Thornburg Mortgage President on CNBC
A: Breaking News: Thornburg Mortgage (TMA), a jumbo mortgage lender, President makes a live appearance on CNBC after stock plunges 46%. What a brave thing to do and props to this CEO for stepping up, marking their holdings to market (which I said is crucial to get through this credit mess) value, taking the loss, and restructuring their company for future shareholder value. Here are some points that the CEO is making as I listen:
Thornburg Mortgage President Larry Goldstone makes the following points on live conference call:
* No Chapter 11 Plans - Wont Solve Problems. Will Make Problems Worse
* 80% of Rumors are NOT TRUE
* Able to reach 80% of obligations
* Financing in Jumbo Mortgage Space is very difficult thing to do
* Massive Credit Mortgage Crisis - Hundreds if not more lenders not funding loans.
* Severe Credit Crisis Going on
* Lenders Making It Very Difficult to Rollover Financing. Value of Assets declining precipitously in recent weeks. Liquidating assets in recent weeks
* Asset Backed Securities Markets for non govt mortgages not functioning properly
* Mortgage backed securities markets not functioning properly
* We can sell everything right now, and still have $14.28/share left
* Been selling mortgage securities, liquidity does exist, but not a palatable thing to be doing
* Currently marking to market right now
* Market having a hard time differentiating between high quality assets and low quality assets
* Taking steps to put ourselves in position whereby we can comfortably fund our day to day positions
Recall my post back on August 6th titled, "Should The Fed Step In And Save The Credit Markets", where I clearly stated my opinion on the best way to minimize the pain of the current credit crisis:
LET THE COMPANIES WHO MADE BAD BETS STEP UP TO THE PLATE, PUBLICIZE THEIR LOSSES, TAKE BOOK VALUE & LIQUIDATE BAD HOLDINGS IN ORDER TO WRITE OFF THE LOSSES! ANNOUNCE A RE-STRUCTURING EFFORT AND PUBLICIZE EXACTLY WHAT IS BEING DONE TO FIX THE PROBLEM & BRIEF INVESTORS ON THE FUTURE DIRECTION OF THE COMPANY
Posted by Colin
Tue Aug 14th, 2007 09:21 PM
I would say he is right about the rumors not being true. The reality is even worse than the rumors.
Mark my words, things will get worse, a lot worse, before they get better.
This guy came on air, props to him for that. But he did what all the other CEOs do...sent a veiled message to the public that things are going to be worked out, when in reality, things will fail.
Posted by Noah
Wed Aug 15th, 2007 10:27 AM
well I do think that the near future will bring many small lenders out of the woodwork that can no longer contain their problems, and at least one major bank warning big time and one major brokerage warning big time.
So we have that to potentially price in if it happens.
Posted by Sang
Wed Aug 15th, 2007 12:38 PM
Countrywide downgraded by MS to sell, and it was slapped with verbiage regarding potential risk of bankruptcy today as well. Quite interesting since they claim to have over $120 billion in liquid cash, which apparently MS thinks is not going to be enough.
The law prevents me from saying much on a public forum like this, but I can be vague enough to say this: this iceberg is a huge one, and the tip that we're seeing today is very misleading as it gives the illusion of the iceberg being a lot smaller than it really is.
Cheers,
Sang