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View Full Version : A little bit of inside baseball on why capital markets are still stalled



Frozen Sooner
2/25/2009, 12:40 PM
There seems to be a lot of disgust about the fact that capital markets are still locked up a bit even after banks have received TARP funds.

Part of the explanation is that both FDIC and NCUA made an accounting rule change in the fourth quarter with the end of the first quarter being the drop dead date for compliance.

The rule change has to do with reserve requirements and the definition of an "impaired loan." Previously, an impaired RE loan was a loan delinquent by 60 days. Institutions were required to reserve at 140% for all impaired loans.

Now, any RE loan that is a DAY delinquent is considered impaired with the same reserve requirements. As you might imagine, this is sucking up a lot of capital for large RE lenders and makes institutions a bit wary about further RE lending-particularly for lenders (like us) whose contracts stipulate a 6 day grace period.

Anyhow, hadn't seen this reported anywhere. Figured I'd throw it out there so people know a little more about what's going on inside the industry.

yermom
2/25/2009, 12:46 PM
that's right, tighten up. sounds like a great idea

Frozen Sooner
2/25/2009, 12:48 PM
Kind of the law of unintended consequences here. FDIC's intent was to keep institutions from hiding bad debt in the 30-59 day range and to recognize that loans have a higher default rate. They just went WAY too far with it.

stoops the eternal pimp
2/25/2009, 01:07 PM
I ll post my question in here...I just opened an E Trade account...I'm learning the market..I've been looking at some different stock for a while...

Any tips for a n00b

OUDoc
2/25/2009, 01:16 PM
I ll post my question in here...I just opened an E Trade account...I'm learning the market..I've been looking at some different stock for a while...

Any tips for a n00b

Frozen Concentrated Orange Juice.

JohnnyMack
2/25/2009, 01:25 PM
Ball bearings. It's all ball bearings these days.

stoops the eternal pimp
2/25/2009, 01:28 PM
http://a.espncdn.com/photo/2006/1106/nhl_pp_dukes_275.jpg

Chuck Bao
2/25/2009, 02:55 PM
I ll post my question in here...I just opened an E Trade account...I'm learning the market..I've been looking at some different stock for a while...

Any tips for a n00b

When you buy, set a cut loss price and stick to it.

Penguin
2/25/2009, 03:46 PM
Buy a house. Slap some paint on it. Flip it for a $90,000 profit. Whole process shouldn't take more than 5 days.

That's how Bill Gates made his billions.

bluedogok
2/25/2009, 10:11 PM
Kind of the law of unintended consequences here. FDIC's intent was to keep institutions from hiding bad debt in the 30-59 day range and to recognize that loans have a higher default rate. They just went WAY too far with it.
Isn't that what usually happens anytime a new law or regulation is passed?


Ball bearings. It's all ball bearings these days.
Don't forget about the Fetzer Valve....

GottaHavePride
2/25/2009, 11:03 PM
Any tips for a n00b

[:dean:] Mason jar. Backyard. Shovel. [/:dean:]

Mixer!
2/25/2009, 11:07 PM
http://img207.imageshack.us/img207/7717/justonewordplastics.jpg (http://imageshack.us)

"plastics."