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  • Tue, Oct 28 2008
  • 1:42 PM » White House Tells Banks to Stop Hoarding Money
    Published Tue, Oct 28 2008 1:42 PM by news.yahoo.com
    An impatient White House is serving notice on banks receiving billions of dollars in federal help to quit hoarding the money and start making more loans.
    Click Here to Read the Full Article

    Source: news.yahoo.com
  • 12:22 PM » Consumer Confidence Plunges to Record Low
    Published Tue, Oct 28 2008 12:22 PM by The Big Picture
    chart via , Bloomberg > The Conference Board reported Consumer Confidence Index for October hit a record low of 38. Is there any connection between weak consumer confidence readings and bullish reversals in the stock market? To decide, have a look at the following quick-and-dirty overview (which includes all data going back to the Feb-67 start of the confidence series): (*Note: Interim low - market was already in a secular upswing.) (#Note: Consumer confidence readings that were closest to the latest reading.) Table via From the Conference Board "The Conference Board Consumer Confidence Index™, which had improved moderately in September, fell to an all-time low in October. The Index now stands at 38.0 (1985=100), down from 61.4 in September. The Present Situation Index decreased to 41.9 from 61.1 last month. The Expectations Index declined to 35.5 from 61.5 in September. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. Says Lynn Franco, Director of The Conference Board Consumer Research Center: "The impact of the financial crisis over the last several weeks has clearly taken a toll on consumers' confidence. The decline in the Index (-23.4 points) is the third largest in the history of the series, and the lowest reading on record. In assessing current conditions, consumers rated the labor market and business conditions much less favorably, suggesting that the fourth quarter is off to a weaker start than the third quarter. Consumers' appraisal of current conditions deteriorated sharply in October. Those saying business conditions are "bad" increased to 38.3 percent from 33.4 percent, while those claiming business conditions are "good" declined to 9.2 percent from 12.8 percent. Consumers' assessment of the labor market was also much more negative. The percentage of consumers saying jobs are "hard to get" rose to 37.2 percent from 32.2 percent in September, while those claiming...
    Click Here to Read the Full Article

    Source: The Big Picture
  • 12:22 PM » Phoenix and Las Vegas home prices fall 31%
    Published Tue, Oct 28 2008 12:22 PM by themessthatgreenspanmade.blogspot.com
    The August for the S&P Case-Shiller Home Price Index shows the 10-City and 20-City Composite Home Price Indices at new record annual declines of 17.7 percent and 16.6 percent, respectively. Price indices for all 20 cities are shown below. To aid in viewing this graphic, the order of the legend (upper left) reflects the top-to-bottom position of all 20 cities for the current month (far right). As such, the legend indicates which cities have managed to hold onto the largest real estate price gains since 2000. Not surprisingly, a number of cities have consistently moved down in the legend, notably, Phoenix and Las Vegas, both of which were near the top of the list late last year and earlier this year. The reason for their steady move down is clear to see when looking at the table below - both now sport year-over-year declines of more than 30 percent. Miami is not far behind, nor are San Francisco, Los Angeles, or San Diego. Regrettably, the curve for San Francisco in the first graphic above is somewhat obstructed - its recent decline has been remarkable, mirroring Las Vegas in declining sharply in 2008. David M. Blitzer, Chairman of the Index Committee at Standard & Poor's, noted: The downturn in residential real estate prices continued, with very few bright spots in the data. The 10-City Composite and the 20-City Composite reported record 12-month declines. Furthermore, for the fifth (5th) straight month, every region reported negative annual returns. This started when Charlotte, NC, was the last region to turn negative back in April 2008. Both the 10-City and 20-City Composites have been in year-over-year decline for 20 consecutive months. Of the 20 regions, 13 of them had their annual returns worsen from last month’s report . As seen throughout 2008, the Sun Belt markets are being hit the most. Phoenix and Las Vegas are both reporting annual declines in excess of 30%, and Miami, San Francisco, Los Angeles and San Diego are all in excess of 25%. There was...
    Click Here to Read the Full Article

    Source: themessthatgreenspanmade.blogspot.com
  • 12:22 PM » More Improvement in Money Market Conditions
    Published Tue, Oct 28 2008 12:22 PM by Google News
    While none of the changes in interest rates were dramatic, and both interbank rates and stress levels remain elevated, improvement continues and all the metrics moved in the right direction. From : Money-market rates in London declined as cash injections by European central banks showed signs of easing the paralysis among lenders. The London interbank offered rate, or Libor, that banks charge each other for three-month loans in dollars fell 4 basis points to 3.47 percent today, its 12th straight drop, according to the British Bankers' Association. The comparable euro rate slid 5 basis points to 4.85 percent, the lowest level since April 28. Rates for the U.K. pound were also lower... The European Central Bank today lent financial institutions 325.1 billion euros ($408 billion), the most in 10 months. The Bank of England loaned $3 billion of overnight cash today, after allotting the same amount yesterday. Singapore's comparable rate for U.S. dollars fell 4 basis points to 3.48 percent, its 10th straight decline since reaching 4.8 percent on Oct. 13, the highest level this year. Hong Kong's three-month interbank lending rate, or Hibor, increased 10 basis points to 3.84 percent today, the highest since Oct. 17. While money-market rates have declined, the three-month Libor for dollars remains 197 basis points above the Federal Reserve's target rate for overnight loans of 1.5 percent and up from 81 basis points about three months ago. At the start of the year, the spread was 43 basis points. In a further sign some banks remain wary of lending to each other, financial institutions lodged 213.1 billion euros in the ECB's overnight deposit facility yesterday, up from 202.6 billion euros the previous day. The daily average in the first eight months of the year was 427 million euros. The Libor-OIS spread, a measure of cash scarcity, narrowed 5 basis points to 258 basis points today, down from 345 basis points two weeks ago. It was at 87 points before Lehman...
  • 10:21 AM » America Underwater: Growing Number of Homeowners “Upside Down” on Mortgages
    Published Tue, Oct 28 2008 10:21 AM by loanworkout.org
    With falling housing prices in nearly every market, the questions that homeowners are asking have shifted. Rather than asking “what is my home worth?”, they are now asking “Is my home worth it?” The problems are affecting the entire country, with nearly 1 in 6 homeowners owing more than their home is worth.For homeowners who owe [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 10:20 AM » Iceland Central Bank: 18% Rate!
    Published Tue, Oct 28 2008 10:20 AM by The Big Picture
    Gee, do you think they are trying to attract some capital? Iceland's central bank unexpectedly raised the benchmark interest rate to 18 percent, the highest in at least seven years, after the island reached an aid agreement with the International Monetary Fund. Policy makers raised the key rate by 6 percentage points, the Reykjavik-based bank said in a statement on its Web site today, taking the rate to the highest since the bank began targeting inflation in 2001. It will publish the reasons for today's move at 11 a.m. local time. The central bank is raising rates as Iceland, the first western nation to seek aid from the IMF since the U.K. in 1976, faces a prolonged contraction, coupled with possible hyperinflation and rising joblessness. The economy will shrink as much as 10 percent next year, the IMF forecasts. Iceland will receive about $2.1 billion in aid from the Washington-based fund, according to a deal struck on Oct. 24. The US Fed starts a two day meeting today . . . > Source: Tasneem Brogger and Helga Kristen Einarsdottir Bloomberg, Oct. 28 2008 http://www.bloomberg.com/apps/news?pid=20601068&sid=ay61s1zV3NCA&
    Click Here to Read the Full Article

    Source: The Big Picture
  • 10:19 AM » Vikram Pandit Rejects CitiSachs?
    Published Tue, Oct 28 2008 10:19 AM by Seeking Alpha
    submits: Yesterday's news is that Goldman Sachs (GS) approached Citigroup (C) last month to propose a merger. Citigroup CEO Vikram Pandit rejected the idea from Goldman Sachs CEO Lloyd Blankfein, , citing people it didn't identify. The deal, which was to have been structured as a takeover of Goldman by Citigroup, would have led to the firing of thousands of workers in the investment banking units of the two companies, and the loss of several senior executives, the newspaper said. However, uniting Goldman’s strengths in risk management, advisory services and proprietary trading with Citi’s large retail deposit base and huge corporate client network could have created a powerful financial giant.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:18 AM » Ain't Globalization Grand?
    Published Tue, Oct 28 2008 10:18 AM by Seeking Alpha
    submits: Two familiar names from the US deleveraging debacle are spreading their joy to little ol’ New Zealand. Where the wise virgins (OK, maybe not so wise; those yields were probably a clue) have taken it in the privates over the last year or so with the collapse of a dozen or so finance companies caught with, among other things, failed real estate developments and dodgy consumer loans. But at least some of the crooks are already getting . To put things in perspective, Bridgecorp’s loss of $NZ 460 million affecting 14,500 investors would, in the U.S., be roughly equivalent to just over 1 million investors being taken for roughly $26.5 billion (based on the mid-2007 exchange rate of NZD=USD 0.77). Just a flesh wound. NZ Press Association via The NZ Herald Oct. 24 2008
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:17 AM » Moyers: James K. Galbraith on Finacial Crises
    Published Tue, Oct 28 2008 10:17 AM by The Big Picture
    Bill Moyers talks about the economic future with with James K. Galbraith, Lloyd Bentsen, Jr. Chair in Government/Business Relations at the LBJ School of Public Affairs at the University of Texas at Austin. Galbraith is the author of six books, the most recent, . click for video Source: PBS, October 24, 2008 http://www.pbs.org/moyers/journal/10242008/watch2.html BILL MOYERS: Watching Alan Greenspan testify before Congress this week, I tried, I tried very hard not to keep thinking of Ayn Rand. I failed. The philosopher and novelist Ayn Rand was Alan Greenspan's ideological guru, his intellectual mentor. She was also one of the most amazing fantasists of the last century, the author of two of the most influential books of my generation THE FOUNTAINHEAD and ATLAS SHRUGGED, both timeless best-sellers. Rand was a hedonist, an exponent of radical self-interest, who so believed in unfettered, unbridled capitalism that she advocated the abolition of all state regulations except those dealing with crime. In the gospel according to Rand, the business community was constantly beleaguered by evil forces practicing, are you ready for this? Altruism! Yes, the unselfish regard for the welfare of others was a menace to greed, and Rand would have none of it. Alan Greenspan met her as a much younger man in New York and, like so many blossoming capitalists, was smitten. He has since downplayed her influence on him, but as Chairman of the Fed for nearly 19 years he seemed quite Rand-like as he watched Wall Street run wild. Yesterday, like an old warrior still in a fog after his armies have been routed from the field of battle, he expressed shock at how his ideology has failed him. He didn't see it coming, he told the House Oversight Committee. The extent of the meltdown is, "Much broader than anything that I could have imagined," a "Once-in-a-century credit tsunami." The wondrous glories of a free market with no need of pesky oversight had somehow gone wrong....
    Click Here to Read the Full Article

    Source: The Big Picture
  • 10:17 AM » IMF Nuclear Option: "Print Money"
    Published Tue, Oct 28 2008 10:17 AM by feeds.feedburner.com
    Eastern Europe, Latin America, and parts of Asia are in a massive currency contagion. Talk has surfaced that the . The International Monetary Fund may soon lack the money to bail out an ever growing list of countries crumbling across Eastern Europe, Latin America, Africa, and parts of Asia, raising concerns that it will have to tap taxpayers in Western countries for a capital infusion or resort to the nuclear option of printing its own money. The Fund is already close to committing a quarter of its $200bn (£130bn) reserve chest, with a loans to Iceland ($2bn), Ukraine ($16.5bn), and talks underway with Pakistan ($14.5bn), Hungary ($10bn), as well as Belarus and Serbia. Neil Schering, emerging market strategist at Capital Economics, said the IMF's work in the great arc of countries from the Baltic states to Turkey is only just beginning. "When you tot up the countries across the region with external funding needs, you get to $500bn or $600bn very quickly, and that blows the IMF out of the water. The IMF, led by Dominique Strauss-Kahn, has the power to raise money on the capital markets by issuing `AAA' bonds under its own name. It has never resorted to this option, preferring to tap members states for deposits. The nuclear option is to print money by issuing Special Drawing Rights, in effect acting as if it were the world's central bank. This was done briefly after the fall of the Soviet Union but has never been used as systematic tool of policy to head off a global financial crisis. Hungary was forced to raise interest rates last week by 3 percentage points to 11.5pc to defend its currency peg in Europe's Exchange Rate Mechanism. Even Denmark has had to tighten by a half point, raising fears that every country on the fringes of the eurozone will have resort to a deflationary squeeze. The root problem is that Eastern Europe and Russia have together borrowed $1,600bn from foreign banks in euros and dollars to fund their catch-up growth spurt over the...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • Mon, Oct 27 2008
  • 1:42 PM » The Great Panic of 1873
    Published Mon, Oct 27 2008 1:42 PM by The Big Picture
    Here's something you probably haven't yet read: The New York Times article on The Great Panic of 1873, as written by Roger Babson. Fascinating stuff > Source: Roger W. Babson, the Well Known Statistician, Tells of the Business Epochs That Followed That Period of Depression The New York Times, April 9, 1911 PDF
    Click Here to Read the Full Article

    Source: The Big Picture
  • 11:53 AM » Remember When the ABX and CMBX Were In Vogue?
    Published Mon, Oct 27 2008 11:53 AM by mrmortgage.ml-implode.com
    You don’t hear much about the ABX and CMBX indices any longer. The last ruckus over these came about six months ago when the spinners tried to tell us that they really did not portray the true value of the market bla bla bla. Well, it looks as though Markit was accurate after all. To be honest, I haven’t looked at the ABX and CMBX in about a month. I used to post ABX prices regularly because they seemed to be a leading indicator to credit market disruptions. So I went back and reviewed this weekend in order to see what impact that the $700bb TARP bailout had on the values. One would assume that if Treasury was really planing on overpaying for distressed assets, then perhaps the ABX and CMBC would have gotten a bounce. They have bounced many times over the past year and a half for much less. What I found was what I would expect…that ABX indices are at all time lows and CMBX spreads all all-time wide levels. This surely does not look like a market about to be bought. This looks like a market continuing its downward trajectory as all asset are being repriced lower during the deleverging process. -Best, Mr Mortgage ABX AAA rated Second Half 2007 below. They are at all-time lows at just 41 cents. ABX BBB rated Second Half 2007 below. They are near all-time lows at just 5.5 cents. CMBX A rated, at all time wide levels at 700. This is one of the highest grades. CMBX BB rated, at all time wide levels at 3405. This is the lowest rated. More Mr Mortgage Posted on October 24, 2008 10:29 AM Posted on October 21, 2008 11:11 AM Posted on October 20, 2008 2:00 PM Posted on October 20, 2008 12:32 AM Posted on October 15, 2008 10:07 PM Posted on October 13, 2008 7:51 PM
    Click Here to Read the Full Article

    Source: mrmortgage.ml-implode.com
  • 11:53 AM » Let’s Use Fannie to Clean Up the Mess It Made
    Published Mon, Oct 27 2008 11:53 AM by loanworkout.org
    Earlier this week, James Lockhart, the director of the Federal Housing Finance Agency and the government conservator of Fannie Mae and Freddie Mac, said that the two companies need to begin writing down the principal on mortgages they hold or acquire. This could be an important step in slowing the housing slump. It also suggests that while [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 10:53 AM » Insurers Line Up for the Government Bailout
    Published Mon, Oct 27 2008 10:53 AM by dealbook.blogs.nytimes.com
    The chase for a piece of the Treasury Department’s $700 billion bailout program intensified Friday as the government considered extending it to include insurance companies as well as banks, and the auto industry stepped up efforts to secure a share of the money, The New York Times’s Edmund Andrews and Eric Dash reported. Even as the [...]
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 10:53 AM » Credit remains crunched
    Published Mon, Oct 27 2008 10:53 AM by CNN
    With financial institutions and individual investors worried that a worldwide economic slowdown will pose a risk to their investments, lending remained constricted and U.S. Treasurys rose.
  • 10:46 AM » Will Equity Markets Gain Traction as TARP Begins Implementation?
    Published Mon, Oct 27 2008 10:46 AM by Seeking Alpha
    submits: In recent weeks there has been plenty of talk about the Treasury's TARP initiative, but little progress on its actual implementation. On Friday we got news that PNC Financial (PNC) was the first bank to get a capital infusion from the TARP, and would use much of the cash to help fund its acquisition of troubled banking competitor National City (NCC). I have previously written highly of PNC stock and this deal only furthers my bullish long-term view on the company. It is paying about $2 per share for a bank that traded at nearly $40 last year and fits its geographical footprint very well. PNC's track record on successful acquisition integration is outstanding.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 10:45 AM » Fed lending program open for business
    Published Mon, Oct 27 2008 10:45 AM by CNN
    The Federal Reserve started buying so-called commercial paper on Monday to jumpstart a critical but faltering lending market used by banks and big businesses.
  • 10:44 AM » Yen strength continues
    Published Mon, Oct 27 2008 10:44 AM by CNN
    The Japanese yen continued to rise Monday and the dollar held firm against other currencies despite signs that a government intervention in the currency market may be on the horizon.
  • 10:43 AM » Credit Is Likely to Ease This Week: Pimco's Gross
    Published Mon, Oct 27 2008 10:43 AM by CNBC
  • 10:42 AM » Capital One, Sun Trust Sell Preferred to Government
    Published Mon, Oct 27 2008 10:42 AM by Calculated Risk Blog
    From the WSJ: Capital One, SunTrust to Sell Government Preferred Stock A host of financial firms announced they will sell preferred stock and warrants to the federal government ... The biggest morning disclosure was Capital One Financial Corp.'s $3.55 billion sale of preferred stock and warrants to the Treasury Department, followed by SunTrust Banks Inc. at $3.5 billion. ... Other firms
    Click Here to Read the Full Article

    Source: Calculated Risk Blog
  • 10:41 AM » Treasury: first 9 banks to get funds this week
    Published Mon, Oct 27 2008 10:41 AM by Reuters
    WASHINGTON (Reuters) - The U.S. Treasury will begin sending $125 billion to the first nine banks to sign up for its capital program early this week, and is willing to listen to other industries seeking government assistance, a senior Treasury official said.
  • 10:40 AM » Recession Reality Setting In — Slowly
    Published Mon, Oct 27 2008 10:40 AM by CNBC
  • 10:39 AM » The Broker Rebellion
    Published Mon, Oct 27 2008 10:39 AM by dealbook.blogs.nytimes.com
    David B. Armstrong was proud for a long time to be part of Merrill Lynch’s thundering herd — the brokers in the storefronts and office buildings who are the face of Wall Street to many Americans. But he struck out on his own in May, relieved, he said, that he would no longer have to explain [...]
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 10:38 AM » General Motors, Driven to the Brink
    Published Mon, Oct 27 2008 10:38 AM by dealbook.blogs.nytimes.com
    As General Motors tries to salvage its future through a possible merger with Chrysler, the possibility of bankruptcy looms for G.M. and perhaps for Chrysler as well, The New York Times’s Bill Vlasic and Nick Bunkley wrote in an article Sunday that looked at the effects of plunging S.U.V. sales on Detroit automakers. On Monday, [...]
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 10:37 AM » Goldman called Citi for merger in September: source
    Published Mon, Oct 27 2008 10:37 AM by Reuters
    LONDON (Reuters) - Goldman Sachs Chief Executive Lloyd Blankfein called Citigroup Inc head Vikram Pandit last month about a possible merger, but Pandit rejected the proposal, a source familiar with the matter said on Monday.
  • 10:36 AM » Tech companies offer loans as defaults rise: report
    Published Mon, Oct 27 2008 10:36 AM by Reuters
    (Reuters) - Big tech companies are filling the void left by banks and specialty lenders that are retrenching and making financing more difficult for smaller tech firms, the Wall Street Journal said.
  • 10:36 AM » Mortgage Threat From Hedge Funds Irks Democrats
    Published Mon, Oct 27 2008 10:36 AM by dealbook.blogs.nytimes.com
    Several Democratic lawmakers lashed out Friday at hedge funds that have threatened to block attempts to renegotiate mortgages for struggling homeowners, The New York Times’s Barry Meier reported. At least two funds, Greenwich Financial Services and Braddock Financial, have told banks that they may take legal action if loans are renegotiated in a way that hurts [...]
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 10:36 AM » So When Will the Banks Give Loans?
    Published Mon, Oct 27 2008 10:36 AM by dealbook.blogs.nytimes.com
    The dirty little secret of the federal government’s $700 billion bailout plan is that many recipients of Treasury’s largess won’t be using the money primarily to make new loans. Instead, The New York Times’s Joe Nocera writes in his latest column, executives from the likes of JPMorgan Chase will use it to acquire other banks. After having [...]
    Click Here to Read the Full Article

    Source: dealbook.blogs.nytimes.com
  • 10:08 AM » Currency Crisis Meltdown in Europe, Japan, Australia
    Published Mon, Oct 27 2008 10:08 AM by feeds.feedburner.com
    Currency interventions don't work but that does not stop countries from wasting money trying. A massive unwinding of the Yen carry trade is in progress and in response the . The Group of Seven warned on Monday the yen's wild swings threatened financial stability, fanning speculation central banks may intervene to halt a rally in the currency driven by a Japanese exodus from emerging markets. G7 finance ministers and central bank governors said they were prepared to act, if necessary, but market reaction was muted, reflecting doubts over the will for co-ordinated action and whether Tokyo could succeed acting on its own. "We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability," the brief statement said. On Monday, the yen traded near an all-time high against the Australian dollar and near a 13-year peak against the U.S. dollar, as a 6 percent slump in Tokyo shares spurred a renewed wave of selling of higher-yielding currencies. The yen climbed nearly 19 percent so far this year against the U.S. currency, which itself has gained substantially against many emerging markets currencies and the euro, despite the grim outlook for the U.S. economy. Europe on the brink of currency crisis meltdown The Telegraph is reporting . The financial crisis spreading like wildfire across the former Soviet bloc threatens to set off a second and more dangerous banking crisis in Western Europe, tipping the whole Continent into a fully-fledged economic slump. Currency pegs are being tested to destruction on the fringes of Europe’s monetary union in a traumatic upheaval that recalls the collapse of the Exchange Rate Mechanism in 1992. “This is the biggest currency crisis the world has ever seen,” said Neil Mellor, a strategist at Bank of New York Mellon. Experts fear the mayhem may soon trigger a chain reaction within the eurozone itself. The risk is a surge in capital flight...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 10:08 AM » NY Times Lending Conspiracy Madness
    Published Mon, Oct 27 2008 10:08 AM by feeds.feedburner.com
    At least a dozen people asked me to comment on the New York Times article Most seem to believe the bank bailout package is part of some complicated scheme by the treasury and Fed to give banks taxpayer money explicitly for takeovers. Indeed that is the very essence of the tale the New York Times is spreading. The Times article is a bit disjointed, so I rearranged paragraphs slightly for ease in understanding. My insertions are in braces. From the New York Times .... It was Oct. 17, just four days after JPMorgan Chase’s chief executive, Jamie Dimon, agreed to take a $25 billion capital injection courtesy of the United States government, when a JPMorgan employee asked [on a conference call] “Chase recently received $25 billion in federal funding. What effect will that have on the business side and will it change our strategic lending policy?” [Dimon Responded] “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.” Read that answer as many times as you want — you are not going to find a single word in there about making loans to help the American economy. On the contrary: at another point in the conference call, the same executive explained that “loan dollars are down significantly.” He added, “We would think that loan volume will continue to go down as we continue to tighten credit to fully reflect the high cost of pricing on the loan side.” In other words JPMorgan has no intention of turning on the lending spigot. It is starting to appear as if...
    Click Here to Read the Full Article

    Source: feeds.feedburner.com
  • 9:38 AM » Wall Street Hedge Funds Vs. Homeowners & Barney Frank
    Published Mon, Oct 27 2008 9:38 AM by loanworkout.org
    House Financial Services Committee chairman Barney Frank is warning Wall Street hedge funds and threatening to subpoena at least two hedge funds, Greenwich Financial Services and Braddock Financial to testify next month after the funds warned mortgage servicing companies not to participate in federal loan modifications. “Your decision is a serious threat to our efforts to respond [...]
    Click Here to Read the Full Article

    Source: loanworkout.org
  • 9:37 AM » "Currency crisis is gathering storm"
    Published Mon, Oct 27 2008 9:37 AM by Google News
    Ed Harrison sent us a link to his latest post, and it's a doozy. Most of us in the US who are financially-minded have been sufficiently caught up with the three ring circus of market turmoil, seemingly-a-new-trick-every-day Fed and Treasury interventions, and continuing financial firm implosions that we haven't looked up much to see what is happening in the wider world. Yes, the Baltic Dry Index is tanking, a bunch of Eurobanks nearly failed, but hey, that was two weeks ago, old news, Iceland collapsed, Argentina is on the ropes again (but that seems to happen every five years), South Korea is wobbly, and plunging commodity prices are giving exporting countries big shocks. But in the generally-provincial US, that amounts to background noise. Your humble blogger has taken note of further worrisome developments, such as the dramatic fall in the Australian and New Zealand dollars (7% on Friday, ouch, on top of steep falls before that), the pound and the euro without being sure what to make of that. It appears to go beyond flight to quality; some of its is high demand for dollars to unwind dollar-related trades, and the Friday action in particular, with big moves in the dollar and an even bigger rise in the yen, versus huge bid-asked spreads in some other currencies, seemed to be a flight to liquidity. And then we have other countries looking shaky: the Baltics, Russia, a lot of Eastern Europe. and Latin America. Harrison has focused on this constellation, and : In the last few weeks, the currency market is where the action has been....all of this is a prelude to some sort of currency crisis.... But, it is in commodity and emerging market currencies where the trouble is brewing. First, we saw a nightmarish plunge of the Australian and Kiwi Dollar as commodities plummeted. This all out assault on commodity and emerging market currencies then widened to include the Icelandic Krona, the South African Rand, the Polish Zloty, the South Korean Won, the Hungarian Forint...
  • 9:36 AM » The Federal Reserve's balance sheet
    Published Mon, Oct 27 2008 9:36 AM by www.econbrowser.com
    On Thursday, the Federal Reserve issued its weekly , which provides details of the Fed's balance sheet. Once upon a time, this was one of the least interesting of the government's many releases of data. These days, it's become one of the most exciting. The essence of the Fed's balance sheet used to be quite simple. The Fed's primary operations would consist of either buying outstanding Treasury securities or issuing loans to banks through its discount window. It paid for these transactions by creating credits in accounts that banks hold with the Federal Reserve, known as reserve deposits. Banks can turn those reserves into green cash any time they desire, so the process is sometimes loosely summarized as saying that the Fed pays for the Treasury bills it buys or loans it extends by "printing money". Before the excitement began, the Fed's assets consisted primarily of the Treasury securities it had acquired over time (about $800 billion as of August 2007) plus its discount loans (an insignificant number at that time). Its liabilities consisted primarily of cash held by the public (about $800 billion a year ago) plus the reserve deposits held by banks (which again used to be a very small number). Bernanke's overriding goal since then has been to extend a huge volume of short-term loans to financial institutions. If he'd done that in the usual way, just creating new reserve deposits with each new loan, the supply of cash would have ballooned, bringing worries of inflation. The Fed didn't want to do that, and in fact there was no shortage of funds available for overnight interbank lending. The fed funds rate, an average overnight lending rate between banks, is already quite low, and further reductions seem unlikely to accomplish much. But remain quite high relative to the overnight rate. Bernanke's first approach to this challenge was to "sterilize" the new loans from the Fed, basically selling off the Fed's...
    Click Here to Read the Full Article

    Source: www.econbrowser.com
  • 9:36 AM » CRA and Fannie and Freddie as betes noire
    Published Mon, Oct 27 2008 9:36 AM by www.econbrowser.com
    There is so much chaff floating around about the roles of Fannie and Freddie and of the in the current crisis, despite the best efforts of economists like Jim Hamilton , and , that it seems worthwhile to once again go through some of the arguments that have been forwarded. From : Federal Reserve Board data show that: More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions. Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year. Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics. From . The article continues: What's more, only commercial banks and thrifts must follow CRA rules. The investment banks don't, nor did the now-bankrupt non-bank lenders such as New Century Financial Corp. and Ameriquest that underwrote most of the subprime loans. These private non-bank lenders enjoyed a regulatory gap, allowing them to be regulated by 50 different state banking supervisors instead of the federal government. And mortgage brokers, who also weren't subject to federal regulation or the CRA, originated most of the subprime loans. In a speech last March, Janet Yellen, the president of the Federal Reserve Bank of San Francisco, debunked the notion that the push for affordable housing created today's problems. "Most of the loans made by depository institutions examined under the CRA have not been higher-priced loans," she said. "The CRA has increased the volume of responsible lending to low- and moderate-income households." In a book on the sub-prime lending collapse published in June 2007, the late Federal Reserve Governor Ed Gramlich wrote that only one-third of all CRA loans had interest rates high enough to be considered sub-prime and that to the pleasant surprise of commercial banks there were low default rates. Banks that participated in CRA lending had found, he...
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    Source: www.econbrowser.com
  • Fri, Oct 24 2008
  • 7:51 PM » Banks to Announce Equity Injections
    Published Fri, Oct 24 2008 7:51 PM by WSJ
    The Treasury is allowing banks to individually announce government investments, scrapping an earlier plan to release the names of multiple banks receiving federal money.
  • 9:44 AM » PNC to Acquire National City
    Published Fri, Oct 24 2008 9:44 AM by Calculated Risk Blog
    Press Release: PNC to Acquire National City The PNC Financial Services Group, Inc. and National City Corporation today announced that they have signed a definitive agreement for PNC to acquire National City for $2.23 per share, or an aggregate fixed amount of approximately $5.2 billion in PNC stock. Additionally $384 million of cash is payable to certain warrant holders. ... PNC plans to issue
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    Source: Calculated Risk Blog
  • 9:44 AM » Fed Marks Down Bear Stearns Assets by $2.7 Billion
    Published Fri, Oct 24 2008 9:44 AM by Calculated Risk Blog
    The Fed has marked down the Bear Stearns assets from $29,526 million to $26,802 million this week. This is a mark down of $2.7 billion or 9.2%. The Fed is now underwater by a little over $2 billion plus lost interest. Today: 2. Information on Principal Accounts of Maiden Lane LLC Millions of dollars Oct 22, 2008 Net portfolio holdings of Maiden Lane LLC (1)26,802Outstanding principal amount of
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    Source: Calculated Risk Blog
  • Thu, Oct 23 2008
  • 8:30 PM » Greenspan finds a flaw
    Published Thu, Oct 23 2008 8:30 PM by themessthatgreenspanmade.blogspot.com
    Tomorrow's headlines will all look similar to what is now on the internet: - Bloomberg - New York Times - WSJ - Wash. Post - MarketWatch But, beyond the of partisan wrangling, the most striking aspect of today's gathering of the to discuss the role of federal regulators in the ongoing financial crisis was the tone of it all. My how things have changed. And if you didn't know it by looking at home values, stock prices, or the quickly souring economy, you'd sure know it by how former Fed chairman Alan Greenspan was addressed by elected officials and how he responded. Having aged noticeably in the two-and-a-half years since he retired (I guess that sort of thing happens when you're in your early eighties), the one-time "second most powerful man in the world" looked feeble and a bit unsure of himself as, time and again, he would attempt circuitous "non-answers" to direct questions only to be interrupted and pressed for a more succinct reply. Elected officials no longer just sit and listen with mouths agape. Like when Toto pulled back the curtain on the Wizard of Oz, all the magic is gone. The key replies from the former Fed chairman were that he "found a flaw" in his ideology regarding how markets work, that he was "partially wrong" about derivatives, and that he “made a mistake” in trusting industries and individuals to self-regulate. But, without a doubt, the big news was the fall from grace. To wit, this opening exchange: Henry Waxman: You were perhaps the leading proponent of deregulation of our financial markets, certainly you were the most influential voice for dergulation. You have been a staunch advocate for letting markets regulate themselves. Let me give you a few of your past statements: In 1994, you testified at a Congressional hearing on regulation of financial derivatives. You said there was nothing involved with federal regulations that make it superior to market regulations. In 1997, you said there...
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    Source: themessthatgreenspanmade.blogspot.com
  • 8:29 PM » Conference Calls Show Regional Banks Squeezing Homebuilders
    Published Thu, Oct 23 2008 8:29 PM by Seeking Alpha
    Construction loans are increasingly the source of non-performing assets for regional banks, and so they are taking steps to shrink their builder loan portfolios or restrict builder access to credit lines. The possibility of a highly-leveraged, large public homebuilder failing is still a possibility.
    Click Here to Read the Full Article

    Source: Seeking Alpha
  • 8:28 PM » Roubiini Foresees Possible Market Shutdown
    Published Thu, Oct 23 2008 8:28 PM by Google News
    After the Fed, ECB,, Bank of England, and other central banks took unprecedented measures over the last month to restore liquidity and recapitazlie banks, Nouriel Roubini sounded slightly less gloomy. He had deemed that the authorities has avoided a systemic financial meltdown, but a nasty, protracted recession was in the offing. It appears that Roubini has reversed himself with his latest remarks He now says systemic risks are increasing due to hedege fund margin calls, redemptions, and liquidations, and the authorities may be forced to close financial markets. Note that this is not a new line of thought. During the turmoil of the last month, particularly the week of October 6, some professional investors were quietly discussing the possibility of short-term market closures. From (hat tip readers Dwight, Saboor): Hundreds of hedge funds will fail and policy makers may need to shut financial markets for a week or more as the crisis forces investors to dump assets, New York University Professor Nouriel Roubini said. ``We've reached a situation of sheer panic,'' Roubini, who predicted the financial crisis in 2006, told a conference of hedge-fund managers in London today. ``There will be massive dumping of assets'' and ``hundreds of hedge funds are going to go bust,'' he said.... ``Systemic risk has become bigger and bigger,'' Roubini said at the Hedge 2008 conference. ``We're seeing the beginning of a run on a big chunk of the hedge funds,'' and ``don't be surprised if policy makers need to close down markets for a week or two in coming days,'' he said..... Italian Prime Minister Silvio Berlusconi roiled international markets on Oct. 10, first saying world leaders were discussing shutting down global financial exchanges, and then saying he didn't mean it. ``In a fairly Darwinian manner, many hedge funds will simply disappear,'' Roman said, speaking at the same event as Roubini... ``Things are getting...
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