This should come as no surprise.  When private lending got out of financing risky mortgage loans, the FHA stepped in- and now they are at risk of running out of money: The Federal Housing Administration, hit by increasing mortgage-related losses, is in danger of seeing its reserves fall below the level demanded by Congress, according to government officials, in a development that could raise concerns about whether the agency needs a taxpayer bailout. The rising losses at the FHA, part of the U.S. Department of Housing and Urban Development, come as the agency has rapidly increased its role in guaranteeing…
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“It would be like Rome selling the Vatican to the Japanese to make it a hotel, and hiring the Pope as a bellboy,” he deadpans – from Bloomberg’s review1 of the new BBC drama "The Last Days of Lehman Brothers" … and the NYT has the scoop2 on "American Casino" — here’s the trailer: Any Doomers actually see these things?  Ideas for better productions?3

  It was bad enough when subprime loans [Which were in the minority.] were toxic.  Now prime loans are even worse: America’s most credit-worthy borrowers are defaulting on their loans faster than those with poor financial records, according to a report in the Wall Street Journal. The rate of mortgage delinquency among prime borrowers is accelerating and could mean that banks will soon be suffering more losses from the usually safe customers than from their less-reliable ones, the report said. The number of subprime borrowers falling down on their mortgage repayments reached 25 percent in the first quarter, but has…
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"If we’re going to restore and maintain investor confidence and…consistent liquidity, that is going to require an explicit backstop," said John Courson, chief executive and president of the MBA. – WSJ1 Maybe now CDARS will have to do debt instruments so that Bill Gross can get around the $100K limit on coverage Let’s see if I’ve got this one straight.  Fannie and Freddie get smashed into dozens of Fragmies.  The "good" Fragmies with the valuable assets become new private label mortgage lenders (and dues paying MBA members).  The "bad" Fragmies, with all the losses that the big GSEs managed to…
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It’s Friday, and it’s been depressing enough since CR at Calculated Risk pointed out that, according to NAR numbers, that $8,000 first time home buyer tax credit cost taxpayers $43,000 per house. [That's not including the interest for borrowing the money.]  Agents have been encouraging buyers to get out there and buy before the credit is gone.  Not to worry- it looks like the credit will be extended.  Not only is the credit likely to be extended, but perhaps very nearly doubled.  On top of that, it will probably be extended to all buyers, not just first-timers: [Hat tip Freedom’s…
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“These are proprietary trading shops that are masquerading as market makers,” said Tim Quast of Modern IR, a consulting firm that advises corporations on market structure issues. – NYT1 Maybe Doomers should start paying attention to the Optiver Inquiry.2 3 The write-up1 in the NY Times is both detailed and fascinating.  While the immediate issues seem to be limited to some species of flash options strategy on commodity markets, the Commodity Futures Trading Commission (CFTC) appears to be delving into low-latency, co-location and the whole High-Frequency Trading (HFT) package. Indeed, this little gem could have come right out of the…
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It’s hard to believe, but remember this rant from Jim Cramer?    It’s been just over two years since Cramer told the Fed it would need to lower interest rates and save his Wall Street buddies. Here’s what the New York Times said in August 2007:   Jim Cramer, known for his histrionics on the CNBC financial news channel, angrily called for Mr. Bernanke to lower interest rates, something the Fed has resisted doing. A week ago, Mr. Cramer charged that the Fed was “asleep” and that the chairman “has no idea how bad it is out there” in the…
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… Selling its [the Fed's] billions worth of MBS, notes [Goldman Sachs economist] Mr. Hatzius, would drive up mortgage rates and cool the housing market, which in turn should slow the economy. – WSJ1 In other news, GS has applied for FDA approval to use the Thompson submachine gun to fight high blood pressure. Another possibility is that their econo-analysts have an office pool on to see just what level of bogosity the scribes of NY can tolerate without noticing.  Anyway, the article has a really nice chart summarizing the Fed’s reported holdings from the H.4.1

  The Mortgage Banker’s Association has released a new plan for successor organizations for the GSEs.  This plan states that it won’t put taxpayer money at risk- or maybe it will: [Thanks John!] As the new administration deliberates on what the government’s role should be in securing mortgage credit across the US, the Mortgage Banker’s Association today released its recommendations on how to support the secondary mortgage market. The key recommendation is to create a new type of mortgage backed security that would help to ensure liquidity. The Mortgage Bankers Association (MBA) said the new security would be supportive of…
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After prompting from an IRS auditor, the agency will study whether it should make greater use of data on mortgage-interest payments provided to it by banks. The IRS currently uses such data to send notices to non-filers who it believes should have filed a return. – WSJ1 No good deed goes unpunished, eh?