FINspeak

Over the last year, most large banks have shut down their businesses with mortgage brokers as seen in the exit of Chase, Wells Fargo, and Bank of America. There seems to be a realization that an in-house ‘direct to customer’ model is more profitable than relying on brokers to provide funding volumes.  

Brokers help banks to source leads to prospective borrowers and perform a significant part of the upfront process of originating a loan. Having cultivated the broker community as a viable channel for many years, why are banks exiting this market in a hurry?  

Continue reading "Customer Intimacy and the Credit Crisis" »

Posted by Mahesh Makhija at 02:45 PM | Permalink | Comments (1) | TrackBacks (0)

What a turbulent three weeks of the New Year it has been! It began with the hope that major stock markets around the world (led by the US Dow Jones Index), were beginning to thaw. But what promised to be a sneak preview to a turn-around, rapidly changed course; over the past week, the US Banking system teetered on the brink of collapse for the third time in four months. Citi finally accepted the fait accompli that its days as a Universal Bank  were numbered. Bank of America’s much vaunted acquisition of Merrill Lynch almost came unstuck!

The US Treasury and Federal Reserve (along with the FDIC) have made multiple attempts at resuscitating the credit markets. After the TARP approach of investing in Banks’ preferred stock and (subsequently) using the back-stop guarantee mechanism, the latest thinking among US Government bureaucrats is to segregate the “bad” assets on Banks’ balance sheet from the good ones or what is popularly being termed the "Good Bank – Bad Bank" model.

Read more about this on the Think Flat site.  

Posted by Balaji Yellavalli at 01:17 PM | Permalink | Comments (0) | TrackBacks (0)

I like the news already. He has commented, and rightly so, that right now the patient need a blood infusion and not short term thing like budget deficit.

How true? When things get tough most of the people start to worry about the short term things like cutting cost, manage the deficit. This is true for most of the organizations. A contrarian view would be to actually increase the spending on fixing the root cause and in the preparation for the future. This is the time to build for the future and not save for present.

I think this will differentiate the leaders from the pack across organization that will reap the rewards when the tide turns.

Are you ready? This is the question that needs to be asked by each organization rather than are you saving enough?

Posted by Mritunjay Singh at 06:32 AM | Permalink | Comments (0) | TrackBacks (0)

Many question whether this deluge of losses is actually necessary.  Bankers are pressuring regulators and lawmakers to make adjustments to FAS 157, the mark-to-market accounting rule in the US.  Put in place in response to the Enron crisis (Enron overvalued its assets to the point of bankruptcy) mark-to-market accounting requires corporations to value asset at their "fair value"; the price the asset would command on the open market. 

Read more on the Think Flat site...

Posted by Balaji Yellavalli at 01:47 PM | Permalink | Comments (0) | TrackBacks (0)

Posted by Balaji Yellavalli at 08:49 PM | Permalink | Comments (0) | TrackBacks (0)

Hello readers!  I've put together a few entries discussing the credit crisis.  They are currently posted on the Think Flat blog.  Below are the links:

The Shotgun Wedding Planner on Wall Street!

Three Cheers for the Universal Bank!

Fannie Mae and Freddie Mac - Flattened by Credit Crunch?

Posted by Balaji Yellavalli at 07:46 PM | Permalink | Comments (0) | TrackBacks (0)