KeNo's Housing and Economic Portal: Wednesday September 14 Housing and Economic stories

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Funding pressures squeeze Bank of Ireland - (www.reuters.com) Bank of Ireland's underlying operating profit shrank by two-thirds in the first half of 2011 on steeper funding costs, a signal the country's top lender has not fully recovered despite a fresh investor base and healthier loans book. As the only domestic lender to avoid nationalisation after an unprecedented property bubble burst, Bank of Ireland's success in attracting private capital has helped fuel a rally in Irish sovereign debt prices. But the company, which along with Allied Irish Banks (AIB) will form the core of a radically pared-down domestic banking industry, faces a challenge in growing its top line as funding conditions remain tough and Irish consumer demand continues to spiral down. The cost of the government guarantee of Bank of Ireland's liabilities rose 58 percent from a year ago to 239 million euros in the half.

Virginia house painter fights to keep business as recession becomes a way of life - (www.washingtonpost.com) Morales filed paperwork to open his painting business in December 2007, the month the recession officially began, and his life has since become a reflection of the country’s economic fate. He lost his house in Woodbridge to foreclosure, lost four of his five painters and lost $35,000 of his elder son’s college savings. He stayed busy in 2008 and 2009 by painting and then repainting his own house, convinced that recovery was just around the corner. He reinvested everything he earned back into his business last year, believing the economy finally had stabilized. Then, last month, when stock prices tankedand sales of new homes fell for the third straight month, Morales sat down with his wife and two sons to discuss their finances. “I’m sorry,” he told them, “but this is the way it is going to be — job to job, week to week. It’s not getting better.” He is one of millions for whom the recessionhas become permanent, no longer a crisis to endure so much as a reality to accept.

Banks criticized over level of Greek writedowns: report - (www.reuters.com) Some European financial institutions should have booked bigger losses on their Greek government bond holdings in recent results announcements, the International Accounting Standards Board (IASB) said in a letter to the EU market regulator. The criticism comes as Europe's lenders face calls to shore up their balance sheets and restore confidence to investors unnerved by the euro zone debt crisis, funding market jitters and a slowing economy. In a letter addressed to the European Securities and Markets Authority (ESMA), the IASB -- the rule setter aiming to become the global benchmark for financial reporting -- criticized inconsistency in the way banks and insurers wrote down the value of their Greek sovereign debt in second-quarter earnings. It said "some companies" were not using market prices to calculate the fair value of their Greek bond holdings, relying instead on internal models. While some claimed this was because the market for Greek debt had become illiquid, the IASB disagreed.

FDIC Objects to BofA $8.5B Mortgage-Bond Deal - (www.bloomberg.com) The Federal Deposit Insurance Corp. filed an objection to Bank of America Corp. (BAC)’s proposed $8.5 billion mortgage-bond settlement with investors, joining investors and states that are challenging the agreement. The FDIC, the receiver for failed banks, owns securities covered by the settlement and said it doesn’t have enough information to evaluate the accord, according to a filing yesterday in federal court in Manhattan. Under the agreement, Bank of America would pay $8.5 billion to resolve claims from investors in Countrywide Financial Corp. mortgage bonds. The settlement was negotiated with a group of institutional investors, including BlackRock Inc. (BLK) and Pacific Investment Management Co. LLC, and would apply to investors outside that group. Bank of New York Mellon Corp. (BK), the trustee for the mortgage-securitization trusts covered by the agreement, has asked a New York state judge to approve the settlement in November. An investor group is trying to move the case to federal court, which Bank of New York opposes.

U.S. lenders making more subprime car loans: report - (www.bloomberg.com) Lenders are making more subprime auto loans again, reversing the cautious approach they adopted after the credit crisis, an industry research firm said on Tuesday. The portion of car loans made to subprime borrowers rose to 40.8 percent in the second quarter from 37.2 percent a year earlier, according to Experian Automotive, a unit of credit bureau and research firm Experian Plc. The data shows how keen lenders are to boost their loan books amid a sluggish economy. Car loans are seen by lenders like Ally Financial and Wells Fargo Co as relatively safe because they are collateralized and repossessing cars is easier than foreclosing on homes. Compared with house prices, used car values held up well during the recession.