Yesterday we fulminated at the failure of the Treasury Department to include mortgage counselors, one of the constituencies in the original Hope Now Alliance, in the efforts to craft a plan a to salvage subprime borrowers facing resets. This was a major oversight since the counsellors will play an essential role in gathering information from […]
Read more...As much as I would like to leave the matter of Hank Paulson and his dubious subprime rescue plan alone, the latest developments demand comment, first my own, followed by a roundup of other views. One tidbit later on to induce you to read the entire and admittedly long post: successful implementation of the program […]
Read more...Hoisted from comments by a helpful anonymous reader was a revealing post yesterday at FT Alphaville that we somehow missed. It’s a important addition to the discussion over the stress in the US housing and mortgage-backed securities markets. CreditSights, an award-winning provider of credit research, disputes the commonly held view that the sharp falloff in […]
Read more...Yesterday, we posted some thoughts about the subprime rescue plan under development among the Treasury, some leading servicers, other regulators, and some investors (most notably Freddie and Fannie). A few additional items: We had commented that the plan would be limited to only borrowers who were current on payments. That appears to be incorrect, or […]
Read more...The Wall Street Journal’s page one story, “Rate Plan Has Skeptics, Fans,” offers little new information about the substance of the program (not surprising) but gives mainly positive reviews. In case readers somehow haven’t figured it out, I believe this program to be a Bad Idea in any form, although some variants could be worse […]
Read more...Do we see a pattern here? The much-covered, little-loved SIV rescue program (formally known as the Master Liquidity Enhancement Conduit and informally called the Entity or Super SIV) was announced prematurely, didn’t clearly solve the problem it was meant to address, involved a lot of failing around to try to resolve irreconcilable interests (those of […]
Read more...The rating agency Fitch for some time has warned of lax lending practices in the commercial real estate market. Bloomberg reports today that prices of derivatives protecting investors against default of the highest-rated commercial real estate securities have appreciated sharply in the last month, signaling the expectation of defaults ” rising to the highest level […]
Read more...The sighting of a robin does not make a spring, nor do the actions of four judges constitute a trend. Nevertheless, the fact that some courts are taking a harder look at foreclosure practices may foretell a shift in attitudes. Gretchen Morgenson, in “Foreclosures by Lender Investigated,” appears to have her facts right. Morgenson is […]
Read more...While a number of analysts, investors, and commentators have said for some time that the credit crisis is serious and is likely to damage the real economy, the only views that the Fed takes seriously are those of highly regarded economists, fellow regulators, and senior industry executives (oh, and of course, that of Fed futures […]
Read more...The most successful fund in the “bet against subprime” game is Lahde Capital, established last year by Andrew Lahde, is up 100% after fees. However, the fund is so small that the article in the Financial Time on its results didn’t say how much has under management. Firms that produce such dazzling returns can turn […]
Read more...In an article in today’s New York Times, Yale Professor Robert Shiller makes a very important point: the remedies proposed by the powers that be for the burgeoning housing mess are woefully inadequate: ….our reaction to the current crisis is anemic….The “Super S.I.V.” rescue plan, instigated in October by Henry M. Paulson Jr., the Treasury […]
Read more...When it rains, it pours, or as they say in finance-land, in a crisis all correlations move to 1. Fitch has been warning for a while that commercial real estate lending had exhibited many of the frothy lending practices that plagued subprime (overly optimistic projections, no cash down, terms that were viable only if the […]
Read more...The Wall Street Journal has a page one story today on the role of resets in the supbrime mess. While the story mainly covers familiar ground, it does have some new bits of information, and I’ve excerpted them below. One item is that the profile of troubled borrowers is shifting from ones resulting from “higher […]
Read more...Does being a former Fed chairman mean never having to say you’re sorry? In Oslo, Greenspan maintained that the housing bubble was not due to negative real interest rates in the US, but instead was a “global phenomenon.” He is thus arguing that housing price appreciation in various markets resulted from a common source that […]
Read more...Charles W. Calomiris, the Henry Kaufman professor of financial institutions at Columbia’s business school, has an interesting but ultimately frustrating post at VoxEU in which he argues that the trouble we are seeing in the credit markets is not yet a Minsky moment (in very simplistic terms, the point at which an overlevered and highly […]
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