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Bailout's Early Impact? Mortgage Rates Jump
Tweet Share on Facebook October 15, 2008 Comment (1)While the government's massive plan to inject capital into banks, buy up souring assets, and guarantee bank debt has produced some tentative signs of healing in the credit markets, it also appears to be driving fixed mortgage rates sharply higher.
From the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending October 10:
The average contract interest rate for 30-year fixed-rate mortgages increased to 6.47 percent from 5.99 percent, with points increasing to 1.14 from 1.09 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
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The $700 Billion Bailout Plan (Take Two)
Tweet Share on Facebook October 14, 2008 Comment (8)When the controversial $700 billion bailout plan made its awkward spin through Congress, Treasury officials focused mainly on its authority to allow the government to buy up vast quantities of mortgage and other assets that were gumming up the credit markets.
But Tuesday, the Feds issued details on an amended bailout plan, which includes making equity investments in U.S. banks and guaranteeing bank debt. The changes come after European officials undertook similar measures last week.
As a result, the largest financial bailout since the Great Depression now has three distinct components:
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The 'Saturday Night Live' Bailout Skit Mystery
Tweet Share on Facebook October 10, 2008 Comment (12)Not long after the Saturday Night Live cast skewered Democratic lawmakers and "victims" of the housing crisis in a sketch last week, the Web video of the performance vanished from its site.
From deadlinehollywooddaily.com, via patrick.net:
Needless to say, a lot of conspiracy theories were spun, real or imagined, especially by Republicans who wondered if the Democratic Congress, or perhaps Soros himself, were pulling NBC's puppet strings. "If you suspect a few high-placed phone calls to NBC led to the bailout skit slipping down the memory hole, you're not alone," wrote right-wing commentator Michelle Malkin.
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Hear Treasury's Prebailout Conference Call
Tweet Share on Facebook October 10, 2008 CommentThe Wall Street Journal reported that recordings of a conference call involving Treasury officials and industry representatives—which took place just before the House rejected the $700 billion bailout bill—has been posted on youtube.com.
As the biggest market intervention in U.S. history made its way through Congress, Neel Kashkari, the Treasury official named this week to run the program, offered assurances to 800 financial-industry players.
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Amid Outrage, AIG Revises Get-Together Policy
Tweet Share on Facebook October 9, 2008 Comment (15)Facing sharp criticism for organizing an expensive outing to the St. Regis resort shortly after the government gave it a massive bailout, insurance giant AIG has revised its get-together policy.
From AIG:
A short time ago, our Chairman and CEO Ed Liddy said that he has ordered the immediate cancellation of all outside meetings, conferences, and recognition events across AIG, except those that are required by law or that are deemed absolutely critical to sustain our ongoing business needs.
Given AIG's commitment to our customers, business partners, regulators, and American taxpayers, coupled with the new and very different challenges our company now faces, we take these responsibilities extremely seriously. Their trust is critical to our success. We recognize the need to be sensitive about all company expenditures.
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Almost 1 in 6 Homeowners 'Under Water'
Tweet Share on Facebook October 9, 2008 Comment (3)With home prices continuing to fall at the national level, a growing number of Americans are now "under water" on their mortgages—meaning that their homes are worth less than what they owe on their loan.
The Wall Street Journal reported this week that almost 1 in every 6 American homeowners is now stuck in this predicament.
From The Wall Street Journal:
About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.
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Great Web Reads: Thursday Edition
Tweet Share on Facebook October 9, 2008 CommentSome solid articles to check out:
- Mystery of That Missing SNL Bailout Skit Solved: NBC.com Took It Down for Legal Reasons; Has Put Up Edited Version Today (deadlinehollywooddaily.com, via patrick.net)
- Rolling Out the TARP (Felix Salmon)
- The Adjustment Process (Calculated Risk)
- John McCain's New Mortgage Plan Is Worse Than I Had Imagined Possibly , Even Given What I Know About John McCain (Brad DeLong)
- Sheriff in Chicago Ends Evictions in Foreclosures (The New York Times)
- Knock Out: CNBC Confirms Lehman CEO Punched at Gym (Business & Media Institute)
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Will the Government Buy Stakes in U.S. Banks?
Tweet Share on Facebook October 9, 2008 Comment (2)It wasn't that long ago that the government received sweeping authority to purchase $700 billion of distressed mortgage and other assets. But now the Treasury Department appears increasingly likely to take direct equity stakes in U.S. banks—a move that would further Uncle Sam's already historic intervention into private enterprise.
"I'll be very surprised if they don't [inject capital into banks]," says a former Treasury official.
Shortly after the British government unveiled a plan to put as much as $87 billion into its banks in exchange for shares in the companies, Treasury Secretary Henry Paulson highlighted the federal government's newly acquired authority to take similar measures.
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Invoice for AIG's Expensive St. Regis Stay
Tweet Share on Facebook October 8, 2008 Comment (17)The disclosure that AIG executives took an expensive trip to the St. Regis shortly after receiving a massive government bailout has drawn scathing criticism.
From the Associated Press:
The White House said on Wednesday it was "despicable" that American International Group Inc. executives spent hundreds of thousands of dollars on a posh California retreat just days after getting a federal bailout.
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Pending Home Sales Rise Unexpectedly
Tweet Share on Facebook October 8, 2008 Comment (1)The National Association of Realtors on Wednesday released its pending home sales report for August:
From NAR:
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in August, jumped 7.4 percent to 93.4 from an upwardly revised reading of 87.0 in July, and is 8.8 percent higher than August 2007 when it stood at 85.8. The index is at the highest level since June 2007 when it stood at 101.4...
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