Thursday May 29 Housing and Economic stories

Top Stories:

Credit default swaps on Lehman Brothers and Merrill Lynch debt have risen - (www.telegraph.co.uk) - The debt markets in the US and Europe have begun to flash warning signals yet again, raising fears that the global credit crisis could be entering another turbulent phase. The cost of insuring against default on the bonds of Lehman Brothers, Merrill Lynch and other big banks and brokerages has surged over the last two weeks, threatening to reach the stress levels seen before the Bear Stearns debacle. Spreads on inter-bank Libor and Euribor rates in Europe are back near record levels.
S&P Slashes $34 Billion in ALT-A Securities. ALT-A…The Next ‘Crisis’ - [2008-05-28] - The ALT-A crisis may make the subprime crisis look like a bump in the road when all is said and done.This story is really picking up steam lately, but it seems like as with the suprime crisis at the beginning, the mainstream media and definitely Washington is not giving this much attention. In my opinion, the ALT-A space collapsing could cause much larger crisis for the broader economy because ALT-A loans cut across all socio-economic boundaries and were used most heavily in in the nation’s most affluent cities/regions.
Banks yanking away equity lines of credit - (blog.cleveland.com)
KeyCorp plunge sparks fears for smaller lenders - (www.ft.com) - Shares of US regional banks slumped Wednesday after KeyCorp (NYSE:KEY) , the third-largest bank in Ohio, doubled its forecast for loan losses and prompted concerns that small US banks may have underestimated the cost of the housing slump.
Hedge Funds Foment Russia Credit Crunch With 16% Puts - (www.bloomberg.com) - Even with record oil prices pumping the economy, the global credit crunch is penalizing Russian borrowers as the put options leave companies liable for refinancing nearly a third of their 1.5 trillion rubles of bonds at higher rates by yearend, Bloomberg data show. Soaring interest costs may contribute to a slowdown in economic growth to 6.5 percent from 8.1 percent in 2007, said Ivailo Vesselinov, senior economist at Dresdner Kleinwort in London.
Investment banks split over Fed loan facility - (www.ml-implode.com) - A rift is developing among large US investment banks over whether continued access to a special Federal Reserve borrowing facility is worth the expected trade-off in further regulation by the central bank. Investment banks such as Goldman Sachs that have been less affected by the credit crisis are reluctant to accept any significant new limits by the Fed, while those more affected, such as Lehman Brothers, are seen as more eager to maintain access to the Fed facility even if it means new limits on risk-taking.
Rating Agencies Face New Standards; Cannot Recommend Deal Structure - (www.ml-implode.com)
Ambac writes down $228 million in CDOs in April - (www.ml-implode.com) - Bond insurer Ambac Financial Group Inc. said Wednesday it continued to take millions of dollars in charges in April tied to its credit derivative and investment portfolio
Investors Putting Bad Loans Back To Lenders - This Is Only The Beginning. - (www.ml-implode.com) - The auditing of defaulted loans looking for fraud or lender negligence is escalating at a feverish pace. This is being spearheaded in many cases by the mortgage insurer but even Fannie and Freddie are in the game. If any sign of fraud is found on a defaulted loan, in most cases the originating or selling lender/investor is liable. If the originating lender is no longer in business, as is the case with most middle market mortgage bankers and brokers, then the original ‘investor’ or loan purchaser carries the burden. In most cases, these are your big named banks and Wall Street banks."
Moody's Changes Tone Over Probe - (online.wsj.com) – Ah, the great thing about being a corporation. You can find a few fall guys and company takes no blame. Moody's Corp. employees may be fired if the firm finds that errors in calculating credit ratings for certain products were covered up, people familiar with the matter said, marking a turn away from the firm's more-defensive stance for months. Moody's had been saying it did nothing wrong in its rating business during the last few years, despite dramatically lowering many of the ratings on the securities it tracked.
Shuttered Houses, Thriving Wildlife - (www.washingtonpost.com)
Realtor group continue to spew bullshit; press prints it - (blogs.businessweek.com)
Supervisors Covered Up Risky Loans - (www.npr.org)


Other Stories:

Majority of Renters Have No Plans to Purchase a Home: Survey - (www.ml-implode.com) - "Origination volume for new mortgage may take awhile to rebound, if the nation’s renters have any say in the matter. The vast ma...
Alt-A Problems Grow, While Subprime Takes Turn for the Worse - (www.ml-implode.com) - Despite an absolute dearth of ARM resets, the number of severely delinquent Alt-A borrower continues to grow, according to a report released late last week by Clayton Holdings, Inc. The number of troubled Alt-A borrowers in the 2007 vintage rose an eye-popping 26.5 percent from March to April alone, nearly reaching 17 percent of loan volume
BofA gives Countrywide's Sambol the Boot - (www.ml-implode.com) - BofA said Wednesday that David Sambol, the Countrywide operating chief who was to lead the combined company’s mortgage business after they merge this summer, will retire
Will AIG Need Even More Capital? - (www.ml-implode.com) - The $20 billion in capital raised by American International Group may not be enough for both itself and its troubled subsidiaries, an analyst told clients Wednesday. AIG shares were recently faring worst among the Dow industrials, falling 4.7%
ResCap’s Servicer Ratings Cut; “Weak” Financial Condition Cited - (www.ml-implode.com) - Fitch Ratings said Tuesday afternoon that it had cut its residential mortgage servicer ratings on troubled lender Residential Capital LLC, as the ratings agency said questions over the company’s “weakening financial condition” continue to run unanswered
Banks Choking Home Sales– Should Have Done It Earlier - (www.ml-implode.com)
National Realtors Association Opens Multiple Listings to Internet Brokers - (www.ml-implode.com) - In a settlement of an anti-trust lawsuit (one might more accurately call it a capitulation), the National Association of Realtors will open its multiple listing service to Internet brokers

With Bold Steps, Fed Chief Quiets Some Criticism - (www.nytimes.com)
Fed's Fisher: Rate hikes could come sooner vs later - (www.reuters.com)
In Housing, the Strong Turn Weak - (www.nytimes.com)
Making a good living, but still feeling strapped - (money.cnn.com)
Dow: Country in "true energy crisis" - (www.ap.com)
Obama Pitches Housing Plans - (online.wsj.com)
Mortgage applications down 4.6% last week: MBA - (www.marketwatch.com)
Atlanta's tallest buildings face soaring taxes - (www.ajc.com)
Mishkin to Leave Fed in August, Return to Columbia - (www.bloomberg.com)
Bernanke Met With BlackRock's Fink Five Weeks After Bear Stearns Bailout - (www.bloomberg.com)

Lenders Pressed on Bad Loans - (online.wsj.com)
Investors increase bets on US rate rise - (www.ft.com)
Choosing Bankruptcy to Stay Afloat - (www.washingtonpost.com)
Banks launch central clearer for derivatives - (www.ft.com)
Banking regulator promotes more inflated appraisals - (www.reuters.com)
Empty houses now for all to see - (www.smh.com.au)
Give my stimulus check to the rich - (www.latimes.com)

Fear Led to Run on Bear Stearns - (online.wsj.com) ($) (05/28/2008 05:41 AM)
GM to speed up production cuts in Flint, Mich. - (www.chicagotribune.com)
Why Rivals Don't Copy Southwest's Hedging - (online.wsj.com)
Dow Chemical bumps prices up to 20 percent - (www.chron.com)
Bear Bond Traders Odd Men Out in Merger - (www.thestreet.com)
As food prices spiral, farmers, others profit - (www.chicagotribune.com)
Four reasons housing won't recover quickly - (msnbc.msn.com)
Aggressive lending and borrowing caused housing bubble - (news.bbc.co.uk)

French Consumer Confidence Unexpectedly Drops to Record Low on Fuel Prices - (www.bloomberg.com)
German Import Prices Rise More Than Expected as Costs for Oil, Gas Surge - (www.bloomberg.com)
China cries "Inflation!" but plays it cool - (www.reuters.com)
Now an importer, Indonesia pulls out of OPEC - (money.cnn.com)

$4 a gallon means beer costs more - (articles.moneycentral.msn.com)
Smart money betting against Fed's weak dollar - (optionarmageddon.blogspot.com)
Crude Oil Bubble Trouble - (greatdepression2006.blogspot.com)
US house prices tumble a record 14% in 1Q - (biz.yahoo.com)
L.A. house prices down 21.7% in last year - (latimesblogs.latimes.com)
Chicago house prices fall 10% in March - (www.chicagobusiness.com)
Housing even worse than expected - (www.nytimes.com)
Case-Shiller index makes housing bottom look distant - (www.businessweek.com)
Yikes! FL house prices continue freefall - (www.palmbeachpost.com)
FL trails only Vegas in plunging house prices - (www.miamiherald.com)
Realtors Group Settles Anti-Trust Case - (www.bloomberg.com)