KeNo's Housing and Economic Portal: Friday July 22 Housing and Economic stories

Thursday, July 21, 2011

Friday July 22 Housing and Economic stories

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First Chicago fails, Wintrust takes over assets - (www.chicagotribune.com) First Chicago Bank & Trust failed Friday, and its assets and deposits were taken over by Lake Forest-based Wintrust Financial Corp. Since April 2010, Wintrust, which has assets of $14.1 billion, has acquired six collapsed lenders with total assets of about $1.9 billion. First Chicago is the fifth Illinois bank to fail this year. First Chicago, which had $959 million in assets as of March 31, had been operating under regulatory scrutiny for more than a year. In April, it had fallen to "significantly undercapitalized" status and was given a deadline of early June to raise enough money to be considered "adequately capitalized." The bank, whose main investor has been a California private equity firm, was looking to raise about $50 million.

Borg: EU Needs to Cut Greece’s Debt Service Costs - (www.bloomberg.com) The European Union needs to look for ways of reducing Greece’s debt servicing costs, Swedish Finance Minister Anders Borg said, suggesting a shift in focus as the bloc begins considering additional aid for the country. More than a year after the EU and the International Monetary Fund extended Greece 110 billion euros ($157 billion) in aid, they’re considering options for additional support as the country’s borrowing costs and indebtedness continue to grow. The yield on two-year Greek notes rose to a euro-era record of more than 30 percent last week. The nation’s debt burden will rise to 158 percent of GDP this year from 143 percent in 2010, according to EU forecasts. “If the Greeks are now delivering, and if they can stick to that plan and continue to perform in a way that is building credibility, that is shifting the balance of discussion,” Borg said yesterday in an interview in Aix-en-Provence, France.

This Time, Japan’s Gloom Runs Deeper - (www.nytimes.com) TRADERS here are fond of joking that no one has lost money betting against Japan since the collapse of the bubble economy of the 1980s. More than two decades later, the Nikkei 225 stock index is still three-quarters off of its peak. And the economy has been hit by blow after blow, from sagging property prices to mounting debts and intensifying competition from China. Add an aging population, a lack of jobs for college graduates and persistent deflation and you can see why Japan’s so-called lost decade is a misnomer. Japan has lost decades — plural, not singular. Natural disasters could be added to the list of economic shocks, notably the earthquake that leveled Kobe in 1995, and, in March, the earthquake and tsunami in northeastern Japan and the nuclear crisis in Fukushima that followed.

Lehman Borrowed $18B From Secret Fed Program - (www.bloomberg.com) Lehman Brothers Holdings Inc. (LEHMQ)’s brokerage borrowed as much as $18 billion in four separate loans from a previously secret program of the U.S. Federal Reserve in June 2008, three months before its parent filed the biggest bankruptcy in U.S. history. The program, which peaked at $80 billion in loans outstanding, was known as the Fed’s single-tranche open-market operations, or ST OMO. It made 28-day loans to units of 19 banks from March 7, 2008, to Dec. 30, 2008. Bloomberg reported on ST OMO in May, after the Fed released incomplete records on the program. In response to a subsequent Freedom of Information Act request for details, the central bank disclosed borrower names, amounts borrowed and interest rates. The Lehman brokerage, Lehman Brothers Inc., tapped the ST OMO program for as much as $5 billion in short term funding in March 2008, and lower amounts at other times during the month. It took as much as $10 billion in June as the credit crisis worsened, according to Fed data. The maximum outstanding for any period was $18 billion.

Goldman Took Biggest Loan in Fed Program - (www.bloomberg.com) Goldman Sachs & Co., a unit of the most profitable bank in Wall Street history, took $15 billion from the U.S. Federal Reserve on Dec. 9, 2008, the biggest single loan from a lending program whose details have been secret until today. The program, which peaked at $80 billion in loans outstanding, was known as the Fed’s single-tranche open-market operations, or ST OMO. It made 28-day loans to units of 19 banks between March 7, 2008, and Dec. 30, 2008. Bloomberg reported on ST OMO in May, after the Fed released incomplete records on the program. In response to a subsequent Freedom of Information Act request for details, the central bank disclosed borrower names, amounts borrowed and interest rates. ST OMO is the last known Fed crisis lending program to have its details made public. The central bank resisted previous FOIA requests on emergency lending for more than two years, disclosing details in March of its oldest loan facility, the discount window, only after the U.S. Supreme Court ruled it had to. When Congress mandated the December 2010 release of data on special initiatives the Fed created in its unprecedented $3.5 trillion response to the 2007-2009 collapse in credit markets, ST OMO -- an expansion of a longstanding program -- wasn’t included.