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« VIDEO - Violent clashes erupt in Italy after Berlusconi survives no confidence vote | Main | TARP COP: Geithner's Treasury Effort (HAMP) To Help Troubled Borrowers Was A MASSIVE Failure »

Chris Whalen: Devaluation And Default Will Be Dominant Banking Themes Of 2011

Video - Chris Whalen: New Bank Bailouts Under Dodd-Frank For Bank Of America, Wells Fargo Within 12 Months

  • "2011 will be a year of massive pain and restructuring for big banks."

Runs just 3 minutes.  Huge government restructuring and intervention is on the way.  Next year will be a killer.  TARP 2.0 bitchez.

  • "Foreclosures are going to overwhelm Bank of America and Wells Fargo."

You will hear that Lehman's estate owns Whalen's mortgage and they can't legally foreclose.  Not due to the Lehman bankruptcy, instead because they never changed the record 7 years ago when they purchased the loan from Bank of New York.


By banking analyst Christopher Whalen

Will Devaluation and Default be the Themes for 2011?


Well, sad to say that the whole point of being a free society is that booms and busts will happen again. The Irish and their American cousins share this terrible but also wonderful attribute. When the desire for individual freedom and opportunity runs into the reality of a zero sum world, there is fraud and larceny. Sad to say, when Americans arrive at the point of perfectly managed regulatory perfection we shall all being living in a Euro-style corporate dictatorship. The reason that the Danes have such an orderly mortgage market is because like much of Europe, their people have only the freedoms allowed by the state. And fraud and corruption in Europe are largely the province of politicians and their clients among the largest banks and corporations. Indeed, America is well along in the journey down that road to serfdom, in part because we still are unwilling to punish the outliers and thereby restore balance between individual aspirations for a better life, call it the American dream, and the public good.

The view on all of this expressed by the banking and loan servicing community is that the imperfections in the documentation of a lien or the transfer of a note are significant, but that at the end of the day the imperfections will be cured and the note holder will prevail. We agree.  More to the point, when the dead weight of all of the defaulted loans which are just now starting to move from foreclosure to involuntary sale falls upon lenders, the courts, and communities, the legal and technical problems that Smith and others very accurately accurately describe will become political and they will be fixed -- and not always to the benefit of the note holder. The whole point of our federalist system is that such issues must first be adjudicated by the lower courts, then the appeals courts and Congress will take a systemic view and move toward a consistent means of resolution. 

One of the things about a free society is that when a problem grows to a certain size, the political force behind the good of the many becomes irresistible and the good of the few or the one can often overlooked. As new political tendencies join governments in Ireland and the U.S. in January 2011, we look for macro economic and financial factors to start driving events in some ways that will be very unpleasant for creditors and consumers like. More on this in a couple of weeks.  Just remember that sovereign states like Ireland, California and New York don't file bankruptcy, they merely default a la Iceland and Argentina.  Or to quote the headline in The Daily Bail"Secret GOP Plan: Avoid A Massive Bailout By Pushing States To Declare Bankruptcy, Smashing Unions"

Continue reading at IRA...


Whalen says Bank of America is completely insolvent...


The Daily Bail gets a mention in Chris' latest piece.

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Reader Comments (6)


main page of site.;..much useful bank data is here...
Dec 14, 2010 at 4:12 PM | Registered CommenterDailyBail
« Chris Whalen On Banks, Illusory Expectations And The Great Federal Reserve Shell Game »

Dec 14, 2010 at 4:13 PM | Registered CommenterDailyBail
« Dick Bove: Mortgage Put-Back Apocalypse Could Cost Banks More Than $150 Billion »

Dec 14, 2010 at 4:14 PM | Registered CommenterDailyBail
« Chris Whalen: New Bank Bailouts Under Dodd-Frank For Bank Of America, Wells Fargo Within 12 Months (VIDEO) »

Dec 14, 2010 at 4:15 PM | Registered CommenterDailyBail

"Goldman would have failed without the bailout. No question."
Dec 14, 2010 at 4:26 PM | Registered CommenterDailyBail
« Chris Whalen Explains Everything You Need To Know About Foreclosures, Loan Put Backs & Bank Risk (New Video) »

Dec 14, 2010 at 4:27 PM | Registered CommenterDailyBail

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