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Feds Up AIG Bailout: 5 Things You Need to Know
Tweet Share on Facebook November 10, 2008 Comment (5)The Feds announced Monday that they were boosting the government’s bailout package for AIG to more than $150 billion, significantly greater than the original $85 billion lifeline Uncle Sam tossed the struggling insurance giant in September.
Here’s what you need to know:
1. AIG’s problems are in credit default swaps and securities lending. AIG on Monday reported a third-quarter net loss of nearly $25 billion. But the company’s big headaches haven’t been in its bread-and-butter insurance business, but rather in lesser-known lines. AIG is a big player in credit default swaps--which are essentially insurance contracts that pay out when a company defaults--and is also involved in securities lending. Turmoil in these two businesses have hammered AIG’s balance sheet, causing a severe liquidity crunch.
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Which Banks Have TARP Funds Lined Up?
Tweet Share on Facebook November 7, 2008 Comment (13)ProPublica has a neat chart showing the financial institutions that have announced preliminary approval for TARP funds so far. (via The Big Picture)
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PNC Outlines Risks to National City Deal
Tweet Share on Facebook November 7, 2008 Comment (2)In a recent filing with the Securities and Exchange Commission, PNC outlined the potential risks it faces on account of its controversial deal to acquire the struggling National City.
From the SEC filing:
In addition, our planned acquisition of National City presents us with a number of risks and uncertainties related both to the acquisition transaction itself and to the integration of the acquired businesses into PNC after closing. These risks and uncertainties include the following:
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Drop in Pending Home Sales Called a Relief
Tweet Share on Facebook November 7, 2008 CommentThe National Association of Realtors said Friday that pending home sales fell in September after posting a strong gain the previous month.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in September, declined 4.6 percent to 89.2 from an upwardly revised reading of 93.5 in August, but is 1.6 percent higher than September 2007 when it stood at 87.8.
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Barack Obama on Real Estate Issues
Tweet Share on Facebook November 7, 2008 Comment (1)NAR’s REALTOR Magazine ran this interview with President-elect Barack Obama on its web site today.
This fall, when the presidential campaign was in full force, Obama responded to the magazine's pressing questions about the mortgage crisis, sustainable development, housing affordability and other topics. Here's what he said:…
Even though prices have been easing for the last two years, housing affordability remains a challenge for many people. What can the federal government do to improve this situation?
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Goldman Sachs Sees Deeper Recession, Higher Unemployment
Tweet Share on Facebook November 7, 2008 Comment (2)Shortly after today’s ugly employment report, Goldman Sachs has changed its economic forecast. It now expects a deeper recession and higher unemployment.
From a report by economists at Goldman Sachs:
BOTTOM LINE: We have marked down our near-term forecasts for real GDP – to annualized declines of 3½% and 2% in the fourth and first quarters, respectively – and we have added another 50 basis points of Fed easing by year-end. These changes reflect the accumulation of evidence that US domestic demand and production continue to fall sharply. As a result, we now expect the unemployment rate to reach 8½% by year-end 2009. We continue to assume enactment of a $200 billion (bn) package of fiscal stimulus early next year; although prospects of a larger package are rising, we prefer to wait until its timing and outlines become clearer before incorporating it into our outlook.
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Chris Dodd to Retain Banking Committee Chair
Tweet Share on Facebook November 6, 2008 Comment (7)Sen. Chris Dodd, a Democrat from Connecticut, announced Thursday that he will maintain his chairmanship of the Senate Banking Committee in the upcoming Congressional session.
Rumors had circulated that Dodd might give up the post to seek the chair of either the Senate Foreign Relations Committee or the Health and Education Committee. Dodd is a senior member of both committees.
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Could the Banking Giants Get Even Gianter?
Tweet Share on Facebook November 6, 2008 Comment (1)There's already great concern in the banking industry that the financial turmoil and the TARP could trigger massive consolidation that would work to reduce the number of smaller, community banks out there. But check out this nugget from today's Wall Street Journal:
While financial-services companies are braced for more-assertive government oversight, Mr. Schumer added that Capitol Hill's reworking of market rules could also give banks some victories. He said Democrats would be willing to consider easing limits that currently prevent banks from holding more than 10% of U.S. deposits after an acquisition. Any change to this policy could free up huge institutions such as Bank of America Corp., Wells Fargo & Co. or J.P. Morgan Chase & Co. to pursue more acquisitions.
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Fannie Mae Spent $6,000 on Post-Takeover Golf Outing
Tweet Share on Facebook November 6, 2008 Comment (3)Sure, your company was run so poorly it had to be taken over by the Feds. But that doesn’t mean you should be paying your own green fees, does it?
Not at Fannie Mae, at least.
From The Associated Press:
Mortgage finance company Fannie Mae acknowledged Tuesday that it spent more than $6,000 on a golf outing after it was seized by the government earlier this year, but said it is halting similar company-sponsored events.
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Putting Odds on Obama’s Treasury Secretary Candidates
Tweet Share on Facebook November 6, 2008 Comment (7)With Obama Treasury secretary speculation in full swing, The Home Front staffers put our proprietary algorithms to work (OK, we winged it) and generated the odds of certain leading candidates being selected.
Here are the results:
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