Chataya de Fleury

I will be dead by then.

Definitely going to say that the current environment is what it is, and volatility can be 100% expected. My personal hope is that we are not living through even more interesting times. As many of us who lived through it well remember, 2008-2009 was terrifying. Fucking terrifying. I hold out the hope that this current seeming / potential crisis is an isolated response to the INSANE FED RATE INCREASES. All caps on that in case your name is J-Pow.

I actually am literally not allowed to trade most regional bank stocks - and certain other stocks. So, I am not commenting on stock prices, especially individual stocks, so, please take this as a macro comment: The volatility on a lot of stocks during this particular time is going to be HUGE.

How old are you? I’m near 50, and when I was 21 and working at a bar in the early 90s, I had colleagues who were applying for old-fashioned mortgages where the bank literally wanted to see copies of cancelled checks. You speak of “uploading documents” and, sure, technology helps - no one is schlepping around banker boxes anymore. But, it is true that the securitization of mortgage loans has created less hassle - the three paystubs of which you speak. Much like how credit bureaus - as much as we hate them - have expanded access to credit. Back in the days before credit cards were widely issued, people would literally have credit accounts at various local merchants, who would send a bill on a monthly basis. I grew up that way, with my parents paying the bills on a monthly basis from the gas station or the shoe store. Sorry that you don’t like all this, but it’s not bullshit. Just like how I don’t like standard social media and choose not to participate in Twitter or Facebook - those things are no less real, as is their impact on society.

What you and other people who like to bemoan “accounting pirates” and such do not realize is that if we did not have things like modern financial instruments, such as securitizations, it would be the 1970s all over again when buying something like a house. In my musings, below, I’m going to give you an example based on “you” applying for a plain vanilla Agency-eligible Mortgage. If there were no RMBS market, rather than doing a literal two-minute application for pre-approval on Rocket Mortgage, you would have to schlep loads of financial documents down to your local bank for a financial colonoscopy performed by a loan officer. This would take weeks. Just to get a pre-approval. You might even get questioned on some of your income and expenditures in excruciating detail. Your mortgage rate would also be much higher than it is now, because that mortgage would not be sold by the bank to generate liquidity.

I’m still kind of low-key crying. I’m sure the Doctor is sick of it. 2008 wasn’t so bad for me, I literally had $2k in the bank and I made it work - all of it - and made bank, both on the strength of some solid investments and my work ethic. That will not be going to happen this time around. “Afloat” will happen. Maybe. If I’m lucky.

I the current crisis, it’s pretty much all. They haven’t said it, but since they also guaranteed Signature…yup, right now, any and all.

This is now completely moot since the Fed is buying all of these at par. And also, it’s not typical that depositors call for all their money all at once. Unrealized losses due to pricing on literally THE SAFEST ASSETS ON THIS PLANET mean nothing. Unless a run on the bank crystallizes those losses.

My strong opinions here are that you are correct. The subprime issue is….no longer an issue. Non-agency mortgages have some very strict credit boxes - credit scores in the 750 plus range with a max of 70% LTV. Just take a look at MFA, EFC, RWT. *** I’m just here to cry about having to sell some stock to meet my tax obligations. Tax obligations that came about from a stock that was issued to me at call it $50 per share, then it vested at $20 per share, and now it is worth $10 per share. That means my comp package was scheduled at a $50 share price. It vested and settled at $30, so I owe taxes on that. It’s now worth $20. And since my base pay just got reduced by 1/3, coming up with this cash is not easy. Yes, you can add the obligatory three zeroes.

Omg, I remember when it was the Big 8, though by the time I was in grad school, it was the Big 5, and then Andersen spectacularly imploded. I interviewed with Andersen!! Ah, the days before the VIE guidance and SOX.

You must have missed the multimillion dollar fines that some firms have received for employees simply discussing internal client-related matters on their cellphones vs e-mail, corporate Zoom, Teams, etc. I seem to remember that you’re a teacher - please forgive me if I’m wrong. Are you allowed to discuss matters with other teachers over text message or via phone - whether it’s just a text or a call to say, “hey, are you teaching Gilgamesh this year?” or “is young Eric having a problem in your class, too? Do you think we should discuss with his parents now, or wait for the conference in a month?” WE CAN’T - absolutely CANNOT - do that. When it happened again, the next year, Goldman, Morgan Stanley, etc, then also extended those fines to the erring employees. Managing Directors had to pay millions, while lower level staff hundreds of thousands to thousands - depending on the egregiousness of the conduct and the employee’s seniority level. Basically, working for such a firm does have a lot of rules, and, yeah, regulators actually do hold people accountable. And I will tell you that there is no set of entities held more accountable than entities subject to SEC oversight while under a Democratic administration. (And I am a Democrat, btw.)

Sigh Do know on what basis of accounting that people wanted balance sheets, in 2008? FAIR VALUE. They said that amortized cost was meaningless, and fair value should become the standard, or, if amortized cost was elected, that a fulsome disclosure of “currently expected credit losses” had to made. Well. Now you want it to just go back to amortized cost? Nothing makes you people* happy. * the average “man on the street” / non-finance folks.

Then there are a good number of PE firms which should be getting fined. I know regulators look at those e-mails. This will be found.

If when I turn 50 in 655 days and I exercise my call option on our marriage, I shall remind you of this , as you cook and clean.

Not with a bank asset base of Treasuries and Agency RMBS. That’s not industry specific. That’s top of the iceberg. I’m in the under-the-water part of the iceberg.