Housing/Subprime/Credit Roundup — May 19, 2008

Items of Interest:

Bloomberg:
Banks Keep $35 Billion Markdown Off Income Statement -- Banks and securities firms, reeling from record losses resulting from the collapse of the mortgage securities market, are failing to acknowledge in their income statements at least $35 billion of additional writedowns included in their balance sheets, regulatory filings show...

Deal Book / NY Times:
For Banks, Subprime Hangover Lasts Beyond the Morning After -- Banks that had hoped to get over their subprime mortgage pain and move on are finding the hangover is lasting longer than expected as bonds of banks and insurers that have been crushed still may not be cheap enough to buy.

Reuters said in a report that the conventional wisdom last year was that companies like Citigroup and Merrill Lynch, both under new leadership, would use the last quarter of 2007 as a so-called “kitchen sink” quarter, to report their worst write-downs and losses, and move on.

But that did not happen...

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Wall Street Journal:
Fannie, Freddie Called Weak in Capital Base -- Fannie Mae and Freddie Mac are "a point of vulnerability for the financial system" because their capital is meager in relation to their mortgage assets and obligations, the companies' main regulator said...

Housing Doom blog:
Fannie Mae: Building The Underwater Mortgages Of Tomorrow

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• The Scars of Losing a Home - Robert Shiller, New York Times
• Credit is Scarce, but Not Capital - David Pauly, Bloomberg
• Bubbles, Not In The Abstract - Tim Duy, Economist's View
• New York's Office-Space Crisis - Sen. Charles Schumer, New York Post
• Will Our Kids Be Dumb and Broke? - M.P. Dunleavy, MSNMoney

Housing/Subprime/Credit Roundup — May 16, 2008

Items of Interest:

Econoday / Barrons:
April 2008 Housing Starts -- The housing sector in April rebounded unexpectedly but the improvement may actually reflect the fact that it is more difficult to get into single-family housing or at least merely volatility in multifamily starts. Starts rebounded 8.2 percent, following a sharp 13.8 percent drop in March. April's 1.032 million units annualized were still down 30.6 percent year-on-year and came in above the consensus expectation for a 0.940 million units. The April boost was led by a 36.0 percent rebound in multifamily starts as single-family starts slipped another 1.7 percent...

Barry Ritholtz / TBP:
Housing Starts Plunge 30.6% -- Does this look like a bottom to you ?

Diana Olick / CNBC Realty Check:
Housing Starts: The Numbers Are A Joke And Not A Funny One

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Wall Street Journal:
Bernanke's Bubble Laboratory -- First came the tech-stock bubble. Then there were bubbles in housing and credit. Chinese stocks took off like a rocket. Now, as prices soar on every material from oil to corn, some suggest there's a bubble in commodities.

But how and why do bubbles form? Economists traditionally haven't offered much insight. From World War II till the mid-1990s, there weren't many U.S. investing manias for them to look at. The study of bubbles was left to economic historians sifting through musty records of 17th-century Dutch tulip-bulb prices and the like.

The dot-com boom began to change that. "You were seeing live, in action, the unfolding of lots of examples of valuations disconnecting from fundamentals," says Princeton economist Harrison Hong. Now, the study of financial bubbles is hot...

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Bloomberg:
U.S. Consumer Confidence Falls to 28-Year Low, Single-Family Starts Drop -- U.S. consumer confidence was the weakest this month since Jimmy Carter was president, and single- family home construction fell to a 17-year low in April.

The Reuters/University of Michigan preliminary index of consumer sentiment dropped to 59.5, compared with an average reading of 85.6 in 2007. Builders broke ground on 692,000 single-family homes at an annual rate, the Commerce Department said today in Washington. Total housing starts unexpectedly rose because of an increase in condominium construction...

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Calculated Risk:
HELOCs: The New Subprime -- "...The market has, obviously, taken the view that the worst of the writedowns are behind us, and if anything it's now just a macroeconomic problem we face. I think that's dead wrong. We're now entering the phase where the macro impacts earnings, but also the stage where real cash losses start to hit the banks (subprime and Alt-A is primarily a mark-to-market issue, but HELOCs [Home Equity Line Of Credit] are going to be large, outright losses). Once WAMU, WFC, BAC and JPM start to get data through on how rapidly their HELOC portfolios are deteriorating, watch the losses pile up. I'm talking realised losses, not mark-to-market writedowns." ...

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• Fannie lowers down payments - CNN Money
• Elusive Senate housing bill inches forward - CNN Money
• The Incredible Shrinking Nest Egg - Sandra Block, USA Today
• Want To Fix The Fed? Get Rid Of It - Mish's Global Econ. Trend Analysis
• The Housing 'Crisis' Isn't, Really - George Will, Washington Post

Housing/Subprime/Credit Roundup — May 15, 2008

Items of Interest:

Paul Jackson / Housing Wire:
Senate Committee Takes Up Housing Debate -- The Senate Banking Committee is set to tackle proposed housing legislation on Thursday, and a key Democratic lawmaker said this morning that a deal with Republicans was nearing fruition. Committee Chairman Christopher Dodd (D-CT) told the press Thursday morning that a deal was “very close” during an interview on Fox Business Network; last second negotiations involving GOP leaders shuttled a scheduled committee markup on the Senate’s housing package from 10am EST to 11:30EST.

Dodd has been working hard to gain the support of key Republicans for a tentative housing relief package, postponing earlier committee markups in the face of stiff GOP opposition.

The House of Representatives last week passed its own sweeping version of housing relief as part of a revised Foreclosure Prevention Act. House Financial Services Committee Chairman Barney Frank (D-MA), who originally pushed for the proposed legislation, has said he wants to authorize the Federal Housing Administration to insure up to $300 billion in refinanced mortgages for troubled borrowers, when the investor agrees to take a haircut on a portion of the outstanding debt...

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• Matters of Homeowner Trust - Nicole Gelinas, City Journal
• Beginning of the End of the Credit Crisis? - Felix Salmon, Market Movers
• Who Will Be the Next Homebuilder to File Chapter 11?? - Seeking Alpha
• Collateral Damage for Condo Owners - Christine Haughney, NY Times
• Recovery From Worst Housing Slump Since 1930s Comes With Angel - Bloomberg