Calculated Risk Fri 2009-09-04 19:23 EDT
John Burns Consulting sent out a note today titled: FHA Likely To Be The Next Shoe To Drop"The FHA's aggressive lending programs have continued throughout the housing downturn, causing its market share of the mortgage industry to grow from 2% in 2005 to 23% today. ... The FHA insurance fund, however, is likely running dry. ...
Bruce Krasting Fri 2009-09-04 19:11 EDT
In the Week in Review section the NY Times had a piece by David Streitfeld titled ``When Debtors Decide to Default''. I thought it was an important story. The NY Times put the issue of Debt Repudiation on the table. Exactly where it belongs. The author also contributed a new adjective to describe many of America's troubled borrowers, ``Ruthless Defaulters''. This definition comes to us from the ``lending'' side of the equation. I think that is a misguided definition by the industry. I don't think they know what they are up against. Yet...Debt repudiation is the biggest systemic risk we face...the default rate on mortgages in excess of $500k is going to explode this fall...the CC numbers would follow. Broad based debt repudiation is a distinct possibility.
Mish's Global Economic Trend Analysis Sun 2009-08-30 12:03 EDT
The second quarter 2009 Quarterly Banking Profile has some interesting charts and facts that inquiring minds will be interested in.Insured Institution Performance Higher Loss Provisions Lead to a $3.7 Billion Net LossMore Than One in Four Institutions Are UnprofitableCharge-Offs and Noncurrent Loans Continue to RiseNet Interest Margins Show Modest ImprovementIndustry Assets Decline by $238 BillionThe Industry Posts a Net Loss for the Quarter The Industry Posts a Net Loss for the Quarter Burdened by costs associated with rising levels of troubled loans and falling asset values, FDIC-insured commercial banks and savings institutions reported an aggregate net loss of $3.7 billion in the second quarter of 2009. Increased expenses for bad loans were chiefly responsible for the industry's loss. Insured institutions added $66.9 billion in loan-loss provisions to their reserves... ``Conventional wisdom regarding money supply suggests there is massive pent up inflation in the works as a result of the buildup of excess reserves...The reality is excessive debt and falling asset prices have rendered the best efforts of the Fed impotent. Banks are not well capitalized, they are insolvent, unwilling and unable to lend.''
15-year high; Bank problem listings; FDIC insured institutions; greater; Mish's Global Economic Trend Analysis; unprofitable.
naked capitalism Thu 2009-08-27 10:50 EDT
In a show of how much our government thinks that serving the financial oligarchy, rather than the citizenry, is its prime duty, the Fed is fighting to stop the court-ordered disclosure of who borrowed money under the Fed's various lending facilities. The reason I lump the Fed in with "the government" is that the central bank has been serving as an off-balance sheet entity of the Treasury for quite some time. And not only are the Fed and Treasury acting in near lockstep, but there has been no meaningful change in the government stance towards the banksters. Yes, Team Obama makes more of a show of trying to rein them in, but push comes to shove, it's merely Paulson version 2.0: same content, better packaging. Paulson's success in muscling...
Fed Uses Scare Tactics; Forestall Loan Disclosures; naked capitalism; Quelle Surprise; trying.
Fri 2009-07-24 00:00 EDT
Tue 2009-06-16 00:00 EDT
Prosper offers trading platform called Open Market that lets any financial institution securitize (package and re-sell) its portfolio of loans to individual P2P lenders
CNET; Prosper CEO says P2P lending; reboot economy; Webware.
Fri 2009-05-08 00:00 EDT
fractional reserve lending defended against claim of fraudulence; ``So long as the bank never lends out more unsecured than it has in excess capital, there has been no fraud. The instant the bank does so, it has committed fraud.'' ``Our failure is regulatory. It is against the law to commit fraud and yet we have refused to prosecute those who have claimed to be solvent when they are not. ''
FRL; Market Ticker; Mish; Rebuttal.
Thu 2009-05-07 00:00 EDT
``Fractional Reserve Lending (FRL)...in conjunction with micro-mismanagement of interest rates by the Fed is the root cause of the financial crisis''; ``FRL is the enabler for credit bubbles. Given enough time, credit bubbles are guaranteed to implode in deflationary fashion.'' austrian economic libertarian critique
Case; Fed; fractional reserves lending; Mish's Global Economic Trend Analysis.
Tue 2009-04-21 00:00 EDT
defending fractional reserve lending; ``leverage limits prevent excessive expansion of credit without interfering with the intermediation function''; propose to set regulatory capital limits as the inverse of leverage; transparency of asset valuations
Wed 2009-04-01 00:00 EDT
Thu 2009-02-26 00:00 EST
Chocolate Covered Cotton, by billmon; ``taking a look at how the stinking heap was created''; securitized lending morphing to fatal innovation, collateralized obligations; ``full nationalization still would be less expensive and messy than creating the kind of Potemkin markets the Geither plan seems to envision''; ``ncreasingly desperate attempts to maintain a phony façade of free markets and private enterprise, in an economy now utterly dependent on the federal safety net''
Wed 2009-02-11 00:00 EST
``I call for the resignation of Fed Chairman Ben Bernanke, the abolishment of fractional reserve lending, and the end of the Fed itself''
Congress; Mish's Global Economic Trend Analysis; Open Letter; pain; shares.
Fri 2008-12-05 00:00 EST
``the cure is to embrace deflation and stop fractional reserve lending and the serially bubble blowing activities of the Fed''
Central Planning; China prepares; Mish's Global Economic Trend Analysis; prepared; worst case.
