TARP Repayments

[ucodegen]

To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%.

I think your estimate of borrowing costs for FRE/FNM are almost double what they currently are. Is some of that for long term borrowing that has not yet rolled over?

http://www.reuters.com/article/idCNN077795720091207?rpc=44

[bubba99]

But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”

[bubba99]

But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”

[bubba99]

But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”

[bubba99]

But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”

[bubba99]

But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”

[davelj]

[quote=bubba99]But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”[/quote]

OK, then explain to me why industry profitability in 2009 was the lowest in 17 years. This should be interesting…

[davelj]

[quote=bubba99]But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”[/quote]

OK, then explain to me why industry profitability in 2009 was the lowest in 17 years. This should be interesting…

[davelj]

[quote=bubba99]But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”[/quote]

OK, then explain to me why industry profitability in 2009 was the lowest in 17 years. This should be interesting…

[davelj]

[quote=bubba99]But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”[/quote]

OK, then explain to me why industry profitability in 2009 was the lowest in 17 years. This should be interesting…

[davelj]

[quote=bubba99]But because banks can get .5% money, the return on my CD’s has gone from 5% to 1%. Even their “other” money is cheap now because of the fed actions.

Plus the average yield on assets is down because of write downs for reserves for losses on “bad loans”.

Cheap money, plus bad loan management equals “any idiot can make money under these conditions”[/quote]

OK, then explain to me why industry profitability in 2009 was the lowest in 17 years. This should be interesting…

[davelj]

[quote=ucodegen]

To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%.

I think your estimate of borrowing costs for FRE/FNM are almost double what they currently are. Is some of that for long term borrowing that has not yet rolled over?

http://www.reuters.com/article/idCNN077795720091207?rpc=44%5B/quote%5D

If you match fund the portfolio with a mix of 5-7 year treasuries, you’ll come out at around 2.6% – I just rounded it off to 2.5%. I’m lazy that way.

[davelj]

[quote=ucodegen]

To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%.

I think your estimate of borrowing costs for FRE/FNM are almost double what they currently are. Is some of that for long term borrowing that has not yet rolled over?

http://www.reuters.com/article/idCNN077795720091207?rpc=44%5B/quote%5D

If you match fund the portfolio with a mix of 5-7 year treasuries, you’ll come out at around 2.6% – I just rounded it off to 2.5%. I’m lazy that way.

[davelj]

[quote=ucodegen]

To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%.

I think your estimate of borrowing costs for FRE/FNM are almost double what they currently are. Is some of that for long term borrowing that has not yet rolled over?

http://www.reuters.com/article/idCNN077795720091207?rpc=44%5B/quote%5D

If you match fund the portfolio with a mix of 5-7 year treasuries, you’ll come out at around 2.6% – I just rounded it off to 2.5%. I’m lazy that way.

[davelj]

[quote=ucodegen]

To use an example, lets say that F&F charge off 10% of their portfolio (which would be a big number). Further, let’s say the average yield on the remaining 90% of their book is 5.5% and their funding costs (now borrowing at govt rates) are 2.5%.

I think your estimate of borrowing costs for FRE/FNM are almost double what they currently are. Is some of that for long term borrowing that has not yet rolled over?

http://www.reuters.com/article/idCNN077795720091207?rpc=44%5B/quote%5D

If you match fund the portfolio with a mix of 5-7 year treasuries, you’ll come out at around 2.6% – I just rounded it off to 2.5%. I’m lazy that way.

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