Delinquency rate on bank loans up to record 6.49% - (www.marketwatch.com) Delinquency rates for loans and leases at U.S. banks increased to a record 6.49% in the second quarter from 5.58% in the first quarter, the Federal Reserve announced Monday. The Fed began collecting the data in 1985. The charge-off rate rose from a record 2.03% to a record 2.65%. Before this recession, the highest charge-off rate had been 1.70%. Delinquency rates for real estate loans rose from 7.10% to 8.27%, the highest since the data began in 1987. Delinquency rates for commercial and industrial loans rose from 3.12% to 3.73%, while delinquencies for consumer loans rose to from 4.69% to 4.92%, also a 22-year high.
US banker found guilty of $1B subprime fraud - (www.news.bbc.co.uk) A former Credit Suisse banker has been found guilty of fraud after deceiving investors into buying risky investments that led to $1bn (£610m) of losses. A jury in New York needed less than a day's deliberation to find against Eric Butler. His co-defendant, Julian Tzolov, had already pleaded guilty. The two sold high-risk US sub-prime investments to people who were told they were buying much safer products. They did this as it meant they received much higher commissions. Unknown risks: The fraud started to unravel towards the end of 2007 when the US housing market began to stall, and bad debts in the sub-prime mortgage market started to be revealed. Butler faces a prison sentence of up to 45 years. Tzolov may get a lesser sentence because he agreed to help prosecutors, and testified against his former Credit Suisse colleague. "The defendants' fraudulent misrepresentations saddled investors with unknown risks they did not bargain for," said Benton Campbell, the US Attorney for the Eastern District of New York. Butler and Tzolov deceived a number of corporate clients including drugmaker Roche, semi-conductor business ST Microelectronics, and Canadian fertiliser firm Potash Corporation. "It was a bait-and-switch scheme," said Assistant US Attorney John Nowak. "They deceived clients who had trusted them."
Cash for Clunkers didn't boost hybrid sales - (www.sacbee.com) The federal Cash for Clunkers program is getting a lot of trucks and sport-utility vehicles off the road, but it hasn't made best-sellers out of the Prius or other gas-efficient hybrids. The purpose behind the program was twofold: boost anemic consumer spending while loweringgasoline consumption. There's no doubt that Cash for Clunkers accomplished the former, though interest now appears to be tapering off. It's less clear what the trade-in program has accomplished on the environmental front. Much to the chagrin of public-interest groups, a fair number of U.S. consumers are turning right around and buying new light trucks with their credits from the Car Allowance Rebate System, or CARS. The Toyota Prius and Honda Insight, two of the most popular and fuel-efficient hybrids, are noticeably absent from the top-10 list of new cars purchased to replace turned-in clunkers. "It appears that despite some of these glowing (federal) reports we've seen on the environmental benefits of the program, a lot of light trucks and SUVs are being purchased through the program," said Lena Pons, a policy analyst Public Citizen, the Washington, D.C.-based advocacy group. Public Citizen has filed a Freedom of Information Act request seeking more information on the CARS program, charging that the Obama administration has not provided details on clunkers being traded in and new cars being purchased. Edmunds.com, the Santa Monica-based auto information site, has been doing its best to keep score. According to Edmunds, the top 10 list of clunkers being turned in by U.S. consumers to date is an all-American-brand affair dominated by light trucks. The Ford Explorer SUV tops the list, with 10.2 percent of all clunker turn-ins nationwide. Edmunds' top 10 list of new vehicles purchased via the CARS program includes some gas-sippers such as the Ford Focus, Honda Civic and Toyota Corolla. But it also includes full-size trucks such as the Ford F-150 and Chevrolet Silverado. The Ford F-150, which gets less than 20 miles per gallon in combined city/highway driving, was second on the clunkers-turned-in list, at 8.6 percent. The Silverado likewise gets less than 20 mpg in city/highway driving. Most using the CARS program are turning over a 1984 or younger vehicle getting less than 18 miles per gallon in combined city/highway driving. If the fuel economy improvement on the new car is 4 to 9 mpg, the federal credit is $3,500. If the improvement is at least 10 mpg, the credit is the maximum $4,500. The rules vary for SUV, minivan or non-full-size pickup truck buyers. If the fuel economy improvement is 2 to 4 mpg, the credit is $3,500. If the improvement is at least 5 mpg, the credit is $4,500. If buying a full-size pickup or large van, the standard for a $3,500 credit is a 1 mpg improvement; it's 2 mpg to get a $4,500 credit. Jessica Caldwell, a senior analyst at Edmunds, said she was not surprised that some consumers were turning in old big vehicles to get new big vehicles.
Advertisers deserting Fox News' Birther Glenn Beck - (www.marketwatch.com) In what is shaping up to be one of the more effective boycott campaigns in years, advertisers are abandoning the "Glenn Beck" show on Fox News following the host's incendiary comments that President Barack Obama is a "racist" and has a "deep-seated hatred for white people." Among the advertisers to pull spots from the popular cable talk show are Geico, owned by Warren Buffett's Berkshire Hathaway (BRK A 100,940, +1,940.00, +1.96%)(BRK B 3,275, +45.00, +1.39%); Procter & Gamble (PG 52.45, -0.01, -0.01%); Sargento Cheese; and Progressive Insurance (PGR 16.02, -0.07, -0.44%), according to the companies and Color of Change, one group that is organizing a campaign against the program. Beck, who made the remarks during another Fox News program late last month, is among the network's biggest draws, pulling in an average of about 2 million viewers. (Fox News is a unit of News Corp. (NWS 12.51, +0.28, +2.29%), which also owns MarketWatch, the publisher of this report.) Geico didn't respond to a request for comment but sent Color of Change an email saying it had "instructed its ad-buying service to redistribute its inventory of rotational spots on [Fox] to their other network programs, exclusive of the Glenn Beck program." Privately held Sargento told its media buyer not to put any of its ads in Beck's show, said a spokeswoman. "We market our products to people regardless of their political affiliations," she said. "Yet we do not want to be associated with hateful speech used by either liberal or conservative television hosts."
Florida's population declines for the first time since 1946 - (www.miamiherald.com) Florida lost population for the first time in 63 years, spelling potentially tough times for teachers and others. TALLAHASSEE -- For the first time since the end of World War II, the growth state of Florida lost population, researchers say, in a sign that the economic recession is even worse than many had feared. In all, the state lost about 58,000 people from April 2008 to April 2009, according to a new estimate from the University of Florida's Bureau of Economic and Business Research. ``It's such a dramatic shift from what we've seen in the past,'' said Stan Smith, the bureau's director. ``Florida's economy is, in a lot of ways, driven by population growth,'' he said. ``Perhaps more importantly, population growth is a reflection of how the economy is doing both in Florida and in the nation.'' Smith said the decline doesn't look like a trend. Instead, he sees it as a deviation from previous decades of growth upon which Florida's development-based economy relies. He also said the decrease is a ``drop in the bucket'' compared with Florida's 18.3 million population. Smith said the last time Florida lost population, in 1946, it was because so many soldiers left the state's military bases to go home. This population loss, he said, is solely due to the bad economy. The decline all but guarantees that state economists will likely revise downward state budget projections released just last week, when they forecast that Florida will receive $147 million less in taxes this budget year than they had previously anticipated. With fewer Floridians, classrooms will likely be a little emptier than forecast. Already, the state had projected that, in the current budget year, nearly 10,000 fewer kids would be in class. That estimate is likely to change now as well, and it could mean trouble for teachers because classroom funding is pegged to class size. ``If you have fewer students, it's not like you can't pay for the students, but you might have to let the teacher go,'' said Amy Baker, the head of the Legislature's Office of Economic and Demographic Research. With 400,000 empty homes on the market, Baker said, the smaller population also means there aren't as many potential buyers. For months, Gov. Charlie Crist has cheered glimmers of apparently good news in the state's economy. However, the new estimates show just how badly financial conditions have deteriorated in Florida. The state has shed a record 392,800 jobs in a year, unemployment is headed toward 11 percent and one in every 154 Florida homes are in some form of foreclosure.
Taking Wall Street Advice in Rally Means Owing $6,000 - (www.bloomberg.com) Anyone who did what Wall Street analysts advised last March has only losses after the biggest stock market rally in seven decades. Citigroup Inc., Bank of America Corp. and more than a dozen other firms told clients to purchase European energy producers and U.S. drugmakers while selling banks and retailers, according to combined rankings compiled by Bloomberg. An investor who used $10,000 to buy companies in the highest-rated industries and bet on declines in the lowest since the advance began on March 9 lost everything and would owe as much as $6,000 to cover bearish trades, the data show. The recommendations didn’t work because companies with the worst earnings led the 46 percent gain in the Standard & Poor’s 500 Index since it fell to a 12-year low five months ago. Securities firms that failed to foresee that the hardest-hit stocks last year would recover fastest steered investors to drug and energy producers, which have trailed the MSCI World Index by more than 24 percentage points, the data show. “Analysts are attached to fundamentals,” said Romain Boscher, who helps oversee $18.5 billion as head of equities at Groupama Asset Management in Paris. “This is a technical rally, a rally of sentiment. Analysts were too defensive. There was an inflection point and they didn’t see it.”
California's stressed IOU holders waiting for cold cash - (www.sacbee.com) California is winding down its IOU business, but the end won't come soon enough for struggling state vendors like Gloria Freeman.