The New York Times, in “Loan Giant Overstated Its Capital Base,” sets forth an interesting bill of particulars as to where Freddie deviated from what one might consider a full and fair statement of its financial condition. Indeed, the article says that the widely-expected Sunday intervention was triggered by the GSE’s regulator determining that the […]
Read more...Guess the powers that be were unwilling to risk playing chicken with the markets and losing. So much for the theory espoused by some that the government couldn’t put the GSEs into custodianship absent a breaching of statutory minimums (technically, by being insolvent under the “fair asset” valuation method, Freddie is already on plenty thin […]
Read more...More cheery news on the housing front. The rise in foreclosures wasn’t unexpected, since there are widespread, albeit anecdotal reports of banks being backlogged on foreclosures, either by virtue of design or understaffing. But notice how prime mortgages are a significant component of new foreclosures. From Bloomberg: New foreclosures increased to 1.19 percent, rising above […]
Read more...Although there have been rumors of various Lehman Hail Mary passes (the number of companies allegedly interested in investing in the troubled bank seems to grow on a daily basis), the one involving it spinning off less than choice debt into a liquidation vehicle appears to have some substance. A Bloomberg story today gives details […]
Read more...Brad Setser is thoughtful and data driven, but he also isn’t shy about saying what numbers portend, even if he runs the risk of sounding a tad alarmist. We’ve had so much complacency, followed by concerted efforts to keep asset values and confidence aloft that an unvarnished presentation can come off as a dousing of […]
Read more...Today’s Financial Times describes a new sign of how bad things are in the real estate market in London. People are so desperate to keep their deals alive that they are buying houses they do not want (yes, that sounds completely barmy, but the piece explains how it works). The net effect is that not […]
Read more...We wrote yesterday about Japanese retail and institutional investors exiting Freddie and Fannie holdings, and didn’t consider it as worrisome as it might seem on the surface, since at this juncture, the funding of our current account deficit is coming almost from central banks and to a lesser degree, sovereign wealth funds. Tonight, the Financial […]
Read more...Bloomberg reports that today’s sale of $3 billion of GSE debt went well, which investors took as a sign that a GSE crisis is not imminent. However, even this striving-to-be-upbeat article had some threads that bode ill for the longer term. And DealBreaker pointed out earlier this week that there is a profitable arbitrage on […]
Read more...Banks in the UK have retreated from residential mortgages with considerable speed. Even though the falloff in July vs. June was not dramatic, home lending is a such a low level that any further decline is not welcome. The Independent did not try to put lipstick on this pig, although a few sources did attempt […]
Read more...Yes, it’s the end of the summer, but the Fed boys worked over the weekend, so what’s the excuse of Hank Paulson & Co.? The saber rattling for the Fannie and Freddie rescue program to be unveiled is getting louder and louder. We had an unmistakable demand from the Chinese over the weekend, if you […]
Read more...When you think you’ve read everything worth considering on a given topic, once in a while something comes along to prove you wrong. A case in point is this post by Charles Calomiris at VoxEu on the subprime mess. It is longer than the standard VoxEU offering, but well worth your attention. Calomiris not only […]
Read more...A story in the New York Times warns, “Some Fear Commercial Property Loans Will Be Next Stage in Downturn.” This is news? I’m in a lazy mood, so I will merely search old posts. Fitch warned in April 2007 (yes, the year is no typo) of the lousy quality of commercial real estate loans and […]
Read more...Warning: Josh Rosner is controversial in some circles. He co-authored a simply terrific paper with Joe Mason, “Where Did the Risk Go? How Misapplied Bond Ratings Cause Mortgage Backed Securities and Collateralized Debt Obligation Market Disruptions.” If you haven’t read it, do so now. If you don’t have the time, we summarized it here. However, […]
Read more...Another day of nervousness and not-exactly-positive developments on the Fannie and Freddie front. What is remarkable about the situation now is that at least some of the trouble elements were entirely predictable, which suggests that a bit of aforethought might have led to a better plan and less bad outcomes (I’m not such as optimist […]
Read more...The real estate recession has arrived, with a vengeance, in London and environs. While fading prospects for City employment and pay levels is no doubt part of the equation, the proximate cause is the dearth of mortgage finance, which bodes ill for the market’s prospects. Indeed, the headline item reflects a drop in asking prices, […]
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