Commentary - 07/28/2008

Covered Bonds - Burying Them Won't Help

Yes, I know what "covered" bonds really means, but still the same, it's just another government intervention. The same folks end up holding title to the land.

This article was published by Marketplace July 28th: Four big banks to kick-start covered bond market

WASHINGTON (MarketWatch) - Appearing alongside Treasury Secretary Henry Paulson, representatives of the four largest U.S. banks agreed Monday to kick-start a market for covered bonds - an alternative way to provide mortgage loans - in the United States.

Covered bonds were first created in Germany and are in widespread use in Europe.

Under the practice, a bank borrows funds to lend to homeowners and holds the mortgages on its books. It uses the proceeds of the mortgages to repay investors.

So, instead of borrowing from depositors, who today cannot repaid, but who freely had the choice whether or not to deposit their money in those banks. Now these four banks are going to borrow from ALL the United States taxpayers, who were sold out by their congressional respresentatives and have no free choice on whether or not to shoulder those obligations.

On top of this, my problem with the FourBigBanks is that they are like four used-car dealers, all owned by the same folks (with apologies to the used-car business). It is made to appear that there are four individual decisions made to participate with the U.S. Treasury. Taking a closer look, it's really Goldielocks (Goldman-Sachs) and the four bears.

"Covered bonds may be more attractive to investors, in the near future anyway," Durrer said.

Representatives of Bank of America, Citigroup, JP Morgan Chase & Co and Wells Fargo said that they would help kick start the market.

"We look forward to being leading issuers as the U.S. covered market develops," the four banks said in a statement.

Under this approach, commercial banks may be able to take some market share away from the two mortgage giants, Fannie Mae and Freddie Mac.

Don't you like the way they use the word "MAY" and "NEAR FUTURE?"

Our folks in Washington are sure good at locking the barn door long after the horses and all the hay had already been stolen. Then they act as if they didn't have anything to do leaving the door wide-open in the first place.

Then again: Sometimes The Dragon Wins


Symbol Name Of Corporation
GS

Major
Holders
Goldman Sachs Group Inc. (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
Barclays Global Investors UK Holdings Ltd17,075,9284.31%$3,672,178,316-.--%
Marsico Capital Management, LLC14,496,2103.66%$3,117,409,960-.--%
State Street Corporation14,274,7763.61%$3,069,790,578-.--%
Vanguard Group, Inc. (The)11,231,0272.84%$2,415,232,356-.--%
Wellington Management Company, LLP9,760,9432.47%$2,099,090,792-.--%
AXA (Paris, France)9,240,2732.33%$1,987,120,708-.--%
FMR LLC7,831,4921.98%$1,684,162,354-.--%
Janus Capital Management, LLC6,791,8871.72%$1,460,595,299-.--%
Bank of New York Mellon Corporation6,418,0881.62%$1,380,209,824-.--%
Northern Trust Corporation6,357,4111.61%$1,367,161,235-.--%
% of Shares Held by All Insider and 5% Owners:9%-.--%
Top 10 [0.9%] of 1010 Institutional Holders Control26.15%-.--%
Percentage of Barclays and "Associates" Control12.87%-.--%
NOTE: Vanguard manages three funds that control 2.10%.
SPDR Trust controls 0.60%.
Janus Capital manages a fund that controls 0.55%.
Fidelty manages a fund that controls 0.45%.
Therefore, the TOP 10 Major Holders control 29.85%, and
Barclays/Associates control 14.02% of Goldman-Sachs.

Symbol Name Of Corporation
BAC

Major
Holders
Bank of America Corporation (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
Barclays Global Investors UK Holdings Ltd185,100,3444.17%$7,637,240,193-.--%
Capital Research And Management Company156,894,9403.54%$7,887,108,633-.--%
State Street Corporation154,105,8783.47%$6,358,408,526-.--%
Vanguard Group, Inc. (The)132,052,5142.98%$5,448,486,727-.--%
FMR LLC (Fidelity)115,977,0632.61%$4,785,213,619-.--%
AXA (Paris, France)110,375,3092.49%$4,554,085,249-.--%
Capital Research Global Investors106,505,6402.40%$4,394,422,706-.--%
Wellington Management Company, LLP96,954,9732.18%$4,000,362,185-.--%
Capital World Investors77,785,3501.75%$3,209,423,541-.--%
Bank of New York Mellon Corporation56,888,4681.28%$2,347,218,189-.--%
% of Shares Held by All Insider and 5% Owners:1%-.--%
Top 10 [0.7%] of 1423 Institutional Holders Control26.87%-.--%
Percentage of Barclays and "Associates" Control8.92%-.--%
NOTE: Capital Group manages two funds that control 3.15%.
Vanguard manages four funds that control 2.78%.
Washington Mutual manages a fund that controls 1.01%.
Therefore, the TOP 10 Major Holders control 33.81%, and
Barclays/Associates control 9.93% of Bank of America.
Capital Group now controls 10.84%.

Symbol Name Of Corporation
C

Major
Holders
Citigroup Inc. (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
Capital Research And Management Company230,537,5774.63%$10,759,188,718-.--%
Barclays Global Investors UK Holdings Ltd193,733,2243.89%$5,703,506,114-.--%
State Street Corporation168,713,7333.39%$4,966,932,299-.--%
Capital Research Global Investors152,224,2973.06%$4,481,483,303-.--%
Vanguard Group, Inc. (The)147,162,3652.95%$4,332,460,025-.--%
Capital World Investors135,231,7772.71%$3,981,223,514-.--%
FMR LLC (Fidelity)104,388,7532.10%$3,073,204,888-.--%
AXA (Paris, France)85,210,0351.71%$2,508,583,430-.--%
Bank of New York Mellon Corporation76,662,5871.54%$2,256,946,561-.--%
UBS Global Asset Management (Americas) Inc71,044,1101.43%$2,091,538,598-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [0.7%] of 1416 Institutional Holders Control27.41%-.--%
Percentage of Barclays and "Associates" Control8.82%-.--%
NOTE: Capital Group manages four funds that control 5.58%.
Vanguard manages three funds that control 2.13%.
Therefore, the TOP 10 Major Holders control 35.12%, and
Capital Group controls 15.98% of Citigroup.

Symbol Name Of Corporation
JPM

Major
Holders
JPMorgan Chase & Co (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
AXA (Paris, France)162,403,2304.83%$7,088,900,989-.--%
Barclays Global Investors UK Holdings Ltd150,034,4754.47%$6,549,004,833-.--%
State Street Corporation123,254,2063.67%$5,380,046,091-.--%
Vanguard Group, Inc. (The)100,641,6663.00%$4,393,008,720-.--%
FMR LLC (Fidelity)89,333,4812.66%$3,899,406,445-.--%
Capital Research And Management Company74,443,9012.22%$3,411,019,543-.--%
Davis Selected Advisers, LP73,675,3802.19%$3,215,930,337-.--%
Capital Research Global Investors66,839,9011.99%$2,917,561,678-.--%
Bank of New York Mellon Corporation57,802,6121.72%$2,523,084,013-.--%
Goldman Sachs Group Inc46,848,3411.39%$2,044,930,084-.--%
% of Shares Held by All Insider and 5% Owners:1%-.--%
Top 10 [0.7%] of 1317 Institutional Holders Control28.14%-.--%
Percentage of Barclays and "Associates" Control11.25%-.--%
NOTE: Vanguard manages four funds that control 2.87%.
Capital Research manages a fund that controls 1.99%.
Davis Selected Advisers manages a fund that controls 0.99%.
Washington Mutual manages a fund that controls 0.91%.
Barclays manages a fund that controls 0.59%.
Legg-Mason manages a fund that controls 0.53%.
Therefore, the TOP 10 Major Holders control 36.02%, and
Barclays/Associates controls 13.28% of JP Morgan Chase.
Capital Group controls 6.20%.

Symbol Name Of Corporation
WFC

Major
Holders
Wells Fargo & Company (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
Berkshire Hathaway, Inc289,259,8688.62%$8,732,755,414-.--%
Capital Research And Management Company139,587,0004.16%$4,972,088,940-.--%
Barclays Global Investors UK Holdings Ltd112,321,7123.35%$3,390,992,485-.--%
State Street Corporation111,160,0883.31%$3,355,923,056-.--%
Capital World Investors110,275,0003.29%$3,329,202,250-.--%
Vanguard Group, Inc. (The)97,861,7252.92%$2,954,445,477-.--%
UBS Global Asset Management (Americas) Inc70,084,9662.09%$2,115,865,123-.--%
FMR LLC (Fidelity)65,437,7071.95%$1,975,564,374-.--%
Davis Selected Advisers, LP62,466,5141.86%$1,885,864,057-.--%
State Farm Mutual Automobile Insurance Co55,039,0141.64%$1,661,627,832-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [0.8%] of 1208 Institutional Holders Control33.19%-.--%
Percentage of Barclays and "Associates" Control6.66%-.--%
NOTE: Capital Group manages three funds that control 2.66%.
Vanguard manages three funds that control 2.17%.
Washington Mutual manages a fund that controls 1.35%.
Davis manages a fund that controls 0.95%.
Barclays manages a fund that controls 0.58%.
Therefore, the TOP 10 Major Holders control 40.90%, and
Barclays/Associates control 8.59% of U.S. Bancorp.
Capital Group now controls 10.11%.

Symbol Name Of Corporation
FNM

Major
Holders
Fannie Mae (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
Capital Research And Management Company208,804,89621.35%$12,697,425,725-.--%
Capital Research Global Investors115,585,26611.82%$4,621,098,934-.--%
Capital World Investors108,644,20011.11%$4,343,595,116-.--%
AXA (Paris, France)41,085,3244.20%$1,642,591,253-.--%
Barclays Global Investors UK Holdings Ltd38,982,4953.99%$1,558,520,150-.--%
FMR LLC (Fidelity)34,875,4863.57%$1,394,321,930-.--%
State Street Corporation30,604,6043.13%$1,223,572,067-.--%
Vanguard Group, Inc. (The)29,380,8203.00%$1,174,645,183-.--%
Lord Abbett & Co28,150,2472.88%$1,125,446,875-.--%
HSBC Holdings PLC23,281,5752.38%$930,797,368-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [1.6%] of 603 Institutional Holders Control67.43%-.--%
Percentage of Barclays and "Associates" Control7.12%-.--%
NOTE: Capital Group manages nine funds that control 28.86%.
Washington Mutual manages a fund that controls 3.40%.
Therefore, the TOP 10 Major Holders control 99.69%, and
Barclays/Associates control 10.52% of Fannie Mae.
Capital Group now controls 73.14%.

Symbol Name Of Corporation
FRE

Major
Holders
Freddie Mac (As of 31-Dec-2007)
Top 10 Institutional HoldersShares2007Value2006
Capital Research Global Investors60,678,1008.82%$2,067,302,867-.--%
Capital World Investors42,545,6006.18%$1,449,528,592-.--%
AXA (Paris, France)36,630,0155.32%$1,247,984,611-.--%
Pzena Investment Management, LLC29,661,9624.31%$1,010,583,045-.--%
Barclays Global Investors UK Holdings Ltd27,283,6923.97%$929,555,386-.--%
UBS Global Asset Management (Americas) Inc22,649,7973.29%$771,678,583-.--%
Morgan Stanley21,698,4733.15%$739,266,975-.--%
Hotchkis & Wiley Capital Management, LLC21,245,6503.09%$723,839,295-.--%
State Street Corporation21,042,3093.06%$716,911,467-.--%
Goldman Sachs Group Inc20,192,6962.93%$687,965,152-.--%
% of Shares Held by All Insider and 5% Owners:0%-.--%
Top 10 [2.0%] of 489 Institutional Holders Control44.12%-.--%
Percentage of Barclays and "Associates" Control13.11%-.--%
NOTE: Capital Group manages four funds that control 17.00%.
Washington Mutual manages a fund that controls 1.65%.
Vanguard manages a fund that controls 0.91%.
Therefore, the TOP 10 Major Holders control 63.68%, and
Barclays/Associates control 14.76% of Freddie Mac.
Capital Group now controls 32.00%.

© 2008 by Edward Ulysses Cate
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