Financial Solution News

The preferred stock ratings of Freddie Mac and Fannie Mae have been downgraded from A1 to BAA3 by Moody’s Investors Service. Additionally, Fannie and Freddie’s Bank Financial Strength Ratings has been downgraded from B minus to D plus.
The downgraded ratings remain on review for possible further downgrade. Moody’s said the downgrades of the financial strength ratings reflect its view that the government sponsored enterprise’s flexibility to manage volatility in their mortgage risk exposures is “constricted” because they now have “limited access to common and preferred equity capital at economically attractive terms.”
The downgrades of the preferred stock ratings reflect a greater risk of dividend omission stemming from two issues.
First, the Government Sponsored Enterprises mortgage portfolio performance is “worse and more volatile than Moody’s expected”, which could lead them to breach the capital requirements governing their ability to pay a preferred dividend. Second, there is uncertainty about how the preferred stock would […]

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The preferred stock ratings of Freddie Mac and Fannie Mae have been downgraded from A1 to BAA3 by Moody’s Investors Service. Additionally, Fannie and Freddie’s Bank Financial Strength Ratings has been downgraded from B minus to D plus.
The downgraded ratings remain on review for possible further downgrade. Moody’s said the downgrades of the financial strength ratings reflect its view that the government sponsored enterprise’s flexibility to manage volatility in their mortgage risk exposures is “constricted” because they now have “limited access to common and preferred equity capital at economically attractive terms.”
The downgrades of the preferred stock ratings reflect a greater risk of dividend omission stemming from two issues.
First, the Government Sponsored Enterprises mortgage portfolio performance is “worse and more volatile than Moody’s expected”, which could lead them to breach the capital requirements governing their ability to pay a preferred dividend. Second, there is uncertainty about how the preferred stock would […]

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IndyMac will cover 50% of uninsured deposits as IndyMac Federal Bank.
The government is stepping in to support IndyMac. Having just changed its name from IndyMac Bancorp after it was seized Friday. The FDIC has assumed control saying it will cover 50% of uninsured deposits and fully insure all up to $100,000, which is normal.
John Bovenzi, the FDIC COO says there’s probably no bank in the country that has access to greater capital and liquidity than Indymac Federal Bank. He also states the FDIC expects to sell it in the next 90 days.
Because Charles Schumer has loose lips, IndyMac Bancorp became the second biggest federally insured financial company to be taken over by regulators.

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Two days after the Federal Deposit Insurance Company took over California based IndyMac Bancorp Inc, officials say the bank will reopen Monday morning (Today) for business as usual.

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Original post by Admin

One company in the news is IndyMac.
It heated up again yesterday, they are blaming comments from Senator Charles Schumer for big withdrawals and now the Senator is firing back saying they were on the rocks anyway.
Everyone questions that statement by Schumer, this is a big bank, $18 billion deposits.
What is the FDIC doing about this?
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“IndyMac has announced they will no longer accept any new loan submissions or rate locks in either retail or wholesale, and are closing their “forward” mortgage business.”
Citing regulatory pressure to maintain its capital levels, IndyMac is shifting away from and shutting down much of its forward mortgage origination business to focus on its Reverse Mortgage unit, Financial Freedom, according to a letter from chief executive Mike Perry posted on IndyMac’s corporate blog.
IndyMac said as of July 7 it would no longer accept any new loan submissions or rate locks in its retail and wholesale forward mortgage lending channels, except for its servicing retention channel and would cut roughly half its staff of 7,200 over the next couple of months.
The company said it plans to honor all its existing rate locked loans and continue to fund them.
“While the managers and employees in these units have worked incredibly hard, these […]

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CIT Completes Exit of Business Including Entire Loan Book and Servicing Operations

NEW YORK-(BUSINESS WIRE) CIT Group Inc. (NYSE: CIT), a leading global commercial finance company, announced today that it has agreed to sell its Home Lending business, consisting of $9.3 billion in assets and related servicing operations, to Lone Star Funds for $1.5 billion in cash and the assumption of $4.4 billion of outstanding debt and other related liabilities. The servicing centers, which employ approximately 300 people, are located in Marlton, NJ and Oklahoma City, OK.
In a separate transaction, CIT agreed to sell its approximately $470 million manufactured housing portfolio to Vanderbilt Mortgage and Finance, Inc. for approximately $300 million. Net cash proceeds from the two transactions are expected to be approximately $1.8 billion.
In the second quarter of 2008, CIT expects to record an estimated pretax loss for the Home Lending segment of […]

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The Federal Reserve Board on Thursday announced its approval of the notice of Bank of America Corporation, Charlotte, North Carolina, to acquire Countrywide Financial Corporation ("Countrywide"), Calabasas, California, and thereby indirectly acquire Countrywide Bank, FSB, Alexandria, Virginia, and certain other nonbanking subsidiaries of Countrywide.
Attached is the Board’s Order relating to this action.
Attachment (1.38 MB PDF)
Bank Of America, Countrywide Financial, Federal Reserve, Lenders With Problems 2008, Merger/Acquisitions, mortgage news
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Shakeups at Washington Mutual and Wachovia. Roundtable Discussion with Andrew Seibert of Nextier Wealth Management and Forbes CEO Steve Forbes.
Washington Mutual shares are down after Kerry Killinger stepped down as chairman. Shares of Wachovia are falling to below is the value in almost 13 years after Ken Thompson was ousted.
Chairman Lanty Smith has been appointed interim CEO. Is this new management what these companies need to get back on track? Are there more troubles for financials?

I think their values will go lower until they get a feel for who will take over. There are probably more Writedowns to come.
These banks have not gone beyond the problem of the Subprime Mortgage Industry and there is possibly another shoe to fall. If the Credit Deterioration continues, there will be many more problems.
 
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Wachovia has big news today. Shares of falling in the premarket after the company ousted CEO Ken Thompson.

Wachovia stated he is stepping down at the request of the board, saying no single precipitating event calls because the board to reach the decision, but a series of previously disclosed disappointments and setbacks cumulatively have negatively impacted the company and performance. Perhaps you can call it an understatement.
Shares down 57% in the past 12 months.
 
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Original post by Admin