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house loan guarantees ensure the misallocation of credit - (www.ochousingnews.com) Government interference in
credit markets isn’t new::: Bastiat,
Frédéric — (1801-1850): At all times, but especially in the last few years,
people have dreamt of universalizing wealth by universalizing credit. I am sure
I do not exaggerate in saying that since the February Revolution the Paris
presses have spewed forth more than ten thousand brochures extolling this
solution of the social problem. This solution, alas, has as its foundation
merely an optical illusion, in so far as an illusion can serve as a foundation
for anything. These people begin by confusing hard money with products; then
they confuse paper money with hard money; and it is from these two confusions
that they profess to derive a fact. In this question it is absolutely necessary
to forget money, coins, bank notes, and the other media by which products pass
from hand to hand, in order to see only the products themselves, which
constitute the real substance of a loan. For when a farmer borrows fifty francs
to buy a plow, it is not actually the fifty francs that is lent to him; it is
the plow. And when a merchant borrows twenty thousand francs to buy a house, it
is not the twenty thousand francs he owes; it is the house.
Spain’s Shrinking Bank Network Leaves CaixaBank Top-Heavy -
(www.bloomberg.com) CaixaBank SA is among lenders
that look increasingly bloated as Spain’s economic slump adds pressure on banks
to cut branches after the busted credit boom. CaixaBank has 6,631 branches to
serve its 13.2 million customers, or one branch per 1,991 clients. That
compares with 3,093 clients for each of the 4,752 Spanish branches run by Banco Santander SA, the country’s biggest
lender, and 3,215 customers at Banco Popular Espanol SA. An economic
crisis afflicting Spain follows a decade-long credit boom that saw the number
of bank branches surge to the highest per capita in Europe. While lenders
including Bankia and Santander have announced plans to close more than 2,000
branches in an economy already grappling with a recession and the region’s
highest jobless rate, banks may have to shrink further. “Spain has this problem
that it is excessively banked,” said Alvaro Cuervo,
director of the University College of Financial Studies in Madrid. “It’s not
over.”
Deep Cuts Raise Questions About Morgan Stanley - (www.nytimes.com) When Morgan
Stanley’s top executives gathered in mid-September at the Gramercy
Park Hotel in Manhattan to discuss strategy, some participants complained that
the room was too small. Apparently, that was the point: James P. Gorman, Morgan
Stanley’s chief executive, chose the cramped quarters to force discussion among
the executives, said people briefed on his decision but not authorized to speak
on the record. These days, it is the Wall Street firm that is finding itself a
bit boxed in. Regulatory demands, weak markets and lower credit ratings have
weighed on all banks, but perhaps more so on Morgan Stanley, the smallest of
the big Wall Street firms. In the three years that Mr. Gorman, 54, has been at
the helm, the bank has been progressively shrinking its business of trading
bonds, commodities and other investments and expanding into wealth management.
Danish Mortgage Banks Mull Lifeline to Homeowners: Nordic
Credit - (www.bloomberg.com) Denmark’s
$500 billion mortgage industry is looking at how to keep struggling homeowners
afloat as the nation’s push into interest-only loans a decade ago now threatens
a jump in losses amid rising unemployment. Loan writedowns for mortgage
banks in Denmark jumped 51 percent in the first half of last year, according to
a report released last month from the financial regulator. Losses rose 17
percent in 2011, compared with a 25 percent drop in provisions at 35 of Germany’s
largest credit banks and a 55 percent drop in net loan losses at Sweden’s
mortgage lenders. Loans that allow principal payments to be postponed by as
many as 10 years now comprise more than half of outstanding mortgages after
being introduced in 2003. Denmark’s two mortgage banking groups, whose members
include Nykredit A/S, Europe’s biggest issuer of home-loan backed
bonds, are in talks with regulators on how to help homeowners unable to meet
principal payments or refinance into similar loans.
House
Builders Lobby Weakens Drywall Legislation - (www.propublica.org) Last week, federal lawmakers trumpeted the passage of the Drywall Safety Act of 2012 as a
bipartisan victory for thousands of homeowners harmed by contaminated drywall. "This
is a bill about protecting American families — their health and financial
well-being," said Rep. Scott Rigell, R-Va., the measure's primary sponsor
in the House. "It is up to Congress to ensure that preventative standards
are in place so no American family is faced with the hardship and heartache
from contaminated drywall ever again." But the bill doesn't actually set
preventative standards. Instead, it asks an industry association committee
comprised mostly of drywall manufacturers and builders to develop voluntary
limits on sulfur content in drywall for the government to enforce.
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