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  • Fri, Nov 21 2008
  • 9:40 AM » Obama’s Challenge: The Mortgage Market
    Published Fri, Nov 21 2008 9:40 AM by The Big Picture
    After he takes office, President-elect Barack Obama will face monumental challenges posed by the U.S. financial system. Some experts say a key is getting money back into the mortgage market. MarketWatch’s Stacey Delo reports. (Nov. 20) 11/20/2008
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:39 AM » The Citi Conundrum
    Published Fri, Nov 21 2008 9:39 AM by www.portfolio.com
    What’s a global bank with a $1 trillion balance sheet to do? Citigroup faces a frightening next few weeks. With recessions around the world threatening to create a new wave of consumer-driven losses for the bank, this week’s cost-cut plan, a focused strategy, and an endorsement from one of your biggest and most influential shareholders are simply not going to cut it. Shares of Citigroup are down 50 percent this week alone and there are no obvious solutions. David Enrich of the Wall Street Journal reports that Citi has now begun weighing whether to sell off pieces of the company or even the company itself. He cautions that these internal discussions are very preliminary and that the chief executive, Vikram Pandit, and the board, remain committed to the bank’s strategy of cutting costs and streamlining to weather the financial storm. Erich Dash and Louise Story of the New York Times pour some cold water on these discussions, saying that “Citigroup executives are seeking to stabilize the stock price, but at this point they are not actively exploring selling or splitting up the company.” And they note there are few buyers willing to pay the prices Citi would seek for its assets. Yves Smith on the Naked Capitalism blog goes further, pointing out that American International Group, the insurer that had to be rescued by the government had more desirable assets than Citi and could not find buyers. “Financial institutions are too capital starved to be sticking their necks out now, and private equity firms cannot meet their target returns without leverage, which they cannot get right now. And who pray tell would buy the entire bank?” So what are the possibilities for Citi? More Government Help. The bank has raised $50 billion in new capital on its own and is getting $25 billion as part of the $125 billion injected into the nation’s nine biggest banks under Tarp. Hits from credit cards, commercial real estate, and consumer lending may produce another $20 billion in losses for 2009...
    Click Here to Read the Full Article

    Source: www.portfolio.com
  • 9:38 AM » JPMorgan to cut 10 pct of investment bank staff
    Published Fri, Nov 21 2008 9:38 AM by Washington Post
    NEW YORK -- JPMorgan Chase & Co. is shedding about 10 percent of its investment bank staff in an effort to better weather the global economic slowdown.
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:38 AM » Ask AP: Importance of housing starts, honeybees
    Published Fri, Nov 21 2008 9:38 AM by Washington Post
    -- American farmers have long worried about the declining population of honeybees, a key crop pollinator. But honeybees originally came from Europe, so can't U.S. farms get by without them _ with a little help from good old American bugs whose ancestors were here before Columbus?
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:38 AM » Small lenders criticise FDIC scheme
    Published Fri, Nov 21 2008 9:38 AM by www.ft.com
    The Federal Deposit Insurance Corporation may revise a $1,400bn programme to guarantee bank debt on concerns the scheme could undermine the market for overnight loans between banks and unfairly disadvantage community lenders
  • Thu, Nov 20 2008
  • 8:05 PM » Citigroup Blames Short Sellers For Collapse
    Published Thu, Nov 20 2008 8:05 PM by feeds.feedburner.com
    Ciitigroup is in deep trouble and here is the proof: . Citigroup Inc., which fell as much as 25 percent in New York trading today, is urging the Securities and Exchange Commission to revive a prohibition on short-selling financial stocks, according to a person familiar with the matter. The bank has also discussed with lawmakers its proposal to reinstitute the ban on bets that share prices will fall, said the person, who declined to be identified because the discussions weren't public. Citigroup, down for eight of the past nine trading days, declined $1.22 to $5.18 on the New York Stock Exchange at 2:37 p.m. Buffeted by four straight quarterly losses, New York-based Citigroup has raised about $75 billion since December by selling assets and equity stakes, including a $25 billion injection from the U.S. Treasury. SEC spokesman John Nester declined to comment. Citigroup spokesman Michael Hanretta didn't return a phone call seeking comment. No One Wants To Comment Since no one wants to comment, I will. It's a sure sign of desperation when companies blame short sellers for company woes. Make no mistake about it, Citigroup is desperate. Let's look at a couple of charts. Citigroup Weekly Waterfall click on chart for sharper image Citigroup 60 Minute Chart click on chart for sharper image Citigroup fell over 20% yesterday and at one point today was down over 30%, closing off $1.69 or 26%. Citigroup's Ridiculous Short Selling Claim Inquiring minds are looking at as of October 28, 2008. Citigroup is blaming shorts when the short interest is under 3%. That's ridiculous. If Citigroup does not understand this, it is a sign of incompetence. If Citigroup does understand how ridiculous their claim looks (and is), that is additional support for the desperation thesis. Note the dividend. Citigroup is paying a dividend when it is clearly in need of capital . Is that a sign of arrogance or incompetence? That Citigroup is in this mess in the first place is clearly...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 8:04 PM » Credit Defaults Swaps Peg Corporate Bond Risk at Record Levels
    Published Thu, Nov 20 2008 8:04 PM by Google News
    As the prospects for the economy deteriorate, the cost of default protection on corporate bonds hit a new high. From Bloomberg: The cost of protecting corporate bonds from default surged to records around the world as the prospect of U.S. automakers filing for bankruptcy protection fueled concern of more bank losses and a deeper recession. “Markets are back in crisis mode,” said Agnes Kitzmueller, a Munich-based credit strategist at UniCredit SpA, Italy’s biggest bank. “There is fear in the market.”... Credit-default swaps on the Markit CDX North America Investment-Grade index jumped 23 basis points to an all-time high 270, according to broker Phoenix Partners Group at 11:15 a.m. in New York. The Markit iTraxx Crossover Index of 50 European companies with mostly high-risk, high-yield credit ratings climbed 37 basis points to 927, having earlier traded at 933, according to JPMorgan Chase & Co. prices in London.... Treasury yields declined to record lows, with two-year notes dropping below 1 percent for the first time, as investors shunned all but the safest assets. Investors face a “poisonous cocktail” of concerns over the collapse in value of mortgage-related assets in the U.S., Jeroen van den Broek, the Amsterdam-based head of credit strategy at ING Groep NV, wrote in a report today. Treasury Secretary Henry Paulson’s decision to abandon plans to buy toxic mortgage assets has driven the price of the securities to record lows, triggering concern of more losses and writedowns at banks. Credit-default swaps on New York-based Citigroup Inc. rose 40 basis points to 405, Phoenix prices show. Contracts on Goldman Sachs Group Inc increased 65 basis points to 400 and Morgan Stanley rose 60 to 515. “Anything’s possible in this market,” said Mark Bayley, a director of credit at ABN Amro Holding NV in Sydney. “You’re seeing sellers of risk and very few buyers. The sellers are becoming more stressed and willing to accept very wide spread levels for corporate bonds.”... Investors...
  • 8:03 PM » Treasury Capital Purchase Program (TARP)
    Published Thu, Nov 20 2008 8:03 PM by Calculated Risk Blog
    Here is the site for the (hat tip Ras Stash) Here are the details released as of Nov 17th: CAPITAL PURCHASE PROGRAM: $158,561,409,000 Total $15,000,000,000 Bank of America Corporation $3,000,000,000 Bank of New York Mellon Corporation $25,000,000,000 Citigroup Inc. $10,000,000,000 The Goldman Sachs Group, Inc. $25,000,000,000 JPMorgan Chase & Co. $10,000,000,000 Morgan Stanley $2,000,000,000 State Street Corporation $25,000,000,000 Wells Fargo & Company $10,000,000,000 Merrill Lynch & Co., Inc. $17,000,000 Bank of Commerce Holdings $16,369,000 1st FS Corporation $298,737,000 UCBH Holdings, Inc. $1,576,000,000 Northern Trust Corporation $3,500,000,000 SunTrust Banks, Inc. $9,000,000 Broadway Financial Corporation $200,000,000 Washington Federal Inc. $3,133,640,000 BB&T Corp. $151,500,000 Provident Bancshares Corp. $214,181,000 Umpqua Holdings Corp. $2,250,000,000 Comerica Inc. $3,500,000,000 Regions Financial Corp. $3,555,199,000 Capital One Financial Corporation $866,540,000 First Horizon National Corporation $1,398,071,000 Huntington Bancshares $2,500,000,000 KeyCorp $300,000,000 Valley National Bancorp $1,400,000,000 Zions Bancorporation $1,715,000,000 Marshall & Ilsley Corporation $6,599,000,000 U.S. Bancorp $361,172,000 TCF Financial Corporation
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:03 PM » $300 Billion in Exotic Mortgages Now Available
    Published Thu, Nov 20 2008 8:03 PM by mrmortgage.ml-implode.com
    FHA is now New Century, IndyMac, Wamu, Lehman and Countrywide all rolled up into one. The failed $300 Billion Hope For Homeowners (H4H) program that the markets heralded when it was announced is getting revamped. This is because it was a bad idea - only 100 applications have been submitted as of Oct 1st. Hear that?!? 100 applications. 100 freaking applications! Its no wonder in the universe why there is no faith in the solons. Remember Dodd and Schumer pumping this with all they had? If they would have just called me, I would have told them it was fundamentally flawed - I wrote about it several time. Now this is just more tax payer money already ear-marked that they will spend however they want. Their choice is to spend the money on more bad loans. Additionally they are going to buy outright worthless second mortgage paper - second mortgages are basically unsecured credit cards and widely unsecured by virtue of the home prices falling below the amounts of the total first and second loan amounts. The reasons for failure are simple - banks do not want to participate because they have to write principal balances down too much and waive second mortgage liens. Getting a bank to waive principal is next to impossible as you know. That is the primary reason for every foreclosure prevention plans failure. Additionally, borrowers simply don’t qualify without exotic-type loan programs. So, what is the solution that FHA came up with? You got it - to change lending guidelines turning FHA into an exotic lender giving borrowers exotic loans. It gets better - they are giving these loans to troubled borrowers in default with their present lender. Brilliant! FHA WILL NOW BE THE BIGGEST EXOTIC, HIGH LTV and HIGH DEBT-TO-INCOME RATIO lender around. Actually folks, because FHA is a government agency you and I are taking the hits for all the losses to come from this program. If this style of lending caused the great mortgage and housing meltdown in the first place, why would issuing new loans...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 8:03 PM » Big banks get crushed
    Published Thu, Nov 20 2008 8:03 PM by CNN
    Bank stocks plunged again Thursday with some of the biggest names in the industry falling to their lowest levels in more than a decade. It's anybody guess when the selloff will end.
  • 4:45 PM » What is the technical definition of “depression”?
    Published Thu, Nov 20 2008 4:45 PM by feeds.feedburner.com
    A guest post from, veteran business journalist and author of the blog , a humorous look at marketing, business and his dog. “People have begun to feel like a Christian Scientist with appendicitis.” — It is difficult to believe but earlier this year people were still debating whether or not we were in a recession. The debate broke down along the lines of, “We haven’t met the technical definition of a recession” vs. “If it smells, like a duck, quacks like a duck and looks like a duck then it’s a duck.” One of the reasons for the debate was because there are so many different definitions of a recession. The standard definition used by idiots and journalists (like me!) is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters. Idiots and economists (like them!) don’t like this because it leaves out the unemployment rate and consumer confidence as indicators. “” Sadly, that’s not going to be an issue this time around. National Bureau of Economic Research (NBER) says a recession is “” A recession runs from when business activity has reached its peak and starts to fall until business activity has bottomed out. When business activity picks up again is called an expansionary period. I like this definition because it would let us say that a depression is the period from the end of the recession until the start of the expansionary period. If there’s no gap between the two then there’s no depression. Like so many other things that we take for granted today, the “recession” idea was invented as a response to the Great Depression. Before then any economic downturn was called a depression. Then the tsunami hit and economists realized they needed to differentiate between it and something that’s just a big wave. So there really is no technical definition for a depression. One guide that’s been offered is that a depression is any economic downturn where real GDP declines by more than 10 percent. While useful this does create some difficulties for the academic...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 4:44 PM » Paulson calls for hedge fund manager oversight
    Published Thu, Nov 20 2008 4:44 PM by Market Watch
    WASHINGTON (MarketWatch)--Treasury Secretary Henry Paulson on Thursday said he wants to see more hedge fund regulation as part of his proposal for creation of a new systemic risk regulator.
  • 4:43 PM » Marsal to take over as Lehman CEO at end of year
    Published Thu, Nov 20 2008 4:43 PM by Reuters
    NEW YORK (Reuters) - Bryan Marsal, currently chief restructuring officer of bankrupt Lehman Brothers Holdings Inc, will take over as chief executive of the company after the close of business on December 31, a lawyer for the company said in court on Thursday.
  • 4:42 PM » Fear Gripping Commercial Real Estate—But Question Is Why?
    Published Thu, Nov 20 2008 4:42 PM by CNBC
    Posted By: I’ve been reporting on Commercial Mortgage Backed Securities today and the fact that despite relatively low rates of default on commercial loans, investors are still running for the hills. The trouble, as with everything in today’s economy, is the unknown. Investors think CMBS is the next shoe to drop. Topics: | | Sectors: | Companies: MEDIA: |
  • 4:41 PM » Paulson: crisis happens once or twice in 100 years
    Published Thu, Nov 20 2008 4:41 PM by Washington Post
    WASHINGTON -- Treasury Secretary Henry Paulson called the financial crisis now plaguing the world economy a "once or twice" in a 100 years event, even as he warned Thursday against imposing too-strict regulations to prevent a repeat calamity.
    Click Here to Read the Full Article

    Source: Washington Post
  • 4:40 PM » Commercial mortgage delinquencies to double in 2009, Fitch says
    Published Thu, Nov 20 2008 4:40 PM by Market Watch
    SAN FRANCISCO (MarketWatch) - Commercial mortgage delinquencies will double next year amid a recession and rising unemployment, Fitch Ratings said on Thursday.
  • 4:40 PM » BoA CEO blames regulators and GSE flaws for crisis
    Published Thu, Nov 20 2008 4:40 PM by Reuters
    CHICAGO (Reuters) - Bank of America Corp Chief Executive Kenneth Lewis on Thursday blamed much of the current credit crisis on lax regulation by state officials and said all "systemically important" financial institutions need some form of federal oversight.
  • 4:40 PM » Citi's Prince Has Come
    Published Thu, Nov 20 2008 4:40 PM by www.portfolio.com
    A t a time when few have much faith in Citigroup, one of the original true believers is making a big show of loyalty. Prince Alwaleed bin Talal of Saudi Arabia, who helped rescue Citi in the early 1990s, says he has increased his stake in the bank to 5 percent. The prince expressed "his full and complete support to Citi management, led by Vikram Pandit, and believes they are taking all necessary steps to position the company to withstand the challenges facing the banking industry and the global economy," according to a statement . The investment should provide relief to a battered stock. Shares of Citi fell 23 percent on Wednesday after the bank said that it would buy back $17.4 billion in assets held by its . The stock is down 78 percent this year. It's not just the prince's money but also his history that might give confidence to investors. He has been the bank's most influential shareholder, supporting the 1998 merger with Sandy Weill's Travelers Corp. and dropping his backing of Charles Prince as chief executive last year. But some have said that his loyalty is largely sentimental (the bank provided him with a loan early in his career) and has clouded his judgment as an investor. Certainly, he has little to show in the way of returns over the last decade with Citi. Alwaleed's stake has been diluted over the last 12 months, falling to under 4 percent, as Citigroup raised some $50 billion in capital. He was overtaken as Citi's biggest investor after the bank agreed to sell a 4.9 percent stake to the Abu Dhabi Investment Authority for $7.5 billion a year ago. Citi is also getting $25 billion under the Treasury's financial rescue plan, TARP. This fall has been a cruel season for Pandit, Citi's chief executive. He lost face with the botched deal for Wachovia, and his plan on Monday to cut more than 50,000 jobs and slash expenses by 20 percent has been met with a less-than-enthusiastic response on Wall Street. But he has apparently...
    Click Here to Read the Full Article

    Source: www.portfolio.com
  • 3:37 PM » Ron Paul on Ron Paul
    Published Thu, Nov 20 2008 3:37 PM by themessthatgreenspanmade.blogspot.com
    Here's Ron Paul talking about his exchange with Fed chief Ben Bernanke the other day and further below is the original clip of the two. Interesting stuff...
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 3:37 PM » Update: Doubt For ResCap As Ongoing Concern`
    Published Thu, Nov 20 2008 3:37 PM by ml-implode.com
    Without GMAC's continued support and the successful execution of this and other initiatives, it is acknowledged that ResCap's days may be numbered.
    Click Here to Read the Full Article

    Source: ml-implode.com
  • 1:46 PM » Default Risk: Not Just for Homeonwners Anymore
    Published Thu, Nov 20 2008 1:46 PM by feeds.feedburner.com
    Homeowners are not the only ones having difficulty paying their mortgages. Owners of commercial properties, from office buildings and industrial parks to malls and resorts to hospitals and medical buildings are all feeling the pressure. And as of Tuesday, the cracks are officially beginning to show. reports that, according to RBS Greenwich data, delinquencies on debt backed by comercial real estate reached 0.78 in October. Further, payment on approximately 35 percent of all sub-prime mortgages backing bonds are 30 or more in arrears. Two large borrowers, Westin and Promenade, are about to default on $334 million in loans bundled into bonds. Both loans were made by J.P. Morgan Chase & Co. These loans may be among the largest and first on the verge of default, but they are not the only one. Extrapolating on the level of enrivonmental site assesments (ESAs) which are the first step in most commerical real estate transactions, the commerical real estate market is slowing down. The number of ESAs conducted across the U.S. fell by 17 percent during the third quarter of 2008 compared to the same quarter in 2007, reports. The deepest decline occured in the West where ESA activity was off by 25 percent. The only region showing an increase in ESA activity was the Northeast with a gain of 11 percent. Unfortunately, the Northeast regional only accounts for about 4 percent of all ESA activity in the nation. Preliminary indications for October reveal a decline in ESA activity of 21 percent nationwide hinting that conditions will continue to worsen as the year ends. At the local level, select metropolitan areas including Washington, DC, Boston, MA and California’s Inland Empire experienced increased ESA activity according to . Washington, DC also appears on ‘ list of top five places to invest in commercial real estate in 2009. Seattle, WA leads the list, which is based on a survey of 700 real estate professionals conducted by the Urban Land Institute, followed by San Francisco...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 1:46 PM » Treasury Yields At Record Lows, Swap Spreads Collapse
    Published Thu, Nov 20 2008 1:46 PM by feeds.feedburner.com
    Once again treasury bears who do not understand the implications of a collapse in credit are taking a beating as . Treasury yields declined to record lows, with two-year notes dropping below 1 percent for the first time, as global stocks slumped and a deepening recession drove investors to the safest assets. Yields on two- and five-year notes and 30-year bonds dropped to the least since the Treasury began regular issuance of the securities. Ten-year note yields touched the lowest since 2003 after yesterday’s release of the minutes of last month’s Federal Reserve meeting showed policy makers expect the economy to contract through the middle of 2009 and more interest-rate cuts may be needed to counter deflation. “Fear is dominating the market place,” said Andrew Richman, who overseas $10 billion in fixed-income assets as a strategist in West Palm Beach, Florida, for SunTrust Bank’s personal asset management division. “People are seeing their net worth evaporate.” My Comment : Is it fear? Perhaps. But if so perhaps the fear is rational. This economy may not come back for years. The 30-year yield fell 19 basis points to 3.72 percent, the lowest level since regular sales started in 1977. Yields on five-year notes declined to 1.92 percent, not seen since 1954, according to data compiled by Bloomberg and the Fed. My Comment : I have been calling for record low yields. So far the only one not to happen is the 10 year note. Some Fed policy makers said they were prepared to cut interest rates further as “more aggressive easing should reduce the odds of a deflationary outcome,” according to minutes of the Oct. 28-29 meeting released yesterday. My Comment : Any cuts by the Fed now are purely symbolic. The Fed Funds Rate is effectively zero. Remember the claim that paying interest on reserves would put a floor under the Fed Fund Rate at 2? Another Bernanke academic solution meets real world experience. Fed officials lowered their economic-growth estimates to zero to 0.3 percent for...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 1:46 PM » America’s Mark-to-Model Banking System (revisited)
    Published Thu, Nov 20 2008 1:46 PM by mrmortgage.ml-implode.com
    Reflection time - earlier in the year I put together a chart for my own personal use showing all financial institutions Level 1, 2 and 3 assets vs their shareholder equity, tier capital etc. After not too long I realized it was a fairly good guide to troubled financial institutions. I posted it on the blog on Oct for all of you guys and got emails about it for a month. I think its time to review the chart because it clearly shows why all this is happening and why TARP could not be used to buy distressed assets. Everyone was focused on Level 3 and glossed right over Level 2, which could be equally as toxic and marked to some sort of internal proprietary modeling system that give these assets much more value than reality. For many of these firms at the top of the list a mere 5% haircut in their Level 2 book renders them insolvent. Remember, its not a liquidity problem, its a solvency problem, which this chart clearly shows. The institutions listed here were my top 25 short picks earlier in the year based upon this chart. Some still look good. Please note that I have not updated this chart completely because I have not had the time but since I have not heard of very many banks selling massive amount of bulk assets, I would assume that these numbers have not shrank, more likely grown. -Best Mr Mortgage America’s Mark-to-Model Banking System Oct 2nd 2008 Is $700bb really enough? Buying distressed assets from banks balance sheets is a waste of money. How insolvent are the nation’s leading banks? Level 1, 2, and 3 assets are ways of classifying a company’s assets based on the degree of certainty around the assets’ underlying value. For example, Level 1 assets can be valued with certainty because they are liquid and have clear market prices. At the other end of the spectrum, Level 3 assets are illiquid and estimating their value requires inputs that are unobservable and reflect management assumptions. Think of it like Prime, Alt-A and subprime mortgage loans for example. Somehow...
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 9:53 AM » Oil falls below $50 a barrel
    Published Thu, Nov 20 2008 9:53 AM by CNN
    The plunge in oil prices continued Thursday with prices falling below $50 a barrel as growing concern about the economy weighed on demand.
  • 9:52 AM » GMAC seeks bailout
    Published Thu, Nov 20 2008 9:52 AM by CNN
    GMAC Financial Services announced Thursday that it is seeking government assistance, trying to access the $700 billion set aside for banks that its parent General Motors has so far been denied.
  • 9:51 AM » Senate to probe bond-ratings firms: report
    Published Thu, Nov 20 2008 9:51 AM by Reuters
    (Reuters) - A U.S. Senate subcommittee is opening a probe into causes of the global financial crisis, focusing in part on whether bond-ratings firms, driven by conflicts of interest, boosted mortgage investments which have since collapsed, the Wall Street Journal said.
  • 9:50 AM » Financials need at least $1 trillion: analyst
    Published Thu, Nov 20 2008 9:50 AM by Reuters
    (Reuters) - The U.S. financial system still needs at least $1 trillion to $1.2 trillion of tangible common equity to restore confidence and improve liquidity in the credit markets, Friedman Billings Ramsey analyst Paul Miller said.
  • 9:50 AM » FHA-Backed Loans: The New Subprime
    Published Thu, Nov 20 2008 9:50 AM by Business Week
    Click Here to Read the Full Article

    Source: Business Week
  • 9:39 AM » Ford’s Most Advanced Assembly Plant (Rural Brazil)
    Published Thu, Nov 20 2008 9:39 AM by The Big Picture
    This is a video of a new Ford plant in Brazil. Butch writes in: Pretty fascinating stuff. No wonder manufacturers want to leave the USA!. The UAW will not allow this to happen in the USA. One look at this and each of you will instantly be able to tell what is wrong with the manufacturing plants of the US car makers and why there will probably never be another one built in the US. It will also point out why more will go off shore. –08/22/2007 Via
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:38 AM » Is Citigroup Failing?
    Published Thu, Nov 20 2008 9:38 AM by Seeking Alpha
    James F. Wood submits: Citigroup (C), along with Band of America (BAC) and JPMorgan (JPM) have been setup by the government as too big to fail. Yet the price action on the Citi stock indicates that the market is getting very close to declaring Citi a failure. Look back to the price action of Bear Stearns preceding its failure. If we soon get massive withdrawals by concerned borrowers, the game is up. No one wants that. Yet, the Fed and Treasury must be in a panic trying to think through how they deal with this situation. There is not another US bank that could buy Citi. Nor is it likely to find a foreign buyer, particularly one that would be acceptable to US authorities. Bankruptcy probably really is unthinkable for Citi.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 9:37 AM » Dr. Duy: Fed Policy Adrift
    Published Thu, Nov 20 2008 9:37 AM by Calculated Risk Blog
    Professor Tim Duy takes a hard look at Bernanke I understand the Federal Reserve Chairman Ben Bernanke is considered something of a sacred cow, our one point of light in an uncertain world. An academic who cannot be questioned by other academics. A smart person who has mastered the Great Depression and therefore “knows” what to do, and is providing the leadership to do it. I am beginning to question all of these assumptions. ... for now, I see a distinct lack of leadership from the Federal Reserve, and it suggests that Bernanke has used up his bag of tricks. And I don’t think that he knows what to do next. Indeed, Fedspeak is now littered with confusing statements that leave the true policy of the Federal Reserve in question. Read it all ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:36 AM » Poole on Quantitative Easing
    Published Thu, Nov 20 2008 9:36 AM by Calculated Risk Blog
    "The FOMC for many years has instructed the open market desk at the New York Fed to keep the actual Fed Funds rate close to the target Fed Funds rate. Clearly in recent weeks, it is not succeeding. As far as I can tell, it can't be trying." William Poole, former President of Fed Bank of St. Louis From Bloomberg: ``There has been a policy shift, but the Fed is not transparently announcing what it is doing and why,'' said former St. Louis Fed President William Poole, now a senior fellow at Cato. ``Monetary policy works best when the markets understand what the central bank is doing.'' ... ``It is a move to quantitative easing, to force lots and lots of reserves into the banking system with the expectation that banks will start to trade them for a higher-yielding asset,'' said Poole, a Bloomberg contributor Click image for video. Poole Sees Evidence of Unannounced Policy Shift at Fed (Source: )
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:35 AM » JP Morgan Predicts That Fed Will Cut Fed Fund Rates to Zero by January
    Published Thu, Nov 20 2008 9:35 AM by Google News
    Bloomberg tells us that JP Morgan has issued a report that contends that the Federal Reserve will cut its policy rate to zero by early next year. While this may prove to be correct, it certainly isn't an obvious move. First, most central banks regard getting below 1% short term rates is dangerous territory. ZIRP (zero interest rate policy) let to a deflationary trap for Japan, and there isn't a particularly good reason to think it will fare better here. In addition, once short term rates fall below 1%, money market funds have trouble operating profitably. The Fed may find itself not merely acting as a big player in the commercial paper market (money market funds are big buyers of CP), but becoming the ONLY player. That would also not be good. From : The U.S. Federal Reserve will probably cut interest rates to zero percent over the next two months to staunch deflation, according to JPMorgan Chase & Co. The Fed will lower borrowing costs by 50 basis points at each of the next two policy meetings on Dec. 16 and Jan. 28, JPMorgan economist Michael Feroli wrote in a note to investors yesterday. The central bank will hold rates at zero for the rest of 2009 to prevent prices from spiraling down as companies cut jobs and banks reduce lending, stifling spending, Feroli said. The Fed may not be the only central bank to begin offering free money to jolt life into their recessionary economies and keep prices rising as the 15-month credit crisis deepens. The Bank of Japan cut its benchmark rate to 0.3 percent last month, and the European Central Bank has signaled it's ready to lower rates further after two reductions in the past six weeks. U.S. consumer prices plunged 1 percent last month, the most since Labor Department records began in 1947, the government said yesterday. Some Fed members indicated a willingness to cut rates to spur growth and keep prices from falling, according to minutes from the last Federal Open Market Committee meeting that were released hours...
  • 9:35 AM » Mortgage Aid: Who is Worthy of Help?
    Published Thu, Nov 20 2008 9:35 AM by feeds.feedburner.com
    A guest post from Frank Shump. Frank is a veteran from the financial services industry, and currently authors a blog called , which documents his thoughts on money matters and his adventures in self employment. Even with bargain hunters starting to come out of the wood work and credit just barely starting to thaw out, things are still fairly bleak in the real estate market. in the third quarter, with foreclosures doing the most damage. Bailout money has been plentiful, from the to Freddie Mac eating such huge losses that it had to tap taxpayer money already. What about struggling mortgage owners, though? The government has clearly stated that they aim to help out the homeowners too, but how will Uncle Sam decide who will get the helping hand? That answer may not come easy. The Bush administration recently announced a new foreclosure prevention program that aims to help troubled borrowers and keep them in their homes. The plan, spearheaded by the Federal Housing Finance Agency, has worked with a coalition of lenders, servicers, investors and community groups called Hope Now to target the “most-at-risk” homeowners. Who does that mean specifically? At present, Fannie and Freddie are looking to extend aid to homeowners that are more than three months past due on their loans so that the most troubled borrowers get the most immediate attention. You’ll have to jump through a few hoops, of course, including having to write a “hardship letter” to explain why you fell behind on your payments for a “good reason.” Good reasons could or could not include job loss, divorce, and medical bills. Borrowers will also have precious little equity in their homes, and if you exceed the mortgage balance by more than 10%, you’re too “well off” to get help. Other homeowners are so far deep underwater that there’s no way to pull them out. If you were already up to your eyeballs in debt and then lost your job for example, you’re out of luck there, too. Prepare for bankruptcy and giving up your...
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    Source: feeds.feedburner.com
  • 9:35 AM » Federal Reserve Out of Firepower
    Published Thu, Nov 20 2008 9:35 AM by feeds.feedburner.com
    A guest post from Frank Shump. Frank is a veteran from the financial services industry, and currently authors a blog called , which documents his thoughts on money matters and his adventures in self employment. Thus far, all indications seem to lead us to believe that the Federal Reserve can solve economic problems by throwing massive amounts of money at it. From , to in order to stimulating lending, to the $700 billion financial bailout that’s constantly shifted from a package aimed squarely at aiding struggling financial institutions to helping out consumer debt firms as well. With all of this money being tossed around and historic, unprecedented actions taken place, is there anything at all left that the Federal Reserve can do to stop us from going into a recession? According to Kansas City Federal Reserve President Thomas Hoenig, no, no there is not. “The Fed has done about as much as it can do, we might put it out there, but banks are not able to, given their own capital constraints, able to lend as aggressively.” If Hoenig is right on the mark with that statement, and the recession continues to worsen, then there isn’t much more that the Fed can do to help us out of it. If and when it comes to it, we’re just going to have to suck it up and continue to tighten the belt. Unfortunately that certainly isn’t the answer that automakers in the U.S. want to hear. Talks between congressional Democrats and the Bush administration seemed to be bottoming out recently. Democrats in the Senate insisted that they’ll try and , but talks have been ground out to a stalemate, and they don’t have the votes to do so without that support. Republicans, for their part, believe that the $25 billion loan should actually come from a loan program previously approved to help them develop more fuel-efficient vehicles. That could change when Obama takes office, however. The Bush administration recently told top lawmakers that half of the $700 billion bailout fund will not go anywhere before...
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    Source: feeds.feedburner.com
  • 9:23 AM » 2009-2013 Mortgage Volume Forecasts
    Published Thu, Nov 20 2008 9:23 AM by Market Watch
    Emergent, a Des Moines, Iowa-based market research, forecasting and advisory services firm for the financial services, mortgage and real estate industries, issued its Mortgage Volume Forecasts for 2009 -- 2013, including its Market Behavior Metrics tables, in order to provide lenders details on the size, density and speed of growth of mortgage lending opportunities.
  • Wed, Nov 19 2008
  • 5:58 PM » A Foreclosure Solution so Simple it Would Work
    Published Wed, Nov 19 2008 5:58 PM by yourmortgageoryourlife.wordpress.com
    "That's right - a solution to the foreclosure problem that would save banks from certain ruin, keep homeowners in their homes instead of out on the streets and onto Public Assistance, put a bottom on the housing price crash while allowing for high-cost areas to come into par with median income levels, and save the taxpayer trillions of dollars in debt that is to be piled on to the trillions of dollars in debt we already own. Sound too good to be true? That is understandable considering the constant barrage and misinformation being shoveled by the Federal Government's sycophants like Paulson and Bernanke, the ridiculous political posturing of Barney Frank and his faux-hearings orchestrated to merely put the "official story" into the congressional record, and the complete and utter surrender of the Fourth Estate to news cycles and sound-bites. The newest old proposal you have never heard of: Saving Family Homes Act."
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    Source: yourmortgageoryourlife.wordpress.com
  • 5:57 PM » CMBS: Still Melting
    Published Wed, Nov 19 2008 5:57 PM by Seeking Alpha
    submits: The implosion of the CMBS market continues today. AAA tranches of the CMBX are 100 basis points wider. Cash bonds are 200 basis points wider. As an aside, I lack proficiency in the world of CMBS so if someone sees an error please jump in and correct me. Anyway, the cash AAA bonds which I note above are super senior and are packaged for the bondholders’ enjoyment with 30 percent credit enhancement. They are designed to absorb enormous stress. I am not sure how much the landscape would need to mimic 1929 before these things are wounded, but they are designed to withstand a lot of pain.
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    Source: Seeking Alpha
  • 5:56 PM » Comparing Stock Market Crashes
    Published Wed, Nov 19 2008 5:56 PM by Calculated Risk Blog
    Click on graph for larger image in new window. This is an update to a graph that Will sent me comparing four stock market crashes. Note: updated with intra-day prices with S&P 500 at 828. This is an epic crash, and I'll add the Great Depression soon.
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    Source: Calculated Risk Blog
  • 5:55 PM » Paulson's Explanation Leaves More Questions
    Published Wed, Nov 19 2008 5:55 PM by Business Week
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    Source: Business Week
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