THG's Post Apocalyptic IHub Paradise.

[ThatHawaiiGuy]

Truth? Where? (Why Credit is Locked)

http://market-ticker.denninger.net/archives/610-Truth-Where-Why-Credit-is-Locked.html

Hattip Calculated Risk:

"Meredith Whitney: I just want to be clear in terms of the decline in originations on your mortgage portfolio, was that more credit based or in terms of tightening underwriting standards or LIBOR challenge?

Jamie Dimon: The origination business, and I think it's true for a lot of people in the industry, Meredith, people have gone back to old fashioned 80% LTV, real verified income, more disciplined appraisals, and then in some areas they won't even go to 85% LTV because of expected home decreases so we are not at 85% in California, Nevada, or Florida we're at 65. So that's why it's down. I think it's true for us and everybody else. Almost everything being originated is eligible for Fannie Mae, Freddie Mac, or FHA. So therefore you have this great reduction. Obviously the quality of that stuff is going to be much higher."

The response from someone in the loan closing business on my board:

"Umm, Jamie, I close your loans....you lying sack of ***t "

And we wonder why the credit markets are locked up?

A better question is why Jamie Dimon isn't locked up.

The automated-underwriting game is alive and well, as are high-DTI loans with all the agencies.

Until the lying stops and lending returns to 36% DTI, 80% LTV (30/fixed implied) home prices will not find their bottom and the losses will not end.

Nor will the credit markets unlock, because everyone involved with more than two firing neurons in their head knows that the lies continue to come thick and fast.

This, by the way, was supposed to be made a criminal offense by SarBox and other regulation after ENRON blew up.

You can see for yourself how good of a job it did.

Hank, Ben and Congress: If you do not stomp on this here and now, continuing instead to "throw money at the problem", we are going to get that bond market dislocation and an economic depression.

I and others have been hammering on this for close to 18 months and you continue to play your same old tune with identical (failed) results, because you have refused, for the entirety of that time, to put a stop to the blatant lying across the financial industry.

Quarter after quarter we saw "kitchen sink" claims only to find that we then had to rip out the plumbing! Whre is the accountability for those failed claims Hank, Ben and CONgress?

This is identical to what happened in the 1990s in the Internet sector (I know, I ran a company in that space and saw it every day) but that was one sector of the economy.

This time its everyone that gets screwed because this is at the heart of the economy, and that heart is rotten at the core.

When do you stop coddling the liars and thieves and instead start forcing them into the open where they can be prosecuted and jailed?

I understand they are your friends Ben and Hank but when do you put the good of the country in front of protecting the billions that your buddies have extracted from ordinary Americans over the last 10 years?

As just one example a simple discounted cash-flow analysis (which used to be taught in sixth grade, but no longer is) on your latest "injection" shows that you are screwing the taxpayer to the tune of more than half of your "equity injection" in these same institutions.

If you want credit to unlock you must put a stop to this across the entire financial system and force the truth into the open.

If you do not stop the games our entire economy is headed straight for the hole in the center of the toilet.

Your latest "intervention" was good for one hour worth of rocket ride higher, and now we are down 350 points on the DOW - again - and its only 10:00 CT. At this rate in another 30 days or so the market will be at zero - it can't go lower than zero, right?

America is tired of the lies Hank and Ben, and we're tired of you covering for and giving our money to the liars.

Cut it out NOW while we still have an economy and financial system left to rescue.

Oh, my anecdotal evidence on LOCs is no longer anecdotal. This is precisely the sort of disruption that, if not cured immediately, can lead to empty store shelves:

"``Letters of credit and the credit lines for trade currently are frozen,'' Khalid Hashim, managing director of Precious Shipping Pcl, Thailand's second-largest shipping company, said in Singapore yesterday. ``Nothing is moving because the trader doesn't want to take the risk of putting cargo on the boat and finding that nobody can pay.'' "

Cut it out H-h-h-h-Hank.