MUST SEE VIDEO: Hudson River Plane Landing (US Airways 1549) Animation with Audio


 Hudson River Plane Landing (US Airways 1549) Animation with Audio

Incredible animation - hat tip to Bill Cohen.

 Hudson River Plane Landing (US Airways 1549) Animation with Audio 

Professional 3D animation, accurately reconstructed to match the event. Learn more at:

   from Scenesystems site:

Our accurate reconstruction of the Hudson River plane crash which took place on January 15, 2009 was on display at the LegalTech tradeshow from the 2nd to 4th February. Proving immensely popular, over 100 people asked us for details of how we made it. The video is now available on YouTube, Video - ….

The animation took 3 days to put together, and was quite complex due to the limited amount of detailed official information about what happened and the large number of buildings. Our animators took data about the flight path from the New York Times, and further details related to timings, environment, etc., from various other news sources and eyewitness reports. The reconstruction contains digitized accurate models of the exact plane involved in the crash, and the whole Manhattan skyline.

MortgageNewsClips: Accounting BS, Bernanke on MTM, Women Disappear, Forward Looking, FDIC 2, Cash Offers, A Better Fix, Reverse Limits Up, Slicing Bloc, Prieur has 23 Videos, Seniors and Housing


WORTH READING: shows accounting bs -  The End of the Credit Crisis - Alex Trias - seeking alpha

Bernanke suggests mark-to-market revisions for illiquid assets - Federal Reserve Chairman Ben Bernanke says mark-to-market accounting rules are “a good principle in general” but that accounting-standards groups should figure out a better way to value assets that aren’t being traded on liquid markets. “I don’t see a suspension of the whole system as being constructive, because there is a great deal of information in valuing many of these assets,” he said. - Bloomberg


Terminated: Why the Women of Wall Street Are Disappearing - Anita Raghavan - After the scandals of the 1990s, didn’t Investment Banks put sexist employment practices behind them? Evidently not. -   Forbes


Agencies to Begin Forward-Looking Economic Assessments - The federal bank regulatory agencies announced today that they will start conducting forward-looking economic assessments of large U.S. banking organizations as the Capital Assistance Program (CAP) gets under way. These assessments will be done on an interagency basis as a coordinated supervisory exercise to ensure they are carried out in a timely and consistent manner. Supervisors will work with institutions to estimate the range of possible future losses and the resources to absorb such losses over a two-year period. - FRB Atlanta



1.  Insured Banks and Thrifts Lost $26.2 Billion in the Fourth Quarter - Domestic Deposits Increased by 3.8 Percent - FDIC Press Release

2.  F.D.I.C.’s Bank Fund at Lowest Point in 25 Years - ERIC LIPTON - NY Times 


Cash offers for bank owned property soar - Tim Iacono - themessthatgreenspanmade


A better way to fix the banks - Lowell Bryan and Toos Daruvala - Here’s a plan that could solve the toxic-asset pricing problem voluntarily—without requiring Uncle Sam to nationalize the whole industry—and make (pretty much) everyone a winner. - McKinsey Quarterly  


1.  HUD Makes Higher Reverse Mortgage Loan Limits Official - Kohn Yedinak - The U.S. Department of Housing and Urban Development published Mortgagee Letter 2009-07 which raises the national FHA loan limit for HECMs to $625,500.  The changes are effective immediately for loans closed on or after February 24, 2009 - Reverse Mortgage Daily

2.  Huffington Post Describes How Housing Crisis Is Hurting Seniors Looking To Move - John Yedinak -  Mark Miller is one of my favorite journalists who covers all things Baby Boomer on websites like Retirement Revised, 50+ Digital, and he also contributes to the Huffington Post.  Over the weekend, Miller wrote about how the housing crisis is hurting seniors who are unable to sell their homes when they decide to move for health or lifestyle reasons.  As a result, continuing care communities are having problems attracting new residents due to the large upfront payment which is required for seniors to move into these types of communities. - more - Reverse Mortgage Daily  


Mortgage Interest Deduction on the Slicing Block - Luke Mullins - In order to pay for health care reform, President Barack Obama is proposing to take the axe-or at least the scalpel-to a longtime sacred cow: the mortgage interest deduction. The plan, which was included as part of the president’s budget proposal for 2010-unveiled Thursday—would reduce the value of the mortgage interest and other deductions for the nation’s highest earners. Taken together, the increases are expected to bring in $318 billion over 10 years.  - US News


23 Financial Videos for the past week - Prier du Plessis’s weekly summary - Investment Postcards from Capetown

The Garrett, Watts Report (February 28, 2009)

To Our Clients, Colleagues and Friends, 

  • Did you know that the U.S. banking system has about $7.2 trillion in loans?  Assume a 10% loss as real estate values continue to decline, and that is a $720 billion loss. And that doesn’t even include consumer loans.
  • Are you a “professional depositor”?  If so, you made good money from 1998 – 2007, in which the first day pop averaged 16.1%, with every one of those years ending up positive.  The worst year was 1999 with an 8.1% average gain and the best was 2003 when the average first day pop was 37.5%. All this easy money came to a halt last year, with the average actually being negative.  There were only 10 conversions, and only four of them popped upward the first day, and barely.  If you don’t invest in mutual conversions, you should have skipped this item.  Our apologies.
  • AOL has periodic polls, and a recent one asked if the Obama’s choice of a Portuguese Water Dog was a good choice or a bad choice.  Amazingly, over 110,000 people voted.  Who cares???? 
  • The Royal Bank of Scotland just reported a 7.9 billion Euro loss for the quarter.  That’s about $10.2 billion.  RBS was founded in the 1600’s
  • We know of one West Coast mortgage lender who was told their warehouse line wouldn’t be re-newed come March 15.  They were, in essence, given three weeks to replace it, a near impossibility.  As Tim Carlsen of Hyperion Mortgage in Oregon reminds us, it’s another example of why you want to stagger the renewal dates on your lines.
  • We’ve gotten reports that Fannie and now the MI companies are auditing every loan done in the past three years.  Damn, this has sure gotten to be a tough business.
  • March is a busy, crazy month for us.  We’ll be in Grand Rapids , Seattle , Greenwood Village ( Colorado ), Sun Prairie (guess what state?), Independence ( Ohio ), Ann Arbor , Georgia , Maryland , Dallas , and a few others.  We once did a project in Estonia , and why don’t we have more jobs in Europe ?  We’re open to work in Paris , London , Venice , Budapest and Prague ? Also Honolulu , the Virgin Islands , and Phukett. And all beachfront communities in Mexico , The Caribbean, and Key West .
  • People are interesting.  Last week we compared Ronald Regan to Richard Nixon.  We thought this would engender a slew of e-mails, but we didn’t get a single response.  But we mentioned an obscure folk singer who probably made her last album 30 years ago, and we get flooded with e-mails about her.  Interesting.  The biggest response we ever got was when we incorrectly said that Pamela Anderson had just celebrated her 50th birthday (or was it Demi Moore?) and we got inundated with letters telling us she was only forty.  Go figure.
  • Speaking of unusual e-mails, we once referred to the Bank of America as the BofA.  Someone fairly high up at Indy Mac wrote us a long letter saying that the word the shouldn’t go in front of the BofA.  It was simply Bank of America or BofA and not the Bank of America.  It’s weird because this was about a week before Indy Mac was closed down.  You’d think people would have had more important things to worry about at a time like that.   By the way, what is it?  BofA or the BofA?
  • Don’t despair.  We just had dinner with two first tier warehouse lenders and both are still writing commitments.  Both have good pricing and terrific service.  All is not lost.
  • Regulators handed out nine Cease & Desist Orders last week, or at least that’s how many we counted.  All the usual stuff: Increase capital, have better Board oversight, improve credit quality, etc. etc. etc.  If you get a C&D, you must have a good attorney help you get out from under it. And it needs to be an attorney who has helped other institutions get out from under such regulatory orders.

Hey, it looks like we’re getting back to a twice-a-week schedule for the Garrett, Watts Report.  While we send it to many people who are not current clients, we really do intend it for clients or other people who might become clients.   We get requests all the time from people who want to get on our distribution list, people in professions we’re not involved in, and we don’t add them. It really is just for mortgage bankers, commercial bankers, and people in closely related fields.  You might be surprised at the relatively small number of people who get this.  It’s well under a thousand. 

By the way. we added our tag line down below:  “Garrett, Watts , helping you increase revenue, control costs, and better manage risk.”  See you next week.   

                                                           *     *

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

Helping mortgage lenders increase revenues, control costs, and better manage risk.

Am I A Masochist? Another Try At Buying A GM Vehicle. - by Mark Sunshine


Mark tells of his saga.  Quite the story. (BC)

Am I A Masochist? Another Try At Buying A GM Vehicle.

Unexpectedly, my wife and I are back in the market for another new car and we are trying again to buy a GM vehicle. Unfortunately, just like last month we can’t seem to pull it off. We want to buy a Cadillac CTS but we can’t get a dealer to honor their advertised price. Sometimes the car that is advertised doesn’t exist and sometimes it is the fine print in the GM promotional pricing that trips us up. After visiting a few dealers we got frustrated and e-mailed GM. From their response, we are convinced that GM is run by morons who don’t have a clue how to sell cars.

According to the definition of a masochist is someone who derives pleasure from being humiliated or mistreated, either by another or by oneself and someone who has a willingness or tendency to subject oneself to unpleasant or trying experiences. My wife, Christy, and I must be masochists because we are still trying to be loyal to GM.

The reason that we need a new car is because my car, a 2003 Cadillac De Ville, is in trouble. The car has about 65,000 miles on it but recently had some mechanical problems including a broken motor mount that caused the engine and transmission to drop out of the vehicle. Fortunately, the drive train didn’t fall out of the bottom of the car while we were moving but even so it seems like a good time to trade it in.

My wife saw opportunity when the bottom fell out of the De Ville. She immediately demanded that we get a new car and used the usual guilt trip of “we drive our kids in the car…what if the kids were in it when the engine fell out”. You see, she hates the De Ville and says that people make fun of me when I drive it. Christy says the De Ville is an “old man’s car” and I am not in the De Ville target demographic. After all, I am not in my 80s yet, I don’t need to travel with an oxygen bottle (for shortness of breath) and I have a strong pulse. My kids hate to ride in the De Ville and their friends ask them if I am their “Grandpa” whenever they see me drop them off out.

>>> Read the rest at Mark Sunshine Blog  >>>

3rd government intervention’s a charm for Citi? FHA news; Stocks’ tumble helping rates somewhat.

It is well documented, somewhere, that rocker George Thoroughgood was a loan agent. In fact, he wrote a song about finding the best rates for his borrowers:

Now, every morning, just before breakfast, I don’t want no coffee or tea.

Just me and my good buddy Weiser. That’s all I ever need.

Cause I lock a loan, yeah, with nobody else.

I lock a loan, yeah, with nobody else.

Yeah, you know when I lock a loan, I prefer to be by myself.

Now, the other night I lay sleeping. And I woke from a terrible dream.

So I called up my pal, Jack Daniels, and his partner Jimmy Beam.

And we locked loans, yeah, with nobody else.

We locked loans, yeah, with nobody else.

Yeah, you know when I lock a loan, I prefer to be by myself.

Lenders had a good January, will end up with great February’s, and solid March’s. After that, it is anyone’s guess as pipelines clear up, loans are purchased, and rates perhaps inch downward. Will these volumes continue if rates stay the same? Are underwriting guidelines going to loosen up? “What do you think?” he said sarcastically. As of yet, aside from a couple random things from Fannie (like increasing the number of properties a borrower can own) personally I have seen no sign of anyone loosening up any guidelines. Investors will take their cue from Freddie and Fannie, and, like I said, I have seen no signs that would point to different guidelines, especially since credit risk is one of the key issues bringing the housing market to where it is. And the government is better in dealing with rates then in setting guidelines.

Last week the Fed bought $25 billion in agency mortgage-backed securities – the most since the program began. Almost 50% of the securities were Fannie 4.5’s, which generally include mortgage rates from 4.75-5.125%.

Citigroup, who just announced $10 billion in write-downs in the 4th quarter, and parent of CitiMortgage, will offer to convert as much as $27.5 billion in preferred stock, not held by the federal government to common stock, with the U.S. agreeing to match up to $25 billion of the conversions in the latest effort to keep them afloat. If this happens, common shareholders would see their holdings diluted by nearly 75%, with the government becoming the largest holder at 36%. The goal of this is to increase their tangible common equity, in spite of last year’s net loss of $27.7 billion. The agreement marks the third time in the last 6 months that our government has come to Citigroup’s rescue: twice late last year the government pumped a total of $45 billion into the company, and also agreed to protect Citigroup against most losses on $301 billion of assets. That gave the U.S. a 7.8% stake in the company. And the government has pressured Citi to break itself up, although rumors that Herb and Marion Sandler are interested in buying CitiMortgage are unfounded!

FHA treats short sales, deeds in lieu, etc all the same as foreclosures when it comes to guides and they require 3 years before a borrower can qualify for a loan. Fannie has the new short sale guideline that requires 2 years before a borrower can qualify and 5-7 years for foreclosures. Speaking of FHA, remember that Mortgagee Letter 2009-07 establishes the new FHA loan limits set forth by the American Recovery & Reinvestment Act of 2009. Things to note: new loan limits are for FHA loans that receive approval in calendar year 2009, not farther out; changes apply to the 203b (basic loan), 203h (disaster victims), & 203k (rehab loan); the national FHA floor limit remains at 271,050; the FHA ceiling for high value areas is 729,750; lastly the national reverse mortgage limit increases from 417,000 to 625,500. For the limit in your area, check HUD Website

This morning the US GDP number (the sum of all goods and services produced by the economy) was expected to be -5.4%. It actually fell at an annual rate of 6.2% in the 4th quarter, the deepest slide since the first quarter of 1982. It should be no surprise that consumer spending, which accounts for more than two-thirds of domestic economic activity, dropped at a 4.3 percent rate, the biggest fall since the second quarter of 1980.  This, combined with stocks being hit by the Citi news, has brought the 10-yr yield back down to 2.93% and mortgage prices better by roughly .125. Later on we’ll see the Chicago Purchasing Manager’s Survey for February, expected to slide further after January’s decline, and the University of Michigan ’s Consumer Confidence Survey – as if that is going to be positive and move the market.

An elderly gentleman had serious hearing problems for a number of years.

He went to the doctor and the doctor was able to have him fitted for a set of microscopic hearing aids that allowed him to hear 100% perfectly.

He went back in a month and the doctor said, “Your hearing is perfect. Your family must be really pleased that you can hear again.”
The gentleman replied, “Oh, I haven’t told my family yet. I just sit around and listen to the conversations. I’ve changed my will three times!”


MortgageNewsClips: Snap It Up, Second Try, 3yr Futures, Forward Looking, I Want TARP Back, Fear Futures, Fix Rate Rocks, Schumer, Stress Test, Don’t Fail, Good Bet, 6 Ez Steps, Ira Has 3

1.  Traders Snap Up Credit Protection On Citi’s Riskier Subordinated Debt - … The widening of the subordinated credit default swaps is reminiscent of the move in Fannie Mae and Freddie Mac’s comparable swaps in August, before the government announced its plans to recapitalize the troubled housing finance agencies. … -

2.  Schumer:2/3 Of Mortgage Servicers Agree To Foreclosure Plan - DJ - … “Two-thirds of servicers are the large banks that are part of the [Troubled Asset Relief Program],” Schumer said. “They’ve already agreed they are going to refinance now that they are no longer worried about getting sued.” … -


1.  A Second Try at Calming Bank Investors - Government Wants New Infusions to Be Regarded as Capital - By Binyamin Appelbaum - Washington Post

2.  Treasury Releases Details of ‘Stress Tests’ for Bailed-Out Banks - Binyamin Appelbaum - … Federal regulators yesterday launched “stress tests” of 19 of the largest banks to determine how much more money they will need. The results are expected no later than the end of April. Banks then will have six months to raise the money from private investors or accept federal aid. … - Washington Post 


Sign of the times:  CME Group to Launch 3-Year U.S. Treasury Note Futures -  … “This new futures contract is an extension of our benchmark U.S. Treasury complex and in response to strong customer demand following the recent reinstatement of 3-Year Treasury notes into the monthly auction cycle,” said Robin Ross, CME Group Managing Director of Interest Rate Products. “The new contract will provide an additional tool for basis trading, duration management, and both yield curve and credit spread trading.” - PRNewswire-FirstCall 


“Stress - Test” - Agencies to Begin Forward-Looking Economic Assessments - The federal bank regulatory agencies announced today that they will start conducting forward-looking economic assessments of large U.S. banking organizations as the Capital Assistance Program (CAP) gets underway.  FR Board press release            5 page FAQ


House Democrats Demand TARP Funds Back - By DIANA GOLOBAY - House Committee on Financial Services Democrats, including Barney Frank, issued a letter Tuesday to the CEO of Chicago-based Northern Trust Corp., asking for a return of some of the $1,576,000,000 in TARP funds granted to the bank on Nov. 14. “We are dismayed and angered to learn that Northern Trust recently spent millions of dollars on a PGA golf tournament sponsorship and associated parties at the same time it has taken over $1.5 billion in federal stabilization funding under the Troubled Asset Relief Program,” the letter read, in part. - housingwire


CBOE unit to offer fear-based futures - (Reuters) — The CBOE Futures Exchange, a subsidiary of the Chicago Board Options Exchange, said on Wednesday it plans to offer a new product tied to the so-called VIX, Wall Street’s favorite barometer of investor fear. Trading in CBOE mini-VIX futures, a contract which will be one-tenth the size of the standard CBOE VIX futures contract, will debut on Monday, the CFE said. - Crain’s Chicago Business

Arms are dead:   Freddie Mac: ARM Borrowers Refi Into 15-Year, Fixed-Rate - In the fourth quarter of 2008, 97% of prime borrowers who originally had a conforming adjustable-rate mortgage (ARM) chose a new conforming fixed-rate mortgage when they refinanced, up from a revised 85% in the third quarter, Freddie Mac reports. Furthermore, 99.7% of borrowers who had a fixed-rate loan refinanced into another long-term fixed-rate loan, up from a revised 97% in the third quarter. - MortgageOrb 


NBC Dallas-Fort Worth

Why More US Banks Aren’t Being Allowed to Fail - ALBERT BOZZO - … Since the recession began in January 2008, the FDIC has closed just 39 banks—25 in 2008 and 14 thus far in 2009.  By contrast, more than 1000 institutions were closed during 1988 and 1989 when the savings and loan crisis was at its peak. -  NBC-DFW


GSE Debt a Good Bet, With or Without Explicit U.S. Guarantee - Fannie Mae and Freddie Mac debt obligations still lack an explicit guarantee from the U.S. government, but Fitch Ratings says that’s a technicality, and it predicts the government sponsored enterprises’ senior and subordinated debt obligations “will be fully supported.” - Research Recap

has details: How to Fix the Crisis in Six Easy Steps - Dear John Thain Blog -
Step 1: Nationalize Citi and Bank of America
Step 2: Begin lending.
Step 3: Begin replenishing bank assets with new, cleaner assets.
Step 4: Broaden the Fannie and Freddie loan modifications and housing stabilization plan to the government’s new properties.
Step 5: Break up the institutions that are owned by the government.
Step 6: Immediately implement a new regulatory regime.


   IRA ARTMAN SECTION - thanks Ira: 

How You Can Green Your Home and Cash in on Stimulus Money - By G. Jeffrey MacDonald, Christian Science Monitor - … New incentives increase the size of tax credits for homeowners who buy qualifying products. … can now receive a tax credit worth 30 percent of the upgrade cost … Previously, homeowners could get a tax credit worth just 10 percent of an upgrade cost … - Alternet


About Quants:  Recipe for Disaster: The Formula That Killed Wall Street - By Felix Salmon - … For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. … (this made CDS and CDOs possible) - WIRED MAGAZINE: 17.03 


Is the Net Impact of the Obama Economic Plan Positive or Negative? - Jim Haughey, RCD Chief Economist - Reed Construction Data

Ira Artman’s Sterling Slivers: The Proud Few - A Stress Test With Teeth

© 1992, Columbia, Castle Rock, & New Line Cinema - A Few Good Men.

Tomorrow morning, before the New York Stock Exchange opens, the President could ride Amtrak’s Acela train to Manhattan. He could stand at the steps of the Federal Hall Memorial at the corner of Nassau and Wall.

There, beneath the gaze of George Washington, he could announce that he will immediately suspend or terminate all Federal Reserve and Treasury special facilities, programs, and plans:


  • Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility;
  • Commercial Paper Funding Facility;
  • Consumer Lending Facility;
  • Money Market Investor Funding Facility;
  • Primary Dealer Credit Facility;
  • Term Asset-Backed Securities Loan Facility;
  • Term Auction Facility; and
  • Term Securities Lending Facility.


  • Automotive Industry Financing Program;
  • Capital Assistance Program;
  • Capital Purchase Program;
  • Targeted Investment Program;
  • Temporary Money Market Fund Guarantee Program;
  • Term Securities Lending Options Program; and
  • Troubled Asset Relief Program.


  • Homeowner Affordability and Stability Plan.

As of today, with all of these initiatives in place, the most distressed mega banks trade at price/book ratios that do not exceed 20 cents on the dollar.

If the above facilities, programs, and plans were all eliminated, the price/book ratios of the weakest institutions would drop to no more than 5 or 10 cents on the dollar – tops.

The total assets of the 114 largest US banks – those with assets in excess of $10 billion each - stand at about $10 trillion. If the Federal government acquired these for a nickel or dime, it would spend no more than $500 billion to $1 trillion.

A handful of relatively well-capitalized large banks would remain as independent entities, outside the grasp of our elected representatives.

After the assets of the failed institutions were parceled out to the survivors, the US banking system would look not that different from the Canadian system recently praised by the Chairman of the President’s Economic Recovery Advisory Board - Paul Volcker:

  • What [should] we … be aiming for when we get out of the mess? …
  • We are going to need a financial system that is not going to be so prone to [severe] … crisis…
  • [It] … ought to be a strong, traditional, commercial banking-type system…
  • We ought to have some very large institutions …whose primary purpose is … to service consumers, individuals, businesses and governments by providing outlets for their money and by providing credit. They ought to be the core of the … financial system…
  • Those institutions should not engage in highly risky entrepreneurial activity. That’s not their job because it brings into question the stability of the institution. They may make a lot of money and they may have a lot of fun, in the short run. It may encourage pursuit of a profit in the short run. But it is not consistent with the stability that those institutions should be about. It’s not consistent at all with avoiding conflict of interest.
  • These institutions that have arisen [outside of Canada] … that combine hedge funds, equity funds, [and] large proprietary trading with commercial banks, have enormous conflicts of interest. And I think the conflicts of interest contribute to their instability. So I would say let’s get rid of that. Let’s have big and small commercial banks and protect them – it’s the service part of the financial system.

Source: Paul Volcker – US Economic Crisis, Toronto, Feb 2009.

Are you listening Mr. President?

We need you at that corner of Nassau and Wall.
- - - - - - - - - - -
I used to work with numbers for a living. The walls sure seem to be closing in as I continue my search for a new job or at least my next idea. Till next time.


FDIC - Quarterly Banking Profile, 2008Q3.

Paul Volcker – US Economic Crisis, Toronto, Feb 2009; available at John Mauldin’s Outside The Box, 23 Feb 2009.

Castle Rock, Columbia Pictures & New Line Cinema Entertainment – A Few Good Men: Image of Jack Nicholson, 1992.