There's a new day dawning out there. Some analysts are proposing that bankers should be paid in toxic assets. Among the chief proponents of this idea are Vince Farrell of Soleil Securities and Jim Rodgers of Rodgers Holdings.

Now this seems to be a fine idea. The bankers, with their greed and excess speculation, took down our financial system. The U.S. Treasury and the Federal Reserve had to pledge $12.2 trillion of your money to bail out these ... (you finish the sentence as you see fit). Can you imagine what $12.2 trillion is like? Do you have any idea what this money could have done for our country?

Continue reading What if bankers were paid in toxic assets?

What if bankers were paid in toxic assets? originally appeared on BloggingStocks on Mon, 14 Sep 2009 15:40:00 EST. Please see our terms for use of feeds.

Continue reading Wells Fargo climbs out from under the TARP

Wells Fargo climbs out from under the TARP originally appeared on BloggingStocks on Tue, 01 Sep 2009 18:00:00 EST. Please see our terms for use of feeds.

To do this they have chosen nine firms out of 100 that applied for the program. The guts of the program are that the government will partner with private companies to buy toxic assets.The Treasury supposedly did background checks to be sure that none of the firms chosen had any "conflicts of interest."

Continue reading Why is the government spending $30 billion to buy toxic assets?

Why is the government spending $30 billion to buy toxic assets? originally appeared on BloggingStocks on Thu, 09 Jul 2009 15:00:00 EST. Please see our terms for use of feeds.

Just when I think I have heard it all, they come up with something even more eye-poppingly incredible. That's right folks. First they sucked you into the dot-com boom; then wiped out your tech stocks. Next they urged you to buy houses with money you couldn't pay back -- and those houses plunged in value while the global stock markets lost half their value -- further decimating your net worth.

Now they want to give you the once in a lifetime opportunity to buy the very toxic waste that is sinking the entire global financial system. And if you have a job in state government, your pension fund may be enticed into this financial sludge as well.

Continue reading Wanna buy some toxic waste?

Wanna buy some toxic waste? originally appeared on BloggingStocks on Thu, 09 Apr 2009 10:30:00 EST. Please see our terms for use of feeds.

Continue reading Bank stocks at least 20% undervalued thanks to accounting rule change

Bank stocks at least 20% undervalued thanks to accounting rule change originally appeared on BloggingStocks on Thu, 02 Apr 2009 12:30:00 EST. Please see our terms for use of feeds.

Many people are wondering when this recession/depression will end. Well the waiting is over.

Tomorrow a group of accountants will vote on a new accounting rule that will end the financial crisis. This rule, called FAS 157-e, permits banks to make up the value of assets they carry on their books that nobody wants to buy. By letting banks put whatever value they choose on these assets, they will no longer need to tell investors just how badly those assets have deteriorated.

This is obviously fantastic news for the global economy. We can now get back the $12.8 trillion we've spent bailing out the bad bets of banks and insurance companies. That's because the toxic waste that has so far caused them to take $3 trillion in write-offs is no longer toxic. In fact, the banks can mark those assets just as high as they want -- taking a profit by valuing them at, say, $1.20 instead of the 60 cents at which they're currently priced on their books. This increase in value will instantaneously give the banks as much capital as they want.

Continue reading New accounting rule to end financial crisis: April Fool's?

New accounting rule to end financial crisis: April Fool's? originally appeared on BloggingStocks on Wed, 01 Apr 2009 12:30:00 EST. Please see our terms for use of feeds.

Continue reading Closing Bell: Suddenly, Uncle Sam is again a friend (BAC, C, AIG, GE, GM, TIF)

Closing Bell: Suddenly, Uncle Sam is again a friend (BAC, C, AIG, GE, GM, TIF) originally appeared on BloggingStocks on Mon, 23 Mar 2009 16:15:00 EST. Please see our terms for use of feeds.

Of course, there is no shortage of toxic financial assets. They are clogging the financial system and putting incredible pressure on global banks.

Typically, such things get bought up. But, with little visibility and the complexity of modern financial instruments, it's been tough to attract bottom-fishers into the market.

Yet, according to U.S. Treasury Secretary Timothy Geithner, it's important that private operators swoop in.

Continue reading Wilbur Ross craves toxic assets

Wilbur Ross craves toxic assets originally appeared on BloggingStocks on Wed, 18 Feb 2009 10:00:00 EST. Please see our terms for use of feeds.

Continue reading Stuff bad mortgages in ETFs? Great idea!

Stuff bad mortgages in ETFs? Great idea! originally appeared on BloggingStocks on Mon, 16 Feb 2009 08:30:00 EST. Please see our terms for use of feeds.

	Media Biz: What will happen when print media dies?
	Why the banks won't price their toxic assets
	Dubai: What goes up must come down
	Continental plane crash ends remarkable aviation safety streak
	Stocks picks and pans: MCD, CPB, CLH, POT, KO, VZ, TIF, HNZ ...

DailyFinance today: the death of print media, toxic assets, and Dubai falling originally appeared on BloggingStocks on Fri, 13 Feb 2009 18:20:00 EST. Please see our terms for use of feeds.

Why is this a good idea? My colleague's plan would unfreeze the market for the toxic waste, which might then be valued at 90% of its face value. And once an active market for trading the toxic waste emerged, we would no longer need to rely on mark-to-market accounting to estimate its worth. Suddenly, the toxic waste would become worth something that private investors would be willing to buy.

My colleague -- who worked with me on several consulting projects 25 years ago -- has an exceptional background. He's semi-retired and does not have a blog of his own. He retired from a military career, has five degrees including a Doctorate in Business Administration (DBA) from Harvard Business School (HBS) and completed consulting assignments with 74 companies worldwide. Not surprisingly, his plan has gotten some reactions and here are his thoughts on some of those comments:

Continue reading Response to comments on toxic waste removal plan

Response to comments on toxic waste removal plan originally appeared on BloggingStocks on Wed, 04 Feb 2009 11:25:00 EST. Please see our terms for use of feeds.

In the heat of the moment very often bad decisions are made. According to OECD (Organization for Economic Cooperation and Development), the decision by the U.S. Treasury to shift the TARP money away from buying toxic bank assets to simply giving money to the banks was the wrong move.

OECD outlined steps to follow to return the banking industry to a sound footing: First, bank assets must be guaranteed to avoid a run on the banks. Second, toxic assets must be removed from bank balance sheets. This is the step that was not done. According to OECD, the failure to remove toxic assets from bank balance sheets only serves to prolong the problem and make it more dangerous. These toxic assets can get worse through more defaults, thus making it necessary to inject more funds into the banking system. It's like holding a stock that keeps dropping and dropping and your margin calls become larger and larger.

So far the Fed and the U.S. Treasury have failed to clear toxic assets from bank balance sheets. This is an absolute must if our banking system is ever going to return to normal and bring back trust in the system. Just ask yourself, would you want to invest in a business when you don't even know what "bad assets" are being carried on the books? Who knows, maybe the value of the toxic assets are more than the bank is worth, in which case it should be shut down. At some point, someone will have to "bite the bullet" and clean up this mess. Congress, the Fed and the Treasury must put a stop to the practice of allowing banks to keep some of their transactions "off the books." That's what got us into this crisis in the first place. We need full transparency from here on or we will never be able to trust our banks again.

What are your thoughts on this?

Banking crisis: No solution yet! originally appeared on BloggingStocks on Fri, 09 Jan 2009 16:45:00 EST. Please see our terms for use of feeds.

Last Friday the Fed announced a $200 billion dollar program for buying toxic assets from banks to help them stay afloat. Yesterday the New York Federal Reserve Bank started a new $500 billion dollar program for buying toxic securities from Freddie Mac (NYSE: FRE) and Fannie Mae (NYSE: FNM)

Since Friday the yield on 30 year agency mortgage securities dropped from 208 basis points over Treasuries down to 190 basis points. This has had the effect of lowering mortgage rates. The rate on a 30 year fixed mortgage has dropped to 5.3% from 6% last November.

The Fed is using four firms to conduct these transactions. They are: BlackRock (NYSE: BLK), Goldman Sachs (NYSE: GS), Pimco and Wellington Management.

As was stated previously, the Fed has not disclosed the details of any of these repurchase programs. They are saying that they will be doing this "as the need arises."

A dramatic effect of this new Fed action is the sharp drop in US Treasuries, which today are down another 217 basis points on the 30 year March futures contract. Since last Wednesday the March 30 year bond futures contract has dropped from 141 down to 133 for a drop of about 800 basis points or $8,000.

I guess we can assume from all of this that Freddie Mac, Fannie Mae and the banks are in much deeper trouble than the Fed led us to believe last November. The Fed is not calling these bailouts any longer. They are just going ahead with these massive programs, programs that, by and large, investors and the public are not aware of.

What are your thoughts on these programs?

The devil in the details: Fed doesn't disclose repurchase facts originally appeared on BloggingStocks on Tue, 06 Jan 2009 17:00:00 EST. Please see our terms for use of feeds.

The year 2008 saw a slew of discount M & A (mergers and acquisitions) deals, most of them below book value. Among these were Wachovia and National City. Capital One Financial bought Chevy Chase Bank at .64 times book value.

If you look at the financial landscape for 2009, some names are already popping up for distressed sales, such as Citizens Republic Bancorp (NASDAQ:CRBC), Huntington Bancorp (NASDAQ:HBAN), Midwest South Financial (NASDAQ:TSFG) and Colonial Banc Group (NYSE:CNB).

It seems that we will see a continuation of the purging of bad bank assets in 2009. Banks use a practice of good/bad assets and move their worst assets to a separate company that absorbs the assets' future losses. Then the original bank emerges as a healthier, deleveraged institution.

All of this is taking place under the radar and it is difficult for investors and the public to know which banks are using this practice. When deleveraging becomes unmanageable, the federal government may need to step in and absorb a bank losses to avoid the bank's failure.

Do you believe the financials are a place to invest in 2009?

Banks are still purging bad assets; which banks are on the edge and may fall off? originally appeared on BloggingStocks on Mon, 05 Jan 2009 14:28:00 EST. Please see our terms for use of feeds.

Continue reading Treasury says TARP is working, banks obligated to lend; so why aren't they?

Treasury says TARP is working, banks obligated to lend; so why aren't they? originally appeared on BloggingStocks on Fri, 05 Dec 2008 12:46:00 EST. Please see our terms for use of feeds.