Yesterday during testimony to the House Financial Services Committee on Financial Regulation, Treasury Secretary Henry Paulson said there is a forthcoming plan to allow private equity firms and hedge funds to invest in banks. Right now, private investors cannot accumulate more than a 9.9% stake in banks without bumping into regulations, but this could rise
July 2008
CONGRESS BETTER DO SOMETHING It appears that Congress can’t quite decide what to do on the current mortgage legislation. The broad thinking suggests that if they can’t do something prior to their summer recess, when they return the November election will consume their time. Although doing nothing is an option, let’s hope they don’t take
BusinessWeek put it best today, pointing out that Wachovia hit a 17-year low just as new CEO Robert Steel starts his $1.1m per year base salary job. Steel has been the Treasury Department’s link with Wall Street since 2006, and is a former Goldman Sachs exec as well. His hire comes about two weeks after
Following IndyMac’s announcement that they’re exiting retail and wholesale lending, Illinois-based Prospect Mortgage announced the purchase of IndyMac’s retail lending network for an undisclosed amount. Prospect owns Metrocities Mortgage, a nationwide mortgage bank who claims 5.6 billion in fundings for 2006 (irrelevant number in current market context); Opteum Mortgage, a mortgage broker headquartered in New
Fannie Mae and especially Freddie Mac, the government backed purchasers of most of our country’s mortgages, are believed to be insolvent by many (including St. Louis Fed President William Poole) to be insolvent. Markets continue to punish both organizations this week, bringing FNMA down 76% in the past 12 months, and FHLMC down 83%. They
MORE HOMES BECOMING RENTALS Goldman Sachs published a good research piece the other day addressing homes being turned into rental units, since buyers aren’t coming to the surface. Basically demand for owner-occupied housing has gone down, and in addition displaced homeowners need rental units since their credit (assuming they lost their own home) has deteriorated.
California governor Arnold Schwarzenegger signed a bill into law today that requires lenders to contact owners 30 days before issuing a notice of default, authorizes local governments to charge lenders up to $1000 per day for not maintaining foreclosed homes, and gives foreclosed owners 60 days to move out of their foreclosed properties. According to
No this is not an Onion story.
Head of Manhattan real estate stalwart Corcoran Group, Barbara Corcoran, said today that housing is much worse now than in any previous corrections. She said that it’s possible we could find a bottom by Spring 2009, but only if jobs improve. She also said that the bill in Congress proposing $300 billion to fund FHA
Some experts believe that, as a typical consumer, my financial well-being can be measured by 5 basic indicators: job creation, changes in real wages, changes in home prices, changes in equity prices, and access to credit. Let’s see… mortgage bankers (and others in many other industries) are seeing “negative” job creation, my real wages are
TREASURIES UP AS FANNIE/FREDDIE FREEFALL Yesterday shares of Fannie Mae and Freddie Mac both plummeted after an analyst with Lehman Brothers wrote in a report that the two companies may need to raise billions of dollars if accounting rules (FAS 140) are changed. Most experts feel that they will not have to come up with
Last Thursday rates worsened, when perhaps they shouldn’t have. Why? Securities firms and investors often “hunker down” early ahead of holiday weekends, and often markets close early. The news that came out didn’t warrant the sell-off. The ISM nonmanufacturing index dropped to 48.2, with orders, business activity, and employment all falling. Apparently, the stimulus has
In an announcement today, IndyMac said they are closing their retail and wholesale lending units, and plan to lay off about 3800 employees in coming months to reduce expenses by about 60%. They will keep their reverse mortgage unit and their loan servicing/retention businesses which, combined, will generate about $5b to $10b in new loans
So far, this is illustration from The Economist is the best picture of bear market that we’ve seen. In the accompanying article about our current markets, they review some basic bear market stats: The American stockmarket had its worst month since 2002 in June and is now down more than 20% from its peak, the
In its take on UBS and the general malaise of Swiss banking, the Economist this week said that even though predators may be circling to grab opportunities in any breakup, the “generally sorry state of its industry” may be its saving grace as “few would-be buyers have the ready cash for such a large deal.”
When I was a young kid in the 1970s, my mom ran a retail clothing store that shared a back alley with a nearby hippie food co-op. They would illegally use her designated dumpster when theirs got full, causing her collection bills to rise — only a nominal rise, but the hippie presumptuousness was highly
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