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  • Tue, Dec 16 2008
  • 11:04 AM » Backwardation That Shook the World
    Published Tue, Dec 16 2008 11:04 AM by
    by Antal Fekete. "On Friday, December 12, backwardation on gold was still in force at an annualized discount rate hovering around 2% in the December contract, and 0.3% in February contract. Many readers have asked me how it is that so many other observers fail to see the backwardation."
    Click Here to Read the Full Article

  • 11:04 AM » Bank of America stock could sink to $9: analyst
    Published Tue, Dec 16 2008 11:04 AM by Reuters
    NEW YORK (Reuters) - Bank of America Corp was rated "underperform" by Friedman, Billings, Ramsey Group Inc analyst Paul Miller in a note, citing the bank's "thin tangible common equity" as a chief concern.
  • 9:45 AM » Goldman takes $2.12 billion hit, posts first loss
    Published Tue, Dec 16 2008 9:45 AM by Market Watch
    NEW YORK (MarketWatch) -- Goldman Sachs, long viewed as the gold standard among Wall Street investment firms, saw its results crash to Earth during its fourth quarter, and on Tuesday reported its first loss since going public almost a decade ago.
  • 8:11 AM » HSBC details exposure to Madoff
    Published Tue, Dec 16 2008 8:11 AM by Market Watch
    Hong Kong-listed shares of HSBC Holdings trade modestly lower Tuesday after it emerges the bank ranks as one of the biggest victims of the funds fiasco linked to Bernard Madoff, the fund manager charged with securities fraud last week.
  • 8:10 AM » GMAC Bank Conversion Plan Gains Support
    Published Tue, Dec 16 2008 8:10 AM by Washington Post
    Investors holding about $10.5 billion of GMAC bonds agreed to sweetened terms of a debt swap, bringing the auto and home lender closer to its goal of becoming a bank and getting a federal bailout.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:10 AM » Pelosi Pushing Mortgage Relief
    Published Tue, Dec 16 2008 8:10 AM by Washington Post
    House Speaker Nancy Pelosi said yesterday that the Bush administration must do more to help struggling borrowers stay in their homes before Congress will agree to release any more money to the Treasury Department's financial system bailout effort, which is running low on cash.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:10 AM » SEC Didn't Act on Madoff Tips
    Published Tue, Dec 16 2008 8:10 AM by Washington Post
    The Securities and Exchange Commission learned about what it describes as one of the largest securities frauds in history when Bernard L. Madoff volunteered his confession, raising questions about the agency's ability to police the financial marketplace.
    Click Here to Read the Full Article

    Source: Washington Post
  • 7:37 AM » Thoughts Ahead of an Unusual FOMC Meeting
    Published Tue, Dec 16 2008 7:37 AM by The Big Picture
    Good Evening: While the news flow affecting our capital markets has remained unswervingly negative over the past few days, the U.S. stock market has managed to hold up relatively well. Rather than ascribing this recent resiliency to an increase in the number of values on offer, it is perhaps possible that investors are hoping the Fed’s two day meeting somehow yields a pleasant surprise. If so, then the U.S. dollar (and later, Treasurys?) may switch positions in the performance tables with commodities in 2009. As last week limped to a close, jobless claims soared, retail sales dove, and the automakers stood just outside of bankruptcy court. Pushing Rick Wagoner off the front page, Bernard Madoff then managed to slip past the Big 3 and register a rare double: he appeared in criminal court while his previously large investment fund became the subject of a bankruptcy proceeding (see below). Mr. Madoff’s confessed behavior put an exclamation point on a week that might be described as fitting only for a Hall of Shame. Along with earlier candidates, Rod Blagojevich, Marc Dreier, Franklin Raines, and Richard Syron, Mr. Madoff is now eligible for the Gulag treatment I mentioned last week. And yet, in spite of all this negativity, stocks closed the week on an up note. Many market veterans could only shake their head in wonder. Heading into today, U.S. stock index futures were pointing higher in the wake of positive action overnight in overseas bourses. After opening mixed to a bit higher, the major averages headed south as they digested the latest batch of poor economic news (see below). The Empire manufacturing survey remained in decidedly negative territory, industrial production and capacity utilization both tailed off last month, the housing market index stayed in record low territory, and the Treasury International Capital (TIC) report revealed that foreign appetites for long term U.S. assets dropped to a mere $1 billion in October (see Merrill’s take below). One month’s...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 7:37 AM » Alan Greenspan's collapsing reputation
    Published Tue, Dec 16 2008 7:37 AM by
    In in the current issue of Time Magazine, there are dozens of categories for which editors have compiled a top ten list based on the events of the last year. From the serious (Top Medical Breakthrough: First Neurons Created from ALS Patients) to the sublime (Top Sports Moment: Tiger's One-Legged Roar), the list encapsulates much of what will be remembered in 2008. From the silly (Top Strange Baby Name: Bronx Mowgli by Ashlee Simpson) to the insignificant (Top Jerry Stiller Word: Falafel), it will be looked back upon as a snapshot of our culture during this time. A new category appears this year which, hopefully, will not become a regular item for this December issue in the years ahead - . All of the expected entries are there - Lehman Brothers, AIG, Fannie and Freddie, hedge funds, and more. Interestingly, of the top ten collapses listed, only was a reference to an individual.
    Click Here to Read the Full Article

  • Mon, Dec 15 2008
  • 3:12 PM » Fitch Warns on Alt-A
    Published Mon, Dec 15 2008 3:12 PM by Calculated Risk Blog
    From HousingWire: Citing “a rapid deterioration of U.S. Alt-A RMBS performance,” Fitch Ratings again took the hatchet to its previous assumptions for Alt-A mortgages on Monday morning, revising its surveillance methodology and updating loss projections for all U.S. Alt-A RMBS. Hoocoodanode?
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 12:19 PM » Recession Adds to WTC Troubles
    Published Mon, Dec 15 2008 12:19 PM by WSJ
    The recession has cast uncertainty on plans for the office space at the World Trade Center, likely leading to more delays in rebuilding the site.
  • 12:19 PM » ‘Spaceship House’ To Be Auctioned in Tennessee
    Published Mon, Dec 15 2008 12:19 PM by WSJ
    Courtesy of Crye-Leike Auction Sushil Cheema reports: From the looks of it, E.T. has come back to Earth and set up shop in Signal Mountain, Tenn. At least, that’s what one might think upon stumbling across the house designed like a spaceship at 1408 Palisades Road. Star Trek fans—or lovers of quirky architecture—now have a chance to buy the house at auction on Sunday. Known as “The Spaceship House,” the building was the creation of Curtis King, who spent $250,000 to have it built for his son in 1973, according to Terry Posey, an auctioneer with Crye-Leike Auction of Cleveland, Tenn., who will be running Sunday’s auction. Made of steel and concrete, the structure provides nearly 2,000 square feet of living space, including three bedrooms, two full bathrooms, a bar and entertainment area. The rooms are round, just like the house itself, and are situated around a central point. The house includes the original fixtures. A retractable staircase serves as the entrance to the house, but it is broken and remains in the “down” position. The Spaceship House changed hands a few times over the years. The current owner, a local man who once owned a furniture business and who is now a real estate investor, wishes to remain anonymous. He bought the property in the fall of 2007 for $165,000, but has never lived there. “Due to health issues, he’s liquidating all his local property and holdings with plans to relocate to Florida,” Mr. Posey writes in an email, adding that the owner wants to unload the property as soon as possible. At the auction, there will be no minimum bid for the property and no reserve. “He trusts that the public will give him all that they are willing to give for it,” says Tony Young, another Crye-Leike auctioneer. The winning bidder must pay a non-refundable deposit of 20%. Crye-Leike previously auctioned the house in March with a winning bid of $135,000 from an Ohio buyer who put down a 10% non-refundable deposit. That deal fell through. The current auction has...
  • 11:46 AM » How Lehman's fall created a global panic
    Published Mon, Dec 15 2008 11:46 AM by CNN
    The world changed forever on Sept. 15, 2008, the Monday Meltdown, a day that will live in the annals of finance alongside Black Tuesday, Oct. 29, 1929. We are still odds-on to avoid a depression like the one that followed Oct. 29, but the Monday Meltdown made one more likely, and has claimed trillions of dollars of wealth worldwide and triggered a global recession. Understanding the financial shock that occurred that day is vital to finding a way out of our current mess.
  • 11:16 AM » Fannie Mae Should Steer Clear of Renting Homes
    Published Mon, Dec 15 2008 11:16 AM by Seeking Alpha
    Tom Lindmark submits: Making the rounds is a proposal that the GSE’s will not evict renters from properties on which they foreclose. How do they intend to manage this process? This has disaster written all over it. Here are a few observations: The rental contract exists between the owner of the property and the tenant. If one of the GSE’s forecloses, that contract is null and void. How do they intend to execute a new contract? Execute a new lease or simply assume the existing lease is in full force and effect? If it is the latter, I suggest the courts will have a field day. Who is going to collect tens of thousands or rental payments from all of these tenants? How do the GSE’s plan on collecting past due rents? Who will handle the eviction process when tenants fail to pay? How do they plan to handle the maintenance issues? In the event a tenant moves will they release the property? Have they considered the difficulties of selling a property occupied by a renter? In the event of a sale, who will be responsible for evicting the existing tenant? How will a mortgage underwriter evaluate a property being purchased by a prospective owner-occupant that is occupied by a renter? Who is responsible for malicious damage when a Fannie (FNM) house is sold and the renter takes their frustration out on the property? Who would want to take that risk? Has anyone thought about how the professional renters are going to game this system? I know this a feel good proposal and I also recognize that there are a lot of people suffering hardships as a result of the mortgage and housing crises. At the same time, you can’t cure every problem The proposed solution to this particular issue needs some thought. We really do have to quit bouncing off walls and consider the consequences of our actions.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:13 AM » Home Values Seen Losing Over $2T During 2008
    Published Mon, Dec 15 2008 10:13 AM by
    Homes in the United States have lost trillions of dollars in value during 2008, with nearly 11.7 million American households now owing more on their mortgage than their homes are worth, real estate Web site said on Monday.
    Click Here to Read the Full Article

  • 9:57 AM » The Mortgage Meltdown
    Published Mon, Dec 15 2008 9:57 AM by The Big Picture
    Scott Pelley reports on the mortgage crisis that’s far from over, with a second wave of expected defaults on the way that could deepen the bottom of the U.S. recession. Where’s The Bottom? December 14, 2008 See also
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:56 AM » 60 Minutes Blows the POA/ALT-A Loan Story
    Published Mon, Dec 15 2008 9:56 AM by
    To have Mr. Pelley and 60 Minutes do this completely un-researched and absolutely baseless story that has little or no semblance to the truth is a more than a shame - lots of people knew this crisis was headed our way. Hell, I wouldn't be surprised if close to a million people knew that these loans were problems and a lot of them were going to fail. Do you think that any of them just might have worked in upper management of a these now failing banks?
    Click Here to Read the Full Article

  • 9:55 AM » Banks Supposedly Will Cut Consumer Credit Card Lines by $931 Billion if Reforms Mandated
    Published Mon, Dec 15 2008 9:55 AM by Google News
    There is a rather amusing story at the Financial Times tonight, "’". Let's look at the particulars. The story is based on a study by law firm Morrison & Forester which concluded that banks will suffer a world of hurt if they are forced to give up practices like universal default (jacking up your rates to default levels if you miss a payment from some other grantor but are current with them) and double cycle billing. The changes pending also require banks to be less punitive about late payment (you'd need to be a full 30 days late to get in trouble). The Morrison & Forester study asserts that banks will lose $10 billion in interest annually, reduce credit lines by $931 billion, and put cards "out of the reach of 45 million customers." Now let us consider a few things: 1. Why, pray tell, is Morrison & Forester, a San Francisco law firm, the author of this pro-industry tale of woe? Why not one of the well-respected, brand name consulting firms (McKinsy, Bain, and BCG all have large financial institutions prictices) or one of the well regarded financial institutions boutiques, like Oliver Wyman? I cannot imagine that they have the ability to to anything more that regurgitate analyses provided by industry incumbents. Even if you were going to have a law firm rubber stamp this sort of PR effort, it might go over slightly better from a law firm know to be a financial regulatory heavyweight, like Sullivan & Cromwell or Arnold & Porter. One might hazard that the industry could not get anyone well known for banking expertise to put its name on a self-serving report like this (note I am not saying M&F knows nothing about banks; pretty much every big firm has something of a banking practice. But they are a pretty odd choice for a report aspiring to be seen as authoritative). 2. That $931 billion estimate is way too precise. 3. I am willing to accept that the industry will make less when these ruses are removed. The whole point...
  • 9:54 AM » GSEs to Let Renters Stay after Foreclosure
    Published Mon, Dec 15 2008 9:54 AM by Calculated Risk Blog
    From the NY Times: Fannie Mae said Sunday that it would sign new leases with renters living in foreclosed properties owned by the company. ... In recent months, skyrocketing foreclosure rates have exposed as many as 70,000 renters to evictions, even though many never missed rent payments, according to analysts who track housing data. ... “While it may be sometimes tougher for us to sell a property when people are in it, we understand that lots of people are in tough situations right now,” said Chuck Greener, a Fannie Mae spokesman. “If a renter wants to stay in their home, we’ll make that happen. And if they want to move out, in many cases we’ll help them pay for the move.” With so many vacant homes for sale, it makes sense to offer renters month to month leases to stay (instead of evicting them even if they are paying their rent). It sounds like Freddie Mac will offer the same program, although I doubt the private sector will follow their lead.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 9:53 AM » Commercial Real Estate: The Next Domino to Drop?
    Published Mon, Dec 15 2008 9:53 AM by Google News
    This week, we had economic data coming in that reported much higher jobless benefits claims than had been expected. nearly 50,000 than the benchmark estimate that economists had predicted. Of course, economists being wrong is by and large as reliable an event as the sunrise, so interpret that statistic as you will. The larger implication of the jobless numbers is the rather severe uptrend. Remember, the job market functions just like any other (relatively) free market. The laws of supply and demand largely determine hiring (or firing) cycles, which fluctuate naturally according economic conditions. But when firms are doing as much housecleaning as they have been over the past several months, the effects are not going to limited to the job market. In several articles, I have argued my thesis that the worsening employment situation means that the downtrend in the housing markets will continue. I have predicted that while demand will, and indeed has, started to return, prices in many areas have yet to hit bottom. There is another connection that jobs play in the real estate market, and that is in commercial real estate. Commercial real estate refers to the portfolios of office building, apartments, retail stores and lots held by developers and commercial leasing trusts, also known as REIT’s (real estate investment trusts). I can’t speak with certainty for other areas of the country, but my suspicion is that the trend I’m noticing in southern California is playing out in other locations as well. The number of commercial real estate vacancies has increased exponentially over the past three months, with stores and offices either downsizing or just going out of business, even at once busy strip malls and shopping centers. Grocery stores, malls, and Targets/Wal-Marts are still thriving, but the number of privately or family-owned businesses being forced to close is a bit depressing, both from a sentimental and economic perspective. The fact is that there are a greater number...
  • 9:52 AM » John Taylor on the Federal Reserve
    Published Mon, Dec 15 2008 9:52 AM by
    Stanford economics professor John Taylor has a in which he takes aim at recent economic policy, and fires with both barrels, concluding that "government actions and interventions caused, prolonged, and worsened the financial crisis." with an argument he articulated at the that excessively loose U.S. monetary policy in 2002-2005 was a factor contributing both to the housing boom and subsequent housing bust. The solid line in the figure below shows the actual path that the fed funds rate followed over this period, with the dashed line reflecting what Taylor believes would have been closer to the optimal response. Source: . Taylor's counterfactual simulations suggest that these excessively low interest rates set by the Fed were a key factor causing the unsustainable housing boom, the consequences of whose collapse we are still trying to recover from. Source: . Taylor also challenges the claim that the low interest rates of 2002-2004 could be attributed to a global savings glut, noting that total world savings was in fact an unusually low fraction of GDP. Global Saving and Investment as a Share of World GDP. Source: . Taylor also reviews the evidence that interest rate differentials such as the LIBOR-OIS spread reflected default risk rather than liquidity shortages. In Taylor's view they did, in which case the new Fed measures such as the could have done little to affect the targeted interest rate spreads. Source: . Taylor further offers support for the proposition that by cutting interest rates too quickly at the start of 2008, the Fed which in turn was . Source: . Although Taylor makes a number of valid points, I feel he overstates the role of the Fed in directly causing all the problems. I would instead point to as the single most important factor that brought us where we are today. I read Taylor's evidence as providing further support for the view that when we , it can do more harm than good. The Fed tried too hard to fight the jobless recovery...
    Click Here to Read the Full Article

  • 9:52 AM » NYT: Don’t Forget Shumer’s Role in the Mess
    Published Mon, Dec 15 2008 9:52 AM by The Big Picture
    “Since the financial meltdown, people have been asking, ‘Where was Congress? Why didn’t they see this coming? Why didn’t they provide better oversight?’ And the answer for some, including Senator Schumer, is that they were actually too busy pursuing a deregulatory agenda. Their focus was on how we have to lighten up regulation on Wall Street.” -Barbara Roper, director of investor protection for the Consumer Federation of America > Today’s New York Times has a damning linking Senator Chuck Schumer to many of the radical deregulatory policies that underlie much of the current crisis. I have assessed a lot of blame for the crisis on several people — Greenspan at the top of the list, followed by several others, including President Bush. Phil Gramm was a prime sponsor of all manners of ruinous legislation — which, I hasten to add, was signed into law by one President Clinton (he sure isn’t blameless in the mess). In the Senate, on the other side of the aisle from Gramm was Chuck Schumer. The votes and support noted by the NYT shows Schumer was not much better than Gramm: “But in building support, he has embraced the industry’s free-market, deregulatory agenda more than almost any other Democrat in Congress, even backing some measures now blamed for contributing to the financial crisis. Other lawmakers took the lead on efforts like deregulating the complicated financial instruments called derivatives, which are widely seen as catalysts to the crisis. But Mr. Schumer, a member of the Banking and Finance Committees, repeatedly took other steps to protect industry players from government oversight and tougher rules, a review of his record shows. Over the years, he has also helped save financial institutions billions of dollars in higher taxes or fees. He succeeded in limiting efforts to regulate credit-rating agencies, for example, sponsored legislation that cut fees paid by Wall Street firms to finance government oversight, pushed to allow banks to have lower capital reserves...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:52 AM » Mr Mortgage: My Case FOR Mortgage Principal Reductions
    Published Mon, Dec 15 2008 9:52 AM by
    This weekend a top reporter, Teri Buhl at the New York Post, picked one of my weekly research reports to clients I put out a couple of weeks ago. In it I talk about terrible bank and regulator led mortgage mods, Indymac and my solution. Most regular Mr M readers already know my views, as I have been very vocal on this topic for months. Below is the Post story. New York Post by Teri Buhl Below is the full write-up on my views on the mortgage market, mortgage modifications and where this has to go. Not included are the proprietary default and foreclosure data released in the original report. Before I start, I believe that the housing market will ‘fix’ itself over time. But regulators are hell-bent of ’saving’ us all with programs that will just not work. In my opinion, the only way to ‘fix’ the housing and mortgage markets is to undo 2003-2007. To ‘undo’ means to: a) force de-levering the home owner/consumer through mortgage principal balance reductions based upon what the borrower really earns using market-rate financing b) make it so home owners can freely refinance and sell their homes c) make it so the vitally important move-up buyer comes back d) stop defaults and foreclosures without making home owners underwater, fully-leveraged, renters for the rest of their life as the present mortgage modification plans do e) allow home prices to fall to historic multiples of incomes and rents without exotic loan programs or artificial, temporarily, government induced low mortgage rates. This can all be accomplished quickly if the right steps are taken. Below is how I believe we can get there. HOME OWNERS AS A GROUP ARE NOT TO BLAME The reality is that at the time most troubled loans were made, the borrowers really could afford it because everyone made $150k per year for the purposes of buying a home. This greater housing and mortgage crisis is not a result of millions of borrowers going wild, buying beyond their means blinded by greed or some massive consumer driven multi-year...
    Click Here to Read the Full Article

  • Sun, Dec 14 2008
  • 9:37 AM » Jim Rogers: Most U.S. Banks “Bankrupt”
    Published Sun, Dec 14 2008 9:37 AM by The Big Picture
    Jim Rogers on Thursday called most of the largest U.S. banks “totally bankrupt,” and said government efforts to fix the sector are wrongheaded: “What is outrageous economically and is outrageous morally is that normally in times like this, people who are competent and who saw it coming and who kept their powder dry go and take over the assets from the incompetent,” he said. “What’s happening this time is that the government is taking the assets from the competent people and giving them to the incompetent people and saying, now you can compete with the competent people. It is horrible economics… Governments are making mistakes. They’re saying to all the banks, you don’t have to tell us your situation. You can continue to use your balance sheet that is phony…. All these guys are bankrupt, they’re still worrying about their bonuses, they’re still trying to pay their dividends, and the whole system is weakened.” > > Source: Jonathan Stempel Reuters, Dec 11, 2008 1:53pm EST
    Click Here to Read the Full Article

    Source: The Big Picture
  • 9:22 AM » Yet More Retention Bonuses at AIG
    Published Sun, Dec 14 2008 9:22 AM by Google News
    Over a weekend, word leaked out that AIG is paying yet more retention bonuses. This move is making a complete and utter sham of the supposed punitive elements of the rescue. But clearly, there was not enough of an adverse reaction to the earlier announcements of retention bonuses to deter the giant insurer. A few Congressmen saying bad things hasn't deterred exhorbitant CEO pay, so why should it be more effective here? Some readers have written in to say they have friends or family at AIG who had worked very hard for many years and continued to work hard, and deserved better. I hate to say it, but the party line on capitalism is that the participants are supposed to bear both risk and reward. Top people at AIG were very well paid just on a cash basis. Yes, it is sad if savings in the form of stock holdings are wiped out, but the government is not supposed to be in the business of saving private enterprise from its bad decisions. There were hardworkng people at Enron and Bear who were not at all culpable in the demise of those firms, but they had their savings wiped out. I have a hard time understanding why anyone at AIG is deserving of any more than what a top government official would earn. The ONLY argument I have heard is from David Merkel, that for certain types of business, it would be hard for a newcomer to get up to speed on the existing book of business. But are there as many people like that as are getting retention bonuses? And more to the point, those people are as often likely to be rank and file, are they not? Sorry, but this pattern looks like abuse to me, pure and simple. And perhaps most important, AIG planned to keep these bonuses secret. That alone strongly suggests they do not pass the smell test. They are living on government life support and have the nerve to lie by omission about what they are doing with senior level compensation. From (hat tip reader Glen): American International Group Inc., the insurer under fire for paying 168 executives...
  • 8:50 AM » Geneva banks lost more than $4 billion to Madoff: report
    Published Sun, Dec 14 2008 8:50 AM by Reuters
    ZURICH (Reuters) - Geneva-based banks and investment funds have lost more than 5 billion Swiss francs ($4.22 billion) in the alleged $50 billion fraud by former Nasdaq chairman Bernard Madoff, Swiss newspaper Le Temps reported on Saturday.
  • 8:50 AM » Lenders turn their backs on 'quality' clients
    Published Sun, Dec 14 2008 8:50 AM by
    High earners with good records are missing out on the best mortgage deals as banks scrutinise applications more closely than ever and reject customers for minor discrepancies
  • 8:50 AM » The Future of Residential Mortgages (Maybe)
    Published Sun, Dec 14 2008 8:50 AM by Seeking Alpha
    Tom Lindmark submits: "Fools rush in" should have been the title of this post. Everything I put down is probably not going to happen, but let’s go ahead and speculate about the future of the U.S. mortgage industry. It’s kind of connect the dots and see where things might lead. The premise I’m starting with is that we really don’t have a private mortgage industry anymore. Sure, semi-private institutions like banks originate the loans and essentially collect a fee for doing so but they only do so in order to sell the loans to either Fannie, Freddie or FHA. There is no meaningful intent to make a loan and hold it in portfolio or hold, pool and sell a mortgage backed security on the private market.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • Sat, Dec 13 2008
  • 10:43 AM » Obama picks N.Y. official to run housing dept
    Published Sat, Dec 13 2008 10:43 AM by Washington Post
    CHICAGO (Reuters) - U.S. President-elect Barack Obama on Saturday named the head of New York's urban housing agency to run the Washington department that attempts to make housing affordable for all Americans and end lingering racial discrimination.
    Click Here to Read the Full Article

    Source: Washington Post
  • 8:22 AM » Investors Prove Countrywide Lawsuit 100% Valid
    Published Sat, Dec 13 2008 8:22 AM by
    The facts are the facts. I am not going to add much commentary to this damaging blog post because it is what it is. All I know is Angelo (Ex-Countrywide CEO) is gonna have some explaining to do to Mr. Lewis (CEO for Now of B of A) over some egg nog and whiskey. Here are links, facts, data and concrete [...]
    Click Here to Read the Full Article

  • 8:21 AM » Bank Failure #24: Haven Trust Bank, Duluth, Georgia
    Published Sat, Dec 13 2008 8:21 AM by Calculated Risk Blog
    From the FDIC: Haven Trust Bank, Duluth, Georgia, was closed today by the Georgia Department of Banking and Finance, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. ... As of December 8, 2008, Haven Trust had total assets of $572 million and total deposits of $515 million. BB&T agreed to assume all of the deposits for $112,000. In addition to assuming all of the failed bank's deposits, BB&T will purchase approximately $55 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition. ... The FDIC estimates that the cost to the Deposit Insurance Fund will be $200 million. ... Haven Trust is the 24th bank to fail in the nation this year, and the fifth in Georgia. The last bank to be closed in the state was First Georgia Community Bank, Jackson, GA, on December 5, 2008.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:21 AM » Bank Failure #25: Sanderson State Bank, Sanderson, Texas
    Published Sat, Dec 13 2008 8:21 AM by Calculated Risk Blog
    From the FDIC: Sanderson State Bank, Sanderson, Texas, was closed today by the Texas Department of Banking, and the Federal Deposit Insurance Corporation (FDIC) was named receiver. ... As of December 3, 2008, Sanderson State Bank had total assets of $37 million and total deposits of $27.9... The FDIC estimates that the cost to the Deposit Insurance Fund will be $12.5 million. ... Sanderson State Bank is the 25th bank to fail in the nation this year, and the second in Texas. The last bank to be closed in the state was Franklin Bank, SSB, Houston, TX, on November 7, 2008. Twofer today. Maybe three?
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 8:21 AM » Executive Accused of Mortgage-Securities Scheme
    Published Sat, Dec 13 2008 8:21 AM by
    Federal prosecutors in Miami on Thursday charged Steven Gordon, 49 years old, a former partner at Bayview Financial LP, with one count of wire fraud, in one of the first cases highlighting investigators' efforts to move beyond low-level mortgage schemes and delve into suspected fraud in the mortgage-securities business involving bigger financial firms. ... Federal investigators say Mr. Gordon reviewed portfolios of Bayview loans and plucked out certain mortgages that he wanted to make more valuable before securitization. On some, he simply used a pen to increase the credit scores of borrowers, making the loans appear less risky and more valuable to investors, according to investigators. On others, he changed internal codes used to classify mobile homes or vacant land and reclassified them as single-family homes, investigators said. The "authorities" will be busy with this for years (and in that I include pretending they are shocked.)
    Click Here to Read the Full Article

  • Fri, Dec 12 2008
  • 2:22 PM » Cut the bull and call it a Depression
    Published Fri, Dec 12 2008 2:22 PM by Google News
    Guest post by , veteran business journalist and author of the blog , a humorous look at marketing and business. This begs the question, how long until we declare World Depression II? The (disputed) technical definitions of Recession and Depression make them lagging economic nomenclature. Economists debate whether we are in a swamp and say nothing about the ever-increasing number of alligators. The lack of an official declaration of recession mostly just gives the chattering classes something to do while avoiding taking action. “Is it a crisis?” “There is no crisis!” “Is there a large, green creature eating my leg?” “There is no large, green creature eating your leg!” Allow me to go out on a very, very sturdy limb and declare a Depression. The economy isn’t going to recover by the end of next year. There is a only a dim possibility it will recover the year after that. But no one in an “official” position is willing to be the bearer of that piece of bad news. Doubt that it is (or will eventually fit the technical definition of) a Depression? Look at the actual numbers. While the official unemployment rate last month was 6.7%, everyone – including the Labor Department – knows that number is bullshit. And that was the rate LAST MONTH. Before Bank of American cut 30K jobs. Before GM and Chrysler were forced to face the music. Before Bernard Madoff’s $50 billion hedge fund/Ponzi scheme came to light.Businesses continue to fire people in anticipation of how bad the economy will get, thus creating a very ugly cycle of wish fulfillment. Then the tsunami returns. Nor, of course, is that all there is. As Karl Denninger notes: “’” T-bills are hitting 0% because people see that a guarantee of no loss is worth the price of no return. Most businesses and state and local governments that rely on credit to cover operating costs are in a “hope for a miracle” mode. It is hoped that that miracle will be the next president’s economic stimulus plan. Mr. Obama is all but promising another...
  • 1:51 PM » Inland Empire Commercial Vacancy Rates Rise Sharply
    Published Fri, Dec 12 2008 1:51 PM by Calculated Risk Blog
    California's Inland Empire is an interesting area to follow. During the housing boom, the local economy was heavily dependent on real estate related employment (see graph at bottom of post), and now, with the housing bust, the area is being devastated. From the Press-Enterprise: Inland office vacancy rates reached 20 percent during the third quarter, according to the 2008 Southern California Office and Industrial Market Report, which was released Thursday by the Casden Forecast at the University of Southern California Lusk Center for Real Estate. Almost 1.5 million square feet of office space was completed during the first nine months of this year, but demand for that property is so weak, mostly because of fallout from the region's housing slowdown, that most of that space remains vacant and is likely to be leased out slowly during the next 12 months, the report found. ... The Inland industrial market also struggled during the first nine months of 2008, mostly because of the drop in imports at the ports of Los Angeles and Long Beach. Industrial vacancy rates climbed from 4.9 percent during the third quarter of 2007 to 8.6 percent during this year's third quarter ... No one could have predicted this .... oh wait, from one of my posts in 2005 (the graphics are better today!): Of all the areas experiencing a housing boom, the areas most at risk have had the greatest increase in real estate related jobs. These jobs include home construction, real estate agents, mortgage brokers, inspectors and more. The following graph uses NSA construction jobs for comparison purposes. Click on graph for larger image. Not surprisingly, California has become more dependent on construction than the rest of the country, and construction has really boomed in San Diego. But San Diego has nothing on the Inland Empire. I believe that areas like the Inland Empire will suffer the most when housing activity slows. I'll post an update to the employment graph.
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 1:35 PM » Goldman Sachs Sued Over MBS Deals
    Published Fri, Dec 12 2008 1:35 PM by
    The mortgage litigation machine is now turning its attention towards RMBS issuers as investors allege fraud and misrepresentation by firms that sold off loans into securitization trusts, with a new putative class-action suit filed Thursday in New York against Goldman Sachs Group Inc. (GS: 69.38 -0.47%) and some of the firm’s individual directors. The case, [...]
    Click Here to Read the Full Article

  • 11:46 AM » NAHB Lays Off Staff, Trims Budget
    Published Fri, Dec 12 2008 11:46 AM by
    Not surprisingly, the National Association of Home Builders is being forced to retrench its staffing and budget as it faces a huge drop in membership — the Washington-based lobbying group said earlier this week that it had cut $11.5 million from its 2009 operating budget and eliminated 52 positions, as a result of cost-cutting measures. ... The group has been among the largest lobbying entities on Capitol Hill in recent years, thanks to the vast run-up in residential construction and housing, and along with the National Association of Realtors and Mortgage Bankers Association helped form a triumverate that represented one of the most powerful lobbying forces inside the Beltway. The NAHB would not comment on whether the budget cuts would eat into the group’s lobbying efforts next year. We suspect they'll still be manage to .
    Click Here to Read the Full Article

  • 11:38 AM » Audit critical of state’s regulation of mortgage companies
    Published Fri, Dec 12 2008 11:38 AM by
    The state failed to adequately regulate mortgage companies to protect the public, a legislative audit says.
    Click Here to Read the Full Article

  • 10:59 AM » Why Sheila Bair wants to bail out consumers
    Published Fri, Dec 12 2008 10:59 AM by CNN
    Sheila Bair may now be a lightning rod, but at least she's finally getting some respect.
  • 10:43 AM » Goldman, once warning of $200 oil, sees $45 in 2009
    Published Fri, Dec 12 2008 10:43 AM by Reuters
    SINGAPORE/LONDON (Reuters) - Goldman Sachs' energy equity research team, which predicted a crude oil spike to $200 a barrel earlier this year, slashed on Friday its 2009 forecast to just $45 as demand deteriorates.
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