1-2 Knockout

Prerequisite to Attaining Florida Mortgage Broker License: Criminal Record

So The Miami Herald (via curbed) did a little digging around in the public records down in Flo-Rida (as Florida shall here-to-fore be referred), and found some things which I'm sure will come as a complete and utter shock to all:

From 2000 to 2007, the OFR (Office of Financial Regulation) allowed at least 10,529 persons with criminal records to begin arranging and selling Florida mortgages. Of that motley throng, 4,065 somehow cleared background checks even though most had previously committed serious crimes -- including bank robbery, racketeering, extortion and fraud -- that by law should have kept them out of the mortgage business.

Nawwww, ya don't say!  Well, the Herald does say, and, for serious, it actually gets worse!

Other crimes of ''moral turpitude'' found on the records of newly approved mortgage peddlers: assaults, dope deals, sex offenses and at least 15 homicides. As it turned out, some of those felons failed to become model citizens upon entering Florida's then-booming real estate market. They went on to commit at least $85 million in mortgage frauds, fleecing both lenders and borrowers, according to the newspaper's findings.

Anywhere else (well, besides Southern California maybe), reactions to such a ridiculous revelation probably range from  disgust to horror, but no, not in our beloved Flo-rida.

Same for Richard Crowder of Miami Beach, one of 23 convicted burglars who successfully transitioned into the mortgage field. Eventually Crowder masterminded one of the state's worst frauds, setting up $37 million in bad loans by falsifying documents, lying on applications and staging phony property appraisals...the OFR might have been doing us a favor by not screening aspiring loan originators such as Ronald D. Collins. He was convicted 37 times between 1983 and 2000 of assorted low-rent money crimes, including forgery and grand theft. Yet had Collins been banned from the lucrative world of mortgages, he might have turned to more dangerous endeavors such as bank robbery or carjacking.

See, after you live in Florida long enough, you learn to look philosophically for the silver lining in every storm cloud.

I'm sure everyone who was duped by these career criminals feels all warm and tingly inside knowing that they did their small part to take a bite out of crime.  If that's not a consolation prize, hell, I don't know what is.

Bernanke, Take My Breath Away

(Hat Tip: KW)

Ric Flair Finance Boards the Failboat

Ladies and gentlemen, boys and girls, children of all ages, the credit crisis has finally claimed another innocent victim.  Mortgage and consumer-loan specialist Ric Flair has shuttered his fledgling operation, Ric Flair Finance ("Home of the figure-4process!"), despite what we're told were steller results. 

I don't want to beat a dead horse here, but I mean, this comes as quite the shock.  We haven't been able to find out what, exactly, Ric Flair Finance actually did (origination maybe?), or what role they played in exacerbating the housing crisis thats swept across the nation, but we're deeply saddened that the company is nevermore, regardless. 

In memoriam, Ric Flair Finance (Wooooo!?)

   

BAC Tells Orangemen to Get Lost

From today's BAC conference call:

"All I can say at this point is we don’t intend to guarantee the public debt but we do understand the ramifications of not paying at maturity. We’ll keep you informed as we continue to integrate the Countrywide transaction."

Later:

"Betsy Graseck - Morgan Stanley

On the point that you mentioned regarding the Countrywide debt where you indicated that you understand the ramifications of not paying, it’s kind of open-ended. I just wonder if you could clarify a little bit what you’re implications are there?

Joe Price

We don’t really have anything else to add to what I said earlier, responded to earlier. We’ll continue to work through the process and when we decide what the ultimate legal and entity structures look like, how we’re going to operate, all the other parameters, we’ll let you know, but that’s kind of where we are right now.

Betsy Graseck - Morgan Stanley

Is there a possibility that you might at some point fully bring the CFC subsidiary into the Bank of America?

Joe Price

Haven’t made any decisions on that."

Buyer's remorse? Already?  Ouch.

Venture Capitalism in Football (Soccer) Players

Tyler Cowen, if you're reading, this certainly fits in your "Markets in Everything" aisle:

From the NYT:

SÃO PAULO, Brazil — Some co-workers are sitting around their office here on a recent Monday afternoon, dissecting the weekend’s soccer matches and picking their top players.

One of the men likes a talented fullback. Another wants a player who has been scoring regularly for a top second division team. And the boss is keen to sign a teenage defender whose contract is up soon.

It could be a fantasy football draft in any office in America — only these trades are real. This is the office of Traffic, a Brazilian company leading a new, and controversial, wave of investment in Brazilian soccer.

Heidi Montag Will Be the Next Secretary of The Treasury or: How We Are All (even more) Royally F&cked

John McCain, cleverly disguised as his non-existent daughter, recently met up with das-uber annoying wannabe-celebutard Heidi Montag to discuss her views on a variety of important topics (Yes I just linked to The Superficial, yes I know I'm gay, yea yea).  Our strategically-placed stalker source tells us items on their agenda included a lengthy debate on the relative merits of silicon vs. saline, but things really got heated when Heidi mentioned the economy.  Our first inclination is that this must have been some sort of subconscious Freudian slip or yet another unfortunate case of a (quasi-)celebrity parroting something she saw scrolling across a TV out of the corner of her eye.  But, according to our informant, before Montag could snap back out of fembot mode (if such a thing is even possible), "McCain" had already devolved into a state that can only be described as TIMMMMAYYYYYY!!!!!!!!!!! (not that Timmmayyyy). 

After reviewing spy footage of the event, we're not entirely sure whether the cause of "McCain's" sudden shift in behaviour was due to hearing Montag say the word "economy" - a mind-boggling occurrence for sure - or merely the mention of the word itself. 

WFC Lays Bear Trap on Wall St.

Today's Wall Street darling is a little old bank from the left coast, Wells Fargo.  The transcontinental horse-back messenger service bank, largely expected to begin an arduous write-off period, surprised analysts by beating their ever sage estimates guesses by $.03 (.53 v .50 est).  The stock bounced 30% on the news.  Unfortunately, WFC's earnings are actually a mine field waiting to blow the legs off some unwitting retail investor.

Most notably, Wells Fargo changed their charge-off policy this quarter for home equity mortgages.  Traditionally they recognized losses after 120 days; now it's 180 days.  Oh, and did I mention they did it to protect homeowners?  From page 4 of their 8-K:

“...the Home Equity charge-off policy changed in the second quarter from 120 days to no more than 180 days to provide more time to work with customers to solve their credit problems and keep them in their homes. The Company has helped nearly 900 customers, and approximately $90 million of Home Equity loans have been modified due to this change."

I know what you must should be asking yourself: what effect did this have on their earnings.  Curiously you have to turn to the next page for that information, divided into two paragraphs, which surely was for clarity obfuscation.

"The policy change had the effect of deferring an estimated $265 million of charge-offs from the second quarter…”

Well, now that Cox solved that problem...

Cox made his "no short selling" announcement at 12:51 (according to Bloomberg).  Expecting the end of the worst, investors bid up shares 9%, only to realize that maybe it wasn't the naked shorts 'who dun it'.

We've Seen This Before

Hey, remember the time large financial entities, implicitly backed a market's liquidity?  The whole problem was created by a duration mis-match between assets and liabilities.  To "serve their clients", provide "temporary relief" and mainain an "orderly market in times of strain" the banks backstopped the rollovers when the regular buyers ceased to come back for more.

I remember.

It worked for awhile.  Until it didn't.

Just a thought.

Define Irony

Does anyone else find it interesting that, up until this point, the entire SEC investigation into rumor-mongering in the downfall of BSC is based on nothing more than unsubstantiated rumors?