Tuesday July 8 Housing and Economic stories

Top Stories:

IndyMac halts new loans under agreement with regulators - (www.marketwatch.com) IndyMac deemed under-capitalized by regulators. Lender can't raise new capital now; halts new loans and cuts 3,800 staff. IndyMac Bancorp said late Monday that regulators have told the lender it isn't "well capitalized" after failing to raise new capital. The company said it has agreed to a new business plan with regulators which includes halting new mortgages to shrink its balance sheet and improve capital ratios. It will also cut 3,800 jobs, bringing staff levels to roughly 3,400. IndyMac is also barred from accepting new brokered deposits unless it gets a waiver from the Federal Deposit Insurance Corp., a bank regulator that insures deposits. But the company said it's not certain a waiver will be granted. Second-quarter losses may be larger than the first-quarter, the company also warned.
IndyMac shares slumped 30% to 50 cents during after-hours trading on Monday. "Insured financial institutions don't fail in the U.S., they go through an orderly unwinding process under the guidance of regulators, and I think that's what we're seeing with IndyMac," Fred Cannon, an analyst at Keefe, Bruyette & Woods, said in an interview on Monday. "We do not expect IndyMac will be the last financial institution to go through this."

IndyMac stops new loans, to cut work force by half - (news.yahoo.com/s/ap) Mortgage lender IndyMac Bancorp Inc., struggling to raise capital to stay in business, said Monday it has stopped accepting new loan submissions in its main mortgage lending divisions and plans to slash 3,800 jobs, or more than half of its work force. The move comes as the lender works with U.S. banking regulators, who have determined the company is no longer well capitalized and have asked it to submit a new business plan designed to improve its financial footing, IndyMac Chairman and Chief Executive Michael W. Perry said in a letter to shareholders."In light of the current environment and related deterioration of our financial position since last quarter, we have been working closely with our federal banking regulators with respect to the actions that they and we must take to meet our mutual goal of keeping IndyMac safe and sound through this crisis period," Perry wrote. bIn the letter, Perry said the Pasadena, Calif.-based holding company for IndyMac Bank has not succeeded in raising additional capital and does not expect to succeed until the housing and mortgage markets are more stable.

IndyMac: Significant Seizure Chatter - Is This the End? Finally! - (www.ml-implode.com) - Note: At this point in time this story is RUMOR as is has not been made official by IndyMac or regulators. I am reporting it from what I have been personally told by people familiar with the matter. And I am not short this stock or trying to start rumors to drive down the price. How much further can it drop! Its at 67 cents. Just remember that when stories like this have come out in the past, there is a flurry of positive spin and in the end, 99.9% are true. My sources put Gov’t officials at IndyMac this weekend doing the deed. I am being told an announcement will come tomorrow first thing, that IndyMac is no more and at least their wholesale operation is gone effective immediately. Apparently wholesale operations will get pink slips, no new loans will be locked and all existing loans in the pipe must be closed by the end of July.

S&L Redux: Men in Black at IndyMac? - (optionarmageddon.ml-implode.com) - The FDIC is certainly looking very closely at the bank’s books after a mini bank-run last week. At $16.5 billion, IndyMac’s insured deposit base is far larger than the combined total of other failed banks rescued by the FDIC so far this year. And the FDIC’s total liquid assets were only $51 billion at year end, of which only $4.2 billion was cash. (for details, see the balance sheet on page 63 of their 2007 annual report). As banks drop like flies this year and next, its likely the FDIC will quickly run out of funds to pay depositor losses. The RTC may get an encore… IndyMac’s insured deposits grew 91%(!) in the year ending March 31st. As their equity has been hit by massive losses, and as “other” sources of financing have dried up, IndyMac has plugged the holes with new consumer deposits. They are attracting these deposits despite their questionable financial condition by offering interest rates among the highest in the nation. [Incidentally, much of the increase in IndyMac's deposits are of the controversial "brokered" variety. These have more than tripled over the last year to $6.9 billion.] Take a look at that list of banks offering the highest CD rates. Many are effectively insolvent, surviving only because they can sell risk-free U.S. government obligations. What is a federally insured deposit, after all, but an obligation of the U.S. government?

Courts May Begin Enforcing Truth-in-Lending Act (TILA) - (bigpicture.typepad.com) - "This story seemed to have slipped by without much comment from anywhere else. There are potentially major ramifications for the...

Freddie Mac, Fannie Mae shares slump - (www.marketwatch.com) - Shares of Freddie Mac (FRE: 11.41, -3.09, -21.3%) and Fannie Mae (FNM:15.37, -3.41, -18.2%) slumped 22% and 15% respectively during afternoon trading on Monday. The Wall Street Journal reported late last week that investors are concerned Freddie is having trouble raising fresh capital to strengthen a weakened balance sheet.

Speculative fever - (www.marketwatch.com) - Congressional moves target loopholes in futures trading, in hopes of curbing prices for oil and food. But does that address the underlying problem?Of course, Congress is not addressing the underlying problem of the inflation. Inflation (true definition) is the continuing rise in the general price level attributed to an increase in the volume of money and credit relative to available goods and services. As long as the Fed keeps interest rates below true inflation measures (3-4%) and continues to create money out of thin air, and credit, we will likely see prices rise.
OPEC chief cites Fed, ethanol - (www.marketwatch.com) - Yes, OPEC is smarter than our Congress. The price of petroleum will continue to rise because of ethanol, the weak dollar and political tensions, the oil cartel's president was quoted as saying Sunday. "We have to follow the evolution of the dollar, because a 1% fall in the dollar means $4 more on the price of oil." Of course the US Fed

Could get worse before better - (www.marketwatch.com) S.F. central-bank head Yellen diverts wind from the market's sails, averring that the economy could be edging toward next rough patch.

Arson Surges for Foreclosed Houses - (www.bloomberg.com) The house had been abandoned after the owner defaulted on a $240,000 home loan from GreenPoint Mortgage Funding, a Novato, California lender that shut down in August, 2007. The fire was one of four suspicious blazes in foreclosed properties that month in the southern Massachusetts city. All are under investigation.

Withholding debt payments as a revoluntionary act? - (www.reenactmentof1776.com) Hmmm, new website proposing revolutionary action probably because he is loaded on debt. From the site: “The lower/middle class owns all of the debt. We own the banks. The Revolution can be accomplished simply by not paying this debt. If the lower/ middle class decided individually and collectively that they were not going to make any mortgage, credit card and auto loan payments then we would bring the banking system to its knees within a short period of time. That would have a seriously negative effect on Wall Street and world markets. We then would simply ask our President, Vice President, our Congress and our Senators if they would please resign and go away. If they do not chose to resign then we sit back and wait and not pay the bills. It’s simple. It’s easy. It’s peaceful. It’s non-violent. It’s something anyone can do. It doesn’t cost anything. It requires no effort. It’s something we already know how to do. You can even barbecue and revolt at the same time.”

Make Toy Cars, Not Cars - (paul.kedrosky.com) It's currently better to be a toy car maker than a real car maker: Mattel's market cap just surpassed that of GM. The maker of Hot Wheels and Matchbox now has a market cap of $6.22B versus the $5.76b cap of the maker of non-toy cars GM.
Mattel Eclipses GM in Value on Toy-Car Gains: Chart of the Day - (www.bloomberg.com)


Other Stories:

Foreclosed houses that just go to pot - (www.chicagotribune.com)
Foreclosures To Rise Whoever Wins White House - (www.huffingtonpost.com)
Failure to learn real estate lessons of 1920s - (www.tampabay.com)
Tenant Tips when Landlord in Distress - (PDF - shra.org)
St. Louis Fed Economist: Let Mortgage Mess Resolve Itself - (www.ml-implode.com) - "As Congress returns from a July 4th recess to again consider a sweeping housing and mortgage reform package that would establis...
Radian Reshuffles Mortgage Insurance Execs, Looks to Regain Momentum - (www.ml-implode.com) - "In a clear effort to signal to investors that it is committed to its mortgage insurance business, Radian Group Inc. (RDN: 1.50,...
Wolfgang Munchau: Maybe the Economists Are to Blame After All - (www.ml-implode.com)
Retail “Doom” While We’re At It - (www.ml-implode.com)
Bitter lessons learned from refinancing - (www.latimes.com)
Mortgage Brokers as Naysayers - (www.nytimes.com)
It's the Condos, Stupid. - (www.berkeleydailyplanet.com)
European Banks May Need EU90 Billion - (www.bloomberg.com)
Banks narrow house equity withdrawals - (www.ocregister.com)
Donating Banks' REO Property to Local Non-Profits - (patrick.net)
Las Vegas Home Prices See Their Largest Year-Over-Year Decline - (www.ml-implode.com)
The Credit Crisis Is Going to Get Worse - (www.ml-implode.com)
Running the world is hard, ruining it, less so - (www.ml-implode.com)
Rock’s hedge fund falters after hard year - (www.ml-implode.com)
Foreclosures to rise, whomever wins White House - (www.ml-implode.com)
Not Declining? Wanna Make A Bet? - (www.ml-implode.com)

Accerleration in Foreclosure, Prices and Job Losses - (www.ml-implode.com)
Bradford & Bingley counts cost of private equity pull-out - (www.ml-implode.com)
The Economy? Words Fail Me. - (www.washingtonpost.com)
Blows to housing market will pound economy too - (www.economist.com)
The buck doesn't stop here; it just keeps falling - (news.yahoo.com)
Defaulted loans mean bigger profits from fees - (www.youtube.com)

Oil falls below $141 as dollar gains strength - (www.ap.com)
Bernanke's Emerging-Market Disciples May Need to Follow Volcker - (www.bloomberg.com)
Economic forces play out both ways - (www.chicagotribune.com)
Foreclosures to rise whoever wins White House - (www.signonsandiego.com)
Las Vegas property market hits a losing streak - (www.reuters.com)

World M&A down $850B vs last year - (www.philly.com)
Commodities Regulator Under Fire - (online.wsj.com)
Banks narrow home equity withdrawals - (www.ocregister.com)
Blackrock, Nuveen Sell New Preferred Haunted by Failed Auctions - (www.bloomberg.com)

Auto Makers Fight Steel Prices - (online.wsj.com)
Detroit Three a shadow of former selves - (www.ft.com)
Sales of RVs careen off the road - (www.latimes.com)
Auto sector's woes could spur deals – Renault CEO - (www.signonsandiego.com)
Despite rocketing prices, outlook is bleak for oil majors - (news.yahoo.com/s/afp)
MBIA is paying for its errors - (www.chicagotribune.com)

Inflation, Oil and... Politics Conspire Against Indian Stocks - (online.wsj.com)
U.K. Factory Production Weakens to Eight-Month Low - (www.bloomberg.com)
Beijing Sets Focus on Inflation Fight and Exports - (online.wsj.com)
Confusion over UK rules on shorting - (www.ft.com)