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More Credit Crunches

Two recent articles in Business Week and the New York Times indicate that subprime mortgage lending crisis is spilling over into other markets. From the New York Times , we find out that it is not just the subprime borrowers that are having a tough time but the prime borrowers with good credit. According...

Credit Fears Spread

From this article in the Wall Street Journal by CARRICK MOLLENKAMP and SERENA NG comes word that the fear and havoc caused by the collapse of the subprime mortgage market is even being felt in the rarefied atmosphere of synthetic collateralized-debt obligations (CDOs), and constant-proportion debt obligations...

Is the FDIC Gearing Up for Subprime-Induced Bank Meltdown? .

A few days ago, the Wall Street Journal reported that the Federal Deposit Insurance Corporation (FDIC) is recruiting its own retirees in order to beef up staff in anticipation of a sharp increase in bank failures, which could amount to 100 or more in the next 12 to 24 months. The FDIC, a federal agency...

Breaking the ARS Liquidity Logjam

Zealous Trading Group's announcement that its electronic marketplace will facilitate secondary trading for the $330 billion market of Auction Rate Securities might help increase overall credit market liquidity, and perhaps indirectly help ease the mortgage credit situation. That announcement includes...

Subprime Lending or Options Backdating, Which Will Receive a Legislative Haymaker?

Recently, the financial industry and the country itself has faced two sweeping market-related “scandals” or “crises” (for lack of a better term): the issues in the mortgage industry with subprime lending, and the executive stock option backdating situation. Both of these scandals...

Thacher Proffitt & Wood LLP on the Effect of the Economic Stimulus Act of 2008

In this analysis of the Economic Stimulus Act of 2008, Stephen F.J. Ornstein, David A. Tallman, and John P. Holahan of Thacher Proffitt & Wood LLP discuss the effect of the recent economic stimulus package on the coverage of several state anti-predatory lending statutes, and conclude that an unintended...

Vegas Foreclosure? Hit the Bank

The collapse of the housing market in the United States has been the source of some fascinating stories as folks try to cope with the crises. We’ve seen stories about delinquent homeowners mailing the keys to their house back to the bank and walking away, giving birth to the phrase “jingle...

A Suburban Love Affair

I like to walk. Given the opportunity I much prefer to walk to stores, restaurants, and folk’s houses rather than drive. Unfortunately, doing so is always an adventure in my town. The whole place is designed around automobiles. Development is spread out. Business and residential uses are segregated...

Good Times For Apartment REITs

It is, of course, a well worn cliché that in every crisis there is opportunity. According to Vivian Marino of the New York Times, the subprime mortgage crisis is apparently no different . With the rate of home ownership falling, foreclosures on the rise, and first time home buyers finding...

Introspection -- Credit Crisis

The Financial Times published two interesting pieces last week ( here and here ) on the efforts of major banks to take blame for the current financial crisis and to suggest areas for reform. FT characterizes these efforts as attempts to avoid increased regulation of the financial sector. According to...

Joy Harmon Sperling on the Groundbreaking Decision in Massachusetts v. Fremont Investment

The Massachusetts Superior Court recently enjoined a mortgagee from foreclosing on "presumptively unfair" mortgages without first obtaining the assent of the Massachusetts Attorney General or, if approval is not granted, without the Court's permission. In so doing, the Court has taken the...

She Came In Through The Bathroom Window

There were a number of interesting real estate/mortgage crisis/collapse of western civilization stories over the weekend: From the Washington Post comes this story about the challenges facing suburban law enforcement now required to police so many empty houses. Police are encountering a variety of...

Look To Your Orb For The Warning

With no new collapses of major financial institutions and little to report other than the continuing decline of housing prices and legislative proposals to close the barn door, the subprime mortgage meltdown and the worldwide financial crisis it spurned doesn’t get headlines like it used to. But...

Thacher Proffitt on The Save New Jersey Homes Act of 2008

The Save New Jersey Homes Act of 2008 is currently awaiting Governor Corzine's signature. It requires creditors to freeze the introductory rates of certain mortgages for 3 years & defer payment of the additional interest accruing at the fully-indexed rate, in addition to requiring specific disclosures...

The End Of The World As We Know It

Eight or nine months ago when the effects of the collapsing housing bubble finally became serious enough to warrant attention in the mainstream national press, speculation arose as to whether and to what extent the government should intervene in the crisis. At the time fallout seemed limited to overextended...

The Congress Strikes Back

Criticism of Paulson's bailout plan came swiftly after release of the details on Friday. Examples can be found here , here , here , and here . On Monday Congressional Democrats submitted counter-proposals. Key elements include oversight and the acquisition of an equity stake in institutions participating...

Ben Bernanke Explains It All

Like many people I assumed that the Treasury Department, as part of its the bailout plan for the financial industry, would buy up bad debt at less than market value. I wondered how firms would make up for the hole that would leave in their balance sheets. In testimony before the Congress on Tuesday Ben...

Agreement on a Bailout Plan

Thank God for Friday's Presidential debate. It got the two presidential campaigns out of town just long enough for Congressional leaders to reach a consensus on a bail-out plan. It's called the Emergency Economic Stabilization Act of 2008 . It looks like most of the original provisions of the...

Bailout Plan Defeated in House

In a stunning turn of events, the consensus bailout plan was defeated in the House of Representatives this afternoon by a vote of 228 to 205. In the end, 95 Democrats and 113 Republicans voted against the plan. Not wanting to reward the wrongdoers seemed to be a common complaint among dissident Democrats...

We're All Keynesians on the Way Down

Brad Setser over at his Follow the Money blog found this amazing quote on Forbes.com from Merrill Lynch emerging equities strategist Michael Hartnett: “The failure of TARP legislation worsens the short-term credit situation. But in so doing it increases the likelihood of a Swedish-style recapitalisation...

House Passes Financial Bailout Bill

By a vote of 263 to 171 the House just passed the version of the bailout bill passed by the Senate on Wednesday.

Rapp & Matasar on Potential Rating Agency Liability & subprime backed-securities

Rating agencies assigned credit ratings to subprime Residential Mortgage-Backed Securities (RMBS) and Collateralized Debt Obligations (CDOs). In making investment decisions, many investors relied on these credit ratings. However, the accuracy and integrity of these ratings have come under question, and...

Lapine on City of Cleveland v. Ameriquest Mortgage Securities, Inc.

In City of Cleveland v. Ameriquest Mortg. Sec., Inc. , 2009 U.S. Dist. LEXIS 41303 (N.D. Ohio May 15, 2009) , the City of Cleveland filed an action against over 20 major investment banks, accusing the banks of creating a public nuisance by reason of their securitizing pools of subprime mortgages made...

Backgrounder: Cities Try to Recoup Foreclosure Costs From Lenders/Developers

The current financial crisis began quietly in the subprime mortgage market and quickly attained a level unimaginable just a short time ago. Nearly two years later, large cities across our nation are dealing with a host of issues related to the rising tide of foreclosures. Several cities have tried to...

Wachovia, KPMG Reach $627 Million Settlement With Investors

NEW YORK - (Mealey's) In what Wachovia Corp. shareholders' attorneys are calling the single-largest recovery for claims brought "solely pursuant to" the Securities Act of 1933, the shareholders, Wachovia, certain of its affiliates and former officers and directors and outside auditor...