Using Veritas to Construct the "Per…

29-04-2017 Hits:84581 BoomBustBlog Reggie Middleton

Using Veritas to Construct the "Perfect" Digital Investment Portfolio" & How to Value "Hard to Value" tokens, Pt 1

The golden grail of investing is to find that investable asset that provides the greatest reward with the least risk. Alas, despite how commonsensical that precept seems to be, many...

Read more

The Veritas 2017 Token Offering Summary …

15-04-2017 Hits:79050 BoomBustBlog Reggie Middleton

The Veritas 2017 Token Offering Summary Available For Download and Sharing

The Veritas Offering Summary is now available for download, which packs all the information about Veritas in a single page. A step by step guide to purchasing Veritas can be downloaded here.

Read more

What Happens When the Fund Fee Fight Hit…

10-04-2017 Hits:78902 BoomBustBlog Reggie Middleton

What Happens When the Fund Fee Fight Hits the Blockchain

A hedge fund recently made news by securitizing its LP units as Ethereum-based tokens and selling them as tradeable (thereby liquid) assets. This brings technology to the VC industry that...

Read more

Veritaseum: The ICO That's Ushering in t…

07-04-2017 Hits:83382 BoomBustBlog Reggie Middleton

Veritaseum: The ICO That's Ushering in the Era of P2P Capital Markets

Veritaseum is in the process of building peer-to-peer capital markets that enable financial and value market participants to deal directly with each other on a counterparty risk-free basis in lieu...

Read more

This Is Ground Zero for the 2017 Veritas…

03-04-2017 Hits:79949 BoomBustBlog Reggie Middleton

This Is Ground Zero for the 2017 Veritas Offering. Are You Ready to Get Your Key to the P2P Capital Markets?

This is the link to the Veritas Crowdsale landing page. Here is where you will be able to buy the Veritas ICO when it is launched in mid-April. Below, please...

Read more

What is the Value Proposition For Verita…

01-04-2017 Hits:82259 BoomBustBlog Reggie Middleton

What is the Value Proposition For Veritas, Veritaseum's Software Token?

 A YouTube commenter asked a very good question that we will like to take some time to answer. The question was, verbatim: I've watched your video and gone through the slides. The exchange...

Read more

This Real Estate Bubble, Like Some Relat…

28-03-2017 Hits:53236 BoomBustBlog Reggie Middleton

This Real Estate Bubble, Like Some Relationships, Is Complicated...

CNBC reports US home prices rise 5.9 percent to 31-month high in January according to S&P CoreLogic Case-Shiller. This puts the 20 city index close to an all time high, including...

Read more

Bloomberg Chimes In With My Warnings As …

28-03-2017 Hits:81258 BoomBustBlog Reggie Middleton

Bloomberg Chimes In With My Warnings As Landlords Offer First Time Ever Concessions to Retail Renters

Over the last quarter I've been warning about the significant weakness in retailers and the retail real estate that most occupy (links supplied below). Now, Bloomberg reports: Manhattan Landlords Are Offering...

Read more

Our Apple Analysis This Week - This Comp…

27-03-2017 Hits:81269 BoomBustBlog Reggie Middleton

Our Apple Analysis This Week - This Company Is Not What Most Think It IS

We will releasing our Apple forensic analysis and valuation this week for subscribers (click here to subscribe - lowest tier is the same as a Netflix subscription). As can be...

Read more

The Country's First Newly Elected Lame D…

27-03-2017 Hits:81074 BoomBustBlog Reggie Middleton

The Country's First Newly Elected Lame Duck President Will Cause Massive Reversal Of Speculative Gains

Note: Subscribers should reference  the paywall material here for stocks that should give a good risk/reward scenario for bearish trades. The Trump administration's legislative outlook is effectively a political desert, with...

Read more

Sears Finally Throws In The Towel Exactl…

22-03-2017 Hits:86922 BoomBustBlog Reggie Middleton

Sears Finally Throws In The Towel Exactly When I Predicted "has ‘substantial doubt’ about its future"

My prediction of Sears collapsing once interest rates started ticking upwards was absolutely on point.

Read more

The Transformation of Television in Amer…

21-03-2017 Hits:84938 BoomBustBlog Reggie Middleton

The Transformation of Television in America and Worldwide

TV has changed more in the past 10 years than it has since it's inception nearly 100 years ago This change is profound, and the primary benefactors look and act...

Read more

Part two of my sumamrization of the Govenment Bailout Funds will rundown the various programs used. See this link for part one .      

  Term Asset-Backed Securities Loan Facility ("TALF"). TALF provides non-recourse loans to investors secured by certain types of asset-backed securities with terms of up to three years. TALF was originally announced as a $200 billion Federal Reserve loan program under which Treasury provides $20 billion in credit protection to the Federal Reserve. Treasury and the Federal Reserve have announced plans to expand TALF to cover additional asset classes, including legacy mortgage backed securities, which could bring the total facility funding up to $1 trillion, for which Treasury will provide up to $80 billion in TARP funds to absorb losses.

TALF participants must use a primary dealer to access TALF and to deliver the collateral to the custodian bank (The Bank of New York Mellon ("BNYM")). The eligibility of the TALF borrower and the TALF collateral is determined through the application process. Once the collateral is deemed to be eligible, a haircut will be assigned to the collateral. In case underlying assets have an average life beyond the defined terms, the haircut will increase. If the average life of Government-guaranteed ABS (SBA loans) is greater than five years, haircuts will increase by 1% for every two years of average additional life. This is actually more stringent than I may have assumed! For all other ABS with average lives beyond five years, haircuts will increase by 1% for each additional year of average life.

image010.gif

image011.gif

Interest rates are based on the loan asset class, and most are quoted at a spread over the London Interbank Offered Rate ("LIBOR")

image012.gif

·          Public-Private Investment Program ("PPIP"). Through two subprograms, PPIP will involve investments in multiple Public-Private Investment Funds ("PPIFs") to purchase real estate-related loans ("legacy loans") and real estate-related securities ("legacy securities") from financial institutions. The program, involving up to $1 trillion in total, will utilize up to $75 billion of TARP funds.

image013.gif

                The SIGTARP has recognized the public's exposure to fraud, collusion and misrepresentation and has even made some recommendations that I must admit make sense. For the bashing given Obama, one should remain cognizant that the SIGTARP came into existence on his watch, and not under the previous administration. See the significance of this below, as excerpt directly from the SIGTARP report:

                SIGTARP'S RECOMMENDATIONS ON THE OPERATION OF TARP

One of SIGTARP's oversight responsibilities is to provide recommendations to Treasury so that TARP programs can be designed or modified to facilitate effective oversight

and transparency and to prevent fraud, waste, and abuse. In Section 4 of this report,

SIGTARP details instances in which Treasury has addressed recommendations made in

and since the Initial Report, and makes a series of new recommendations, including:

• Use of Funds: SIGTARP continues to recommend that Treasury require all

TARP recipients to report on their actual use of TARP funds. This recommendation

is particularly important with respect to the potential application of

the Capital Purchase Program ("CPP") to large insurance companies that may

have purchased banks eligible for CPP in order to access TARP funds, and to

Treasury's recent announcement of an additional $30 billion investment in AIG.

Simply put, the American people have a right to know how their tax dollars are

being used. This recommendation applies not only to capital investment and

lending programs involving banks and other fi nancial institutions, but also to

programs in which TARP funds are used to purchase troubled assets, including

transactions in the Public-Private Investment Program ("PPIP") and surrenders

of collateral in TALF.

• Expansion of TALF: The announced expansion of TALF to permit the posting

of MBS as collateral poses significant fraud risks, particularly with respect to

legacy residential MBS ("RMBS"). SIGTARP has made a series of recommendations

to mitigate these risks, including, among others, that Treasury should require

a security-by-security screening for legacy RMBS; that any RMBS should

be rejected as collateral if the loans backing particular RMBS do not meet

certain baseline underwriting criteria or are in categories that have been proven to be riddled with fraud, including certain undocumented subprime residential

mortgages (i.e., "liar loans"); and that Treasury should require significantly

higher haircuts for all MBS, with particularly high haircuts for legacy RMBS.

 

• PPIP Fraud Vulnerabilities: Aspects of PPIP make it inherently vulnerable to

fraud, waste, and abuse, including significant issues relating to conflicts of interest

facing fund managers, collusion between participants, and vulnerabilities to

money laundering. SIGTARP has made a series of recommendations to address

these concerns, including, among others, that Treasury should (i) impose strict

conflict-of-interest rules upon Public-Private Investment Fund ("PPIF") fund

managers, (ii) mandate transparency with respect to the participation and management

of PPIFs, including disclosure of the beneficial owners of the private

equity stakes in the PPIFs and of all transactions undertaken in them, and (iii)

that all PPIF fund managers have stringent investor-screening procedures, including

comprehensive "Know Your Customer" requirements at least as rigorous

as that of a commercial bank or retail brokerage operation.

 

• Interaction Between PPIP and TALF: In announcing the details of PPIP,

Treasury has indicated that PPIFs under the Legacy Securities Program could,

in turn, use the leveraged PPIF funds (two-thirds of which will likely be taxpayer

money) to purchase legacy MBS through TALF, greatly increasing taxpayer

exposure to losses with no corresponding increase of potential profits. Such an

expansion could cause great harm to one of the fundamental taxpayer protections

in the original design of TALF by significantly diluting the private party's

personal stake, the "skin in the game," and therefore reduce their incentive to

conduct appropriate due diligence. Treasury should not allow Legacy Securities

PPIFs to invest in TALF unless significant mitigating measures are included

to address the dilution of this incentive, which could include prohibiting the

use of leverage for PPIFs investing through TALF or proportionately increasing

haircuts for PPIFs that do so.

 

• Mortgage Modification Program: To prevent fraud in the mortgage modification

program, SIGTARP has recommended that Treasury build certain fraud

protections into the mechanics of the program, including requiring third-party

verification of residence and income, conducting a closing-like procedure in

which identities of participants are confirmed, and delaying modification incentive

payments to servicers. SIGTARP has also recommended that Treasury

proactively educate homeowners about the nature of the program, publicize that

no fee is necessary to participate in the program, and collect and maintain a

database of the names and identifying information for each participant in each mortgage modification transaction.

 

·         Systemically Significant Failing Institutions ("SSFI") Program. Under this program, about $40 billion was used to purchase preferred stock from AIG plus $30 billion was allocated for a new equity capital facility that AIG can draw on as needed. In return of the latter, Treasury will receive non-cumulative preferred shares.

·         Targeted Investment Program ("TIP"). Under this program, Treasury purchased $20 billion of senior preferred stock and received warrants of common stock from each of Citigroup and Bank of America, for a total expenditure of $40 billion in TARP funds.

·          Asset Guarantee Program ("AGP"). Under this program, Treasury, FDIC, and the Federal Reserve agreed to provide certain loss protections with respect to $301 billion in troubled assets held by Citigroup.  In return the U.S. Government collected $7 billion in premiums in the form of preferred stock plus warrants of common stock; $4 billion of the preferred shares and all the warrants were received by Treasury. Although the covered assets (ring-fenced assets) are not removed from Citigroup's balance sheet, investor exposure to future losses on the troubled assets is limited because Treasury, FDIC, and the Federal Reserve have agreed to provide certain loss protections after the first $39.5 billion in losses. Citigroup will then absorb 10% of all additional losses on the pool of assets, and Treasury and FDIC will absorb 90% of further losses up to $5 billion and $10 billion, respectively. At that point, should any further losses be incurred, the Federal Reserve will provide non-recourse loans collateralized by these assets with the same 90%/10% loss-sharing provision.

image014.gif

image015.gif

A similar arrangement with Bank of America was announced on January 16, 2009, but had not yet closed as of March 31, 2009.

image016.gif

Treasury's projected TARP investment through this program accounted for $12.5 billion as of March 31, 2009 - $5 billion in protection for Citigroup and $7.5 billion for Bank of America. 

·         Automotive Industry Financing Program ("AIFP"). Under this program, Treasury made emergency loans to General Motors Corporation ("GM"), Chrysler Holding LLC ("Chrysler"), and Chrysler Financial Services Americas LLC ("Chrysler Financial"). In addition to these investments, Treasury purchased senior preferred stock from GMAC LLC ("GMAC"). As of March 31, 2009, Treasury has expended $24.8 billion in AIFP investments out of an initial projected funding total of $25 billion. Subsequent to the Initial Report, the manufacturers (GM and Chrysler) submitted restructuring plans to Treasury on February 17, 2009, as required which did not meet the threshold for long-term viability. However, on March 30, 2009, both GM and Chrysler were granted extensions to complete the restructuring plans in order to comply with the requirements set forth under AIFP. As a modification to the existing loans, GM will receive up to $5 billion and Chrysler up to $500 million in additional working capital during the extension period.

·         Auto Supplier Support Program ("ASSP"). Under this program, $5 billion of Government-backed financing was provided to  auto suppliers and the manufacturers

·         Auto Warranty Commitment Program. In order to reassure consumers that their auto warranties on GM- and Chrysler-built vehicles will be honored during this period of restructuring, the Administration will provide Government-backed financing. Potential funding for this program is estimated at $1.25 billion.

·         Unlocking Credit for Small Businesses ("UCSB"). Under this program, Treasury announced that it will begin purchasing up to $15 billion in securities backed by Small Business Administration ("SBA") loans. As demand has diminished in the secondary market for these securities due to adverse credit conditions, there has been a reduction in the volume of new small-business loans written by banks. In connection with this program, the Treasury Secretary also called for the largest 21 banks that have received TARP funds to begin reporting monthly the amount of their small-business lending

·         Making Home Affordable ("MHA") Program. On March 4, 2009, Treasury announced its MHA program, which might expend up to $50 billion of TARP funds. MHA is a foreclosure mitigation plan intended to "help bring relief to responsible homeowners struggling to make their mortgage payments, while preventing neighborhoods and communities from suffering the negative spillover effects of foreclosure, such as lower housing prices, increased crime, and higher taxes. Treasury, along with other Federal agencies, "will undertake a comprehensive multiple-part strategy," which will provide for a $75 billion loan modification program for homeowners in default on their payments or facing imminent default; (ii) a streamlined refinancing process for homeowners whose loans are serviced by Fannie Mae or Freddie Mac; and (iii) approximately $200 billion to support Fannie Mae and Freddie Mac. The funds for this effort will be provided from both TARP- and non-TARP-related sources.

 

Key Tables summarizing the equity and debt agreements under the various TARP programs

image017.gif

image018.gif

Table summarizing TARP actual expenditure under each program

image019.gif