Daily Archives: September 7, 2014

Spanish banks to seek 30 billion euros in ECB loans – paper

Spanish banks will seek around 30 billion euros (23.89 billion pounds) in loans from the European Central Bank’s programme to spur lending to businesses and households, Economy Minister Luis de Guindos said in an interview published on Sunday.

“These loans will allow businesses and individuals to get credit on very competitive terms,” De Guindos told La Vanguardia newspaper.

The ECB has embarked on the new cheap lending programme to try to get banks to lend more to revive economic growth in Europe. Many banks have been cutting back on lending as they strengthen their capital.

The first part of the ECB’s new bank funding plan is set for Sept. 18 and a second slated for December aimed at supporting the flow of credit to businesses in the euro zone to stimulate growth.

De Guindos also said the Spanish government would likely seek to sell more shares in state-owned Bankia (>> Bankia SA) in mid-October. The ECB is due to publish the results of a Europe-wide health check of banks on Oct. 17.

Read on.

Banks unsure if mortgage bonds count as liquidity coverage

New banking regulations require large financial institutions to hold enough “easy-to-sell assets,” in order to survive an economic crisis.

Now, the big banks are uncertain whether or not their $1.1 trillion of aggregated mortgage debt qualifies as this type of asset, according to an article in Bloomberg.

The headline of the article states, that as a result, the new banking regulations leave the largest financial institutions “guessing” about what counts as liquidity and what does not:

Left unclear was whether some or all of a type of bonds known as agency collateralized mortgage obligations can count toward the liquidity coverage ratio approved this week by U.S. banking regulators.

The government-backed debt, which isn’t explicitly mentioned in the rule, represents a big part of bank holdings. Wall Street banks create the investments by bundling existing bonds into notes with varying risks, meaning they help support the broader mortgage-backed securities market that funds and sets interest rates on about 80% of new home loans.

Source: Bloomberg
 

Meet The “Access To Affordable Mortgages” Bill: How Congress Will Create The Next Crisis

Oh, man. Many in Congress are certainly in bed with financial institutions where, once again, they will create another financial crisis. Can’t blame the banksters first, Congress, since Congress is trying to pass another bill which I bet, the bank lobbyists wrote.

Submitted by Simon Black via Sovereign Man blog,

Say hello to the next financial crisis, brought to you courtesy of the dumbest new bill of the week: H.R. 5148: Access to Affordable Mortgages Act.

Ordinarily whenever an individual wants to borrow money for a mortgage, the bank conducts due diligence… both on the borrower as well as the property.

It’s in the banks’ interest (as well as the banks’ depositors) to ensure that the property is at least worth as much as the amount being borrowed. Duh.

Congress doesn’t agree. Apparently when banks conduct property appraisals, that seems to unfairly discriminate against some segment of the population trying to buy crap properties.

And we certainly can’t have that going on in the Land of the Free.

So with HR 5148, Congress aims to exempt certain ‘higher-risk mortgages’ from property appraisal requirements.

Curiously, this legislation reverses several provisions in the 1968 ‘Truth in Lending Act’.

It’s as if Congress is now anti- ‘Truth in Lending’ and pro- ‘whatever the hell gets the money on the street’.

And of course, all of this comes at a time when mortgage rates are still near their all-time lows.

You can borrow money to buy a home today at just 4%. That’s less than half the long-term average of 8.5%, and a fraction of the 16%+ people were stuck paying 30 years ago.

Isn’t paying 4% affordable enough? Nope. Not according to Congress.

So now they’re trying to engineer yet another financial crisis by encouraging banks and other lenders to exercise minimal due diligence on their mortgage portfolio.

This comes at a pivotal time. US banks are only now just barely starting to recapitalize after the early days of the financial crisis.

They’ve unloaded their toxic assets to the US government and Federal Reserve.

They’ve borrowed money at essentially 0% from the Fed and loaned it to the Treasury Department at interest (the mother of all scams).

After six years of these freebies and taxpayer-funded bailouts, bank balance sheets are only now starting to clear up.

So what does Congress do? They propose a new law to screw up bank balance sheets all over again.

It’s idiocy on an epic scale… and it makes one wonder what team of monkeys is coming up with these ideas.

On a side note: 

https://beta.congress.gov/bill/113th-congress/house-bill/5148/cosponsors

Sponsor: Rep. Luetkemeyer, Blaine [R-MO-3] (Introduced 07/17/2014)

Committees: House – Financial Services

https://www.opensecrets.org/politicians/summary.php?cid=N00030026

Campaign Funds raised

Top Industries, 2013-2014

1 Commercial Banks $112,400 $24,900 $87,500

2 Insurance                 $94,720 $5,720 $89,000

3 Finance/Credit Companies $62,600 $18,100 $44,500

4 Securities & Investment         $42,000 $3,000 $39,000

7 Real Estate                         $28,320 $8,820 $19,500

His last sponsored bill:

H.Res.702 — 113th Congress (2013-2014) Affirming that private equity plays an important role in growing and strengthening United States businesses throughout all sectors of the economy and in every State and congressional district and that it has fostered significant investment in the United States economy.