Fed Governor Issues Warning on Bank Dividends and Mortgage Put-Back Risk

What is interesting about this story is that Tarullo teaches within the same Law faculty (Georgetown) as Adam Levitin, who has spent the last month detailing the nightmare putback scenario for Bank of America and others.

Levitin's thoughts can be found in these 2 stories:

• MUST READ: 2 Law Professors Are Scaring The Shite Out Of Wall Street Saying Millions Of Mortgages Could Be Rendered Invalid Due To Securitization Errors

• Josh Rosner: "Foreclosure Fraud Nightmare Scenario Could Dwarf The Lehman Weekend"

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John Carney has the details...

If you were counting on the big U.S. banks to restore or increase dividends that were pared back or ended during the financial crisis, you might want to think again.

The final portions of a prepared speech by a top Federal Reserve official seemed aimed at pulling-back market expectations that the central bank would soon authorize a resumption of dividends.

The Fed has been preparing guidelines on how banks will be able to change their dividend policies in the first quarter of next year. When that news was reported last week—the Wall Street Journal’s headline was “Fed to Let Banks Increase Dividend” — the stocks of several banks rose.

But Fed governor Daniel Tarullo appeared to be trying to tamper the exuberance over the new Fed guidelines.

• “Although the details of these guidelines are still being finalized, I can say that our approach to considering such requests will be a conservative one.”

• “We will expect firms to submit convincing capital plans that demonstrate their ability to absorb losses over the next two years under an adverse economic scenario that we will specify, and still remain amply capitalized,” Tarullo said. “We also expect that firms will have a sound estimate of any significant risks that may not be captured by the stress testing, such as potential mortgage put-back exposures, and the capacity to absorb any consequent losses.”

• Continue reading John Carney at CNBC...

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• Read Tarullo's full speech here

• Daniel Tarullo's bio page at the Fed

Comments

[DailyBail]

Daniel K. Tarullo took office on January 28, 2009, to fill an unexpired term ending January 31, 2022.

Prior to his appointment to the Board, Mr. Tarullo was Professor of Law at Georgetown University Law Center, where he taught courses in international financial regulation, international law, and banking law. Prior to joining the Georgetown Law faculty, Mr. Tarullo held several senior positions in the Clinton administration.

http://www.federalreserve.gov/aboutthefed/bios/board/tarullo.htm

[DailyBail]

The worship of Augustus Caesar and the Fall of the American Empire

http://kropotkinoid.wordpress.com/2010/11/13/the-worship-of-augustus-caesar-and-the-fall-of-the-american-empire/

[Cheyenne]

From this pic, I'd like to sock this fuck in the face.

[dogismyth]

From what I have heard and read, the CONgress is putting together a bill (well, the bank lobbyists are) that will literally reinstate the mortgage process and ignore the need for wet ink deeds. I'm sure this was in the works well before the elections, and I'm without a doubt that election contributions were part of the scheme. You thought the Dems might have been evil in the past two years, you ain't seen nothing yet. Republicans grow horns over the thought of self enriching themselves at our expense.

I'm hoping one of these days to hear via major media that bankers have been dethroned through a populace revolution. Maybe a hanging or two conducted western style would instill fear into these pompous and arrogant bastards.

[Cheyenne]

"Maybe a hanging or two conducted western style would instill fear into these pompous and arrogant bastards."

Well put.

[Cheyenne]

"Take the gun. Leave the connolis."

--Johnny Lira, last night.

[Cheyenne]

Foxy has taken down the poker tournament at the Shady Nook at Big Long Lake when I mention Texas Dar.

Texan goes to a Vegas whore house and takes off his hat.

"That's a really big hat you got, mister,' says the hooker.

"Everything's big in Texas," he says.

"That's a really big belt buckle," she says as he takes down his pants.

"Everything's big in Texas," he says.

"Wow, what a huge johnson on you," she says.

Texan does her, then lights up a cigarette.

"So," he says inhaling, "what part of Texas you from?"