MortgageNewsClips: Geithner on Transparency, Eating Cramdowns, BARF, Sales Jump, Foreclosure answer, 3 Prong, Stimulus, Get on Track, worse Than a Bank, Freddie Rents, Reverse Chart, Mark Perry

Day Two: Geithner Tightens Transaction Transparency - By DIANA GOLOBAY - … announced a new policy of posting investment contracts for future transactions on the Treasury’s Web site within five to 10 business days. The campaign, which he said will bring accountability to the TARP and allow taxpayers to monitor the terms and agreements of the transactions, has successfully posted the first nine contracts under the Capital Purchase Program and will post the contracts of other completed transactions on a rolling basis. … - housingwire


1.  Who Will Eat The Cram Downs? - Maurna Desmond - Somebody has to take the hit if bankruptcy judges forgive troubled mortgages. It will probably be you. - Forbes

2.  Here Comes The BARF - Liz Moyer - Why creating a Bad Asset Repository Fund for Wall Street’s toxic assets could make banking even sicker. - Forbes

3.  Worse Than A Bad Bank - Daniel Indiviglio - Trying to insure troubled assets is even hairier than buying them. But it won’t stop the Treasury from trying. - Forbes 


Home Sales Jump - … U.S. home sales registered their biggest monthly jump in nearly seven years in December, as cratering prices began to draw out more buyers and several major housing markets showed some signs of stabilizing. … Such behavior is a sign that the bottoming process in housing has begun.  … - Toro’s Running of the Bulls


Dealing with Foreclosures: Government Chartered Rental Agency? - thanks Liz Coppedge - The Inquisitive Mind


1.  video and text - How Bernanke’s Policy of ‘Credit Easing’ Works - The Fed now has a three-pronged approach to infusing the financial system with capital - By James Cooper - BusinessWeek 

2.  video and text - Stimulus: To Spend or Not to Spend? - Economists are engaged in a fiscal feud over Obama’s spending plan and how much of a boost it will give the recession-wracked economy - By Michael Mandel  - BusinessWeek

good commentary - No sign of ‘weapons of mass inflation’ - Commentary: Bankers, get on track or risk ‘nationalization’ - By Lou Barnes - inman news


Freddie Mac to let residents rent homes after foreclosureUSA Today 


has chart - Top Wholesale Reverse Mortgage Lenders of 2008 - John Yedinak - … Overall, 2008 was a great year for wholesale lenders, with 80% of the top 10 seeing their volume at least double from 2007.  This should be an interesting year for wholesalers, with Nutter having problems others are bound to pick up … - Reverse Mortgage Daily



Housing Affordability Surges to Record High in Dec. - Mark Perry - has chart and commentary  - Carpe Diem

The Garrett, Watts Report (Jan. 30, 2009)

To Our Clients, Colleagues and Friends,  

  • Covenant School beat Dallas Academy 100-0 in a basketball game last week.  The winning coach was fired, presumably for being unsportsmanlike.
  • Now that Bank of America owns Merrill Lynch, let’s look at comparable compensation levels.  The average Merrill employees earned $247,000 last year v. $75,500 at the BofA. We realize that banks tend to have lots of lower-paid employees (like tellers), but it does point to the cultural differences that must be smoothed out.  We don’t know if this is true, but several decades ago, Wells Fargo Bank employees complained about the Well Fargo Mortgage Co. employees making so much more than they were.   As the story went, the Wells people at the bank finally decided to move the mortgage company out of San Francisco and up to Santa Rosa , and hour away. This way, the mortgage company people would be out of sight.
  • We just read that the U.S. has 6,165 Catholic elementary schools, and 1,213 secondary ones. From everything we know about the parochial schools in America , rarely have so few done so much with so little.  Anyone studying what ails the American education systems should learn abut parochial schools to see a system that works very effectively.
  • Perhaps the best predictor of the end of the Economic Crisis will be when the number of foreclosed homes owned by banks and investors starts to drop dramatically. Currently, banks and investors (i.e. FNMA, etc.) own 845,000 homes.  Barclay’s predicts this will peak at 1.3 million in mid-2010.  We hope the number doesn’t go that high.  Regardless, at some point bargain hunters will enter the market in growing numbers, and more normal times will be on their way back.
  • Gee, we haven’t heard from them lately.  FNMA and Freddie Mac have just asked for another $51 billion from the Treasury to cover losses in their loans portfolios.
    Aren’t you getting a bit tired of poorly run companies rushing to Washington all the time begging for more money?
  • Poor Burt Reynolds.  The actor had his Florida home on the market for $15 million – but has now had to drop the price to $8.9 million.
  • Baseball uber-analyst Bill James came up with a statistical model to rate players.  His system gave points for average, runs, runs batted in, power, defense, base running, arm strength and accuracy, and a whole lot of other metrics.  He then ran everyone who’d ever played baseball since 1880 through it.  It turns out that the greatest all-around baseball player was none other than The Say Hey Kid, Willie Mays. Is anyone really surprised?
  • Don’t despair if you’re having a hard time getting a warehouse line.  If you’re consistently profitable, have solid capital and good liquidity, the odds are very good that we can find you a line. There have been a few new entrants in to market, but it’s still largely the same tried and true lenders who provide the bulk of warehouse lines.
  • Changing times:  Two years ago, the banks that had us do FOCIS Audits all paid our fee themselves.  Now, they have the warehouse line borrower or prospective borrower pay for it.  Smart of them.
  • We used to keep a sort of Diary, and were just looking at it when we stumbled on the entry for March 4, 1979:  “15.5% mortgage rates;  17.5% prime rate;  18.2% inflation rate.”  Little did we know that mortgage rates would climb to 19% and prime would reach 22%.
  • And finally, some philosophy from none other than Little Orphan Annie:  “You’re never fully dressed without a smile.”

See you sometime next week.  Take care.

                                                               *     *

Joe Garrett and Corky Watts  -  Garrett, Watts & Co.    -  510-469-8633

“Monopsony” defined. Don’t be the last one on your block to own FICO 08

“You can sleep in your car, but you can’t drive your house.” Ford lost many billion for 2008, and with the recent run-up in mortgage rates, maybe you can get a car loan at less than 6%. Because it seems that 30-yr conventional fixed-rates are up at the 6% level again, at the mortgage-banker level, if you want a one point rebate. (If the borrower wants to pony up a point, rates in the low 5’s are attainable, using the unusual buy-down of 1:1.)

Are mortgage rates getting you down? Don’t blame the NY Fed – they’re going as fast as they can, to the tune of almost $17 billion last week of MBS purchases.

OK boys and girls, here is your word of the day: “monopsony”. A monopsony exists where there is only one buyer of a product, as opposed to a “monopoly” where one seller controls the market. Although there is a minor amount of interest by investors in owning securities backed by mortgages, most would agree that at this point the Fed is the primary buyer, and that we are approaching a monopsony, which, like a monopoly, is rarely good. Use that word tonight during Happy Hour.

Why should your company be any different from Wells’ wholesale? After January 23, Wells’ brokers have to submit their complete credit package, including income and asset documentation for all borrowers, within 10 calendar days of their lock date. In a story published by Market Watch, Wells Fargo said their applications were up 158% during its fourth quarter versus a year earlier, with their pipeline hitting $71 billion by the end of 2008. Wells also claims that its mortgage market share rose to 12%, based on third quarter 2008 data, from 10% a year earlier.

Fair Isaac has something new to talk about. They will start offering the revamped score, “FICO 08,” to lenders. Fair Isaac believes that the new score will do a better job of predicting borrower defaults, be more forgiving of one-time slipups, take a harder line on repeat offenders, and in general will do a deeper analysis of borrowers with poor or thin credit histories. The score will still range from 300 to 850.

Yesterday was not a good day for Treasury or mortgage rates, or the housing industry. New-Home Sales fell 14.7% in December, and are down 45% from December 2007! This represents the 5th straight month of declines. Durable Goods, as I mentioned yesterday, were also down for the 5th month in a row. Regardless, the Treasury auctioned off $30 billion of 5-yr notes, and it did not go as well as hoped. At this point the last thing on the Fed’s mind is inflation, and in fact deflation is on the minds of many.

How about today – do we need more news that the economy is doing poorly? Will the 10-yr Treasury make up some of the nearly 2 points in price that it lost yesterday? We have already seen Gross Domestic Product, which showed that the U.S. economy shrank at its fastest pace in nearly 27 years in the fourth quarter. It dropped at a 3.8% annual rate, the lowest pace since the first quarter of 1982, when output contracted 6.4 percent. For 2008, GDP rose 1.3 percent, the slowest pace of growth since 2001, when the economy expanded 0.8 percent. U.S. employment costs rose last year at the slowest pace on record, with the Employment Cost Index increasing 2.6% in the 12 months to December, down from a 3.3 percent rise in 2007. The numbers indicate that companies have been cutting overtime and reducing workers’ benefits like pension contributions. We still have the Chicago Purchasing Manager’s survey and the University of Michigan Consumer Confidence survey later, but for now the 10-yr stands at 2.80% and mortgages are about .250 better in price than yesterday late afternoon.

(Warning – PG rated.)

A Greek and a Scotsman were sitting in a Starbuck’s cafe one day discussing who had the superior culture.   Over triple lattes the Greek guy says, “Well, we Greeks built the Parthenon,” arching his eyebrows.
The Scotsman then replies, “Well… it was the Scots that discovered the Summer and Winter Solstices.”
The Greek retorts, “We Greeks gave birth to advanced mathematics.”
The Scotsman, nodding in agreement, says, “Scots were the ones who built the first timepieces and calendars.”
And so on until the Greek comes up with what he thinks will end the discussion. With a flourish of finality he says, “The Greeks were the ones who invented sex!”
The Scotsman replies, “Aye, that is true, but it was we Scots who introduced it to women.”


Rates continue higher in order to attract buyers for the government’s debt

The US Post office is requesting that they no longer delivery mail on Saturday’s as a way to save money. Makes sense to me. With all of these lay-offs (Kodak is shedding 3,000 jobs), closings (Starbucks is shutting down another 300 outlets, leaving ex-mortgage bankers with no choice but to drive farther for a latte), showing that the economy is bad, why aren’t mortgage and Treasury rates lower? Simple – the government needs to issue more debt to pay for a rescue. And in order for all of this supply to attract investors, yields have moved higher. Remember Econ 101.

Citing data from LPS Applied Analytics, a mortgage-data research firm, the Wall Street Journal reports that about 6.9% of prime, jumbo loans were at least 90 days delinquent in December, up from 2.6% in the year earlier period. Delinquencies of non-jumbo prime loans that qualify for government backing increased to 2.1% from 0.8%. Defaults on jumbo mortgages tend to result in outsized losses for lenders given that expensive homes are much more difficult to sell when the real-estate market sours. According to the article, three lenders accounted for nearly half of all jumbo loans made in the first nine months of 2008. The top two originators, Chase and WaMu, made more than 25% of all jumbo loans. In addition, BofA and Wells Fargo each accounted for 11% of the jumbo market.

Speaking of Wells Fargo , their Wholesale Lending group will require two new requirements for FHA and VA transactions: a minimum loan score of 620 is required, regardless of any automated underwriting system (AUS) decision, and a payment history for FHA streamline refinances and VA interest rate reduction refi loans. (No 30-day or greater mortgage lates in the most recent 12 months will be allowed for FHA Streamline Refinances and VA IRRRLs.)

Rates moved higher yesterday, in spite of the House passing the Stimulus Bill (with no Republican support, for those of you playing along at home, as they believe the bill includes too much spending and not enough tax cuts). Things were relatively stable, even with the stock market rallying on financial stocks’ improvement, until the Fed’s announcement. As expected, they are leaving overnight rates alone. But bond market investors were disappointed that the policy statement did not include an immediate intent to begin purchasing government bonds – they have an “inclination” to do so.

Today does not look rosy either. We have a $30 billion 5-year note auction by the Treasury, with the market still swallowing $40 billion of 2-yr notes. We already saw Jobless Claims rise 3,000 last week, up to 588,000, with the moving average increasing to 542,500 from 518,250 the week before. Durable Good orders fell for the 5th month in a row, and dropped 2.6% in December following a November revised decline of 3.7%. Later we can look forward to New Home Sales, expected down slightly. In spite of being “over sold”, prices have moved down more, and rates higher, mostly due to the auction ahead of us. As I type this the 10-yr is at 2.70% and 30-yr mortgage prices are about .250 worse in price.

A filthy rich Florida man decided that he wanted to throw a party and invited all of his buddies and neighbors. He also invited Frank, the only mortgage broker in the neighborhood. He held the party around the pool in the backyard of his mansion. Frank was having a good time drinking, dancing, eating shrimp, oysters and BBQ and flirting with all the women.

At the height of the party, the host said, “I have a 10 foot man-eating gator in my pool and I’ll give a million dollars to anyone who has the nerve to jump in.”

The words were barely out of his mouth when there was a loud splash. Everyone turned around and saw Frank in the pool! Frank was fighting the gator “tooth and nail”, jabbing it in the eyes with his thumbs, throwing punches, doing head butts and choke holds, biting the gator on the tail and flipping it through the air like some kind of Judo Instructor. The water was churning and splashing everywhere.

Finally Frank strangled the gator and let it float to the top like a dime store goldfish, and then he slowly climbed out of the pool. Everybody was just staring at Frank in disbelief. Finally the host says, “Well, I reckon I owe you a million dollars.”

“No, that’s okay. I don’t want it,” said Frank.

The rich man said, “Man, I have to give you something. You won the bet. How about half a million bucks then?”

“No thanks, I don’t want it,” answered Frank.

The host said, “Come on, I insist on giving you something. That was amazing. How about a new Porsche and a Rolex and some stock options?”

Again Frank said no.

Confused, the rich man asked, “Well, Frank, then what do you want?”

“I want the name of the guy who pushed me in the pool!” 


MortgageNewsClips: Short Sales, 10 Ways to Buy, Thomas Sowell, Dudley at NY Fed, Damages Ahead, Subpoenas Coming, Dump FAS 157, Cram Down Debate, Dumb Bubble Deals, FHFA, Fair Value Pull Back, Warming Up, Loss Ratios, Bert Ely


Foreclosure Moratorium Spurs New Interest in Short Sales - Tom Gordon - … By working with loan servicers, some homeowners will be able to modify their loan terms and stay in their homes. But many won’t.  Not all borrowers will qualify for modified loans. Lenders are keenly aware of this, as well as the fact that foreclosing on a home is an expensive proposition  … - RISMEDIA 


1.  has list of 10 - Creative New Ways To Buy A Home - Matt Woolsey - A traditional bank mortgage isn’t the only option for purchasing a house.   Even though mortgage rates are at near 30-year lows, some homebuyers are completely avoiding banks and getting below-market rates-even without credit or income qualification. - Forbes

2.  Economic Slow Pace Can’t Continue - Brian S. Wesbury and Robert Stein - We may be in the doldrums, but we’re not frozen in time. - Forbes


Bailout Funds - What Are They Buying? - By Thomas Sowell - … Using long, drawn-out processes to put money into circulation to meet an emergency is like mailing a letter to the fire department to tell them that your house is on fire.  If you cut taxes tomorrow, people would have more money in their next paycheck, and it would probably be spent by the time they got that paycheck, through increased credit card purchases beforehand. … - Real Clear Politics


Dudley to Replace Geithner as Head of the New York Fed - By Neil Irwin - William C. Dudley, a behind-the-scenes engineer in the Federal Reserve’s response to the financial crisis, is being promoted to a starring role. - Washington Post 


Lawsuits Against Mortgage Securities Issuers: Damages Issues Ahead? - by Kevin LaCroix -  … These lawsuits, typically filed under the ’33 Act and alleging misrepresentations in the offering documents, claim that investors who purchased securities in the offering have been harmed due to the deterioration in the performance of the underlying mortgages. … - D&O Diary


Subpoenas Issued in Merrill Lynch-Bank of America Merger - New York Wants to Know: Who Knew About $4 Billion in Bonuses? - By RICHARD ESPOSITO - ABC News


A Bold New Plan: Dump FAS 157 - By Liz Peek -  … Demonstrating the impact of mark-to-market accounting, Bove reviews the figures for Bank of New York. Delinquencies on BNY’s commercial mortgage-backed securities were 0.88% of its total portfolio; Bove points out that the bank is currently carrying the loans at $0.75 on the dollar, indicating a 25% default rate. … - Motley Fool


US House Panel Begins Debate On ‘Cram-Down’ Mortgage Relief - (Dow Jones)- A U.S. House panel began debating legislation Tuesday to allow judges to modify mortgage loans for people in bankruptcy, after a key Democrat agreed to changes narrowing its scope.  - CNN Money



Dumbest Bubble Deals - By Elizabeth MacDonald - As rotten mortgages continue to cripple the balance sheets of large companies, beleaguered executives face yet another looming risk to their stock prices.  Massive writedowns related to past M&A deals, where companies bought up en masse bad mortgage mills and finance companies during the go-go bubble years. … The looming writedowns are a sobering comeuppance for executives who went on a spectacular, speculative merger bender during the housing and credit bubble - Fox Business News


FHFA SENDS TWO INTERIM FINAL RULES TO FEDERAL REGISTER - regarding Enterprise Portfolio Holdings and Federal Home Loan Banks Capital Classifications - has links to both at FHFA 


FASB Pulls Back on Fair Value - Joseph Rosta - The banking industry has won a victory in the fair value war, sort of. - US Banker


Understanding Loss Ratios’ Effect On Insurance Premiums - By Ronald A. Reitz - One of the conditions imposed upon borrowers under their deed of trust or mortgage is to obtain and maintain homeowners insurance for their property. The mortgage servicing industry refers to homeowners insurance as hazard insurance.  While borrowers are required to maintain insurance coverage, servicers know from experience that delinquent borrowers often let their policy lapse early on in the default process. The responsibility falls on the servicer to track every loan to ensure the required hazard insurance is in effect. - lots more - MortgageOrb 

FDIC May Limit Interest Rates Offered by Banks With Low Capital - By Margaret Chadbourn -  The Federal Deposit Insurance Corp., which is selling failed U.S. banks at the fastest pace in 17 years, probably will propose limits on interest rates paid by lenders with less than adequate regulatory capital, industry consultant Bert Ely said. -  Bloomberg

Ira Artman’s Sterling Slivers: Now And Then - Bank Nationalization, Mergers and Regulation

                                     Source: © Despair, Inc./, Government.


Well, whatever you want to call it… If we are strengthening [the banks], then the American people should get some of the upside of that strengthening. Some people call that nationalization.

[Who] would … have ever thought we would see the day when we’d be using that terminology? Nationalization of the banks.


The hearing will come to order.

The committee is meeting today to hear testimony from 23 witnesses on recently announced mergers of large financial institutions.

It is an understatement to say that this is a period of dramatic change in the banking industry in the United States.

Since 1980, according to Federal Reserve statistics, there have been about 7,000 mergers of financial institutions in the country that have occurred, and the number of individual banks has dropped from a peak of 14,400 in 1980 to 9,064 today…

Each of the recent merger announcements needs to be looked at on an individual basis as well as on an industry-wide basis.

The Citicorp-Travelers merger involves the integration of a money center commercial bank with a major insurance and securities firm.

  • The NationsBank-BankAmerica merger involves the creation of a national coast-to-coast retail bank based upon a union of two dominant regional banks.
  • The Banc One-First Chicago NBD merger involves a major consolidation within a particular region.
  • The Washington Mutual merger with Great Western and Home Savings involves the creation of the largest S&L in the country…
  • And, finally, the Household-Beneficial merger involves a consolidation of two of the largest consumer finance companies in the country…

Thank you, Mr. Chairman…

We must … be cautious as we look to the 21st century. Banks and other financial institutions are crucial parts of our economic engine. Any future structuremust provide for a true safe-and-sound banking system with certainty and predictability

Mr. Chairman, I am concerned about mega-anything, especially mega-entities with deposit insurance backed by the taxpayer and an implicit moral hazard phenomenon that is assumed.

However, our American dual banking system, today’s system, this banking system is one of the most open in the world. I hope we don’t have to report that as being a historical fact in the future

Thank you very much, Mr. Chairman… I want to welcome all of our bank regulators to join us this morning.

Sometimes when I look at what has happened in the banking world in the last couple of months, I think that maybe the chairmen of these banks have just gotten a prescription for the Viagra pill. I think every time I turn around they are growing and growing, but I don’t know what is going to come of it.

Over the last month we have seen five mega-mergers announced in the banking industry. If approved, these five banks will control over $2 trillion in assets.

Mega-merger mania is the new Beanie Baby of the American financial scene; everybody has got to have one, but at the end of the day they are not worth very much…

Mr. Chairman, before us today we have—pending regulatory approval:

  • the largest bank, the largest thrift and the largest finance company in the country, as well as the largest financial services company in the world.

Judging from their stock prices, it looks as if the market has already blessed these unions, but it is appropriate that we take a very careful look at what the results of these mergers are going to be…

Because the Citigroup merger goes the farthest in this regard, it is the transaction that should give us the greatest concern.

By asking the Fed to squeeze a very sizable insurance underwriting operation through a loophole with the expectation that we will repeal Glass-Steagall sometime in the next five years, the Citigroup companies are essentially playing a very expensive game of chicken with Congress. It is important the Fed take a very close look at this.

The other deals are troubling for their sheer size.

  • The new BankAmerica would control 8 percent of the banking assets in the country, uncomfortably close to the cap allowed by the interstate branching laws.
  • Banc One may bump up against the deposit concentration limits in some of its local markets because of the overlap in service between the two banks.
  • Washington Mutual would hold 17 percent of deposits in California but, more importantly, account for a sizable share of the deposits insured by the Savings Association Insurance Fund…

…So my question really is, do you think we should look at shifting it to the private investor so that the threat of a failure, if we have a regulator who is not as up to speed as they should be—we obviously had many regulators during the S&L process, yet they did not stop it. We did insure them. Should we take the risk and shift it to the private investor so that whether or not you have the regulator there or not, if you make a mistake, if you squander money, take all these outrageous risks, then you are going to have to pay for it, not the American taxpayer?

One of the problems is that everything is too big to fail. Everything is too big to fail, and you get these mega-mergers, and it is really too big to fail. One of these things goes down and the American taxpayers are going to have to be the ones that are going to have to bail it out because they are too big to fail.

So do you think we should shift more of this risk away from the American taxpayer and to the person who is initiating the risk and making them realize they will have to pay for it?…

… I would say that we have a lot to learn from the experience of the 1980’s, but I think principal among the things we have to learn is that you can’t deal effectively with an industry like the savings and loan industry when it is already insolvent.

That was the problem that Congress faced. The industry was insolvent by 1980, and we were all pretending that it wasn’t. We tried to deal with remedies that were intended to gamble on an insolvent industry pulling itself out of insolvency.

I think the congressional response in later years, putting emphasis on the maintenance of high levels of capital, putting emphasis on prompt corrective action and on better disclosure, is a marked change from what happened during the experience of the 1980’s.

When an industry or institution is insolvent, it is too late to try to bring remedies to bear, and regulation and supervision should be aimed at preventing insolvency and bringing market forces to bear, so that we are not dealing with institutions that have no net worth left.

That was the problem of the 1980’s.

- - - - - - - - - - - 
I used to work with numbers for a living. I am reminded that truth is stranger than fiction as I search for a new job or at least my next idea. Till next time.


Transcript, ABC News This Week, 25 Jan 2009.

Transcript, House Committee on Banking & Financial Services, 29 Apr 1998. – Government.

What rhymes with “Sells Cargo” and reported earnings today?

The big news of the day, besides more bank earnings, is that a coach of a Texas high school got fired after beating another team in basketball 100-0. The coach would not apologize, since his girls played with honor and integrity (his words) in beating Dallas Academy , which has 8 girls on the team and only 20 in the entire school. The defeated school, by the way, specializes in teaching students with short attention spans. If you’ve already moved on to another paragraph, maybe you fall into this category…

One of my goals in life is to have an index named after me that can impact the market. Trilly Lundberg does surveys of gasoline station prices. The University of Michigan has some kind of consumer sentiment survey. The S&P/Case-Shiller House Price Index came out yesterday, -18.2% year over year. This was about as expected, but certainly shows us that housing continues to be “in the tank”, and until that begins to turn around, no broker should look for looser guidelines or much investor interest in securities backed by mortgages.

Did your locks drop off a cliff last week? You’re not alone, as they fell back to November levels. The Mortgage Bankers Association said its mortgage application activity dropped almost 39% in the week ended Jan. 23. Although lock desks everywhere are breathing a sigh of relief, mortgage company owners are left wondering if they should have outsourced underwriting and other operations work instead of staffing up.

Today the big news for mortgage companies might be in the release of Wells Fargo ’s earnings. Their earnings were obviously impacted by Wachovia’s acquisition at $11.8 billion with no government support, and follow disappointing earnings from BofA, Chase, and Citi. But it gave Wells operations in 39 states, and created one heck of a large bank, and is expected to make money in the years to come. Since then, Wells has estimated the credit loss due to Wachovia’s loans at $60 billion! Wells made $2.8 billion for 2008, but lost $2.55 billion in the 4th quarter due to the merger. Interestingly, the market seems pleased with the steps that Wells took in meeting the Wachovia issues, is not planning on asking the government for additional money, and the stock is up this morning almost 20% in pre-market trading.

Moving on, China remains on holiday through end of week, the House votes on the $816 billion stimulus package today, and the Fed meeting adjourns at 2:15 EST. Yesterday’s record $40 billion Treasury debt auction saw decent demand which boosted treasury and mortgage prices on the day, helping lead to some intra-day price changes. So far this morning the 10-yr is at 2.53% and mortgages are roughly unchanged from their improved price yesterday afternoon.

After an exhaustive review of the research literature here is the final word on nutrition and health:

1.   Those in Japan eat very little fat and suffer fewer heart attacks than us. 

2.   Those in Mexico eat a lot of fat and suffer fewer heart attacks than us. 

3.   Those in China drink very little red wine and suffer fewer heart attacks than us. 

4.   Those in Italy drink excessive amounts of red wine and suffer fewer heart attacks than us. 

5.   Those in Germany drink beer and eat lots of sausages and fats and suffer fewer heart attacks than us.
Eat and drink whatever the heck you like. Speaking English is apparently what kills you.