TG: Year End is going to be brutal for a lot of banks, and the pressure to start dumping REO inventory is going to become more pronounced.
Additionally, FASB 157 kicks in on the 15th of this month. This is the financial guideline requiring more transparency and new accounting rules for “off book” and off Balance Sheet transactions. This rule is going to put a huge spotlight on the billions of dollars worth of bad loans and over-leveraged CDO, CDS and MBS transactions that have occurred during the boom. This will trigger more write-downs, and thus more losses, and thus an even greater push to dump non- and sub-performing assets (including REOs in the case of banks).
According to a lot of folks in the banking and financing industries, banks are currently only listing about 25%+/- of their REO portfolio for fear of triggering a pricing crash. This is going to change very soon.
