Using Veritas to Construct the "Per…

29-04-2017 Hits:85773 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:80004 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:79864 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:84342 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:80884 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:83130 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:54140 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:82264 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:82117 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:81985 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:88011 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:85884 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

I have produced a downloadable PDF which clearly shows exactly how far off the banks and SCAP bank stress tests are from the delinquency and foreclosure information that the Federal government distributes itself. This document is in response to the Government's release of the official bank stress test results, which I honestly feel is a slap in the face to anybody with two brain cells to rub together. Please reference page 7 of the document hyperlinked above, as well as the individual bank's "adverse scenario" projections for various loan categories (towards the end of the document) over the next two years and compare them to the loan loss snap shots that I have gathered below from last December and March, directly from the Federal Reserve's public web site. There is no need to wait two years when the worst case scenario is here and now.

This is the government's summary findings of the potential "WORST CASE" losses over the next two years for all 19 of the bank holding companies that were subject to the government's stress test.

19_bank_scap_results.gif

 

Here are some highlights of interest from my report to compare and contrast:

 Alt-A loans

  • Nearly 36% of Alt A loans had least one late payment over the past one year. In Florida nearly 48.5% of Alt-A loans had at least one late payment over the past one year followed by Nevada (43.5%) and California (41.6%).
  • Alt A loans 90+ days past due were 8.7% of total loans with California and Nevada having the highest 90+ days loans past due at 11.3% and 10.3% of total loans, respectively.
  •  Overall 30.4% of Alt-A loans are in risk of default based on prorate share (based on weighted average foreclosure / past due loans and REO loans for each state with weights based on average loan outstanding at each state). 
  • Nearly 42.8% of Alt-A loan outstanding were originated on or before 2005 while 35.6% and 21.6% of loans were originated during 2006 and 2007, respectively.  With S&P Case Shiller declining by nearly 19% , 29% and 29% since 2005, 2006 and 2007, respectively most of these loans are currently underwater in view of the fact that average LTV at origination for Alt-A loans was at 81%.
  • Overall net charge off for Alt-A loans (cumulative 2 years assuming current delinquent and foreclosed turn into expected charge-off over a two year time horizon) is expected to reach as high as 23.9% significantly higher than Fed's implied loss rate assumption of 9.5%-13.5% under the adverse case scenario. Fed's adverse case and base case assumption for subprime charge offs is even lower than current loans past due which is at 13.0%.

Subprime Loans
  • Nearly 64% of subprime loans had least one late payment over the past year. In California and Florida nearly 67.1% and 71.8% of subprime loans had at least one late payment over the past one year.
  • Overall 50.2% of subprime loans are in risk of default based on prorate share (based on weighted average foreclosure / past due loans and REO loans for each state with weights based on average loan outstanding at each state).
  • Nearly 48.6% of current subprime loans outstanding were originated on / before 2005 while 36.3% and 15.1% of loans were originated during 2006 and 2007, respectively.  With S&P Case Shiller declining by nearly 19% , 29% and 29% since 2005, 2006 and 2007, respectively most of these loans are currently underwater in view of the fact that average LTV at origination for Alt-A loans was at 84.2%.
  • The current LTV for subprime loans is at 115% with Nevada and Arizona having the highest LTV at 154% and 146%, respectively.
  • Overall net charge offs for subprime loans (cumulative 2 years assuming current delinquent and foreclosed turn into expected charge-off over a two year time horizon) is expected to reach as high as 41.4% significantly higher than Fed's implied loss rate assumption of 21%-28% under the adverse case scenario. The Fed's adverse case and base case assumption for subprime charge offs is even lower than current loans past due which is at 28.9%.

The full report, complete with sources and methodology is available here, free of charge. I simply ask that you forward it to your local congressman/woman and/or favorite media personality. The Truth shall set you free (or get you locked up, depending upon which side of the Truth you are on): pdf  BoomBustBlog.com's Realistic Recast of SCAP 2009-05-12 14:52:09

For those of you in the media who may not be familiar with my previous work, I have a strong track record in calling this credit crisis:

  1. The Commercial Real Estate Implosion: I called it in 2007 - "GGP has finally filed Bankruptcy, Proving My Analysis to be On Point Over the Course of 18 Months".
  2. The Investment Bank Implosions: Bear Stearns (Is this the Breaking of the Bear? [Sunday, 27 January 2008]) - and - Lehman Brothers investment banking/CRE implosion connection (Is Lehman really a lemming in disguise? [Thursday, 21 February 2008])
  3. The Mortgage Banking Implosion: I called it in 2004, publicly on the blog in 2007 - Countrywide and Washington Mutual (Yeah, Countrywide is pretty bad, but it ain’t the only one at the subprime party… Comparing Countrywide with its peer)
  4. The Regional Bank Implosion: Spring of 2008 - nearly all of the failed or failing regional banks of significant size (As I see it, these 32 banks and thrifts are in deep doo-doo!)
  5. The Monoline Implosion: 2007-2008 - MBIA (A Super Scary Halloween Tale of 104 Basis Points Pt I & II, by Reggie Middleton) and Ambac (Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion Market Cap and Follow up to the Ambac Analysis), among others including the residential homebuilders and their abuse of off balance sheet JVs - well in advance. 
I suggest everybody read up on how we got here. I started taking defensive action in 2004, and implemented my offensive actions 2007 - right around the time this blog was started. Read my blog by blow analysis below...  

Recommended Reading - The Asset Securitization Crisis: 

  1.   Intro: The great housing bull run - creation of asset bubble, Declining lending standards, lax underwriting activities increased the bubble - A comparison with the same during the S&L crisis
  2.   Securitization - dissimilarity between the S&L and the Subprime Mortgage crises, The bursting of housing bubble - declining home prices and rising foreclosure
  3.   Counterparty risk analyses - counter-party failure will open up another Pandora's box (must read for anyone who is not a CDS specialist)
  4.   The consumer finance sector risk is woefully unrecognized, and the US Federal reserve to the rescue 
  5.    Municipal bond market and the securitization crisis - part I
  6.    Municipal bond market and the securitization crisis - part 2 (should be read by whoever is not a muni expert - this newsbyte may be worth reading as well)
  7.    An overview of my personal Regional Bank short prospects Part I: PNC Bank - risky loans skating on razor thin capital, PNC addendum Posts One and Two
  8.    Reggie Middleton says don't believe Paulson: S&L crisis 2.0, bank failure redux
  9.   More on the banking backdrop, we've never had so many loans!
  10.   As I see it, these 32 banks and thrifts are in deep doo-doo!
  11.   A little more on HELOCs, 2nd lien loans and rose colored glasses
  12.   Will Countywide cause the next shoe to drop?
  13.   Capital, Leverage and Loss in the Banking System
  14.   Doo-Doo bank drill down, part 1 - Wells Fargo
  15.   Doo-Doo Bank 32 drill down: Part 2 - Popular
  16.    Doo-Doo Bank 32 drill down: Part 3 - SunTrust Bank
  17.   The Anatomy of a Sick Bank!
  18.   Doo Doo Bank 32 Drill Down 1.5: Wells Fargo Bank
  19.   GE: The Uber Bank???
  20.   Sun Trust Forensic Analysis
  21.   Goldman Sachs Snapshot: Risk vs. Reward vs. Reputations on the Street
  22.   Goldman Sachs Forensic Analysis
  23.   American Express: When the best of the best start with the shenanigans, what does that mean for the rest..
  24.   Part one of three of my opinion of HSBC and the macro factors affecting it
  25.   The Big Bank Bust
  26. Continued Deterioration in Global Lending, Government Intervention in Free Markets
  27. The Butterfly is released!
  28. Global Recession - an economic reality
  29. The Banking Backdrop for 2009
  30. Reggie Middleton on the Irish Macro Outlook

 

Recommended Global Macro Reading from Guest Contributors:

  1. Debt - Thoughts On A Global Problem (Part 1),
  2. Banking out of Control (Part 2)
  3. Global Debt Stats (Part 3)