Media interest in the subprime problem has died down. Subprimes are now in that same zombie category of ongoing problems that are unpleasant and unresolved, like Katrina victims and Iraq turning military service into involuntary servitude. In poking around, we found an intriguing item that likely won’t get the attention it warrants. Readers may recall […]
Read more...The Wall Street Journal’s Deal Journal tells us that former Comptroller of the Currency and later Bankers Trust Vice Chairman Eugene Ludwig is forming a (target size) $1 billion private equity fund to acquire banks. Now the bit the WSJ doesn’t seem to know is that Ludwig has been looking to form a fund in […]
Read more...That’s what Lewis Ranieri, who can lay claim to founding the mortgage-backed securities market, said in presentation at a Milken Institute conference last week. He asserted that 50% of the subprime borrowers qualified for loans from the FHA, Freddie Mac, or Fannie Mae on much more favorable terms. Tanta at Calculated Risk looks to see […]
Read more...Thanks to Tanta at Calculated Risk, we have a rush transcript from a presentation by Lew Ranieri at the Milken Institute conference on financial innovation. Ranieri is credited with creating the mortgage backed securities business, has continued to be active in the industry, and has sounded warnings on subprimes. I found three points to be […]
Read more...While most US readers believe that the Journal’s ideological bias is limited to its editorial pages, we have repeatedly seen (and commented on) skewed reporting as well. Specifically, the Journal tends to put a positive spin on economic (as opposed to company-specific) reporting. Today’s object lesson is the Bank of England’s latest edition of its […]
Read more...Another sign of the times: appraisers are routinely prodded to sign off on a higher price than they are inclined to, but arm-twisting or bribery by the seller is becoming pervasive. National Appraisal Survey found that 90% of 1200 participants felt pressured to change their reports, up from 55% in 2003. In addition, there is […]
Read more...Calculated Risk has a great post today, “‘Bailouts for UnterNerds: The Freddie Mac Story,” that says, in essence, that the “bailout” or “stabilization” for subprime mortgages announced by Freddie Mac today is much less significant and much less helpful to borrowers than it might seem. Freddie Mac stated that it will be purchase $20 billion […]
Read more...One can debate whether and how much aid subprime borrowers deserve, but a pair of articles Wednesday illustrates how difficult it will be to come up with any form of relief. In an underreported story, the FDIC hosted a session that included banking and mortgage industry leaders, legislators, investment bankers, and representatives from the SEC, […]
Read more...In theory, Monday’s Supreme Court decision to bar state oversight of subsidiaries of federally chartered banks was simply a confirmation of the Office of the Comptroller of the Currency’s efforts to assert (and some would say extend) its authority, but the effect is to end the dual structure which permitted both federal and state regulation […]
Read more...John Kay in the Financial Times gives the best layman’s explanation I have seen of the most widely used risk management approach in financial institutions, value at risk (VAR) and tells us what’s wrong with it. In a nutshell, VAR assumes a normal distribution of events (aka a bell curve). The problem is that prices […]
Read more...You seldom hear language like this from anyone in the deal community, particularly a borrower. But Steve Rattner, head of Quadrangle Partners, sees himself as not just your average LBO maven, but also a thoughtful Democrat (he was expected to get a post in a Kerry administration). But also notice that his comments in a […]
Read more...The Housing Bubble Blog today features “YKYAAFB When….” which stands for “you know you are a fucked borrower”. And many are insightful as well as revealing: Some readers suggested a topic about how a borrower might know they are overextended. “On a thread yesterday somebody made a: ‘You know you’re a redneck when…’ joke. It […]
Read more...So far, it hasn’t gotten much attention in the mainstream business press, but Bloomberg and the Financial Times are very much on top of the story: the House Financial Services Committee is moving forward with proposals to impose new regulations on subprime lending. And Democrats and Republicans are largely on the same page. There are […]
Read more...It’s become such an article of faith that the private sector is better than the government at doing just about everything that those who want the government to take a more active role here and there are put on the defensive. But the using the private sector to promote public goals can be more costly […]
Read more...There are two reasons this item, picked up in Felix Salmon’s blog, is noteworthy. The first is that investment banks happily extending their balance sheets to help get M&A transactions done is a classic sign of the end of a cycle. The second is that Salmon, who is vastly more sanguine about the state of […]
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