Stuff I Found Interesting Today

There’s a lot of interesting things popping up today. Here’s a quick compendium of some that you might find worth pursuing.

Barney Frank & Mark-To-Market

Not content to just get rid of MTM and trust the banks to tell us the truth from now on, Congressman Frank now thinks it might be a good idea to go back and reverse all of those unnecessary write-offs that were caused by MTM accounting.

House Financial Services Committee Chairman Barney Frank, D-Mass., told the ABA that he will take their concerns about reversing retroactive losses to the SEC and Congress. “They [bankers] ought to be able to go back and say they took that loss on an asset that is being held to maturity and recoup that loss,” Frank said.
Paul Jackson at HousingWire does a good job of pointing out that assets that are classified as held to maturity were never subject to MTM accounting. They’re held at amortized cost. Jackson is, by my standards, too charitable towards the Congressman but he does put the debate in perspective. Links-here and here.
Morgan Stanley Raises $6 Billion
Morgan Stanley has raised $6 billion for a new global real estate fund. They had originally planned to raise $10 billion. China Investment Corporation which holds a stake in Morgan contributed $800 million to the fund.
It’s interesting that the fell short of the original goal. From the outset, the meme has been that there is a lot of money just sitting on the sidelines waiting for the right time to pounce. This would seem to be a data point that belies that train of thought. I don’t know that there isn’t a lot out there but I do wonder if it’s sufficient to help mop up the mess given the scope of the problems. Link-here.
Georgia Developer’s Unique Condo Financing Plan 
Trying to sell condos in this market is no walk in the park, particularly since Fannie pulled back from the market.  Cousins Properties, a major Atlanta developer, is taking the bull by the horns. They’ve come up with something that sounds like it could have come from one of the auto finance companies.
  • Cousins financing with 5% initial downpayment
  • Monthly payment based on 4% interest + HOA Dues + taxes
  • Cousins financing term lasts for up to three years. If you no longer wish to own your home at any time, you can move without any further mortgage obligation
  • If your home appraises for less than your purchase price after three years and you wish to move, we will refund your equity
  • Ask about our downpayment option which allows you to move now and make no payments for the first year while you sell your home
  • Each home comes with a five year extended warranty, further protecting the value of your home
  • ACT NOW! This program is being offered for a limited number of units

Pretty clever, don’t you think? This is the sort of creativity that will get us out of this. Link-here.

Fed President Sees Second Half Recovery

It’s pretty hard to find anyone with credibility who subscribes to my notion that we could see things improving in the second half. It therefore makes my day when a guy like Gary Stern, President of the Minneapolis Fed, comes out and jumps on that bandwagon. He expects some improvement beginning in the third quarter but isn’t calling for rapid growth. Where we part company is on the subject of a double dip recession. He doesn’t think it will happen, I do.

Stern also had an interesting take on comparisons of this episode to the Great Depression.

To be sure, “these are in my judgment historic times in the financial sector,” Stern said. Noting that there used to be five major, standalone investment banks in the U.S., Stern said, “if you had told me 13 months ago we were going to have zero at the end of March, I’d have said no way.”

On the other hand, “I wouldn’t rush to the Depression when it comes to the economy for comparisons,” Stern said.

“For those of us who were around for ‘80-’82 and ‘73-’75, what’s happening in the economy and a lot of the rhetoric that goes with it rings more familiar,” he said.

Glad to hear that. The severity of the current recession has been overstated but the risks it poses have not. Link-here.

There aren’t many dull days anymore.

Share

Related Posts

You can leave a response, or trackback from your own site.

Leave a Reply