?mod=yahoo_hs&ru=yahoo

LIBOR SPREADS SIGNAL TROUBLE NOW

This is how many of financials-led market crashes in the past year have began. And when it comes, it comes fast. Look out...this could get interesting. What timing, right ahead of financial's earnings beginning in earnest next week. Hello FASB 157. -Best, Mortgage

09-Apr-08   15:24  Money markets signal fears over banks - FT   

FT reports money markets in the US and Europe are signalling renewed fears about the financial strength of banks, with key confidence barometers almost returning to the levels that preceded the collapse of Bear Stearns. The concerns are being highlighted by the difference between overnight lending rates set by central banks and three-month Libor, the rate at which banks lend to each other. This spread, known as the overnight index swap rate, has been rising in the US and remains elevated in Europe, indicating that banks are reluctant to lend to each other. "Libor is still dysfunctional and, for whatever reason, banks still appear unwilling to lend funds," said Dominic Konstam, head of interest rate strategy at Credit Suisse. The difference between the overnight central bank rates and three-month Libor was typically about 12 basis points before global credit turmoil grew worse last summer. In the US on Wednesday, that spread rose 2bp to 77.5bp. In the UK, the swap rate gained 2.45bp to 95.45bp on Wednesday. In Europe, the swap rate was up 1.29bp at 74.68bp.

LEVEL 3 ASSETS SURGE - LEH, GS & MS STILL PLAYING 'HIDE THE CDO' - CROOKS!

Man, this pisses me off. This is just ugly...especially on LEH part. If not for their $600 mil questionable 'income' off deriv losses and likely moving close to $600 mil to L3, LEH may not be around right now. Goldman, the 'cleanest of the bunch' would probably be the dirtiest if not for accounting tricks. This is as fragile of a system as it gets. These crooks are still monkeying with the numbers and everyone, including the Fed is turning a blind eye. -Best,  Mr Mortgage

 

MarketWatch - MS 47.62, -0.47, -1.0%) both disclosed in 10-K filings that Level 3 assets, or hard-to-value corporate loans, residential and commercial mortgage-related securities and other instruments, rose from the last quarter. Goldman Sachs said Level 3 assets rose by 39% to $82.3 billion, or 13% of total assets at fair value, at the end of February from $54.7 billion, or 10% of total assets at fair value, at the end of November. Morgan Stanley said Level 3 assets rose to $78.2 billion at the end of February from $73.7 billion at the end of November, in both cases representing about 15% of total assets measured at fair value.

Dow Jones Newswires - Lehman Bros 1Q Level 3 Assets $42.51B Vs $41.97B At 4Q>LEH...Lehman Brothers (LEH) disclosed in a 10-K filing that Level 3 assets, or hard-to-value corporate loans, residential and commercial mortgage-backed securities and other instruments, rose to $42.51 billion, or 14% of total assets at fair value at the end of February, from $41.98 billion, or 14.4% of total assets at fair value at the end of November.

MORE LEHMAN NEWS - This company is in real trouble. Now is not a good time to be dumping commercial real estate.

Archstone-Smith sells properties to pay debt-WSJ...Last year Tishman Speyer Properties and Lehman Brothers Holdings (LEH) bought apartment owner Archstone-Smith, but no one said they'd have to sell off parts of Archstone to cover its debt. Now they are, reports the Wall Street Journal. Archstone has about $16B of debt that was used to finance the takeover.

FED Looking For Money??? Wild Stuff.

Some of these ideas sound like double-digit Bond yields could be in our immediate future. Oh my.  By the way, fellow futures watcher...futures gave it all up and fast. Now crashing red from very very green. 7:15pm PST  - Mr Mortgage

By GREG IP
April 9, 2008

WASHINGTON -- The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.

Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed, which would issue debt under its own name rather than the Treasury's; and asking Congress for immediate authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011.

• The Issue: The Fed has sold or committed a lot of its Treasury portfolio to support markets. Some worry it will soon run out of room to do more.

• The News: The Fed is considering several contingency plans for getting more lending capacity so that won't happen.

• The Bottom Line: The Fed has lots of firepower left before it has to turn to these contingencies.

No moves are imminent because the Fed has plenty of maneuvering room. The internal discussions are part of a continuing effort at the Fed, similar to what is under way at foreign central banks, to determine its options if the credit crunch becomes even more severe. Fed officials believe the plans largely eliminate the risk that the Fed will exhaust its stockpile of Treasury bonds and thus lose its ability to backstop the financial system, as some on Wall Street fear.

British and Swiss central banks also are contemplating contingency plans. For now, the European Central Bank is reluctant to consider options that require substantial modifications of its standard tools.

http://online.wsj.com/article/SB120768896446099091.html?mod=hps_us_whats_news

 

CITI Selling $12 Bil in LBO Debt - BAD NEWS

7:30pm PST...THE PUMPERS ARE OUT!!! 90 cents on the dollar my butt - The NY Times just reported it is more like 83-87 cents. This is NOT GOOD AT ALL.

http://www.nytimes.com/2008/04/09/business/09citi.html?_r=2&oref=slogin&oref=slogin

2:30pm PST - News just broke on Fast Money and of course they immediately suggested it was 'mortgage' debt, which means 'write-ups' will happen because mortgage debt has been written down to nothing. TOTALLY IRRESPONSIBLE! Below is the real news.  - Mr Mortgage

"The Citi portfolio includes loans used to finance acquisitions by Apollo, Blackstone and TP, as well as debt in their rivals' deals. Apollo would buy about half the portfolio, with Blackstone and TPG taking the rest. Citi declined comment."

ITS LBO DEBT! Similar debt on others books MUST BE WRITTEN DOWN now. That means everyone that has similar debt. Is this CITI all it has to sell? Is this CITI's most valuable paper?

Facts are, CITI thought they would get 103-108 for it and it is likely on their books for 100. The only reason CITI would do this is because they need to raise tier capital now and it may be all they have they can sell. They are low on capital like everyone else. It was sure amusing to see the sheeple jam the market higher on this as the news broke. Now futures are bright red in a 65 point reversal from the highs. How will bubblevision spin this into something great tomorrow.

The only ones who made out was the LBO firm who are BUYING BACK THEIR OWN DEBT. What a deal.

 

IMPORTANT NOTE - There is still a LEH story out there. It is the only financial not screaming higher on this. Made back 50% of its AH fall but stil down 2%. - Mr Mortgage

LEHMAN TROUBLE??? URGENT!!!

Stock getting pounded on VOLUME A/H on no news anyone can find. It bounced in the sham CITI news that Fast Money broke but still way off the closing price, as other financials are rallying. I suspect this will not hold into tomorrow. Will keep you updated.  - Best, Mr Mortgage

FOMC Minutes As Ugly As It Gets...Ya Right.

This FOMC Minutes release is as ugly as it gets for today. The Fed essentially said they HAD to cut, the US economy is in major slowdown mode with major inflationary pressure. Surprise! STAGFLATION! Bernanke has said that many time if you would have listened. You could have learned this would happen in any high-school economics class. - Mr Mortgage

By Greg Robb

Last update: 2:00 p.m. EDT April 8, 2008

 

WASHINGTON (MarketWatch) - Behind closed doors last month, top Federal Reserve officials confronted new projections of a sharp and severe slowdown, leading them to brush aside worries about rising prices and cut rates aggressively, according to minutes of the meeting released Tuesday. The majority of FOMC members said the substantial easing in March was justified given the deteriorating economic outlook, the minutes said. No one seemed in any way comfortable with recent rising prices. But the majority said it still viewed a moderation in price increases later in the year as likely. There had been no real wage gains, they noted. The decision provoked a sharp dissent from two of the Fed's most hawkish regional bank presidents. Philadelphia Fed president Charles Plosser and Dallas Fed chief Richard Fisher both warned that the public was beginning to think that rising prices were here to stay and this sentiment would be strengthened with another aggressive rate cut.

http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B28F407EB%2D2226%2D4BAD%2D8D38%2DB6B78466241B%7D&siteid=mktw

Fitch - WAMU Ratings UNAFFCTED By Capital Raise

-Well, this just sucks if you are WAMU or their investors. One would think they would check to see if the ratings would improve before you go throw $7 BILLION into a failing bank. This reminds me of the stupid investment in MBIA at $31 per share that is now worth a THIRD of that. You have not heard the end of this story...what is that saying about 'catching falling knives'? Dummies.    -Mr Mortgage

NEW YORK--(BUSINESS WIRE)--Today's announcement by Washington Mutual, Inc. (NYSE: WM) of a series of capital measures, including the sale of $7 billion in new Tier I capital to a group of institutional investors and the anticipated reduction in the quarterly common dividend to $0.01 per share, is unlikely to affect the credit ratings of WM, according to Fitch Ratings.

Concurrent with the new capital, WM also announced preliminary results for first-quarter 2008 (1Q'08) which include a sizeable net loss of approximately $1.1 billion, attributable primarily to a sharp rise in the provision for credit losses to approximately $3.5 billion, more than half of which will go toward building the reserve.

Fitch currently rates WM as follows:
-Long-term IDR 'BBB';
-Short-term IDR 'F2';
-Rating Outlook Negative.

http://www.businesswire.com/portal/site/google/?ndmViewId=news_view&newsId=20080408005967&newsLang=en

Goldman & Lehman Putting on the Pump - Something Smells

These upgrades are absolutely suspect. This may sound far-fetched but this may have something to do with WAMU and the damage it could cause financial stocks when the terms are announced. Currently the street in all their delusion, is using the LEH capital raise as a proxy for how all other financial insti's will raise money and how those stocks will perform afterward. LEH got lucky because they were failing and people jumped big to make a strong illusion of their strength.

But, I still do not think that is the way it will go for WAMU. See my post below on "WAMU Closes wholesale'. I gave my thoughts there. WAMU is not getting a 'LEH type deal, the street knows it and knows WAMU's deal will be so weak it makes suspect the valuation of all financials going into earnings, where raising capital will be paramount to their very survival.

Today's suspect upgraded from LEH and Goldman below...the Pigmen are at it again. - Best, Mr Mortgage

U.S. Brokers, Asset Managers Raised to `Attractive' at Goldman 
By Joyce Moullakis and Adam Haigh

April 8 (Bloomberg) -- U.S. brokers and asset managers were raised to ``attractive'' from ``neutral'' at Goldman Sachs Group Inc., which said mortgage writedowns may ``significantly exceed'' actual losses. ``We have reached an inflection point for stocks with little credit exposure, or where exposure is marked to market,'' Goldman analysts including London-based Richard Ramsden wrote to clients today. ``Investors can benefit by distinguishing exaggerated fears from legitimate, ongoing problems.'' New York-based Goldman reiterated its ``buy'' recommendation on Lehman Brothers Holdings Inc. It rates Morgan Stanley ``conviction list buy.'' It raised Franklin Resources Inc., manager of the Franklin and Templeton mutual funds, to ``buy.'' It also upgraded Bank of New York Mellon Corp., the largest custodian of financial assets, MetLife Inc., American Express Co., and Janus Capital Group Inc. to ``buy.'' FUNNY, NEW YORK MELLON HAD MAJOR OUTFLOWS ON ANY BUYING YESTERDAY AS REPORTED BY THE WSJ.

THIS ONE IS CLASSIC...FNM & FRE upgraded to Overweight from Equal Weight@LEHM Lehman believes GSE's have reached an inflection point and upgraded FNM and FRE to Overweight from Equal Weight due to improvements in the company's abilities to deploy capital at higher returns. FNM price target of $46 is unchanged and FRE price target raised to $45 from $42

Auction-Rate Collapse Quadruples Expenses for Bond Alternatives

This is sad...but 'it is all contained'!

http://www.bloomberg.com/apps/news?pid=20601087&sid=ateKkn9DEjgk&refer=home

Auction-Rate Collapse Quadruples Expenses for Bond Alternatives    

By Jeremy R. Cooke

BARRONS - Why Stocks Rallied Last Week...What a Crock!

Great story for all of you who wonder what the hell the fund managers are thinking when betting your and my 401k money. - Best, Mr Mortgage

http://online.barrons.com/article/SB120735068841591215.html

What a Hoot! 
What Triggered This Week's Rally?

By ALAN ABELSON  | MORE ARTICLES BY AUTHOR

FOOL'S RALLY? AND, BELIEVE US, THAT'S NOT meant to diminish by one whit the joy occasioned by the volcanic eruption that sent stocks hurtling into the stratosphere last Tuesday.

CONTINUED - CLICK LINK ABOVE...MUST READ

 

BARRONS - LEH, MS, GS, MER EARNINGS A SHAM

This is the same story in as my original Lehman video...maybe a Barron's writer actually saw the damn thing. - Best, Mr Mortgage

Wall Street's Latest Illusion
Turning Losses into Paper Profits

By ANDREW BARY  | MORE ARTICLES BY AUTHOR

ALTHOUGH WALL STREET PROFITS ARE under pressure by a host of forces, the tough times also have provided a little-known financial benefit: Some Wall Street titans have been able to book gains from the declining value of their own debt.

These non-cash gains bolstered the bottom lines of Morgan Stanley (ticker: MS), Goldman Sachs (GS) and Lehman Brothers (LEH) in their first fiscal quarters, ended Feb. 29, helping them beat consensus earnings estimates. They had reported the same type of gains in 2007, mostly in the fourth quarter, as credit markets worsened.

Investors, however, should take little comfort from these accounting gains, for two reasons. They provide no cash benefit and, more important, merely reflect investors' growing concerns about the companies' financial health.

Here's how the accounting works: When a company's credit weakens and the yield on its debt rises relative to risk-free Treasuries, the debt becomes worth less to the holder. The financial company, which is the debt issuer, then takes a gain, because theoretically it could buy back its debt below face value.

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