Well, according to my read of Reuters, CFC is originating 44% fewer loans than it did this quarter last year.
That their packages of new loans are now selling well is good, because they have massively tightened their underwriting standards and probably been read the riot act by BAC who gave them the cash infusion that essentially saved them from BK. But these loans “selling well” is largely a tautology, because the buyers of these loans have stated what they will and will not accept. This says NOTHING about any of their existing loans or their status. I would suspect that CFC will take the lead from Citi and figure out a way to shove the reckoning of their substantial book of defaulted and unmarked to market loans somewhere off into the future, into these “SIVs” in order to magically remove them from CFCs’ books.
That the stock is at 2002 levels and down 60+% for the year is, I guess, good. Or bad. Or something. I agree, the biggest news is that there’s reason to believe they can continue in business, but without completely focusing on gloom & doom and without ONLY focusing on the one good aspect of their outlook, the financial info I’m getting is decidedly mixed.
Frankly, I don’t find CFC’s reporting particularly transparent. I take today’s 30% move in the stock and attribute half to a massive short squeeze and half to improved outlook.
They also have significantly fewer employees and lower costs.
This says NOTHING about any of their existing loans or their status.
Management said today that the old loan packages still aren't selling, so the market knows that.
“When asked about details of mark-to-market methodology, with regard to the co’s write down of ~$400 mln on the $12 bln transfer from H.F.S. to H.F.I., co says whenever quoted prices were available they used those as the primary value. Co then goes into more detail, essentially saying they used a variety of factors to determine the value of the positions”
Exactly, House of cards....
I wasn’t aware of any SIVs associated with CFC. Is that factual or are you just trying to make an analogy to Citi? If it is factual, I’d love to see a link to more information.