Wednesday, March 11, 2009

Jamie Dimon: "Get over it"

"I know mortgage investors may take issue with modifications but they should get over it," Dimon said at a U.S. Chamber of Commerce conference in Washington. He was responding to concerns that some mortgage investors may file suit if some mortgages are modified.

"It's a rational plan, good for loan servicers, good for investors and good for homeowners and good for the markets," Dimon said.

Why is Jamie playing ball?

Why do some hedge funds not want to buy the TALF?

The hedge funds, like Mr. Dimon don't want anyone looking over their books!

The government's $1 trillion program to spark consumer lending hit another roadblock when investors balked at signing an agreement required to participate in the program, arguing that it gave Wall Street dealers and the Federal Reserve too much power to look at their books and reject them from the program.

And neither does Jamie Dimon. Did you miss this release Monday evening?

Citibank, Bank of America , HSBC Bank USA , Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31 . Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

The disclosures underscore the challenges that the banks face as they struggle to navigate through a deepening recession in which all types of loan defaults are soaring.

But aren't the counterparties hedged with their derivatives? Isn't that what we heard from Fannie and Freddie? Whoops--Freddie came out with "earnings" today--A loss of $24 billion and another $30 billion needed from the taxpayer:

Freddie Mac, still suffering from the lax mortgage-lending practices of the housing boom, reported a loss of $23.9 billion for the fourth quarter and said it will need a $30.8 billion injection of capital from the U.S. Treasury.

Where did this loss come from?

Freddie blamed the losses on rising mortgage defaults and declines in the value of derivatives used to hedge against interest-rate risks and other securities.

So bring out the "populist rhetoric" but just don't scrutinize our books!

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