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Big Bailed-Out Banks Reduced Loan Balances
Tweet Share on Facebook January 26, 2009 Comment (1)Here's the latest TARP news item that lawmakers and bailout-weary Americans will be fuming over: "Ten of the 13 big beneficiaries of the Treasury Department's Troubled Asset Relief Program, or TARP, saw their outstanding loan balances decline by a total of about $46 billion, or 1.4%, between the third and fourth quarters of 2008," The Wall Street Journal reported Monday. The full article is well worth a read.
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The TARP Song
Tweet Share on Facebook January 26, 2009 Comment (2) -
Peter Schiff: Let the Housing Market Crash
Tweet Share on Facebook January 23, 2009 Comment (89)Earlier this week, I chatted with Peter Schiff, the president of Euro Pacific Capital. Schiff, a notorious bear, argued that the government's response to the housing crisis has only made matters worse and that the best way to help the market would be to let home prices fall further. Some excerpts from the interview:
What's your take of the Fed's moves to engineer lower mortgage rates?
It is a bad thing. They are trying to maintain high home prices by keeping interest rates low. That's how they want to create more affordable housing. What's a much more efficient way [to create more affordable housing] is to let home prices fall so that houses become more affordable because they are cheaper. And so people don't have to borrow as much money to buy a house. These low interest rates are only temporary. They can't stay down here. -
Mortgage Rates Bounce Back Above 5 Percent
Tweet Share on Facebook January 23, 2009 Comment (4)Thirty-year fixed mortgage rates bounced back from record low levels this week, but remain historically attractive at 5.12 percent, Freddie Mac said Thursday. Rates had fallen to a record low weekly average of 4.96 percent last week amid lower inflation and Federal Reserve moves to buy up mortgage-backed securities guaranteed by Fannie Mae and Freddie Mac. But even after ticking higher, rates remain very attractive, down sharply from 6.46 percent in late October 2008.
[Check out Mortgage Rates in 2009: 7 Things You Need to Know.]
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Nouriel Roubini: Financial Crisis Far From Over
Tweet Share on Facebook January 23, 2009 Comment (3)Anyone who thinks the worst of the financial crisis is over hasn't been talking to Nouriel Roubini.
From his Wall Street Journal Op-Ed, co written by Ian Bremmer:
The U.S. economy is, at best, halfway through a recession that began in December 2007 and will prove the longest and most severe of the postwar period. Credit losses of close to $3 trillion are leaving the U.S. banking and financial system insolvent. And the credit crunch will persist as households, financial firms and corporations with high debt ratios and solvency problems undergo a sharp deleveraging process.
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Builder Offers Shockingly-Low Mortgage Rate
Tweet Share on Facebook January 22, 2009 Comment (1)Home builders have used all sorts of gimmicks to try and get people to buy homes in the declining real estate market. But now, Toll Brothers is taking incentives to a whole new level by offering fixed-mortgage rates at just below 4 percent--that's substantially lower than the already-compelling average rates of roughly 5 percent.
From The Wall Street Journal:
Horsham, Penn.-based Toll this week started offering a 3.99% fixed mortgage rate for loans $417,000 or below for 30 years with no points, one of - if not the - industry's lowest rates, one well below the national average of just below 5%.
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Did Barney Frank Help Push Bailout Cash to Home-State Bank?
Tweet Share on Facebook January 22, 2009 Comment (10)Fascinating story in today's Wall Street Journal exploring the potential political factors behind the government's decisions as to which banks should receive bailout cash:
The Treasury had said it would give money only to healthy banks, to jump-start lending. But OneUnited had seen most of its capital evaporate. Moreover, it was under attack from its regulators for allegations of poor lending practices and executive-pay abuses, including owning a Porsche for its executives' use.
Nonetheless, in December OneUnited got a $12 million injection from the Treasury's Troubled Asset Relief Program, or TARP. One apparent factor: the intercession of Rep. Barney Frank, the powerful head of the House Financial Services Committee.
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Housing Starts Hit New Lows: 4 Reasons They'll Get Worse
Tweet Share on Facebook January 22, 2009 Comment (2)The government reported Thursday that housing starts plunged to new lows in December, falling 16 percent from the previous month and 45 percent from a year earlier.
"Last month we wrote, 'This may be the worst housing report ever (data series starts in 1947).' This report was even worse," Pat Newport, economist from IHS Global Insight, said in a report. "Housing starts, single-family starts, and housing permits set record lows in 2008. These records will be shattered in 2009."
Here are four reasons why Newport sees an even-more-painful 2009:
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Low Mortgage Rates: What it Takes to Capitalize on the Trend
Tweet Share on Facebook January 21, 2009 Comment (7)Attractive fixed mortgage rates--which recently dropped to below 5 percent--have triggered a wave of refinancing applications as homeowners look to turn the favorable interest rate trends into real savings. But not all borrowers will be able to get in on the action. Tighter lending standards and falling home prices will prevent some borrowers from obtaining the most compelling rates, while shutting others out of the market altogether.
[Check out Mortgage Rates in 2009: 7 Things You Need to Know.]
To get a sense of what kind of credit profile a borrower needs in order to access today's best rates, I spoke with Chris Freemott, president of All American Mortgage in Naperville, Ill. Freemott passed along this nugget of information that anyone considering refinancing today should be aware of: "[a FICO score of ] 740 is the benchmark for the lowest possible rates," Freemott says.
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George Soros: The $700 Billion Bailout Isn't Enough
Tweet Share on Facebook January 21, 2009 Comment (5)Nouriel Roubini told The Home Front not long ago that the government's controversial $700 billion bailout package won't be enough to stabilize the financial markets. Now billionaire hedge fund manager George Soros is reportedly expressing similar views.
From Reuters, via patrick.net:
The $700 billion financial bailout known as TARP for Troubled Assets Relief Program had been carried out in a "haphazard and capricious way" and "without proper planning," [Soros] said.
"Unfortunately it was misused and the way it was done has poisoned the well. It has created tremendous ill will toward putting up more money," Soros said…
