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miercuri, 5 ianuarie 2011

SEOmoz Daily SEO Blog

Help Us Build the 2011 Search Ranking Factors

Posted: 04 Jan 2011 04:19 PM PST

2011 is here, and that means it's time for our biennial search engine ranking factors survey to be renewed. This year, we're planning something much bigger and, we hope, better. Our plan is to offer a report that provides:

Aggregated expert opinions on the importance of factors individually and ranking influencers overall (as with 2009's version)
Correlation numbers for the factors (on as close to a 1:1 basis comparing data against the question asked to those surveyed)
"Causation" numbers on a relative scale derived from our machine learning-based ranking models (with error margins)
A representation of the relative chunks of the algorithmic pie by their contribution to the overall algorithm

This is, obviously, a huge undertaking for SEOmoz's team, and we could use your help. First, we need your help to recruit the right experts. The form below will enable you to submit nominees:

We'll likely take between 1-200 participants (possibly more), so please send us your best and brightest!

In addition, we'd love your help in defining the factors we'll be measuring this year.

Rand's Current List of 224 Potential Factors

The list below represents my first stab at creating a list of datapoints to use in our correlation and ranking model analysis. Your mission (should you choose to accept it) is to add potential factors (not listed here) that we could gather and analyze in the comments below. This means they'd need to be available on the page/domain itself or fetch-able on the web through an API or other request in a scalable fashion.

In addition to adding your own ideas in the comments, please upvote your fellow mozzers if you like the ideas they're presenting. The comment with the most thumbs up at week's end will earn a special gift from the mozplex and recognition in the final report.

Obviously, not all of these will be directly translated to ideas/concepts of ranking factors for the survey participants to vote on, but many can help to inform their construction and compare against as a datapoint.

Some additional notes on our plans:

Use only Google.com US results for this version (but plan to replicate in other geos/countries)
Retrieve geographically agnostic results using a query structure similar to this one for barber shop and this one for ice cream
Record the presence of ads and universal results on the page, but don't count these URLs/references in our analyses
Segment the data in several variations (by popularity of the query according to Google's AdWords estimates and number of words in the phrase, for example) to be provided as drill-downs from the main report

If you have other suggestions, feel free to comment below or use the form above. I'm looking forward to a remarkable step forward in the understanding of Google's ranking system - thanks so much for your help!

p.s. A huge thanks to our many contributors from years past, many/most of whom we'll be "nominating" for inclusion this year ourselves :-)

p.p.s. You'll likely notice lots of factors on my list that are obvious non-factors (meta keywords, for example). I'm including these only to help us show data on their impact (or lack thereof) which will hopefully assist those of us who need further evidence to help convince clients, managers, etc.

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Michael Gray - Graywolf's SEO Blog

Interview with Andrew Wise of SEOLinkWheelers.com

Posted: 05 Jan 2011 07:38 AM PST

The following is a sponsored post.

For today's post we're going to be talking to Andrew Wise of SEOLinkWheelers.com, for my readers who don't know you can you tell me a little about yourself, and your background in internet marketing.

My career in Internet Marketing is still very young, having recently graduated from school in 2007. My first start was for the pre-eminent music startup Grooveshark.com in a business development role. From there, I taught myself programming and began building my own web empire. Our goal is to ensure our customers’ success and to do anything in our power to make you happy, no matter the cost.

As every SEO knows links, are a critical element for ranking, what's your approach to building links, and what are some the types links you feel should be part of every websites backlink profile.

For every new client, we recommend they invest in some of the best directories on the web, which we use on all of our sites. Yahoo Directory ($299/year), BOTW.org ($159/year with coupons available), and Business.com ($199/year). If you look at the sites with 100s of 1st page rankings, they all have these links, and you should too.

Your company offers link advertising in the form of link wheels. For the readers who might not know what is a "link wheel", and how is it going to help their site?

Link wheels are the evolution of the backlink. When Google first created their algorithm, the way to get top rankings was to get links. The more links, the better, no matter where the links originate.

Everyone knows this doesn’t work anymore. Spam farms, inlinking from your own site, and other forms of garbage links do nothing for your site and are a waste of time. Today, the goal of most site owners is to get High PageRank, quality links.

So how do you get these links? Article directories , web 2.0 sites, and high PageRank blogs. A link wheel is a collection of sites that interlink (randomly) passing on PageRank to each individual site, and all sites pointing to the “money site”. Take this example below:

3 total sites

Site #1
A 200 word article is written on a blog, the blog has 2 links, 1 link goes to site #3, 1 link goes to the client site (ie “money site”)

Site #2
A 200 word article is written on a press release site, 2 links, 1 link goes to site #1, 1 link to the money site

Site #3
A 200 word article on a web 2.0 site, 1 link goes to site #2, 1 link to the money site

etc. etc.

The end result is you have 3 high PageRank sites, each getting random links from sites on different C-Class servers, with different IPs, and these 3 random sites are linking to the client site, creating the ultimate backlinks.

Our link wheels are constructed in much larger quantities: 37 sites, 74 sites, and 119 sites, package details available here

Let's talk about the 800lb gorilla that's now sitting in the room, paid links. Google has taken a pretty hard stance against link sellers in the past, whether or not we agree with their stance it's something as SEO's we have to be mindful of. Where do you feel your product falls on this issue?

Paid links are one of the most effective way to increase your sites’ ranking, there’s no doubt about that. If you look at some text link brokers, these sites are doing millions every month, but there’s a couple problems I have with this.

We run our own content sites in addition to providing SEO services, and all of our SEO services we use on our own sites, which is one of the reasons we are constantly evolving our services, so with that out of the way, here’s my take on paid link sites:

1) Google does not like directly paid links. Paid links are pretty easy to detect (ie any list of random links in a sites’ sidebar) or any sites that operate in the public marketplace are guilty, and may be punished at any time.

2) The paid links model is a rental model. Every month you are renting these links. If you stop paying, you lose all your rankings, so it’s just like PPC, so if you are looking to buy paid links, you are better off just using AdWords

– Our link building is permanent, and personally, I like knowing that every link we build for ourselves and our clients is an investment. Over time, you have to spend less and less money, which is how every business (I think) should operate.

Let's change gears a bit, Google has always been a link based algorithm, but in recent months they have have admitted they are looking at other signals, like social media. Do you ever see links becoming less important than other factors?

Definitely.

Any SEO company who thinks what is working today is going to be working 3, 6 or 12 months from now is crazy. Google is going to evolve their algorithm, and its our job to follow their changes and make changes to our services to ensure they still work.

The main trend I believe we are seeing is a shift to quality content. The days of spammy 1990s websites ranking on the 1st pages of Google is going to fade away. As a site owner, I suggest everyone to get engaged in Facbook, Twitter, and as opposed to Google completely ignoring links, I think they are going to use social media sites to build a “trust factor” for domains, and only if you have certain “trust factors” are you going to be showing up at the top of the search engines.

It’s in Google’s best interests to display quality sites, and these “trust factors” are the best way to do that and also eliminate the spam.

If you ran a search engine what things would you be looking at in social media as signals of trust and quality? Are there places other than social media you think search engines should/might be looking now?

If I was building a new search engine, there are a couple of things I would use to determine how trustworthy a site is, how good of a source of information the site is going to be, etc.

1) RSS/subscriber count — the fact is, the more followers a site has, the more likely they are going to be to be a good source of information
2) Does the site have Facebook accounts? Twitter? GetSatisfaction? Yelp? etc.
3) How often is the site updated? This is a known piece of the Caffeine algorithm but its yet another indication of quality
4) If it’s an eCommerce site, what are the ratings of the merchant? Is it doing well on shopping.com, Google merchant center, etc.

Obviously we haven’t seen exactly what Google is doing on this front, but this is going to be the evolution of their algorithm in the future.

Since you have taken the time to answer these questions, give us your best pitch as to why someone should look at your companies services …

As I mentioned above, we use our services for our own sites. Everyday we are working on ways to improve our services and are constantly investing more money into our product. This past year, we expanded from a network of 100 blogs to more than 2,000 PR3+ blogs that we own and continue to expand in 2011.

From a customer service perspective, we are a small team, it’s just 4 of us, which means we’re selective. We want to work with people we like and who like us. The majority of our customers are referrals and we strive ourselves on making people happy and delivering them a great first class product at a business class price.

We’d love the opportunity to work with you, and we are confident we can help you increase your rankings. We’re US-based, and you can call us at 352-509-5736. If we’re on the line, just leave us a message or shoot an email to help@seolinkwheelers.com, we’ll get back to you as quickly as we can.

Thanks for taking the time to talk to me today Andrew. For anyone who is interested in SEO Link Wheelers be sure to check out their link wheel packages and use the coupon code “graywolf” for 10% off your first order –

The preceding has been a sponsored post. Find out more information about sponsored posts.

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Interview with Andrew Wise of SEOLinkWheelers.com

Back to the White House

Your Daily Snapshot for
Wednesday, Jan. 5, 2011

Photo of the Day

With pen in hand, President Barack Obama sits at the Resolute Desk in the Oval Office as Staff Secretary Lisa Brown organizes a stack of 35 bills for him to sign into law, Jan. 4, 2011. (Official White House Photo by Pete Souza)

Seth's Blog : Five ingredients of smart online commerce

[You're getting this note because you subscribed to Seth Godin's blog.]

Five ingredients of smart online commerce

While it might be more fun to rant about broken online forms and systems, we can learn a lot from sites that aren't broken as well.

Consider the Ibex store. Here are five things they do that make them successful online:

They sell a product you can't buy at the local store. This is easily overlooked and critically important. Because it's unique, it's worth seeking out and talking about. Just because you built a site doesn't mean I care. At all. But if you build a product I love, I'll help you.
They understand that online pictures are free. Unlike a print catalog, extra pictures don't cost much. Make them big. Let me see the nubbiness or the zipper or the way you make things.
They use smart copy (but not too much).
They are obsessed with permission. Once you sign up, you'll get really good coupons and discounts by email. Not too often, but often enough that my guess is that they make most of their sales this way. 25% discount on a product just like a product you love--just before Valentine's day? Sign me up.
They aren't afraid to post reviews. Even critical ones.

No site is perfect, of course, and I hesitate to tell you that this one is. I'm sure there are glitches and your mileage may vary. But the checkout is simple and the customer service, while not trying to be Zappos, is pretty good too.

Penguin Magic, I just realized, follows all five of these rules as well. While the site is very different in look and feel (and has a different audience), they're using the same principles.

The amazing thing to me is that none of this is particularly difficult to do, yet it's rare. The state of the art of online retailing is moving very very slowly.

• Email to a friend •

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marți, 4 ianuarie 2011

Mish's Global Economic Trend Analysis

Big 3 Becomes Big 7; More Competition in Cars
S&P 500 PE Ratios Well Above Mean and Median Long-Term Averages; What's Next?
Cash-Strapped States Seek Laws To Curb Labor Union Power
More Bank of America Putbacks Coming; Fraud Exposed

Big 3 Becomes Big 7; More Competition in Cars

Posted: 04 Jan 2011 08:28 PM PST

With the resurgence of GM and Ford, mistakes by Toyota, and records sales by Hyundai, car buyers have more choices than before, and they are using them. Please consider U.S. Car Business in Major Shift.

U.S. auto sales rose 11% in December, capping a year that suggests the industry is on the verge of one of the most dramatic shifts in its history.

For most of the past century, the U.S. car industry was dominated by General Motors Co., Ford Motor Co. and Chrysler Group LLC. Now, as a result of both long-term trends and the upheaval of the last two years, the Big Three are about to be replaced by a Gang of Seven as the industry's driving force.

In 2010, Hyundai Motor Co. saw its U.S. market share climb to just short of 5%. If the Korean auto maker crosses that threshold as expected this year, the U.S. market will have seven manufacturers—GM, Ford, Toyota Motor Corp., Honda Motor Co., Chrysler, Nissan Motor Co. and Hyundai—with market share of 5% or more. That's a dramatic shift from the days when the three Detroit companies dominated the market and dictated the industry's direction.

In 2008 and 2009, the Detroit Three were beaten down by massive losses and, later, bankruptcy. But in 2010, Ford and Chrysler both gained market share. GM, while its share slipped less than a percentage point, is on its way to reporting billions of dollars in profit for 2010 as its sales rise.

Meanwhile, Hyundai, which a decade ago was laughed off as a maker of cheap, small cars, said its December sales climbed 33% to 44,802. For the full year, its sales totaled 538,228, up 24%. It was the first year Hyundai's U.S. sales exceeded 500,000 vehicles.

Light Vehicle Sales By Month

The Wall Street Journal has a nice interactive chart of light vehicle sales, shown above. The spike in August 2009 is "cash for clunkers".

The big winner for December is "Other" with 322,595 out of 1,144,739, a substantial 28.2% of the market.

Other 322,595 - 28.2%
GM 224,127 - 19.5%
Ford 190,191 - 16.6%
Toyota 177,488 - 15.5%
Honda 129,616 - 11.3%
Chrysler 100,702 - 8.8%

Chrysler is long gone from the Big-Three, never to return.

The overall sales numbers look respectable until you total them up.

click on chart for sharper image

Sales are back to 1991 levels. Population adjusted, the chart would look even worse.

Nonetheless many will point to the bailout of GM by the Bush and Obama administrations as a success. Nothing could be further from the truth. It was bankruptcy that saved GM, not a bailout.

GM would have gone bankrupt sooner without government interference and would have recovered sooner as well. There was no need for government to get involved at all.

I always said GM would go bankrupt but survive, and that is what happened. It would have happened just the same without government interference.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

S&P 500 PE Ratios Well Above Mean and Median Long-Term Averages; What's Next?

Posted: 04 Jan 2011 12:30 PM PST

Here is an interesting chart of long-term S&P 500 PE ratios courtesy of multpl.com. I added the annotations in red.

click on chart for sharper image

Two Key Points

1. In spite of what most cheerleaders suggest, this is one strenuously overvalued market.

2. In spite of the crash in 2008 and early 2009, valuations never reached typical bear market trough valuations.

From the FAQ:

The figures on this site are the PE10 or Shiller PE. They are the price to average earnings from the past ten years. Because this factors in earnings from the previous ten years, it is less prone to wild swings in any one year.

To calculate P/E10:

1. Look at the yearly earning of the S&P 500 for each of the past ten years.
2. Adjust these earnings for inflation, using the CPI (ie: quote each earnings figure in 2010 dollars)
3. Average these values (ie: add them up and divide by ten), giving us e10.
4. Then take the current Price of the S&P 500 and divide by e10.

Wildly Optimistic Forward Estimates

Most PE estimates bandied about only look reasonable based on inflated current earnings and wildly optimistic forward earning estimates.

I took a look at forward earnings estimates and the so called Fed-model in The Question "Are Stocks a Screaming Buy Relative to Bonds?" Creates False Premises Here are a few key snips....

Relative Valuation Comparisons are Problematic

The question "Are stocks cheap compared to bonds?" is pretty much like asking "Are rubber bands cheap compared to oranges?"

When both stocks and bonds are unattractive, assuming one has to choose between those classes is tantamount to asking "Would you rather risk losing an arm or a leg?"

The correct answer to that last question is "Why risk either?"

False Premise

Thus, right off the bat, the initial question implies a false premise "Should one be in stocks or Bonds?" Why does it have to be either?

Relative valuation comparisons can get one in all kinds of trouble. Both asset classes may be overvalued or undervalued.

Indeed, If stocks and bonds are richly priced, perhaps one should be in gold, commodities, currencies, cash, or hedged in some fashion. There is absolutely nothing wrong with sitting on the sidelines.

Forward Earnings Estimates Persistently Optimistic For 25 Years

A a McKinsey Quarterly report Equity analysts: Still too bullish
No executive would dispute that analysts' forecasts serve as an important benchmark of the current and future health of companies. To better understand their accuracy, we undertook research nearly a decade ago that produced sobering results. Analysts, we found, were typically overoptimistic, slow to revise their forecasts to reflect new economic conditions, and prone to making increasingly inaccurate forecasts when economic growth declined.

click on chart to expand

Moreover, analysts have been persistently overoptimistic for the past 25 years, with estimates ranging from 10 to 12 percent a year,4 compared with actual earnings growth of 6 percent. Over this time frame, actual earnings growth surpassed forecasts in only two instances, both during the earnings recovery following a recession. On average, analysts' forecasts have been almost 100 percent too high.

Because forward estimates have been far too optimistic and also to eliminate huge earnings spikes, Robert Shiller and sites like multpl.com use 10-year smoothings.

Finally, I do not believe current earnings statements because banks are still hiding losses off the balance sheets, assets are still not marked-to-market, reserves are insufficient to handle upcoming losses, and because various capital-raising efforts required by Basel III have not been implemented.

On that basis, the market (and forward estimates) are both far frothier than the opening chart implies.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Cash-Strapped States Seek Laws To Curb Labor Union Power

Posted: 04 Jan 2011 09:47 AM PST

In a growing, justified wave of public-union resentment, at least 10 states seek to make major changes in labor law. Radical proposals come from newly elected governors in Wisconsin and Ohio.

I heartily endorse Strained States Turning to Laws to Curb Labor Unions

Faced with growing budget deficits and restive taxpayers, elected officials from Maine to Alabama, Ohio to Arizona, are pushing new legislation to limit the power of labor unions, particularly those representing government workers, in collective bargaining and politics.

On Wednesday, for example, New York's new Democratic governor, Andrew M. Cuomo, is expected to call for a one-year salary freeze for state workers, a move that would save $200 million to $400 million and challenge labor's traditional clout in Albany.

But in some cases — mostly in states with Republican governors and Republican statehouse majorities — officials are seeking more far-reaching, structural changes that would weaken the bargaining power and political influence of unions, including private sector ones.

For example, Republican lawmakers in Indiana, Maine, Missouri and seven other states plan to introduce legislation that would bar private sector unions from forcing workers they represent to pay dues or fees, reducing the flow of funds into union treasuries. In Ohio, the new Republican governor, following the precedent of many other states, wants to ban strikes by public school teachers.

Some new governors, most notably Scott Walker of Wisconsin, are even threatening to take away government workers' right to form unions and bargain contracts.

"We can no longer live in a society where the public employees are the haves and taxpayers who foot the bills are the have-nots," Mr. Walker, a Republican, said in a speech. "The bottom line is that we are going to look at every legal means we have to try to put that balance more on the side of taxpayers."

But it is not only Republicans who are seeking to rein in unions. In addition to Mr. Cuomo, California's new Democratic governor, Jerry Brown, is promising to review the benefits received by government workers in his state, which faces a more than $20 billion budget shortfall over the next 18 months.

"We will also have to look at our system of pensions and how to ensure that they are transparent and actuarially sound and fair — fair to the workers and fair to the taxpayers," Mr. Brown said in his inaugural speech on Monday.

Of all the new governors, John Kasich, Republican of Ohio, appears to be planning the most comprehensive assault against unions. He is proposing to take away the right of 14,000 state-financed child care and home care workers to unionize. He also wants to ban strikes by teachers, much the way some states bar strikes by the police and firefighters.

"If they want to strike, they should be fired," Mr. Kasich said in a speech. "They've got good jobs, they've got high pay, they get good benefits, a great retirement. What are they striking for?"

Mr. Kasich also wants to eliminate a requirement that the state pay union-scale wages to construction workers on public contracts, even if the contractors are nonunion. In addition, he would like to ban the use of binding arbitration to settle disputes between the state and unions representing government employees.

Union leaders particularly dread the spread of right-to-work laws, which prevail in 22 states, almost all in the South or West. Under such laws, unions and employers cannot require workers to join a union or pay any dues or fees to unions to represent them.

Unions complain that such laws allow workers in unionized workplaces to reap the benefits of collective bargaining without paying for it.

"They're throwing the kitchen sink at us," said Randi Weingarten, president of the American Federation of Teachers. "We're seeing people use the budget crisis to make every attempt to roll back workers' voices and any ability of workers to join collectively in any way whatsoever."

In Praise of Throwing the Kitchen Sink

I salute governor John Kasich of Ohio and especially Scott Walker in Wisconsin. Walker wants to eliminate the ability of unions to negotiate including decertification.

Please see Wisconsin Governor-Elect Proposes Abolishing State Employee Unions for details.

From Hardball in Wisconsin; Massive Defeat for Unions in Lame-Duck Session

Nationally, we need to kill collective bargaining for all public unions, scrap Davis-Bacon and all prevailing wage laws, mandate Right-to-Work laws, and do something to cleanup untenable public union pension promises, not just going forward, but existing benefits as well.

To do the latter, I propose taxing public union pension benefits above $120,000 at 90%, returning the excess to the pension plans until the plans are fully funded using a reasonable rate of return estimate of the long-term T-Bill rate. That rate is currently 4.25%.

Day of Reckoning Arrives

To fully appreciate the problem, please see 60 Minutes: Day of Reckoning Arrives; Chris Christie "It's Not an Income Problem, It's a Benefits Problem"; Six Common Sense Solutions

It is a statement of fact that public unions in cooperation with corrupt politicians have bankrupted numerous states and nearly every major city in the country. The worst states are those where the unions have been the most in bed with politicians: California, Illinois, New York, New Jersey. None of them are right-to-work states.

Fortunately for New Jersey, governor Chris Christie is turning thing around.

Six Common Sense Solutions

Scrap Davis-Bacon and all prevailing wage laws.
Scrap collective bargaining for public union workers entirely.
Implement national right-to-work laws.
Outsource every public sector job possible including police and fire departments to the lowest cost private sector provider.
Kill defined benefit pension plans for all new hires and for all public employees that do remain in the system.
Tax public union retiree benefits over a certain amount.

Every states should be a right-to-work state. Better yet, the goal should be complete elimination of public union in the country.

Addendum:

The question keeps coming up: "Don't we need to fix problems with executive pay and fraud at banks at the same time?"

Of course not. It would be like saying one should not organize a save the whales campaign unless there was a simultaneous effort to send a man to mars.

Boom-bust cycles are caused by the Fed and Congressional spending. The solution is elimination of the Fed.

City and state bankruptcies are caused by the unions buying votes of corrupt politicians resulting in untenable wage and benefit packages of public unions. Something needs to be done now about pension promises that cannot be met.

Attempts to address both together as one issue is not workable because the problems are not closely related. Banks and the unions would both lobbying against the bill at the same time.

Moreover, executive pay, however outrageous, does not come out of taxpayer pockets. Union benefits do.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

More Bank of America Putbacks Coming; Fraud Exposed

Posted: 04 Jan 2011 12:11 AM PST

Bank of America agreed to settle part of its claim with Fannie and Freddie for $2.8 billion. It appears to have gotten off cheap but Market Watch reports For B. of A., mortgage 'put backs' aren't over

Bank of America Corp. unveiled a $2.8 billion deal with Freddie Mac and Fannie Mae on Monday that settles legal spats over losses on hundreds of billions of dollars in home loans that the lender sold to the government-owned mortgage giants.

However, the agreement only deals with part of Bank of America's exposure to mortgage repurchase, or "put back," requests, according to analysts.

The bank said it paid Freddie Mac $1.28 billion in cash on Dec. 31 to extinguish "all outstanding and potential mortgage repurchase and make-whole claims" from alleged breaches of representations and warranties on home loans sold by Countrywide Financial to Freddie through 2008. This covers 787,000 loans with a total unpaid principal balance of $127 billion, the bank noted.

Bank of America also said Monday that it agreed to pay Fannie Mae $1.52 billion in cash. But this payment only deals with 12,045 Countrywide loans with about $2.7 billion of unpaid principal balance. It also resolves specific outstanding repurchase or make-whole claims, or extends the cure period for missing documentation-related claims, on another 5,760 Countrywide loans with roughly $1.3 billion of unpaid principal balance, the company noted.

"We have largely addressed the remaining GSE repurchase exposure for legacy Countrywide and the other Bank of America entities," Bank of America Chief Financial Officer Charles Noski said during a conference call with analysts on Monday.

However, the payments announced Monday don't eliminate future liability on loans with an unpaid principal balance of $394 billion that Bank of America entities sold to Fannie Mae, according to Chris Gamaitoni and other analysts at Compass Point Research & Trading LLC.

"I'm perplexed by the reaction," Gamaitoni said in an interview.

Bank of America's payment to Fannie Mae only resolved claims currently outstanding, he noted.

"To believe this is dealt with, you have to assume that Fannie will suffer no losses on its remaining exposure" to home loans with an unpaid principal balance of $394 billion, Gamaitoni added.

A bigger concern is potential losses from put back requests from private mortgage investors and insurers, according to Gamaitoni and other analysts.

In August, Compass Point estimated that Bank of America may lose $35 billion from put backs by insurers and private investors in mortgage-backed securities.

Deutsche Bank analyst Matt O'Connor reckons Bank of America could take another $15 billion hit from repurchase requests on so-called private label mortgage-backed securities.

Still, losses from private label mortgage put backs aren't a systemic risk for big banks, according to Bose George, analyst at Keefe, Bruyette & Woods in New York.

With private label securities, the originator must have knowledge of the fraud for the investor suit to have merit. In contrast, sales to Fannie and Freddie have a more absolute standard.

Also, private label securities investors must show that the fraud contributed to their losses — something that's difficult to do as time passes, George noted.

Raise your hand if you think Fannie will suffer no losses on $394 billion in loans and that Bank of America is not at huge risk from other lawsuits.

Courtesy of Zero Hedge here is a sampling of what Countrywide alleged in a prospectus and what was actually delivered.

Owner Occupied Fraud

Loan-To-Value Fraud

For more examples and a very good writeup, please see How Allstate Used Sampling To Confirm BofA/Countrywide Lied About Virtually Everything When Selling Mortgages

Clearly, Bank of America (Countrywide Financial) committed fraud, so the idea that investor lawsuits have no merit is preposterous. Moreover, it is a simple matter of common sense that when Bank of America exaggerated various numbers in its pools, that it "contributed to losses".

Nonetheless, private investor cases will not be decided on the merits of easily visible fraud, or on the basis of common sense, but rather on how much BofA can get tossed out of court on various legal technicalities.

Thus, it is difficult to assess the odds as to what extent Bank of America gets away with its fraudulent endeavors.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

miercuri, 5 ianuarie 2011

SEOmoz Daily SEO Blog

SEOmoz Daily SEO Blog

Rand's Current List of 224 Potential Factors

Michael Gray - Graywolf's SEO Blog

Michael Gray - Graywolf's SEO Blog

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Back to the White House

Seth's Blog : Five ingredients of smart online commerce

Five ingredients of smart online commerce

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marți, 4 ianuarie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

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miercuri, 5 ianuarie 2011

Rand's Current List of 224 Potential Factors

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marți, 4 ianuarie 2011

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