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Predictions: Value-based Information on Citigroup

April 17, 2008

Analysis of:Wall Street braced for further $11bn writedown at Citigroup | business.timesonline.co.uk

Implications: 1.Additional write-downs by a Major player in the Banking Idustry will affect the stock price, financial marketplace and, stockholder. 2.It is, entirely, possible that the mentioned Financial Insitution will set a precedent in the community of peers. 3.From profitability of $2.00 + per share to a loss of $1.50 + per share in a short time frame of one (1) year.It may be possible that additional infusions of cash/equity may be required. 4.Additional writedowns blanket the entire industry - "Consumer Beware" 5.A "Credit Crunch" is upon the U.S. Economy. The ultimate answer - government intervention at the expense of the taxpayer. 6. The Money Markets may be "At Risk" for the next two (2) years: An indicator of Management Failure?  

Anatomy of a Merger:J.P. Morgan and Bear Stearns

April 17, 2008

Analysis of:Anatomy of a Merger | dealbook.blogs.nytimes.com

Implications: 1.The entire Financial Marketplace is experiencing  Negative implications  of the M & A cause and effect. 2.One can define this example as a "Bailout" ; an injection of new liquidity by the Government or Private Investor's , who will place a Demand for Control by way of an Equity Position. 3.A salient question to be asked: " How much Leverage has been gained by a third party and is this Exposure visible to the Regulatory Authorities"?. At this point in time - Unknown. 4.The issue on the table is the absence of oversight of the Marketplace - the concept of "Accountability" for All relevant events of causation. 5.It is , entirely, possible that Merger and Acquisition activity will result in higher interest rates and  and a downside to the Credit marketplace. 6.The viability of Bear Sterns ratio of Capitalization - was the firm in line with the standards of the Industry?Industry norms should prevail.

The Wholesaler side of Mortgage Banking and the Loss of a Major Vendor.

April 14, 2008

Analysis of:WaMu Ditches the Wholesale Mortgage Biz | www.businessweek.com

Implications: 1.The Financial Institution makes a strategic decision to eliminate "Risk" by terminating residential mortgage loans through the independent mortgage broker. A new market must emerge . 2.The risks to the lender: 1. To gain business by offering Competitive Rates and, 2. Reliance on buyer data provided by the independent broker. 3.The risk to the broker: 1. They must find other souces of "deep pockets" and, Perhaps, a more approppriate method of buyer qualification. A pass or free-ride might become much more difficult to find under the prevailing,Current Marketplace. 4.Now "at risk",the Financial Institution required a 7BNinfusuion of CASH from Privite Equity,disclosed the loss of jobs and , a reduction in dividend distributions. 5.A question not anawered: " Making subprime loans to borrowers with Poor Credit Histories?".Perhaps the answer is weighted by a faulty Merger and Acquisition. A managerial issue. 6. Private Equity WILL Survive!!!

Insurance For Troubled Borrowers: A Risk to the Taxpayer

April 14, 2008

Analysis of:FHA Expands Mortgage Insurance to Troubled Borrowers | www.bloomberg.com

Implications: 1."At Risk" - Federal Mortgage Insurance for Tainted borrowers at the brink of foreclosure. 2.A Transfer Mechanism , which will faal bt default to the US Taxpayer. 3.Lenders will receive a "Hope" of more recovery within the parameters of rising mortgage delinquencies? 4.The Regulatory Authorities MUST find the balance between protection for the Homeowner and , additional, burdens of the Taxpayer. 5.Negative Equity - 3% and 10%.Delinquency rates are two (2) to three (3) months in arrears. Has the question been asked: "Why"?. 6.Federalization of the Housing Market May, likely, have a dramatic affect on the core competency of the economy! 7.An issue for contemplation - "What should be the role of the Financial Services Industry and, to what extent should the Consumer be held Accountable"?.  

Collapse of the Auction-Rate Bond Market:Interest Rates

April 10, 2008

Analysis of:Auction Collapse Quadruples Fee for Bond Alternatives | www.bloomberg.com

Implications: 1.Causation and Affect: Rising interest rates result in higher fees to replace Debt. 2.Investors shy away from the securities and, in turn, the dealers ceased committing capital to prevent marketplace failures. 3.The absence of bids on auction debt by dealers was the salient issue in this matter of a "Failure" - creating devasting rates for States, Cities, and other Municipal entities. 4.Hugh premiums Must be paid , which in today's economic environment is the "Cost of Liquidity". 5.There are alternatives available. However , the cost structure is much higher - Letters of Credit and /or repurchase agreements.The rate of capitalization is steep: No risk and No reward. Safety is an Intrinsic Value. 6.The culprit: Subprime - Mortgage Crisis.

Global Payments Network:Increase or Decrease of Worldwide Acceptance

April 10, 2008

Analysis of:Discover Financial Services to Acquire Diners Club International Network | investorrelations.discoverfinancial.com

Implications: 1. Experienced merchant networks provide accessability for customers. 2.The Obective:improvement of the firm's competitive in the marketplace - Tranparency is unknown. 3.Acquisition of Diners Club, noted as as premium card brand ,by Discover Card is Expected to enhance Brand Recognition. 4.A strategic decision to streamline business operations and gain the ability to focus on a , clearly, defined marketplace. 5.All similar transactions are subject to regulatory oversight and due diligence - Merger and Acquisition Forensics should apply. 6.A Possible Major obstacle is the intergretion of two (2) HUGH Networks: Discover Network Cardholders and Diners Club Cardholders - requirement is a high level of sophistication. 7.The gains to be realized or recognized have, yet, to be discovered within the Financial Marketplace.

The Insurance Market Declines: Specialty Insurance will Deteriorate

April 9, 2008

Analysis of:Soft Part Of Cycle Still Ahead, E&S Exec Says | www.propertyandcasualtyinsurancenews.com

Implications: 1.The major default is a softening of the entire insirance marketplace. Perhaps the Credit Crisis has not been , fully, defined. 2.The soft cycle, as defined by the private equity buyer, has Not evolved - full cycle. 3.A theory presents itself - " A firm's understanding of the Dynamics of Insurance Markets enlarges the scope of being a Buyer". 4.Investors are , now, able to EVALUATE the performance of a company over the past cycle: Two (2) to Four (4) years. 5.Overcapacity of Capital prsents the option of having the ability to absorb large losss. 6. Restrictive underwriting has played a crucial role in this developing situation.

The US Morgage Market: A Breeding Ground for Regulatory Intervention.

April 7, 2008

Analysis of:Fannie and Freddie drive home loans | www.ft.com

Implications: 1.It questionable, at best, that PRIVATE Sources have of Finance have disappeared.Perhaps, non-involvement in bad decisions is a proper statement of fact. 2.A critical component of the matter , at hand, is the availability of fresh funding for the declining US housing price scenerio. 3.Government - chartered mortgage funding is at an all time high: at/or about 90% of full - capacity.Billions of exposure/liability. 4.An authorized , additional , boost of temporary funding/holdings is in the pipe-line. Least we not forget , that 100% is full capacity. 5.The goal - offset a decline in mortgage purchases on the Buy side of larger home loans. 6.A thoughful question to be answered - "Why is the government being pressured to provide greater support and liquidity to a Down-side housing market"?The General Public, Private Enterprise or Political gain.

A Weak Residential Mortgage Capitalization and a "Recession" - Liquidity is Obsolete

April 7, 2008

Analysis of:Moody's cuts Countrywide Bank rating to "D" | www.reuters.com

Implications: 1.The issue , at hand, will impair the Bank's Franchise and the Parent Firm - Countrywide Financial Corp. 2.A Material affect on a proposed acquisition by Bank of America. 3.The salient issue - " Does Countrywide have the Lquidity and Capitalization" to entice Bank of America to move forward with an acquisition. 4.A Downgrade in this Institution's Finanacial Strength provides an insight into the Firm's Financial Posture and Perhaps an "opportunity for the Bank of America. Cost vs Benefit and Risk vs Reward analysis is imperative. 5.It is likely that a further downgrade of investment grade s Possible and MAY present a a "window" for the acquirer. 6.It is entirely possible that an offer may not be realized under a threat of a senior unsecured Rating.

The Question at Hand: Is the US Economy Slowing or Failing.

April 4, 2008

Analysis of:Overdue Consumer Debts Highest Since 1992, ABA Says | www.bloomberg.com

Implications: 1.The American Consumer is beginning to fail on their management of life style and debt.Education and proper advice is the answer. 2.The matter outstanding is the issue of an overextension , relating to credit. 3. The rise and fall of housing prices is the striking criteria, however there are many other issues at hand. 4.Delinquencies are a lagging indicator and will peak during the latter part of an economic slowdown. 5.Lenient Lending policies to increase sales without due diligence is a hidden agenda. 6.All indices indicate that overdue payments MAY keep rising during the first two (2) quarters and, PERHAPS, well into the year end.

New Mortgage Rules: Government Intimidating Capitalism?

April 1, 2008

Analysis of:Fidelity National critiques new mortgage rules | www.marketwatch.com

1.Government intervention and scrutiny May have an adverse affect on the mortgage business, at an inappropriate/critical juncture in the Business Cycle. 2.The issue at hand - inflated appraisal values of homes. It is not to the advantage of the loan processor to overstate a basis of capitalization. 3.Fraudulent appraisals are of no advantage to either the general public or government agencies.The mortgage finance industry will face the concept of a Zero Sum game. Value-added is non-existent. 4.Perhaps the word "Fraud" is to strong. While, indeed, a Conflict of Interest MAY  be appropriate , it would have to be applied to two (2) professionally licensed Industry members - Real Estate Brokerage and Mortgage Bankers. 5.A Downside to any Regulatory Rules and Oversight may have a  stunning affect on the growth of the very basis of our economy - "Capitalism". One might want to consider the use of "Influence".

The Downside of ATM's: High Fees

March 27, 2008

Analysis of:Are rising credit card interchange fees hurting ATM usage? | www.atmmarketplace.com

Implications: 1.Merchantability - interchange fees may , likely, be forced by Regulatory Authorities to control fees and a limitation of credit card company power to control the same. 2.The alternative - swipe the plastic Debit card rather than a credit transaction. 3.There appears to be a contradiction - ATM usage is on a decline, however there is no hard evidence that an increase in the credit card interchange fees at the merchant level are a Direct causation and affect. 4.Objective of ATM Industry - convince the merchants that it is in the best interest of their customers to use Credit Transactions rather than Debit Transactions. 5.The Ultimate challenge for the Consumer - " Merchants WILL find a way to push Debit over the Credit Card Transaction. The most viable option for the consumer is to use cash or check!"

Repurchase Agreements: A Struggle to Find Acceptable Capital Financing.

March 25, 2008

Analysis of:Repo market strains in credit storm | www.financialnews-us.com

Implications: 1.Financial Insitutions will be Demanding Higher Standards on Collateral:Expectation of restictive Due Diligence. 2.The Financial Marketplace may not accept asset-backed securities of sub-investment grade. 3.The basis of Decision-Making: the valuation basis of the underlying assets will affected by liquidations on the mark-to-market securities portfolios. 4.The Credit Crisis - the U.S. Federal Reserve Bank makes billions of dollars available to the Banking System for triple-A rated Private label mortgage backed securitities as collateral. 5.The MAJOR concern: The Pricing of of the underlying vehicles Does Not the basis of Valuation. 6.It is , entirely, possible that there MayBe losses for Investment Banks.

A Cracked Foundation: Market Sentiment or Expectation of Government Bailout.

March 24, 2008

Analysis of:Gold Plummets by Record $59 on Fed's Interest-Rate Decision | www.bloomberg.com

Implications: 1.Expectations - "Awareness of a Correction", which MAY lead to a sharp price downside for a prolonged period of time. 2.The role of the U.S. Central Bank - a reduction of the Federal Funds Rate,credit market losses and Sub-Prime Mortgage market are , indeed, viable indicators of the Financial marketplace. 3. Focus of the marketplace for "Gold" has a direct, focused relationship to the U.S. Monetary Policy. 4.The Risk vs Reward scenerio is , now, an unattractive vehicle for  some holdings of commodities as an asset class. 5.There is a direct relationship between the Federal Government's reaction to the credit issues in the financial marketplace and the Price of gold. 6.Expectations: moderate growth over time ( unqualified ) ans risk mitigation of economic activity.

Morgan Chase Bailout: A Bargain and A Hugh Capitalization of Assets.

March 20, 2008

Analysis of:Did JPMorgan overpay? | dailybriefing.blogs.fortune.cnn.com

Implications: 1.A MATERIAL Gain for the firm by the ability to acquire a solid Securities Clearing business and a more than adequate Headquarters' Building for less than fair - market value. 2. A Time period will have to pass before a clear assessment of the transaction can be a quantified. 3. Perhaps a hidden agenda? The Industry is structured by the principal of the CAPITALIST not Good - Will , which borders on the SOCIALIZATION of an entire Industry. 4.Failure is , ordinarily,poor management decision-making and the concept of an overpayment MAY not be appropriate for the Financial marketplace. 5.Valuation  and Cost vs Benefit are the key Financial criteria. 6.It may well be that the entire Transaction is in jeopody and , a strong possibilty does present itself with the hazard of falling apart.

A Non-Standard Insurance Segement:A Predictive Modeling System for Diversity.

March 18, 2008

Analysis of:Standard Insurers Nab More Nonstandard Auto Biz | www.propertyandcasualtyinsurancenews.com

Implications: 1.Core elements consists of the low- income and the immigrant population. 2.A New Standard for the non-conforming risk will cause a Drastic shift in the Risk Profile of the marketplace. 3.There is NO clear definition of the nonstandard insured - A Blue Print for Failure and , additional , Regualtory Oversight. 4.This Volatile product Will Require A VERY active role by management to ensure  a successful outcome. 5.Management will require extensive technological  enhancements to support this unexplored methodology of business strategy. 6.The key to modeling systems and a challenge to management will be the value - added and the Critical ability to include all possible variables, which , at best, is a difficult objective to achieve.

Restructue Of Five Corporate Entities:Global Operations and Financial Activity

March 17, 2008

Analysis of:Moody's to assign muni bonds corporate ratings | www.guardian.co.uk

Implicatons: 1.A Cash windfall exceeding expectations using Common Stock vs Preferred Stock.Incentives for the Shareholder - unknown.Incentive for the Capital Markets - control. 2.A Credit Card Association restructuring in a downward spiral market May Be the ONLY chance for survival. 3.Global Operations seem to be , primarily, affected. The question remains as to the Affect on Domestic Markets. 4.One may usurp for this Financial Actvity that Global Operations may, indeed, override Domestic Operations. 5.The Largest  IPO in U.S. history has an expectation of a "windfall", which may raise a hugh sum of money or capital infusion but, a question , still, remains viable: : Control and Competitor Reaction. 6.Competitive Strategies will emerge for the three (3) Major players in this Financial Marketplace - Visa Inc, MasterCard and American Expres will re-visit their market postioning.

A Lack of Capitalization - A Misrepresentation of Ratings OR Providing Disclosure?

March 13, 2008

Analysis of:MBIA turning the tables | money.cnn.com

Implications: 1.Inadequate Capital is properly sustained by Financial Rating Criteria. 2.The Institution moves toward splitting its' Municipal Bond and Structured Finance Businesses - A proper reflection of inadequate Capitalization. 3.Under Capitalization is due risky Financial Structered Financial Deals and an appropriate Rating is , well, justified. It is not a myth to be discounted! 4.Identified shortcomings MUST be identified by each individual business unit and the Institution in it's Entirety. 5. The odds of a Default position on the Financial Marketplace is, exceptionally, HIGH! The question remains - "What Insitution will Underwrite the POTENTIAL Exposure?". 6.The CORE issues: (A) A misassessment of risk and (B) A mispricing of the risk exposure.

A Bond Insurer: Material Marketplace Losses Threaten a Viable Financial Institution

March 13, 2008

Analysis of:Ambac's Callen Sees Confidence Returning This Year | www.bloomberg.com

Implications: 1.A reported loss of 90% of Market Capitalization implies a threat to the Institutions' credit rating - market positioning may have Financial Impact on future Decision Making relating to the form's capacity to be a Competitor amongst peers. 2.Causation: the subprime - mortgage securities or expansion beyond public-finance to guarantees on debt obligations. A question , yet, to be answered. 3.Additional capitalization was required with a Major Concern as to the responsiveness of the Financial Markets concerning the following strategy:( A ) Sale of stock and convertable share, (B) A reduction od Stockholder Dividends, (C) A Hold position on New guarantees on asset-backed securities. 4.Realization or Recognition of new Capitalization - Key Executives and Director's , New Investors', Existing Shareholders and Banking Institutions buy buy a major proportion of the share. 5.A Critical Issue , at hand.A small percentile of municipal business has been written this year.

Redemption of Auction-rate Debt:A Dramatic Change in Financial Stategy

March 11, 2008

Analysis of:Aberdeen Fund to Redeem Auction-Rate Securities | www.bloomberg.com

Implications: 1.A failure of Decision-Making and Strategy with an objective of higher retirns. 2.An error of Financial Judgement by assuming that the use of auction rate marketplace might be taped to finance additional investments in government and corporate bonds. 3. This Financial option was proposed to market the securities as a Short Term Investment with Long Term investment vehicles. 4.Investors choose to opt-out of the marketplace ans secured their portfolio with Government debt - Safety of Principal. 5.The mentioned Institution must develop a precise perspective of CURRENT Economic Trends. 6.Perhaps a model has , now, been developed for an accurate determination of all issuers strategy and behavour in the marketplace.

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