Games Banks Play - Number Five

Over the next couple of years, many banks will fail and be taken over by the government or larger institutions. This will be an agonizing process that some banks will try to avoid at any cost. I will explain in a multi part series what to watch out for:

There are strict requirements regarding the sale of OREO by Banks in terms of the cash down payment by the buyer. FASB 66 states that:

"The buyer's initial investment shall include only:

(a) cash paid as a down payment.

(b) the buyer's notes supported by irrevocable letters of credit from an independent established lending institution.

(c) payments by the buyer to third parties to reduce existing indebtedness on the property.

(d) other amounts paid by the buyer that are part of the sales value."

Banks cannot lend money to the buyer to finance the purchase of OREO - or as the Comptroller of the Currency has put it:

"The cash down payment requirement of FAS 66 can be satisfied only with the borrower’s personal funds, funds borrowed from an unrelated source, or an irrevocable letter of credit from a third party. This requirement for a cash down payment generally is not met when a bank provides the borrower with an additional loan for working capital or when the borrower’s down payment is obtained by draws on an unrelated line of credit with the bank."

Part One

Part Two

Part Three

Part Four

What is your Blog Worth?

A new Widget that I saw on Adventures in Moneymaking uses some formula based on traffic, backlinks, etc. to come up with a value for your blog. Mine is worth $22,017.06 as you can see to the right.

Click on it and then put your URL in to see how much your blog is worth.

I put in some well known blogs/ web sites to see what they are worth:

Seeking Alpha - $1.6 million

Blogging Stocks - $1.5 million

The Big Picture - $ 640,000

Calculated Risk - $540,000

Infectious Greed - $190,000

Interesting results. I will look into the methodology some other time.

Games Banks Play - Number Four

Over the next couple of years, many banks will fail and be taken over by the government or larger institutions. This will be an agonizing process that some banks will try to avoid at any cost. I will explain in a multi part series what to watch out for:

Restructured Loans - banks will work with borrowers to try to restructure loans to change the term or the interest rate. This restructuring may trigger an impairment that must be recognized under accounting rules. Also, just because a loan has been restructured doesn't mean that the loan moves from non accrual to accrual status. The borrower must demonstrate an "ability to comply with the new terms." Up to six months may be required before the loan is moved back to accrual status.

Part One

Part Two

Part Three