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Picking the Bank\'s Bottom


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Jan. 20 (Bloomberg) -- Royal Bank of Scotland Group Plc, facing the biggest loss in British history, promised to make 6 billion pounds ($8.7 billion) available to U.K. borrowers as the government took another step toward full control.


In exchange for government guarantees on losses from toxic debt, the bank will have to sign a binding agreement with the Treasury on how much it will lend and on what terms. Auditors will move in to check the bank is following the government directive.


ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“WeÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ll be one of the first guinea pigs,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ RBS Chief Executive Officer Stephen Hester told reporters on a conference call yesterday. The Edinburgh-based company is in talks with the Treasury about terms of the agreement. Loans will only be made ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“on commercial terms and to creditworthy people,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ he said.



Are the sane ones amongst us entitled to ask:




If this ever happens here, there will be no need for any more land subdivisions for a number of years.


The ONLY ressuring thing is that just maybe some sanity is creeping in, but the FAR bigger question is---WILL OBAMA do the same thing??????????



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Jan. 20 (Bloomberg) -- The U.S. Treasury, under pressure to revive lending, is demanding monthly reports from the banks that received the most capital from the government's $700 billion rescue program.


Neel Kashkari, the official who administers the Troubled Asset Relief Program, wrote to Citigroup Inc., Bank of America Corp. and 18 others on Jan. 16 seeking figures on business and consumer loans. Treasury also wanted details on purchases of mortgage-backed and asset-backed securities, according to documents obtained by Bloomberg News. Kashkari will stay for a few months after President-elect Barack Obama is sworn in today.


Obama's aides criticize outgoing Treasury Secretary Henry Paulson's approach to rescues as lacking transparency and not doing enough to get credit flowing though the economy. While Paulson has defended the cash injections as having averted a collapse of the financial system, Obama had to pledge changes before lawmakers approved the release of the second $350 billion.


ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“Banks are becoming the whipping boy for the Treasury's failed policies,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ said



The penny is finally dropping!


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In reply to: spot on Tuesday 20/01/09 03:41pm

correction. i got the CDS exposure figure wrong.



'The latest Reserve Bank Bulletin reveals that the total off-balance sheet business of our banks has gone from $13.79 trillion at the end of June 2008 to $14.21 trillion at the end of Sept 2008. This is an increase of $420 billion. This represents a rate increase of 3 per cent for the quarter, or, an annualised rate of 12 per cent. In the same time the net equity of banks remained unchanged at $131 billion, even though both assets and liabilities increased by $200 billion each.'



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In reply to: spot on Wednesday 21/01/09 02:20am

Well you must be reading different reserve bank bulletins to me.


Based on the latest data released by Reserve bank the numbers are as follows :-


Interest rate contracts 9 trillion

Forex 4 trillion

Derivatives 208 billion

Other 800 billion


Total $14 trillion


The total CDS exposure is around 208 billion a good chunk of which has been provisioned by the banks.


The reason why interest rate and forex contracts have increased by 12% annualised should be pretty obvious given what has happened over the last year.


Contrary to the rubbish that journalists write in this country our reserve bank does have a reaonable handle on the situation.



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This out of todays Wall Street Journal---had to subscribe to view the balance of the article--giant government what???!!!! Bound to be yet more debt.



WASHINGTON -- The U.S. government, recognizing that the banking crisis is far larger than originally thought, is laying the groundwork for a second phase of its rescue attempt, with plans to purge bad assets that are paralyzing the financial system.


Officials at the Treasury, Federal Reserve and Federal Deposit Insurance Corp., in consultation with the incoming Obama administration, are discussing a plan to create a government bank that would buy up the bad investments and loans that are behind the huge losses that U.S. banks continue to report, say government officials. Also under consideration is an additional and giant government ...



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In reply to: flower on Tuesday 20/01/09 04:03pm

in a time of rising unemployment where will all the credit worthy people come from ?


the only way will be to redefine "credit worthy" which will see a return to the situation which started the crisis


lowering of lending standards


this type of lending activity implies there is little likelihood of repayment of principal and interest


adverse selection - the non credit worthy will front up


there is a great unwillingness to accept that a slowdown in consumerism enabled by credit is needed


there is a delusion that massive interventions can erase a decade or more of excess overnight



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It's getting absolutely rediculous.


Last night................


Bank of America +31%

Citi Group +31%

Royal Bank of Scotland +21%


An interesting outcome with so much chatter about nationalising the banks.


Was tempted to buy in the hysterical panic day before, but missed this almost guaranteed bounce. Darn it.

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