Comments on: JP Morgan, Wells Up, WaMu Struggles

By: morganb

morganb — Thu, 17 Apr 2008 13:47:03 +0000

Thanks Holden, I agree. Just as soon as I posted this PJ at Housing
Wire reported JP Morgan's attempt to raise additional capital. So
much for trying to find a positive angle. Since mark to market is
purely an internal decision we can't really know how conservative or
accurate the markdowns are by these companies. Sure there are
regulations regarding asset value, but there is certainly plenty of
gray area when it comes to illiquid and other longer-term asset value
ratings. Toss in this new market reality and the value models lose a
bunch of their credibility.

I think each bank has the opportunity to implode at any given time -
it's just trying to figure out which ones are the closest to the ledge
- and I think WaMu is closest at this point.

By: Holden Lewis

Holden Lewis — Thu, 17 Apr 2008 10:46:22 +0000

Morgan,
Keep an open mind about Wells. I have a purely anecdotal story to illustrate my concern. Wells foreclosed on a house down my street 14 months ago and evicted the owners. Since then, Wells hasn't tried to market the house. It hasn't gone to auction. It sits there, unmaintained. It makes me wonder why. And I think the most likely answer is: They don't want to mark the house to market. They don't want to declare a loss. How many houses has Wells done this to? Thousands? Tens of thousands? Hundreds of thousands? Someday they're going to have to recognize those losses, instead of putting them off.

By: Jimmymac079

Jimmymac079 — Thu, 17 Apr 2008 03:15:21 +0000

correction on the alt-a side.

By: Graham

Graham — Wed, 16 Apr 2008 18:54:46 +0000

What is interesting is that although Wells was by far the most conservative lender I dealt with, they still offered a Doc Relief (SISA) program up to 100% on the Prime Side. Fortunately they didn't offer a neg. am. loan so they are protected that way.