IEHI Feed: The Hedge Fund Implode-o-Meter http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-61751 Thu, 23 Feb 2017 00:27:07 GMT Prudential May Charge Wells Fargo as Fake-Account Fallout Spreads to Other Business Lines http://hf-implode.com/viewnews/2017-02-22_PrudentialMayChargeWellsFargoasFakeAccountFalloutSpreadstoOtherB.html Prudential "has provided notice to Wells Fargo that it may seek indemnification," the Newark, New Jersey-based insurer said in a Feb. 17 regulatory filing, referring to their agreement to sell MyTerm life coverage to Wells Fargo customers. Prudential didn't quantify the sum that it might pursue.

Wells Fargo's sales practices are being scrutinized on multiple fronts after authorities fined the bank $185 million in September for signing customers up for bank accounts and credit cards without permission. On Wednesday, ProPublica said the firm placed the head of a mortgage-lending unit in Los Angeles, Tom Swanson, on leave while examining allegations some customers were charged to lock in low interest rates when the bank delayed applications.

Prudential suspended MyTerm sales through Wells Fargo in December ... That case, in which the ex-workers say they were fired for blowing the whistle on misconduct, is one of several Prudential headaches from the Wells Fargo relationship. The insurer is also facing a suit from a customer seeking class-action status. And regulators from New Jersey and California have announced probes.

...

ProPublica raised the separate concern about Wells Fargo's mortgage practices last month. Some branches in Los Angeles and Oregon broke with the company's policy of eating fees to lock in low interest rates when it was at fault for delays in mortgage applications, the publication said in its report on Wednesday, citing current and former employees. Swanson didn't respond to a message seeking comment.

Wells Fargo is conducting an internal review to ensure it handled rate-lock extensions consistently and with "customers' best interests in mind," company spokesman Tom Goyda said, declining to comment on Swanson. "While that process has not been completed and we can't discuss the results, we want this review to be comprehensive." The firm may take additional steps and "make things right for customers" as warranted, he said.

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iehi-feed-61749 Thu, 23 Feb 2017 00:15:52 GMT Fed Officials Not "Losing Patience" Fast Enough to Hike in March http://hf-implode.com/viewnews/2017-02-22_FedOfficialsNotLosingPatienceFastEnoughtoHikeinMarch.html iehi-feed-61748 Wed, 22 Feb 2017 23:53:46 GMT A Simple Subpoena For Trump's Tax Returns Could Sink Him http://hf-implode.com/viewnews/2017-02-22_ASimpleSubpoenaForTrumpsTaxReturnsCouldSinkHim.html iehi-feed-61746 Wed, 22 Feb 2017 15:24:17 GMT Deutsche Bank Says Next Big Short Is on CMBS as Malls Suffer http://hf-implode.com/viewnews/2017-02-22_DeutscheBankSaysNextBigShortIsonCMBSasMallsSuffer.html iehi-feed-61744 Wed, 22 Feb 2017 15:03:42 GMT Banks Retreat From Apartment Market http://hf-implode.com/viewnews/2017-02-22_BanksRetreatFromApartmentMarket.html Swelling supplies of apartment units are prompting big banks to pull back from new projects, forcing developers to scramble for capital, in a sign that the U.S. apartment industry headed for a downturn.

The apartment sector, which contributes some $284 billion to the economy annually, has been a winning bet for investors since the housing crash, as the economy recovered and more renters sought out units. Since 2010, average U.S. apartment rents have increased by 26%, according to data tracker MPF Research, a division of RealPage.

But fresh supply is beginning to overwhelm demand. More than 378,000 new apartments are expected to be completed in 2017, a 30-year high, according to real estate researcher Axiometrics Inc. In the fourth quarter of last year, 88,000 units were completed but only 50,000 of those were rented by tenants, according to MPF.

"Our business has radically changed," said Toby Bozzuto, president and chief executive of the Bozzuto Group, which owns or manages 59,000 apartments in cities across the U.S. "I haven't seen anything this seismically different since 2008, when credit dried up."

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iehi-feed-61742 Wed, 22 Feb 2017 02:46:40 GMT Fumbling Towards Collapse - KUNSTLER http://hf-implode.com/viewnews/2017-02-21_FumblingTowardsCollapseKUNSTLER.html You ... have an American public, and a mass media, who do not question the premise of a massive "infrastructure" spending project to re-boot the foundering economy. If you ask what they mean by that, you will learn that they uniformly see rebuilding our highways, bridges, tunnels, and airports. Some rightly suspect that the money for that is not there -- or can only be summoned with more accounting fraud (borrowing from our future). But on the whole, most adults of all political stripes in this country think we can and should do this, that it would be a good thing.

And what is this infrastructure re-boot in the service of? A living arrangement with no future. A matrix of extreme car dependency that has zero chance of continuing another decade. More WalMarts, Target stores, Taco Bells, muffler shops, McHousing subdivisions, and other accoutrement of our fast-zombifying mode of existence? Isn't it obvious, even if you never heard of, or don't understand, the oil quandary, that we have shot our wad with all this? That we have to start down a different path if we intend to remain human?

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iehi-feed-61739 Tue, 21 Feb 2017 15:14:21 GMT Goldman Sachs: Market investors have a letdown coming http://hf-implode.com/viewnews/2017-02-21_GoldmanSachsMarketinvestorshavealetdowncoming.html iehi-feed-61737 Tue, 21 Feb 2017 15:08:12 GMT HSBC share run stumbles on writedowns, tough outlook http://hf-implode.com/viewnews/2017-02-21_HSBCsharerunstumblesonwritedownstoughoutlook.html HSBC's full-year profit slumped 62 percent and fell far short of forecasts on Tuesday as the bank took hefty writedowns from restructuring and flagged near-term brakes on revenue growth... HSBC made profit before tax of $7.1 billion in 2016 compared to $18.87 billion for the previous year, well below an average analyst estimate of $14.4 billion in Thomson Reuters data.

... the worse than expected profits took their toll on the bank's bonus pool, which it cut by 12 percent to $3 billion, and sets the stage for results this week from Lloyds, Barclays, RBS and Standard Chartered.

... A $3.2 billion impairment in its private banking business led HSBC to report a $3.4 billion fourth-quarter loss, against analysts' expectations for a profit, as the accounting valuation of the unit caught up with years of declining performance. HSBC effectively built out its Swiss private bank from its $10 billion purchase of Republic National Bank of New York and Safra Republic Holdings in 1999... But major compliance failures at those operations ate into the bank's bottom line and hurt its reputation, leading to a radical restructuring which mean the private bank is now viable as a slimmed-down operation providing advice to wealthy clients referred from the lender's other business lines.

Compliance problems at a unit associated with the late Safra... color us shocked...

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iehi-feed-61735 Mon, 20 Feb 2017 21:23:51 GMT Bailout Negotiators Get Go-ahead to Return to Greece; IMF Role Still In Question http://hf-implode.com/viewnews/2017-02-20_BailoutNegotiatorsGetGoaheadtoReturntoGreeceIMFRoleStillInQuesti.html Greece and its European creditors agreed Monday to resume talks on what economic reforms the country must make next in order to get the money it needs to avoid bankruptcy and a potential exit from the euro this summer.

The creditors also hinted that they would temper their demands for budget cuts -- a welcome thought for austerity-weary Greeks who have seen poverty and unemployment spike as their economy shrank by a quarter over the recent crisis-ridden years.

"There will be a change in the policy mix, if you will, moving perhaps away from austerity and putting more emphasis on deep reforms," said Jeroen Dijsselbloem, the eurozone's top official.

...

Still, there are other potential hurdles to be cleared before the IMF does get involved. One key issue relates to Greece's debt profile over the coming decades. The IMF forecasts Greece's debt will, as things stand, swell to a staggering 275 percent by 2060 from around 180 percent now.

As a result, it's urging the Europeans to come up with a substantive package of debt relief measures. The eurozone countries, notably Germany, have ruled out an outright debt reduction but are open to other kinds of debt relief, such as extending Greece's repayment periods or capping the interest rates at relatively low levels. Debt relief discussions will recommence once agreement on the next batch of Greek reforms is concluded.

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iehi-feed-61733 Mon, 20 Feb 2017 20:47:00 GMT Chinese Banks' Off-Book Lending Vehicles Exceed $3.8 Trillion, Up 30% Y-O-Y http://hf-implode.com/viewnews/2017-02-20_ChineseBanksOffBookLendingVehiclesExceed38TrillionUp30YOY.html Chinese banks had more than 26 trillion yuan ($3.8 trillion) of wealth-management products held off their balance sheets at the end of December, a 30 percent increase from a year earlier, according to the central bank.

The expansion of this form of shadow banking, with money eventually being diverted to quasi-loans and bonds, outpaced the 10 percent growth for normal lending during the same period, raising risks for the broader economy and undermining the country's "deleveraging" efforts, the People's Bank of China said Friday in its quarterly monetary policy report.

Remind anyone of another three-letter-acronym... like "SIV" perhaps?

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iehi-feed-61731 Mon, 20 Feb 2017 15:50:13 GMT Spain's Senior Central Bankers Called To Testify on Bankia Debacle http://hf-implode.com/viewnews/2017-02-20_SpainsSeniorCentralBankersCalledToTestifyonBankiaDebacle.html As part of the epic, multi-year criminal investigation into the doomed IPO of Spain's frankenbank Bankia -- which had been assembled from the festering corpses of seven already defunct saving banks -- Spain's national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel Ángel Fernández Ordóñez, and its former deputy governor (and current head of the Bank of International Settlements' Financial Stability Institute), Fernando Restoy. It also summoned for questioning Julio Segura, the former president of Spain's financial markets regulator, the CNMV (the Spanish equivalent of the SEC in the US).

The six central bankers and one financial regulator stand accused of authorizing the public launch of Bankia in 2011 despite repeated warnings from the Bank of Spain's own team of inspectors that the banking group was "unviable."

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iehi-feed-61730 Mon, 20 Feb 2017 15:32:27 GMT Greenspan: Gold is "Primary Global Currency" http://hf-implode.com/viewnews/2017-02-20_GreenspanGoldisPrimaryGlobalCurrency.html iehi-feed-61729 Mon, 20 Feb 2017 15:30:38 GMT Continuing Global Dollar "Shortage" Implies High Systemic Stress http://hf-implode.com/viewnews/2017-02-20_ContinuingGlobalDollarShortageImpliesHighSystemicStress.html iehi-feed-61728 Mon, 20 Feb 2017 15:29:25 GMT BlackRock: "We're on the precipice of a breakout in inflation" http://hf-implode.com/viewnews/2017-02-20_BlackRockWereontheprecipiceofabreakoutininflation.html iehi-feed-61727 Sun, 19 Feb 2017 19:42:10 GMT ‘From bad to worse': Greece hurtles towards a final reckoning http://hf-implode.com/viewnews/2017-02-19_FrombadtoworseGreecehurtlestowardsafinalreckoning.html "We had an agreement," insisted Balaouras, looking despondently down at his desert boots. "We kept to our side of the deal, but the lenders haven't kept to their side because now they are asking for more. We want the review to end. We want to go forward. This situation is in the interests of no one. But to get there we have to have an honourable compromise. Without that there will be a clash."

It had been hoped that an agreement would be struck on Monday at what had been billed as a high-stakes meeting of euro area finance ministers. On Friday, EU officials announced that the deadline had been all but missed because there had been little convergence between the two sides.

...

The country's epic struggle to avert bankruptcy should have been settled when Athens received €110bn in aid -- the biggest financial rescue programme in global history -- from the EU and International Monetary Fund in May 2010. Instead, three bailouts later, it is still wrangling over the terms of the latest €86bn emergency loan package, with lenders also at loggerheads and diplomats no longer talking of a can, but rather a bomb, being kicked down the road. Default looms if a €7.4bn debt repayment -- money owed mostly to the European Central Bank -- is not honoured in July.

Amid the uncertainty, volatility has returned to the markets. So, too, has fear, with an estimated €2.2bn being withdrawn from banks by panic-stricken depositors since the beginning of the year. With talk of Greece's exit from the euro being heard again, farmers, trade unions and other sectors enraged by the eviscerating effects of austerity have once more come out in protest.

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"Grexit is the last thing we want, but we may arrive at a point of serious dilemmas," said Venizelos. "Whatever deal is reached will be very difficult to implement, but that notwithstanding, it is not the memoranda [the bailout accords] that caused the crisis. The crisis was born in Greece long before."

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iehi-feed-61726 Sun, 19 Feb 2017 19:37:52 GMT Greek Banks worry over sudden bad loan spike in January http://hf-implode.com/viewnews/2017-02-19_GreekBanksworryoversuddenbadloanspikeinJanuary.html Bank sources say that after several months of stabilization and of a negative growth rate in new nonperforming exposure,the picture deteriorated rapidly in January, as new bad loans estimated at 800 million euros in total were created.

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Bank officials attribute the phenomenon to uncertainty from the government's inability to complete the second bailout review, fears for a rekindling of the crisis and mainly the expectations of borrowers for extrajudicial settlements of bad loans.

Senior bank officials note that a large number of borrowers will not cooperate with their lenders in reaching an agreement for the restructuring of their debts, in the hope that the introduction by the government of the extrajudicial compromise could lead to better terms and possibly even to a debt haircut

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iehi-feed-61725 Sun, 19 Feb 2017 19:35:57 GMT Greeks Turn to the Black Market as Another Bailout Showdown Looms http://hf-implode.com/viewnews/2017-02-19_GreeksTurntotheBlackMarketasAnotherBailoutShowdownLooms.html Few problems are more ingrained, or harder to combat, than the shadow economy, which appears to be growing again as new austerity measures compel once law-abiding Greeks to go off the books. Greece's black market is estimated at 20 to 25 percent of the gross domestic product, as more people have stopped reporting their income to avoid paying taxes that, by some estimates, have risen to 70 percent of an individual's gross income.

As of last month, unpaid taxes in Greece had soared to 95 billion euros, up from €76 billion two years ago. Most of that is considered uncollectable.

"The heart of the matter for an ever-rising number of citizens and businesses is that they simply do not have the financial resources anymore to meet their rising tax obligations," said Jens Bastian, an economist and a member of a team of European Union specialists that helped supervise the country's earlier bailouts.''

...

Yiannis [a media consultant] said he had also registered a company in Bulgaria, where the business tax rate is 10 percent, so that he could keep issuing receipts for freelance work. Tens of thousands of Greeks have been registering companies in Bulgaria, Cyprus, Luxembourg and other low-tax countries to avoid paying the higher tax bills at home -- which means less revenue for Greece's coffers and creates unfair competition for tax-paying entrepreneurs who could potentially play a bigger role in the revival of Greece's economy.

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The revenue that [Mr. Ladas, who runs a fire safety equipment company] does earn is steadily being eaten away. When he opened, he kept around 60 percent of his profit, after taxes. Today, his take is about 30 percent, after tax increases approved by the Greek government to meet budget-cutting and revenue targets imposed by creditors.

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iehi-feed-61723 Sun, 19 Feb 2017 18:57:44 GMT Greek Taxes Increases Strangle Its People http://hf-implode.com/viewnews/2017-02-19_GreekTaxesIncreasesStrangleItsPeople.html iehi-feed-61722 Sun, 19 Feb 2017 16:29:23 GMT Jim Rickards: China Disaster to Trigger Gold Run, Trump to Appoint 5 of 7 Fed Governors http://hf-implode.com/viewnews/2017-02-19_JimRickardsChinaDisastertoTriggerGoldRunTrumptoAppoint5of7FedGov.html When you look at the Chinese banking system, private estimates are that the bad debts are 25% of total assets. Banks usually run with 5, maybe 7-8% capital. Even if you said 10% capital, well, if 25% of your assets are bad, that completely wipes out your capital, so the Chinese banking system is technically insolvent, even though they don't admit that. I mean, they cook the books, they take these bad loans.

...

So, if you just say, "Well, I've got 900 billion in the kitty, it's going out the door at 50 to 100 billion a month," I'm going to be broke by the end of 2017. That's what I mean by going broke. You say, "Well, wait a second. Where did the 1.1 trillion, the first part we talked about that the reserve position went down, where did the money go? It didn't disappear." Well, no, it didn't disappear. What's happening is that everybody in China is getting their money out. They're scared to death that the yuan's going to devalue, so what are the Chinese doing? By hook or by crook, some of it's legitimate, some of it's corrupt, some of it involves bribery, some of it involves false invoicing.

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iehi-feed-61721 Sun, 19 Feb 2017 02:34:46 GMT Norway Central Bank Chief Warns of ‘Sharp' Drop in Wealth Fund http://hf-implode.com/viewnews/2017-02-18_NorwayCentralBankChiefWarnsofSharpDropinWealthFund.html Governor Oystein Olsen said that the continued rise in oil cash spending, which now accounts for about 20 percent of the budget and 8 percent of gross domestic product, must now be halted to protect the $900 billion fund, the world's largest sovereign pool of cash.

...

Government withdrawals from the fund are estimated to jump about 25 percent this year after an historic first outflow last year. The Conservative-led government was last year forced to dip into the oil fund for the first time to cover budget needs and protect the economy amid a plunge in oil prices.

... [The central bank] sees a 1 percent chance of a 50 percent decline over 10 years if spending is kept at the current level of about 3 percent of the fund. If spending is raised to 4 percent that probability rises to about 5 percent. If the fund's allocation to stocks is boosted to 75 percent from 60 percent, which is currently being discussed, the probabilities rise even further to about 2 percent and 6 percent, respectively.

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