I’m looking for financial institutions coming clean on non-performing loans. Some early takeaways:
National City set aside $73 million for bad loans, up 30 percent. Net charge-offs rose 41 percent to $117 million, including $10 million of “fraud-related mortgage loan losses,” while nonperforming assets rose 16 percent to $689 million, in part because of real estate foreclosures.
Fortunately, for this particular Pig Man, they’ve been collecting higher “fees” to “offset” this. Does this mean if you can’t make your payments, the bank just ignores loan performance, but reports more robust numbers because they charge through the kazoo for your late payment? What kind of a circular Ponzi scam business is that? Do they provide loans for the late fees too?
Third-quarter profit rose 15 percent, as higher fees and improved mortgage results offset an increase in bad loans.
Wachovia showed an increase on foreclosures from $99 million to $181 million, and an increase in accruing loans past 90 days from 624 million to 666 million, yet their reserve for unfunded lending committments fell from $165 million to $159 million.
Next we have Downey Financial adding a provision for credit losses of $9.6 million in the third quarter of 2006. Non performing assets were up $27 million to $67 million in the quarter, and delinquencies have increased 79.9% since year end to $101.16 billion, yet only $26.4 million in loss provisions were made. These Boyz appear well behind the disclosure curve?
Non-performing assets increased during the quarter by $27 million to $67 million and represented 0.39% of total assets, compared with 0.21% at year-end 2005.
Next we have Corus, all but admitting that the reason they didn’t have more problems, was because their more flakey Ponzi unit customers seemed to have Ponzi backers willing to throw good money after bad. I’d say there is an epidemic of this behavior out there:
The slowdown in the housing market is also impacting Corus in terms of credit quality of loans already on our books. We have seen various projects that are experiencing slower sales of condominium units and/or lower prices than the developer or we would like. While construction projects are clearly not immune to the forces of the slowdown, conversion projects presently seem to be displaying more obvious signs of weakness. So far, we can report that we have only one condominium conversion loan which is nonaccrual and one additional loan listed as a Potential Problem Loan. However, we have had numerous other loans that have experienced meaningful problems, but in these cases, the borrowers or their financial backers have stepped up to the plate and invested additional dollars, signed financial guarantees or taken other actions that have strengthened the loan from our perspective.
In this piece small banks worry that the Ponzi finance spiggot may get turned off. And John Dugan, chairman of the Comptroller of the Currency, provides color on the industry, namely that 35 percent of the banks it oversees exceed the new 300 percent real estate exposure guideline. Stifel Nicholaus downgraded subprimers NEW and LEND today, estimating that 20-50% of borrowers would not qualify under the new underwriting standards that NEW adopted last week.
Is that what Hyman Minsky wrote about here? If it walks like a Ponzi unit, talks like a Ponzi unit, and looks like a Ponzi unit, it probably is a Ponzi unit. Am I the only one who feels like Alice?
“Ponzi? finance units must increase its outstanding debt in order to meet its financial obligations.?