Tag Archive for mortgages

“The Devil’s Derivatives” by Nicholas Dunbar – a Financial Book Review

the-devils-derivatives-by-dunbar-courtesy-review-wwwdoitinvestcom Well, this was a treat for me. The book was launched on July 12th in the US, and by a day later it landed on my desk, courtesy of the publishers (Harvard Business Review Press), who by a skillful marketing found out that I like such (financial management) books … and sent me this copy without any request from my side. Nice surprise.
I have read many books about the financial innovation and the crisis (at least 5 in the last year) – this should qualify me not as an expert, but at least as a knowledgeable person.
“The Devil’s Derivatives” is a book about both, so if you expect some stories about the history of the derivatives or a crash course on how to make money late in the night in front of your computer screen – call an expert. “The Devil’s Derivatives” rather illustrates the point of view of an outside historian – thus representing a relatively objective view on how the derivatives world exploded and then imploded in the last years.
“The Devil’s Derivatives” tells the most interesting financial story of our times – how the banks invented new financial products to make more money, how were the worldwide investors lured to buy them and how regulators were seduced by the siren song and adopted lax rules for the derivatives. It is a story of greed and deception, a story of smoke and mirrors in the heart of the world’s financial system.
Nicholas Dunbar is well placed to tell such a story. First of all, he is a well known financial journalist in the UK, and thus he followed the story step by step as it developed. Secondly, by his own account he lived in both London and New York and saw live the banking mentality. From the money splashing of the bonus system to the secrecy of the boardrooms, nothing is missed by “The Devil’s Derivatives”.
At last (but not at least), Dunbar is a physicist by education – thus the assertions that the derivatives are more complex that the quantum physics has finally found a worthy tester. He is actually drawing a very neat comparison between the two fields of science – with interesting results. Read more

The Latest Bail Out – CIT

citThis piece of news is interesting not because it would impact on any investment strategy…but rather because we are in July 209 and the subprime crisis still haunts the US Treasury. The US government was simply forced to bail out one more bank – this time the smaller CIT bank was impacted.

CIT’s problems surfaced two years ago due to the CEO Jeffrey Peek’s decision taken earlier in the decade to expand into subprime mortgages and student loans, both potentially highly profitable but fraught with added risk. CIT has about $40 billion of long-term debt, according to independent research firm CreditSights. About $1.1 billion of debt will come due in August, followed by about $2.5 billion by the end of the year. Read more

US Mortgages to Be Further Subsidized by the Government

mortgagesThe US Treasury Department is considering giving banks and investors billions of dollars in fresh incentives to modify troubled mortgages and save homeowners from foreclosure, sources familiar with official deliberations said.

Under one scenario, investors in second liens would receive a cash payment if they agree to ease the terms of troubled loans and accept a smaller return on their mortgage investment, the sources said. Read more

Freddie Mac acting CFO in apparent suicide

WASHINGTON (Reuters) – David Kellermann, the chief financial officer of mortgage giant Freddie Mac, was found dead in his Virginia home on Wednesday, an apparent suicide, police said and CNN said..

Kellermann, 41, was discovered before dawn in his suburban Washington home in Fairfax County, Virginia, police said. They did not confirm the exact cause of death but CNN said it had confirmed he had committed suicide.

Should this be linked to the neverending financial troubles of the famous mortgages company?!

Well, why would you care?

A few months ago I was exactly like you. I didn’t care very much about politics, who voted for who, who would endorse McCain to follow him on the White House or why Obama had the way paved by a USD 5 million personal investment by Hillary Clinton. Read more