NAB will shock Wall Street

[FRED]

NAB will shock Wall Street
July 25, 2008 (Business Speculator)

The National Australia Bank's decision to write off 90 per cent of its US conduit loans will have dramatic repercussions around the world. Wall Street will be deeply shocked when they understand the repercussions of what NAB has done. It is clear global banks have nowhere near provided for their exposures to US housing loans which in the words of John Stewart are experiencing a “meltdown”.

We are now way beyond sub-prime. NAB says that it is suffering a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory. This is an unprecedented event and means that the cost of bailing out the US financial system is now far beyond the highest estimates. A US recession is now locked in, but more alarmingly, 55 per cent loan losses point to the possibility of a depression.

It means the cost of bailing out housing exposures to the two mortgage insurers will be so great that it will leave no room to bail out anything else and there are several US banks that are now in big trouble. NAB says that the dislocation in the residential market is separate from the corporate market, but the flow on is inevitable.

While global banks have been writing down their balance sheet assets, few have tackled their conduit exposures which are off balance sheet but to which they are ultimately liable. more...

[icm63]

Re: NAB will shock Wall Street

I guess after close analysis of this post, one should be short financials.

BUY SKF

[nitroglycol]

Re: NAB will shock Wall Street

I guess under a casual browsing of the business news of the last year or so, one should be short financials.

[nathanhulick]

Re: NAB will shock Wall Street

Of course, many/most of the financials are insolvent at this point, but it appears that the government will spare no expense bailing them out.

One thing that I heard, though, is that there is a lot of counterparty risk owning SKF, since its backed by Lehman.

[icm63]

Re: NAB will shock Wall Street

SKF is a proshare, cant see who owns this mob

http://www.proshares.com/

[Guest]

Re: NAB will shock Wall Street

My company used First National here in San Diego for nine years as our primary merchant account. The San Diego branches were bought / merged with Pacific Western Bank two years ago. I have been in discussion with my employers in Europe as to whether to clear our merchant accounts out and keep a sizeable portion in cash, but until this week they have dismissed the concern as overblown. I dare say we will be proceeding to do that next week.

U.S. Closes California, Nevada Banks; Omaha Bank Gains Assets

By Alison Vekshin

July 26 (Bloomberg) -- First National Bank of Nevada and First Heritage Bank, both owned by an Arizona-based company, were closed by U.S. regulators and their deposits and assets are being acquired by Mutual of Omaha Bank.

First National Bank of Nevada, based in Reno with $3.4 billion in assets, and Newport Beach, California-based First Heritage Bank, which had $254 million in assets, were undercapitalized, the Washington-based Office of the Comptroller of the Currency said yesterday in a statement. Mutual of Omaha Bank will take over their accounts, said the Federal Deposit Insurance Corp., which was named the receiver.

``We would first like to reassure all customers of First National Bank of Nevada and First Heritage Bank that all their deposits are safe and accessible,'' Mutual of Omaha Bank Chief Executive Officer Jeff Schmid said in a statement. ``We will be open for business on Monday morning.''

The banks, owned by First National Bank Holding Co. of Scottsdale, Arizona, are the sixth and seventh to fail this year as the world's largest banks and securities firms have announced more than $468 billion in writedowns and credit losses since the start of 2007. FDIC Chairman Sheila Bair has said bank failures will increase as foreclosures rise and home sales slump.

Regulators closed IndyMac Bancorp Inc., a Pasadena, California-based mortgage lender with more than $19 billion in deposits, on July 11, in the third-largest federal seizure of a financial company. Bair said the U.S. may offer to share losses to entice buyers to pay a higher price for IndyMac's assets.

Mutual of Omaha

Mutual of Omaha Bank, based in Omaha, Nebraska, will gain some assets in addition to all deposits, and their 28 offices in Arizona, California and Nevada will open July 28 as branches of the Omaha bank, the FDIC said.

First Heritage, a national bank chartered in 2005, had three branches and mainly served corporations. First National Bank of Nevada, chartered in 1987, also operated as First National Bank of Arizona with 25 branches, the regulators said.

Lenders on the FDIC's ``problem list'' grew to 90 in the first quarter from 76 in the fourth quarter of 2007, the FDIC said in May. The FDIC insures deposits at 8,494 institutions with $13.4 trillion in assets. The OCC is a Washington-based agency of the Treasury Department that regulates national banks.

U.S. bank regulators this year closed Staples, Minnesota- based First Integrity Bank and ANB Financial in Bentonville, Arkansas, in May; Hume Bank in Hume, Missouri, in March; and Douglass National Bank in Kansas City, Missouri, in January. The four lenders had $2.2 billion in assets and losses estimated at $225 million.

To contact the reporter on this story: Alison Vekshin in Washington at avekshin@bloomberg.net.

Last Updated: July 26, 2008 00:01 EDT

[The Outback Oracle]

Re: NAB will shock Wall Street

I don't know why the NAB didn't go to Bernanke and Paulson and say..."listen! you take all this shit from us and we won't say anything". Just like the US Banks! Maybe they did and got knocked back. Bailing out a foreign bank is just going to far????? Or maybe it would start a whole lot of them asking for the same and there isn't that much money in the world!

[Rajiv]

Re: NAB will shock Wall Street

Catherine Austin Fitts response to this article

To the Business Speculator, Australia:

Good piece. Thanks.

You stated that “NAB had a 55 per cent loss on American housing loans – an event that has never happened in the history of a developed country in recent memory.”

I was the U.S. Assistant Secretary of Housing/FHA Commissioner responsible for cleaning up the last housing bubble bust in 1989, including oversight responsibilities for the Resolution Trust Corporation.

Our loss rates on a number of portfolios was that high, if not higher. In addition, we saw numerous communities with default and loss rates that were higher. I recall one town where 70% of the mortgages were in default and owned by FHA, Fannie and Freddie. Given the various banks and savings and loans that were resolved out, we saw institutions with such loss rates.

The reality was that the massive defaults in 1989 were engineered in a process that made a great deal of money those who organized it. What has happened in this most recent round is that the same players have figured out how to engineer more losses by marketing the securitized assets and derivatives globally.

The fundamental scam, however, is not new. We have seen it before. Other than some aging and retirements, it appears to be the same people, same companies, same game.

James Turk calls it the central banking-warfare model. It is at least five hundred years old.

Keep up the good work,

Catherine Austin Fitts

[LargoWinch]

Re: NAB will shock Wall Street

Yeah...we are heading for disaster:

http://www.youtube.com/watch?v=8ErYR...eature=related

Sucks but hey, buy gold/silver/ammo/food/water

You will do fine!

Oh yeah, have a nice day.