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Banks Have Bottomed? Ameriquest Mortgage - 5 Funny Commercials; Alt - A Crisis Inbound

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July 20, 2008 – Comments (8) | RELATED TICKERS: SRS , SFK , FNMA

"Fannie Mae is insolvent....I will short some more if it rises"

-Jim Rogers on Bloomberg, 14 July 08

The Big Picture found a "Very strange confluence" on banks from the Legacy Media:

"Very strange confluence of media coverage this morning on the banking sector. All three major financial papers (WSJ, NYT, Barron's) have stories on the bottom of the banking sector:"

WSJ: Jitters Ease as Citi, Rivals Show Signs of Bottoming Out

NYT: Hope, and Hints, That Financial Stocks Have Finally Touched Bottom   

Barron's: Buy Banks -Selectively  (cover story)

I guess in 2 years, we have hit bottom? Or I might guess like Barry Ritholtz banks have hit "a bottom", not "the BOTTOM".

Seemed like a good time to review some material from the industry.How about Ameriquest? Let see if you think this kind of mess can be cleaned out in 2-4 years? 

Ameriquest - "Don't Judge to Quickly... We Won't":



                Don't Judge Too Quickly... We Won't. - video powered by Metacafe

"Ameriquest was one of the United States's leading wholesale subprime and predatory lenders.

In 2005, Ameriquest Capital and three of its subsidiaries comprised four of the 53 entities that each contributed the maximum of $250,000 to the second inauguration of President George W. Bush.[1] [2] Writes USA Today, "Inaugural fundraisers Dawn and Roland Arnall found a creative way to pump more than the $250,000 limit into the event. Their mortgage firm, Ameriquest Capital, contributed the maximum, as did three subsidiaries, for a total of $1 million. The company declined to comment on its political giving."[3]

Ameriquest was among the first mortgage companies to use computers to search for prospective borrowers and to speed up the loan process.

Ameriquest was widely known in the United States. It advertised widely on television, had blimpsfootball and baseball stadiums, and sponsored the Rolling Stones (2005 U.S. tour) and NASCAR drivers. Its ad slogan is "proud sponsor of the American dream." that flew over

The home stadium of the Texas Rangers was called Ameriquest Field until March 19, 2007, when in an undisclosed agreement between the two entities, Ameriquest relinquished the naming rights, and the stadium was renamed to the "Rangers Ballpark in Arlington".

Subprime lenders made $587 billion in new mortgages in 2004, up from $390 billion in 2003, according to National Mortgage News. Ameriquest's share of that is estimated at over $50 billion.

On August 31, 2007, ACC Capital Holdings announced that it was closing Ameriquest by no longer taking loans and selling its loan servicing unit to Citigroup."

Ameriquests Website has the ending here "Ameriquest Mortgage Company is no longer accepting loan applications."

http://www.ameriquest.com/

Ref: wikipedia 

This may seem like old news since Ameriquest is gone, but the fall out is far from over. The Alt-A crisis is next. You can watch Mr Mortgage talk about it here:

Mr Mortgage - HERE COMES THE ALT-A CRISIS

Disclosure: Long SRS. Looking to buy SKF, again if it drops low enough....

8 Comments – Post Your Own

#1) On July 20, 2008 at 1:03 PM, Tastylunch (29.54) wrote:

nice fnd on those commericials abit, I forgot about Ameriquest.

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#2) On July 20, 2008 at 2:12 PM, abitare (51.12) wrote:

Tastylunch,

I found the Ameriquest videos by using Stumble On. I thought it was a strange omen, so I figured it was worth a post. It is amazing the clients those TV adds must have attracted. I should have been paying more attention, I should have made so much more money shorting these companies.

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#3) On July 20, 2008 at 6:33 PM, abitare (51.12) wrote:

7/19/2008- Part 3 Peter Schiff On FOX Bulls & Bears


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#4) On July 20, 2008 at 9:25 PM, GS751 (27.58) wrote:

I went long SKF on friday plan to hold until another major drawdown.

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#5) On July 21, 2008 at 2:02 AM, lquadland10 (< 20) wrote:

POTTER WINS AGAIN OVER BAILY. Goldman Sachs to the rescue again or more insider trading and financial shnangains? I am going to do a good style smack down with the president on down to congress and everyone in between. Good old Ben put in new regulations YEA!!! BOO... They go into effect in Oct of 09. Banks win again. So....... Is your money safe in the bank?  
anker Leaves Goldman Sachs To Aid Paulson By Dennis K. Berman Word Count: 287  |  Companies Featured in This Article: Goldman Sachs Group

Goldman Sachs Group Inc.'s most senior financial-institutions banker, Ken Wilson, is temporarily leaving the firm to advise Treasury Secretary Henry Paulson on how to resolve the country's banking crisis, according to people familiar with the matter.

As chairman of Goldman's Financial Institutions Group, Mr. Wilson has proved to be a big player in capital raisings and reorganizations across ...  

Businesses Feel Pinch
Of Tighter Lending Even Blue Chips Face
More Onerous Terms;
Individuals Next? By JUSTIN LAHART
July 21, 2008; Page A3

With the credit crunch on Wall Street entering its second year, a widening array of businesses are finding it tough to get credit. And with mortgage giants Fannie Mae and Freddie Mac roiling credit markets, individuals could soon find it harder to get a loan as well.

One company feeling the strain is Chrysler Financial, the financing arm of the Big Three auto maker that was carved out of the former DaimlerChrysler AG last year. The Chrysler LLC unit has $30 billion of short-term debt due to mature in early August. And bankers, led by J.P. Morgan Chase & Co., are pushing hard to get that debt renewed.

While a deal is likely to get done, people involved in the transaction say the terms could be onerous for Chrysler Financial, pushing up borrowing costs for consumers and auto dealers that depend on it for loans. (Please see related article.)

Banks also are pulling back on the amount of rainy-day money they have been giving out to corporate clients in the form of loans called revolving-credit facilities. Retailers such as Sears Holdings Corp. and Talbots Inc. have struggled to renew revolving-credit facilities with their bankers in recent months. Other companies, including Wal-Mart Stores Inc., AT&T Inc. and American International Group Inc., have had to agree to tougher terms on such credit.

Overall, the value of credit held by banks in the second quarter shrank 1.5% from the first quarter, according to Federal Reserve data. That was the largest three-month contraction since 1948.   Little Markets

In the case of the market for U.S. Treasuries, the Financial Times summed up
exactly how small it really is in two major stories, one just under the masthead
on page one, on 24 January 2005. One story began, “During the past few years the
US has become dependent, not so much on millions of investors around the globe
but on a few individuals in a few of the world’s central banks.”[2] In 2003
these central bankers bought enough treasuries to cover 83% of the U.S. current
account deficit, and 86% of those purchases came from Asian central banks.

The two main sources of money for U.S. Treasuries are the central banks of Japan
and China. Japan held about $715 billion in U.S. Treasuries, as of November
2004, and China held about $191 billion.[3] All the other nations’ central banks
hold altogether, about the same amount again, roughly another trillion.

As the total of all obligations is about $4 trillion, two central banks
obviously hold about one quarter of the total. They are in the position to pump
or dump the Treasury market all by themselves. They can sell what they have or
simply stop buying when the Treasury sells.

Since the money comes from a handful of foreign central banks, the possible
rigging of the Treasury market equals the possible rigging of the foreign
exchange markets. These central banks have to buy dollars before they buy
Treasuries. Even Alan Greenspan has acknowledged that the two go together,
admitting that Asian central banks “may be supporting the dollar and U.S.
Treasury prices somewhat.”[4]    

Mervyn's Fights to Keep Its Store Doors Open By Peter Lattman Word Count: 615  |  Companies Featured in This Article: CIT Group

Mervyn's LLC, the long-struggling California department-store chain, is fighting for survival as some of its vendors have halted shipments to the company and key lenders have pulled financing, according to people familiar with the situation.

In recent days, Mervyn's executives have been trying to persuade vendors to ship merchandise to the retailer for the crucial back-to-school season. If that effort fails, the company could be forced to file for bankruptcy protection as soon as this month and shut down, according to these people. Mervyn's operates 177 stores in seven states, mostly in California.

A Mervyn's spokesman couldn't be reached to ...     

Why No Outrage? Through history, outrageous financial behavior has been met with outrage. But today Wall Street's damaging recklessness has been met with near-silence, from a too-tolerant populace, argues James Grant By JAMES GRANT
July 19, 2008; Page W1
Hulton/Getty Images (2), Getty Images (2), American Stock/Getty Images, MPI/Getty Images, Associated Press (2), Corbis Why No Outrage? From top to bottom: New York's Sub-Treasury Building in 1929; Angelo Mozilo, former CEO of mortgage lender Countrywide Financial; Unemployed men, circa 1935; Foreclosure sign, April 2008, Stockton, Calif. Strikers, 'scabs' battle, circa 1935; Bear Stearns executive arrested, June 2008; Hooverville shantytown; NYSE trader, 2008; Mary Lease

"Raise less corn and more hell," Mary Elizabeth Lease harangued Kansas farmers during America's Populist era, but no such voice cries out today. America's 21st-century financial victims make no protest against the Federal Reserve's policy of showering dollars on the people who would seem to need them least.

Long ago and far away, a brilliant man of letters floated an idea. To stop a financial panic cold, he proposed, a central bank should lend freely, though at a high rate of interest. Nonsense, countered a certain hard-headed commercial banker. Such a policy would only instigate more crises by egging on lenders and borrowers to take more risks. The commercial banker wrote clumsily, the man of letters fluently. It was no contest.

The doctrine of activist central banking owes much to its progenitor, the Victorian genius Walter Bagehot. But Bagehot might not recognize his own idea in practice today. Late in the spring of 2007, American banks paid an average of 4.35% on three-month certificates of deposit. Then came the mortgage mess, and the Fed's crash program of interest-rate therapy. Today, a three-month CD yields just 2.65%, or little more than half the measured rate of inflation. It wasn't the nation's small savers who brought down Bear Stearns, or tried to fob off subprime mortgages as "triple-A." Yet it's the savers who took a pay cut -- and the savers who, today, in the heat of a presidential election year, are holding their tongues.

Possibly, there aren't enough thrifty voters in the 50 states to constitute a respectable quorum. But what about the rest of us, the uncounted improvident? Have we, too, not suffered at the hands of what used to be called The Interests? Have the stewards of other people's money not made a hash of high finance? Did they not enrich themselves in boom times, only to pass the cup to us, the taxpayers, in the bust? Where is the people's wrath?

Getty Images Crowds at the New York Stock Exchange in 1929.

The American people are famously slow to anger, but they are outdoing themselves in long suffering today. In the wake of the "greatest failure of ratings and risk management ever," to quote the considered judgment of the mortgage-research department of UBS, Wall Street wears a political bullseye. Yet the politicians take no pot shots.

Barack Obama, the silver-tongued herald of change, forgettably told a crowd in Madison, Wis., some months back, that he will "listen to Main Street, not just to Wall Street." John McCain, the angrier of the two presumptive presidential contenders, has staked out a principled position against greed and obscene profits but has gone no further to call the errant bankers and brokers to account.

The most blistering attack on the ancient target of American populism was served up last October by the then president of the Federal Reserve Bank of St. Louis, William Poole. "We are going to take it out of the hides of Wall Street," muttered Mr. Poole into an open microphone, apparently much to his own chagrin.

SCOUNDRELS ON THE STREET
  There's a gripping story behind every financial scandal. Here's a roundup of movies that examine the money-making industry's dark side:
'Clancy in Wall Street' (1930)
Starring: Charles Murray, Lucien Littlefield, Aggie Herring and Eddie Nugent
An Irish-American plumber, Clancy (Murray), happens on some good stock-market bets , eventually making millions and elevating him in society. But once the market crashes and he's left with nothing, he returns to his roots in hopes that old friends will take him back.
'It's a Wonderful Life' (1946)
Starring: James Stewart, Donna Reed and Lionel Barrymore
Generally filed away in the holiday-favorite category, this film's run-on-the-bank scene and its fallout is a classic example of financial duress on the silver screen.
'Wall Street' (1987)
Starring: Michael Douglas, Charlie Sheen, Daryl Hannah and Martin Sheen
Oliver Stone's classic film centers on Gordon Gekko (Douglas, pictured right), a ruthless Wall Street corporate raider who takes an ambitious young stockbroker (Charlie Sheen) under his wing and exposes him to the perks and pitfalls that come with the high-stakes territory.
'Glengarry Glen Ross' (1992)
Starring: Al Pacino, Jack Lemmon, Alec Baldwin and Alan Arkin
In this film based on David Mamet's Pulitzer Prize-winning play, a group of tough real-estate salesmen struggle to deal with a downturning housing market -- or face the ax.
'Rogue Trader' (1999)
Starring: Ewan McGregor, Anna Friel, Yves Beneyton and Betsy Brantley
In this film, based on a true story, Ewan McGregor plays a trader working in Singapore who makes illegal trades to cover up his losses. He ends up in jail.

 

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#6) On July 22, 2008 at 12:10 AM, imobillc (< 20) wrote:

Great piece of information for the uninformed!

Most people think that only sub-prime was a problem

oh boy! they are wrong.....

I also like the Ameriquest commercials 

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#7) On July 22, 2008 at 1:10 AM, lquadland10 (< 20) wrote:

aba, using housing to consoladate the banks will they lift the ban on owning no more than 10% next?

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#8) On July 22, 2008 at 11:23 AM, dwot (97.28) wrote:

Those commercials were hilarious.

I am beginning to ask myself here what's so special about fannie's bottom...

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