Wednesday June 29 2016 Housing and Economic stories

TOP STORIES:

Countrywide Mortgage Devastation Lingers as Ex-Chief Moves On - (www.nytimes.com) Angelo Mozilo can finally get on with his life. This month the Justice Department told Mr. Mozilo, the former chief executive of Countrywide Financial, once the nation’s largest subprime mortgage lender, that he was no longer under investigation in connection with civil mortgage fraud. The government’s criminal inquiry into Mr. Mozilo’s role in the financial crisis was dropped previously, so he is now in the clear. At least that’s the view from Washington. On Main Street, where the pain of Countrywide’s reckless lending and abusive foreclosure practices still throbs, it’s safe to say that Mr. Mozilo is still identified as a major figure in the mortgage crisis.

Chinese insurers run "Titanic" risks for titanic returns - (www.reuters.com) Years of breakneck growth for China's top insurers has been partly fueled by a splurge on risky investment products that could punch multi-billion-dollar holes in their balance sheets if the slowing economy triggers heavy debt defaults. Industry premiums have increased by an average 13.4 percent a year since 2010, according to the China Insurance Regulatory Commission (CIRC), but in an environment of low interest rates and unreliable stock markets, insurers have increasingly looked to alternative investments to make the returns they need to service their growing business. A Reuters survey of the accounts of the top five listed insurers including Ping An Insurance Group Co and New China Life Insurance showed their holding of assets other than shares, bonds and cash had more than quadrupled in five years to 984 billion yuan ($150 billion).

“I Think this Willful Ignorance Will Bring on a Banking Crisis” – (www.wolfstreet.com)  Central Bankers are willfully ignoring signs that negative interest rates are not working, explains Christine Hughes in the video. As yields fall to the floor, people have to save more to make up for the lack of interest income they’d been counting on. Bank stocks loathe negative rates, and banks are actively looking for other options. In the end, she says, negative rates will bring on a banking crisis. Excellent brief video on the NIRP absurdity: Friday was also the Worst Day for Italian and Spanish stocks, which plunged over 12%. And banks were massacred. Read…  Brexit Blowback Hits Italian and Spanish Banks

Bank-Sovereign Doom Loop Requires Fiscal Response, BIS Says - (www.bloomberg.com) Policy makers have to take tougher action to sever the link between banks and sovereigns that wreaked so much havoc during the last financial crisis, according to theBank for International Settlements. The current regulatory treatment of government debt on banks’ balance sheets is “no longer tenable,” the Basel, Switzerland-based lender said in its annual report released on Sunday. Assigning a capital charge to sovereign bonds is being studied by the Basel Committee on Banking Supervision. Stefan Ingves, chairman of the Basel Committee, has said policy makers will examine options to tighten capital rules around banks’ holdings of sovereign debt in a “careful” and “gradual manner.”

Brexit Adds $380 Billion to Global Negative-Yielding Bond Pile - (www.bloomberg.com)  A flight to safer assets by global investors after Britain’s decision to the quit the European Union has added $380 billion to the pile of negative-yielding government bonds. There are now $8.73 trillion of securities with yields below zero globally, according to the Bloomberg World Sovereign Bond Indexes, up from $8.35 trillion before the vote. In the euro-area, German benchmark bonds with maturities out to 10 years are negative, while Japanese 10-year yields reached a record-low of minus 0.215 percent on Friday. As a victory for Brexit campaigners became clear, it triggered market chaos with the pound suffering its worst decline on record, U.K. bank stocks plummeting and gold prices rallying. Already signs of economic and political turmoil have emerged as U.K. Prime Minister David Cameron plans to step down in October, delaying exit negotiations, while European leaders are calling for talks to begin immediately.

OTHER STORIES:

Rajoy Tackles Podemos in Spanish Vote as Brexit Roils Europe - (www.bloomberg.com)
Angela Merkel urges calm over calls for immediate Brexit - (www.ft.com)
U.K. Faces Long Tussle Over Departure From European Union - (www.wsj.com)

Investor George Soros calls for reconstruction of EU after 'Brexit' vote - (www.reuters.com)

Central banks ready to cooperate after Brexit result - (www.reuters.com)
Spanish voters head back to polls in bid to break deadlock - (www.bbc.com)
Ecuador says Brexit 'spoils' scheduled bond issue - (www.reuters.com)
Russia secures energy deals, talks security with China as Putin visits - (www.reuters.com)