THE BASIS POINT

Economic Indicator Lesson, Consumer Sentiment, 416 FDIC Problem Banks

When I was growing up, no one that I knew of wanted to be a “purchasing manager”. (Or, for that matter, a mortgage banker, but look where that got us!) Anyway, purchasing managers are surveyed, and the results can make the financial markets move. What exactly is a purchasing manager? Whether for use by their own company, or for re-sale, purchasing managers, buyers, and purchasing agents purchase goods for a job. They are considered experts at price, quality, availability, reliability, and technical support when choosing suppliers and merchandise, and are responsible for obtaining all of those at the best price while maintaining desirable inventory levels. It may be a commodity, a finished good, whatever, produced in an old way or by using new technology, produced by a long-time supplier or a new vendor, it doesn’t matter. So tracking what these purchasing managers are doing gives statisticians and recent math majors a feeling that they have their finger on the pulse of the general economy.

What do we have for economic news during the last official week of summer, and the last week that one can wear white pants and still be fashionable? (That is, if ever wearing white pants is fashionable outside of Florida…) Today is the Chicago Purchasing Manager’s Index (see above). Tomorrow we’ll have Construction Spending, Pending Home Sales, and the ISM Index; Wednesday Factory Orders, the minutes from the Fed meeting, and the always-questionable ADP Employment Survey; Thursday Jobless Claims,; and then on Friday, when everyone is trying to leave town (whatever town they happen to be in), all of the Nonfarm Payroll data (NFP expected -225k). With no news yet, the bond market is seeing a slight rally: the 10-yr is back down to 3.45% and the 5-yr and mortgage prices are about unchanged versus Friday afternoon.

Fannie Shuns Taylor Bean
Fannie Mae gave loans from Taylor Bean “the Heisman”. (Think of the statue: player holding his arm outstretched, hand pushing away.)

“Conventional and government loans for which TBW was involved in any part of the origination process – including borrower application, processing, obtaining documentation, and/or underwriting – are ineligible for delivery to Fannie Mae unless re-underwritten by the lender selling the loan to us.” And if anyone wants to send Fannie one of the TBW loans, they must obtain all new documentation, with a HVCC-compliant appraisal, “including a new borrower loan application, and underwrite the TBW-originated loan to your own standards and Fannie Mae requirements. If the loan was previously underwritten through DU, a new DU loan case file must be created and submitted, or the loan must be fully underwritten manually.” And any seller had better be prepared to rep and warrant their underwriting, plus Fannie “will perform extra quality control on loans known to be sourced by TBW.”

And since Fannie is purportedly able to track previous DU case numbers, it probably isn’t in anyone’s best interest to try to slip a loan by them that was previously related to TBW.

Consumer Sentiment, 416 FDIC Problem Banks
Is your sentiment as a consumer improving? The sentiment of those consumers polled by the University of Michigan’s is, improving in late August but still below July’s level. And what else happened Friday? The FDIC said it had 416 banks on its “problem list” at the end of June, equivalent to about 5% of the nation’s banks. And these banks had/have a combined $300 billion of assets, compared with only $78 billion a year ago. So should the government send the FDIC more money now or wait a month or two? On Friday the FDIC “only” closed down three banks: Affinity Bank (CA), Bradford Bank (MD), and Mainstreet Bank (MN).

Rate Renegotiations
With rates having crept down somewhat, canny Secondary folks are dusting off their float-down information. It runs the gamut, from “we don’t have a policy” to “what’ll take to keep that lock?” Flagstar, for example, says, “Existing locks can now go to current market minus .50 in fee from the current market price…you will be capped at your current rebate if the float down price exceeds your current rebate.” Bank of America Home Loans say, “We don’t have an official float down policy but we will work with our customers to renegotiate the rate down.” Be forewarned, however, that most investors won’t pay a higher premium, but will focus on lowering the rate for the borrower.

Daily Humor
Well, a Girl Potato and A Boy Potato had eyes for each other, and finally they got married, and had a little sweet potato, which they called “Yam”.
Of course, they wanted the best for Yam. When it was time, they told her about the facts of life.
They warned her about going out and getting half-baked, so she wouldn’t get accidentally mashed, and get a bad name for herself like ‘Hot Potato,’ and end up with a bunch of Tater Tots.
Yam said “not to worry, no Spud would get her into the sack and make a rotten potato out of her!”
But on the other hand she wouldn’t stay home and become a Couch Potato either.
She would get plenty of exercise so as not to be skinny like her Shoestring cousins.
When she went off to Europe, Mr. and Mrs. Potato told Yam to watch out for the hard-boiled guys from Ireland. And the greasy guys from France called the French Fries.
And when she went out west in the USA, they told her to watch out for the Indians so she wouldn’t get scalloped.
Yam said she would stay on the straight and narrow and wouldn’t associate with those high class Yukon Golds, or the ones from the other side of the tracks who advertise their trade on all the trucks that say, ‘Frito Lay.’
Mr. and Mrs. Potato sent Yam to Idaho P.U. (that’s Potato University) so when she graduated she’d really be in the chips.
But in spite of all they did for her, one-day Yam came home and announced she was going to marry Tom Brokaw. Tom Brokaw!!!
Mr. and Mrs. Potato were very upset.
They told Yam she couldn’t possibly marry Tom Brokaw because he’s just… well he’s just a…

A COMMONTATER !!!