Posted on 03/19/2008 3:05:53 PM PDT by BGHater
Thornburg Mortgage has said it is trying to raise almost $1bn (£500m) in extra capital to avert a possible bankruptcy filing.
The lender, which specialises in big home loans, also plans to offer its lenders a 27% stake in the company.
The measures will significantly dilute the stakes of existing shareholders and the company's shares fell 47%.
Thornburg said that without the new capital it may be forced to seek bankruptcy protection.
Jumbo loans
In a filing with the Securities and Exchange Commission, the company warned that bankruptcy would be a possibility because it would have to sell off the rest of its mortgage assets at depressed prices.
Thornburg specialises in so-called jumbo loans of more than $417,000, which means that until recently they were not eligible for funding from the government-sponsored mortgage agencies Fannie Mae and Freddie Mac.
Thornburg's problems are another sign of the credit crunch spreading from sub-prime lenders to others.
It owes money to five lenders, which are affiliates of Bear Stearns, Citigroup, Credit Suisse, Royal Bank of Scotland and UBS.
The fresh falls in Thornburg's share price followed a 32.4% fall on Monday last week after the company said it could not meet demands for extra cash and collateral from its lenders.
Here we go ... will the Fed step in again?
I’ll bet their problem isn’t the loans; rather, its probably the funding of the loans. They probably borrowed short and lent long—a tempting and profitable policy in times of easy credit, but very risky in the long term.
A new era in the US
Profits are privately distributed
Losses are public funded.
“A new era in the US
Profits are privately distributed
Losses are public funded.”
And....point it out and you’re an anti-capitalist.
Guess these guys are not important enough to warrant Taxpayer guarantees. What a chaotic mess this Fed has created!
Thornburg should be allowed to fail. “That” is being a capitalist. Bail them out like so many more in the future is “socialist”. Soon, the government will own it all. YIPPEE! That’s called “Control” YIPPEE!
Weekend Fed raid coming up.
Gosh I never participated, but I remember when we considered pantie raids but we never considered raiding a bank, my how times have changed.... :-).....
I know a poor attempt at humor, but it is beginning to look like Glenn Beck is right and we are in deep doo-doo......
“Thornburg should be allowed to fail. “That” is being a capitalist. Bail them out like so many more in the future is “socialist”. Soon, the government will own it all. YIPPEE! That’s called “Control” YIPPEE!”
Agreed. BUTTTT...who do you suppose owns the mortgages originated by TMA? If it’s any of the primary dealers, THEY get bailed out. Period.
The gov is making it worse by being a part of the fraud. That will rub off on them too.
The problem is not so much the Fed as it is Congress. They listened to race hustlers whine about how minorities can't qualify for home mortgages and then told lenders to loosen up lending requirements until people that should not have gotten mortgages got them. And Congress threatened 'reform' legislation to make it happen. Of course, the lenders happily complied since there is money to be made originating loans, even if the originator knows the loan will go bad. And don't forget those who took out such loans and then defaulted on them. There is plenty of blame to go around.
Agreed. Let them fail.
The pattern almost looks identical to Bear Stearns.
My problem is with a Fed that is intervening in unprecedented ways into the Markets and doing so in a selective way. They alone determine who is ‘Bailed out’ and who gets to pick up the pieces. IMO it is just making things worse - Just like the other Gov’t blunder, Ethanol.
I am starting a private club of FreeRepublicans. To become a member you have to be called a Marxist for pointing out this little truth. Wanna join?
TMA is not quite in the BSC category. To achieve a ten from the Russian Olympic judge you have to do a perfect swan dive off of a Manhattan skyscraper. Spitzer showed us the form and style required for this maneuver.
Instead of worthless stock, they should give those poor Bear Stearns employees flipper houses.
I was reading a story today about the Starbucks shareholders meeting, and a former employee lamenting that she had lost $80,000 of value from her ESOP from when she worked there. I guess she never heard of Enron or WorldComm....or listened to Bob Brinker.
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