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Thursday, September 11, 2008

Housing/Subprime/Credit Roundup — September 11, 2008

Items of Interest:

Richard Fuld of Lehman Brothers, working Wall Street today
David Cho & Heather Landy / Washington Post:
U.S. Government Assisting in Sale of Lehman Brothers -- The Treasury Department and the Federal Reserve are helping Lehman Brothers put itself up for sale. The details are not finalized, but sources familiar with the matter say the purchase is expected to be completed and announced this weekend before Asian markets open Monday morning.

The Fed and Treasury are talking to a wide range of firms and examining multiple scenarios for the sale of the venerable investment brokerage.

Lehman Brothers, which had been anxious to show it could weather the credit crisis that contributed to the firm's $3.9 billion third-quarter loss, said Wednesday that it would sell a majority stake in its investment-management division, slash its dividend and spin off about $30 billion of real estate assets.

The announcement did little to calm investors' concerns that Lehman, the smallest of the four major Wall Street investment banks, might suffer the same fate as former rival Bear Stearns...
Housing Wire:
Preferred Backlash to GSE Bailout Grows -- Holders of preferred equity in both Fannie Mae (FNM: 0.78 +5.41%) and Freddie Mac (FRE: 0.59 -10.61%) aren’t likely to take the Treasury’s weekend move to place both mortgage finance giants into conservatorship lying down, sources suggested to HW on Thursday. The move has roiled preferred securities on both GSEs, as well as other preferred equities as well. Numerous holders of both preferred and common stock interests in the GSEs have been issuing press statements regarding their exposure and impact on capital, including many community banks.

New England-based LSB Corp. (LSBX: 12.86 -4.47%), a holding company for community banking operation River Bank, said Thursday that it held $10.1 million in Fannie/Freddie preferreds at the end of June; those holdings had declined in fair value to $6.4 million by Aug. 11, the bank said. By Sept. 9, the bank had marked its holdings to $1.1 million.

The preferred hit will bring River Bank’s regulatory total capital ratio down from a reported 13.3 percent to an estimated 10.8 percent, the company said; regulatory guidelines require at least a 10 percent ratio to maintain a “well capitalized” classification...
CNN Money:
A call for a housing bottom worth listening to -- A handful of economists and analysts predict that home prices will level off by next summer.

Alan Greenspan famously declared the worst was over back in November of 2006. And the National Association of Realtors' erstwhile chief economist David Lereah called the bottom a few times, starting in May 2006.

Plenty of other economists and real estate analysts have attempted to do the same - and of course they've all been wrong...

Remembering 9-11

Calculated Risk

MishTalk - Mike Shedlock

Paul Krugman - NY Times

The Big Picture - Barry Ritholtz

naked capitalism - Yves Smith

Pragmatic Capitalism

Washington's Blog

Safe Haven

Paper Economy

The Daily Reckoning - Australia