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  • Mon, Mar 2 2009
  • 3:58 PM » TMZ Story Forces Bank to Return $1.6 Billion!!!!
    Published Mon, Mar 02 2009 3:58 PM by
    How's this for action. Northern Trust -- the bank TMZ exposed this week for throwing a series of lavish parties and concerts in L.A. -- is giving back the $1.6 billion in federal bailout money!
  • 2:13 PM » BofA chief calls Merrill aid 'tactical mistake'
    Published Mon, Mar 02 2009 2:13 PM by
    Bank of America's request for $20bn of government money to prop up its acquisition of Merrill Lynch was a "tactical mistake" that made the bank appear as weak as Citigroup, Ken Lewis, BofA's chief executive told the Financial Times
  • 2:13 PM » HSBC to cut more than 6,000 U.S. jobs
    Published Mon, Mar 02 2009 2:13 PM by CNN
    European bank HSBC is shuttering hundreds of branches in the U.S. that specialize in mortgage and consumer lending, and axing thousands of jobs, as it pulls back from its foray into the American housing market.
  • 9:31 AM » Pimco advising U.S. government on BofA: report
    Published Mon, Mar 02 2009 9:31 AM by Reuters
    (Reuters) - Pacific Investment Management has been hired to advise the U.S. government on the value of $118 billion of assets guaranteed in the bailout of Bank of America Corp , Bloomberg said, citing two people with knowledge of the decision.
  • 9:31 AM » Getting Home Buyers Off the Sidelines
    Published Mon, Mar 02 2009 9:31 AM by Washington Post
    How to rescue housing? The Obama administration doesn't have a plan -- or, more accurately, it has only half a plan. It presupposes that preventing or minimizing home foreclosures is a formula for revival. It isn't.
    Click Here to Read the Full Article

    Source: Washington Post
  • Sat, Feb 28 2009
  • 12:57 PM » February Economic Summary in Graphs
    Published Sat, Feb 28 2009 12:57 PM by Calculated Risk Blog
    Here is a collection of 20 real estate and economic graphs from February ... Click on graphs for larger image in new window. New Home Sales in January The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted). Note the Red column for January 2009. This is the lowest sales for January since the Census Bureau started tracking sales in 1963. (NSA, 23 thousand new homes were sold in January 2009). From: Housing Starts in January Total housing starts were at 464 thousand (SAAR) in January, by far the lowest level since the Census Bureau began tracking housing starts in 1959. Single-family starts were at 347 thousand in January; also the lowest level ever recorded (since 1959). From: Construction Spending in December This graph shows private residential and nonresidential construction spending since 1993. Residential construction spending is still declining, and now nonresidential spending has peaked and will probably decline sharply over the next 18 months. From: January Employment Report This graph shows the unemployment rate and the year over year change in employment vs. recessions. Nonfarm payrolls decreased by 598,00 in January, and the annual revision reduced employment by another 311,000 in 2008. The economy has lost almost 2.5 million jobs over the last 5 months! The unemployment rate rose to 7.6 percent; the highest level since June 1992. Year over year employment is now strongly negative (there were 3.5 million fewer Americans employed in Jan 2008 than in Jan 2007). From: January Retail Sales This graph shows the year-over-year change in nominal and real retail sales since 1993. Although the Census Bureau reported that nominal retail sales decreased 10.6% year-over-year (retail and food services decreased 9.7%), real retail sales declined by 10.9% (on a YoY basis). The YoY change decreased slightly from last month. From: LA Port Traffic in January This graph shows the combined loaded inbound and outbound traffic at the ports of and in TEUs (TEUs...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 12:56 PM » Berkshire Reports Worst Year Ever
    Published Sat, Feb 28 2009 12:56 PM by WSJ
    Berkshire Hathaway's net sank 96% in the fourth quarter. Warren Buffett said credit markets turned "nonfunctional."
  • 12:56 PM » Why Some 'Weathy' Americans May Avoid Higher Taxes
    Published Sat, Feb 28 2009 12:56 PM by CNBC
  • 12:56 PM » Obama Defends His Budget as ‘a Threat to the Status Quo’
    Published Sat, Feb 28 2009 12:56 PM by NY Times
    Saying he would defend his budget plan, President Obama on Saturday cast himself as a populist crusader willing to do battle with special interests.
  • Fri, Feb 27 2009
  • 9:44 PM » Regulators close banks in Illinois, Nevada
    Published Fri, Feb 27 2009 9:44 PM by Washington Post
    NEW YORK -- Regulators on Friday closed Heritage Community Bank in Illinois, and Security Savings Bank in Nevada, marking 16 failures this year of federally insured institutions.
    Click Here to Read the Full Article

    Source: Washington Post
  • 9:44 PM » AIG talks weigh securitizing life policies: source
    Published Fri, Feb 27 2009 9:44 PM by Reuters
    NEW YORK (Reuters) - American International Group Inc may securitize some U.S. life insurance policies and have the interest rate on a government loan lowered, as talks continue to help the insurer deal with its financial problems, a source familiar with the matter said on Friday.
  • 9:44 PM » The Fed: Fed presidents square off over credit policy
    Published Fri, Feb 27 2009 9:44 PM by Market Watch
    Two Federal Reserve bank presidents square off over the central bank’s new credit easing policy, with one describing it as essential and the other saying the jury is still out.
    Published Fri, Feb 27 2009 5:40 PM by Fannie Mae
    FannieNeighbors® is a nationwide, neighborhood-based mortgage option designed to increase homeownership and revitalization in census tracts designated as underserved by the U.S. Department of Housing and Urban Development (HUD).
  • 1:55 PM » Chase: Two-Thirds of WaMu Mortgages Impaired
    Published Fri, Feb 27 2009 1:55 PM by
    More interesting tidbits from Chase’s investor day. Chase said two-thirds of the $173.5 billion in mortgages picked up via its acquisition of Washington Mutual assets were deemed “impaired.” That’s $116.7 billion in bad loans, though Chase said it has already written down their value to $88.8 billion. A hefty 82 percent of the pay option arms are considered [...]
    Click Here to Read the Full Article

  • 1:19 PM » Economic Data Cheat Sheet
    Published Fri, Feb 27 2009 1:19 PM by US Treasury
    Quarterly Economic Statistics
  • 11:34 AM » Treasury Announces Participation in Citigroup's Exchange Offering
    Published Fri, Feb 27 2009 11:34 AM by US Treasury
    Citigroup is planning to strengthen its capital structure through conversion of a significant portion of its preferred securities to common equity in a series of exchange offers.
  • 8:59 AM » Citigroup: World’s Worst Investment to Get Even Worse
    Published Fri, Feb 27 2009 8:59 AM by The Big Picture
    Losers double down. That’s the classic trading rule which the USA is about to violate in an enormous way. According to trading maven , one should “never, ever, ever, under any circumstance, add to a losing position.” And yet that is what we are about to do. To review: Former Treasury Secretary Hank Paulson made a terrible investment on behalf of the taxpayers by purchasing a 7.8% stake in Citigroup (C) for an initial $25 billion dollars. He further put the US on the hook by guaranteeing against 90% of future losses on $301 billion in assets. Subsequently, we (the taxpayers) injected another $20 billion dollars. At the time, Citigroup had a market cap of about ~$50 billion dollars. Today, its worth ~$13 billion. So for about 100% of the market value of Citi, plus insurance guarantees worth of as much as 500% of its value (~$275 billion), we got less than 1/10 of a company that in total was worth 1/5 of our investment. Pretty good deal, eh? That $45 billion dollar stake now has a market value of just over a billion. And, its about to get even worse. Rather than do what is the FDIC-mandated-by-law thing, we will instead convert the nearly worthless common into preferred shares. The taxpayers stake will rise to near 40% of Citigroup. NYT: “Under the terms of the deal, the Treasury Department has agreed to convert up to $25 billion of its preferred stock investment in Citigroup into common stock. It will convert its stake to the extent that Citigroup can persuade private investors, including several big foreign government investment funds, to do so alongside the government, two people close to the deal said.” What does this do for us? Well, the higher investment stake creates an enormous incentive for John Q. Public to continue to pour money into Citi, regardless of valuation. The inept banking giant then has access to infinite amount of capital, courtesy of you, the 1040 filers. Its just another example of why these insolvent banks should be nationalized, or for you squeemish...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 8:58 AM » NAHB To Obama: “Robbing Peter To Pay Paul Won’t Work”
    Published Fri, Feb 27 2009 8:58 AM by
    It’s not often that I agree with the NAHB. [National Association of Home Builders] However, when I read that they felt that financing the president’s health care initiative by reducing the value of mortgage interest and RE tax deductions could be counterproductive, I thought they had a point: WASHINGTON–(BUSINESS WIRE)–Joe Robson, chairman of the National Association of Home Builders (NAHB), today issued the following statement on President Obama’s proposal to reduce the value of the mortgage interest and real estate tax deductions for home buyers and home owners in order to pay for an expanded health care initiative: “With the housing market still reeling from its worst downturn since the Great Depression, this is not the time to talk about raising taxes on home buyers and home owners. This proposal will increase the cost of housing for many middle-class families, particularly in high-cost areas such as California and the Northeast, which will only further undercut the housing market, exert more downward pressure on home values and work against the President’s efforts to stabilize housing and turn this economy around. “The proposed budget would also tax a ‘carried interest’ as ordinary income, which could significantly impact the multifamily and commercial real estate sectors at a time when they are already experiencing a severe downswing. At this critical point in the recession, we should be doing everything we can to stimulate demand in housing and avoid proposals that would reduce housing affordability and further destabilize prices. “The notion of ‘robbing Peter to pay Paul’ just won’t work. Not when the stakes are so high with our economy. This week alone, existing home sales dropped another 5.3 percent and new homes sales plunged 10.2 percent. Inventory of unsold homes is at an all-time high. Financing health care reforms by chipping away at the mortgage interest and real estate tax deductions is certainly not the answer. This will only hurt the ailing housing...
    Click Here to Read the Full Article

  • 8:58 AM » Treasury to take 36% Citi stake
    Published Fri, Feb 27 2009 8:58 AM by
    The US Treasury is to convert some of the preferred stock it holds in struggling Citigroup into common stock, a step that will give it a significant stake in the bank
  • 8:58 AM » Bank failures put pressure on FDIC
    Published Fri, Feb 27 2009 8:58 AM by
    The list of 'problem' banks grew by almost 50 per cent in the fourth quarter, the Federal Deposit Insurance Corporation said, stoking fears that further bank failures could put the agency's deposit insurance fund under severe pressure
  • Thu, Feb 26 2009
  • 5:18 PM » HUD secretary, Congress debate foreclosure plans
    Published Thu, Feb 26 2009 5:18 PM by Washington Post
    WASHINGTON -- Against a backdrop of record-low new home sales, Housing Secretary Shaun Donovan told lawmakers the lending industry is set to launch the Obama administration's $75 billion foreclosure prevention program next week.
    Click Here to Read the Full Article

    Source: Washington Post
  • 5:18 PM » Judge tosses most claims in Citigroup lawsuit
    Published Thu, Feb 26 2009 5:18 PM by Washington Post
    DOVER, Del. -- Corporate directors cannot be held liable for taking risks that result in enormous financial losses unless they do so in bad faith or with conscious disregard of their fiduciary obligations to the company, a Delaware judge has ruled in a lawsuit brought by Citigroup shareholders.
    Click Here to Read the Full Article

    Source: Washington Post
    Published Thu, Feb 26 2009 5:03 PM by
    “Where’s the bottom?” someone shouted at a recent PIMCO staff meeting. “Which market?” I shot back, which sort of ended the conversation, but provided little else in the way of an answer.
    Click Here to Read the Full Article

  • 4:48 PM » Problem bank list tops 250
    Published Thu, Feb 26 2009 4:48 PM by CNN
    The government's closely watched list of troubled banks grew during the fourth quarter to its highest level since 1994, regulators said Thursday.
  • 4:48 PM » SunTrust CEO Accepts Bailout, Pay Raise
    Published Thu, Feb 26 2009 4:48 PM by
    Here's yet another firm that refuses to believe that executive compensation should reflect company performance: Prior to accepting federal bailout money SunTrust Bank (STI) granted CEO James M. Wells III a massive pay raise. According to a proxy filed this Monday with the Securities and Exchange Commission the company's board of directors raised Wells' total compensation over 75% to almost $8.1 million. Last year Wells' base salary jumped 7.7% to roughly $1.1 million; he also received stock options worth $2.1 million and restricted shares totaling $4.7 million. Given the fact that SunTrust stock dropped 54% in 2008 and an ...
    Click Here to Read the Full Article

  • 3:39 PM » Federal Reserve Agency MBS Purchases
    Published Thu, Feb 26 2009 3:39 PM by NY Fed
    FED BUYS $24.999BN MBS
  • 2:32 PM » FDIC Closes on a $1.45 Billion Sale of Distressed Loans
    Published Thu, Feb 26 2009 2:32 PM by
    FDIC Closes on a $1.45 Billion Structured Sale of Distressed Loans
  • 12:56 PM » Obama's Budget
    Published Thu, Feb 26 2009 12:56 PM by
    The full text
    Click Here to Read the Full Article

  • 12:01 PM » FDIC: $1.45 Billion in Distressed Loans Sold
    Published Thu, Feb 26 2009 12:01 PM by Calculated Risk Blog
    From the FDIC: The Federal Deposit Insurance Corporation (FDIC) today announced the conclusion of the sale of $1.45 billion of performing and nonperforming residential and commercial construction loans in distressed markets through the use of two private/public partnership transactions. ... In the two recent transactions, the FDIC placed the loans, which were exclusively from the failed First National Bank of Nevada, into a limited liability corporation (LLC). The FDIC retained an 80 percent interest in the assets with the winning bidder picking up an initial 20 percent stake. Once certain performance thresholds are met, the FDIC's interest drops to 60 percent. The future expenses and income will be shared on the percentage ownership of the purchaser and the FDIC. ... The successful bidders on the two transactions were Diversified Business Strategies and Stearns Bank NA. ... The closure of this sale brings the total amount of assets sold utilizing private/public partnership transactions to approximately $3.2 billion over the last year, in five separate transactions. Although this press release doesn't provide all the details, there is clearly a market for these assets (the FDIC received 30 bids) - so these bids could help value assets at the 19 largest banks. Unfortunately I doubt they will use these prices ...
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 11:00 AM » Chase Banking Chief Says Loan Mod Re-Default Rate Not So Bad
    Published Thu, Feb 26 2009 11:00 AM by
    JP Morgan Chase’s retail banking chief Charles Scharf told shareholders the delinquency rate on modified mortgages isn’t as bad as what’s been tossed around lately. During the company’s investor day in New York, he said loan modifications can be successful “if done properly,” meaning if important things like income are actually verified the second time around. He [...]
    Click Here to Read the Full Article

  • 11:00 AM » Schumer Says 2/3 of Mortgage Servicers on Board Obama Foreclosure Boat
    Published Thu, Feb 26 2009 11:00 AM by
    It appears that 2/3 of mortgage servicers are on board the Obama foreclosure boat has it heads to neighborhoods to rescue struggling homeowners. The boat is leaving the port very soon and the remaining mortgage hold outs will most likely will drown in a sea of bad PR if they don’t jump on the Obama [...]
    Click Here to Read the Full Article

  • 11:00 AM » Report: AIG Discussing "Radical Restructuring"
    Published Thu, Feb 26 2009 11:00 AM by Calculated Risk Blog
    From the Financial Times: AIG and the US authorities are in advanced discussions over a radical restructuring that would split the stricken insurer into at least three government-controlled divisions in an attempt to keep it afloat... Under the plan, the government would swap its current 80 per cent holding in the insurer for large stakes in three units – AIG’s Asian operations, its international life insurance business and the US personal lines business. A fourth unit, comprised of AIG’s other businesses and troubled assets, could also be formed. In return, the authorities would relax the terms, or even cancel a large portion, of a $60bn five-year loan to AIG and convert $40bn-worth of preferred stock into shares... AIG was on track to announce the overhaul on Monday, when it is expected to report a $60bn loss with its fourth-quarter results. The board is due to meet on Sunday. Citi and AIG are keeping us waiting.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:46 AM » JPMorgan warns of more housing woes
    Published Thu, Feb 26 2009 10:46 AM by CNN
    JPMorgan Chase warned of more housing weakness across its mortgage portfolio this year and also said it would cut more jobs related to its purchase of failed savings and loan Washington Mutual than originally planned.
  • 10:45 AM » Citi near deal with government - report
    Published Thu, Feb 26 2009 10:45 AM by CNN
    Citigroup is nearing an agreement with federal regulators to increase the government's stake in the bank to as much as 40%, according to a published report.
  • 10:44 AM » Mortgage relief bill set for House vote Thursday
    Published Thu, Feb 26 2009 10:44 AM by Washington Post
    WASHINGTON -- Debt-strapped homeowners facing foreclosure could resort to bankruptcy to force reductions in their monthly mortgage payments under a measure awaiting a House vote.
    Click Here to Read the Full Article

    Source: Washington Post
  • 10:44 AM » Banking regulator says U.S. not pursuing nationalization
    Published Thu, Feb 26 2009 10:44 AM by Reuters
    NEW YORK/WASHINGTON (Reuters) - U.S. banking regulators are not pursuing nationalization of troubled institutions struggling to shed toxic assets from their balance sheets, the chairman of the Federal Deposit Insurance Corp said on Wednesday.
  • 10:44 AM » Malls Race to Stay Relevant in Downturn
    Published Thu, Feb 26 2009 10:44 AM by WSJ
    An aging mall in Pennsylvania is fighting to reinvent itself amid the toughest climate for retailers in decades.
  • Wed, Feb 25 2009
  • 2:23 PM » Stop bailing out 'good' banks!
    Published Wed, Feb 25 2009 2:23 PM by CNN
    Northern Trust has quickly learned that you can't conduct business as usual when you're on the government dole.
  • 12:34 PM » Is the Fannie-Freddie debacle the result of a backroom deal?
    Published Wed, Feb 25 2009 12:34 PM by The Big Picture
    Edward Harrison is a banking and finance specialist at the economic consultancy Global Macro Advisors focusing on global economics and corporate strategy. Previously, he worked in various consulting, strategy and M&A roles at Deutsche Bank, Bain Consulting, the Corporate Executive Board and Yahoo. He publishes regularly at . ~~~ Everyone should recall that Fannie Mae and Freddie Mac were forced to massively increase their already bloated balance sheet in the aftermath of the collapse. It seems reasonable to me to assume that the two organizations did so only because they were given an implicit guarantee at the time by the government officials involved. Here is my train of thought. In March, the Federal Government offered up this plan: If the GSEs offered (were coerced) to buy up massive amounts of mortgages even though it would bankrupt them, the Federal Government promised to nationalize the two companies, effectively guaranteeing all of the debt issued by the two and solving a nightmare problem. Later, when the mortgages they owned had to be written down by hundreds of billions or trillions of dollars, it wouldn’t matter because the mortgages would be government-owned. The Treasury would simply issue more debt and the taxpayers would absorb these losses. How it happened In early March the markets were in such turmoil that the global monetary authorities were forced to inject massive liquidity into the market. The U.S. , the European Central Bank and in the UK, Canada and Switzerland will inject billions of dollars into money markets.The news cheered investors and U.S. stocks surged more than 3% - their biggest one-day gain in five years. The injection of more than $200bn is aimed at easing the credit crunch and its impact on the wider economy. - One of the problems creating the panic on Wall Street was Bear Stearns. Rumours were going around that Bear had liquidity problems. The money injections by the central banks were an attempt to dampen the volatility. Nevertheless...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 11:46 AM » Treasury Department Touts Expanded Tax Credit for First-Time Homebuyers
    Published Wed, Feb 25 2009 11:46 AM by US Treasury
    In an ongoing effort to deliver on swift implementation of the Obama Administration's recovery, stability and affordability plans, the U.S. Department of the Treasury touted today the availability of an expanded tax break for first-time homebuyers – a provision under the American Recovery and Reinvestment Act of 2009 that will make up to $8,000 available now to qualifying taxpayers who buy homes this year.
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