Gold, Dollar, Bear Stearns, Lehman Brothers, Citigroup, Saint Patrick's Day
What should a sane person do on Saint Patrick's Day? Act like a Leprechaun counting your gold coins. If you don't have any, buy some and pick up as much silver along the way as you can afford. I was so wrong when I wrote on January 3, 2007 in 'US dollar in 2007 and beyond - my prediction' as I stated that US dollar would be continuously falling but falling slow. Unfortunately now, it is literally going down the drain.
JP Morgan got to pick up the Bear carcass for $2 a share paying pretty much for a nice client list. It left the Stearns to rot. The big question is if Lehman Brothers or Citigroup will be next. As crazy as it sounds, let me explain. Lehman Brothers used to offer hard core sub prime mortgages through its BNC Mortgage LLC subsidiary. That was the lender of last resort, if BNC wouldn't take it, no one would. BNC was finished in August 2007, but how much of mortgage securities Lehman Brothers sill holds is a billion dollar question. Besides BNC, Lehman still has Aurora Loan Services LLC, another mortgage unit that used to heavily focus on so-called Alt-A home loans, offered to more-creditworthy borrowers than sub prime ones, but still requiring less documentation. Alt-A and not the sub prime is the biggest bust. So all such mortgage securities have no bids and can't be priced and therefore can't be sold. Nonetheless, the banks still have them on their balance sheets listed as 'Level 3' assets. At the end of 2007 Bear Stearns had $28 billion in such assets, but I don't know how deep Lehman is, but I think quite deep. The Citigroup hippopotamus meanwhile has $133 billion of worthless 'Level 3' mortgage securities. So the writing could be on the wall.
Tue Mar 18, 2008 01:03AM | Copyright: www.bad-credit-advisor.com | More in Economy | Comments (0)
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