The Fed is Populated by Liars and Fatmouths: TALF Gets More Play, Still Fails

...or maybe they are just terribly, terribly confused.

Market Ticker:

In the news today The Federal Reserve announced that due to the continued lying by banks about asset valuations, a practice that has resulted in ABS and CMBS markets remaining locked up, they are continuing to sponsor and support accounting and control fraud, acts that should be treated as felonies and result in prison sentences:

Nonetheless, the markets for asset-backed securities (ABS) backed by consumer and business loans and for commercial mortgage-backed securities (CMBS) are still impaired and seem likely to remain so for some time. To promote the flow of credit to businesses and households and to facilitate the financing of commercial properties, the Federal Reserve and Treasury approved extending TALF loans against newly issued ABS and legacy CMBS through March 31, 2010.

The markets remain impaired due to the continued lying and will remain so until the lying and control fraud stops.

The TALF has a $1 trillion capacity to lend to investors in order to purchase new asset-backed securities in consumer and commercial real estate debt. In a statement, the Fed said that "conditions in financial markets have improved considerably in recent months, nonetheless, the markets for asset-backed securities (ABS) backed by consumer and business loans and for commercial mortgage-backed securities (CMBS) are still impaired."

Impaired may be putting an optimistic spin on circumstances as commercial real estate property values have fallen 35% since October 2007 and $165 billion in commercial mortgages need to be refinanced this year, according to Bloomberg. Over the next three years, about $1.5 trillion in commercial real estate loans are coming due, Walter J. Mix, a managing director at LECG LLC, recently wrote in The Deal magazine.

Additionally, Realpoint Research reported that June delinquencies in commercial mortgage-backed securities rose an "astounding" 585% to a 12-month high of nearly $29 billion, while Real Estate Econometrics LLC predicted that the default rate on commercial real estate is likely to reach 4.1% by year's end. That projection would imply defaults on about $44.3 billion of commercial mortgages, based on the $1.08 trillion of such loans held by U.S. banks in the first quarter, according to data in the report.

Originally slated to last through December 2009, TALF will now last until June 30, 2010. The securities eligible for collateralizing TALF loans include newly issued, triple-A-rated ABS backed by loans to consumers and businesses, and newly issued and legacy triple-A-rated CMBS.
So the boys reason that a TALF extension is a rational response to "recovery" in just about every sector but commercial real estate?

These guys are truly genius-caliber...

In the immortal words of Morphine ("Sharks"):

Sharks patrol these waters
Sharks patrol these waters
Don't let your fingers dangle in the water
And don't you worry about the day glow orange life preserver
It won't save you
It won't save you
Swim for the shores just as fast as your able
Swim like a motherfucker swim
Fast as that seen ships to now
The ever glorious now the ever present now
Drenched in flower and deep-fat-fried
And cooled on paper towels and then devoured
You know I spent 15 years in a life raft
15 years in a life raft and now I got something to say
Stay in your life boats, people
Stay in your life boats, people
It's murder out there murder out there

Jr Deputy Accountant

Some say he’s half man half fish, others say he’s more of a seventy/thirty split. Either way he’s a fishy bastard.


Anonymous said...

I couldn't help myself when I read this and just waited like the proverbial circling shark to post another prediction from my bestus friend newsletter writer Jim Willie:

> The Chinese in a recent White House visit ordered that Ben Bernanke not be renewed as USFed Chairman. He insulted the Chinese in a Beijing trip a few years back, and has lied through his teeth on monetization of debt securities. The Chinese also ordered that the bruhaha with Union Bank of Switzerland end, since Beijing requires continued Swiss services in managing its gold & silver bullion. My sources of information are not Reuters and USGovt news releases. <

Remember JR, you read it here first.... lol

Ohhhh my dear Anon, we are on the same page since I wrote about that yesterday:


we're screwed! YAY!
xoxo Jr

Anonymous said...

> Ohhhh my dear Anon, we are on the same page since I wrote about that yesterday <

You got me - next time I'll have to read the whole $@#$@$ page....heh heh

I'll forgive you.

Truth be told if I didn't get comment notifications via email, I probably wouldn't be able to keep up either. I'm losing it :P