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Sallie Mae reports $1.6B quarterly loss
The student lender cited heavy borrowing costs, $575 million reserve to cover expected losses on student loans.
January 23 2008: 10:53 AM EST
WASHINGTON (AP) -- Embattled Sallie Mae, the nation's largest student lender, on Wednesday reported a fourth-quarter loss of $1.6 billion as it slumped under heavy borrowing costs and set aside $575 million to cover expected losses on student loans.
The quarterly loss at SLM Corp. (SLM), as the company is formally known, was equivalent to $3.98 a share, compared with a profit of $18 million, or 2 cents a share, in the fourth quarter of 2006.
The Reston, Va.-based company reported a loss on a "core" basis of $139 million, or 36 cents a share in the October-December period, compared with profit of $326 million, or 74 cents a share, a year earlier. Core earnings exclude treatment for student loans bundled together as securities and derivatives, the complex financial instruments used as a hedge against interest rate swings
http://money.cnn.com/2008/01/23/news/companies/bc.apfn.earns.salliemae.ap/index.htm?source=yahoo_quote
NovaStar moves to Pink Sheets
January 17, 2008 9:47 AM ET advertisement
The OTC Bulletin Board started listing NovaStar Financial Inc.'s stock Thursday morning. The company's stock now trades under the ticker symbol NOVS.
The stock's final day of trading on the New York Stock Exchange for the Kansas City-based subprime mortgage lender was Wednesday, when it closed at $1.94, down 9 cents, or 4 percent.
NovaStar stock took a steep dive Monday, after the company had said in a Friday filing with the Securities and Exchange Commission that it will eliminate about 170 jobs and give up its mortgage-origination and brokerage business licenses.
The company will have about 30 employees remaining after the cuts and said it will take a pretax charge of about $1.3 million to $1.8 million, mainly for severance costs, mostly in the first quarter.
The New York Stock Exchange said Friday that it would delist NovaStar's stock starting Thursday.
NovaStar's stock price and employee count plummeted in 2007 because of the meltdown of the subprime mortgage market.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=ACBJ&date=20080117&id=8055686
NovaStar unit faces involuntary bankruptcy filing
Wed Jan 23, 2008 6:44pm EST
NEW YORK, Jan 23 (Reuters) - A unit of subprime mortgage lender NovaStar Financial Inc NOVS.PK was hit with an involuntary Chapter 7 bankruptcy petition accusing it of failing to pay a $48.9 million judgment, court records show.
American Interbanc Mortgage LLC of Irvine, California filed the petition against NovaStar Home Mortgage Inc on Wednesday in the U.S. bankruptcy court in Kansas City, Missouri, the city where NovaStar is based.
According to NovaStar's latest quarterly report, American Interbanc last June won a $46.1 million judgment against the home mortgage unit, following an Orange County, California jury trial in which it accused NovaStar of false advertising and unfair competition. Interest has subsequently accrued on the judgment.
In its report, NovaStar said the home mortgage unit could not afford the judgment, which was appealed, and that the parent "may be forced to consider bankruptcy" if American Interbanc sought to hold it responsible. NovaStar said it does not believe American Interbanc has a legal basis to hold it responsible for the judgment.
Robert Berry, a lawyer for American Interbanc, said on Wednesday that NovaStar Home Mortgage is "not paying its obligations, and doesn't appear likely to pay them." He said his client has not ruled out the possibility of trying to enforce the judgment against NovaStar Financial.
Lance Anderson, NovaStar's chief executive, did not immediately return a call seeking comment.
NovaStar in the last year halted subprime mortgage lending, quit its brokerage operations, and fired most of its staff. It once specialized in making home loans to customers with weak credit, but like dozens of rivals was battered by soaring delinquencies and defaults. NovaStar's business now consists mainly of managing a mortgage securities portfolio.
Shares of NovaStar closed Wednesday down 1 cent at $1.75 on the Pink Sheets. (Reporting by Jonathan Stempel; Editing by Carol Bishopric)
http://www.reuters.com/article/marketsNews/idUKN2333643220080123?rpc=44
Sovereign 4Q Net Loss Widens
Wednesday January 23, 5:26 pm ET
By Deborah Yao, AP Business Writer
Sovereign Bancorp 4Q Net Loss Widens Amid Loan Defaults and Eroding Value of Thrift It Bought
PHILADELPHIA (AP) -- Sovereign Bancorp Inc. on Wednesday reported a 12-fold widening in its losses in the fourth quarter, as it recorded a massive write-down because customers defaulted on loans and the value of its investment in a New York thrift fell.
The Philadelphia-based parent of Sovereign Bank also said it was suspending its quarterly stock dividend until further notice, a move that will reserve $160 million in capital this year.
Sovereign lost $1.6 billion in the quarter, or $3.34 per share, compared with a loss of $129 million, or 28 cents per share, in the same quarter a year ago.
Results were hurt by a $1.58 billion write-down of goodwill -- what a company is worth beyond its assets.
About half the write-down came from a decline in business at Independence Community Bancorp in Brooklyn, which Sovereign purchased over some shareholder objections in June 2006. The goodwill write-down was higher than what Sovereign disclosed last week.
Sovereign also booked $180 million in pretax, noncash charges related to the decline in value of its Fannie Mae and Freddie Mac preferred shares. Another $27 million in charges came from loan defaults by two unspecified mortgage companies.
Sovereign increased its reserves for loan and lease losses -- a buffer against bad debt -- by $88 million to $738 million.
Excluding the charges, Sovereign posted operating earnings of $94 million, or 18 cents per share, in the quarter, compared with profit of $167 million, or 33 cents per share, a year earlier.
Analysts surveyed by Thomson Financial were expecting profit of 22 cents per share
"Our fourth-quarter results have been impacted significantly by disruption in the credit markets and continued weakness in the residential mortgage market," Joseph Campanelli, Sovereign's president and chief executive, said in a statement.
He added that Sovereign's decision to suspend its dividend was necessary: "Today's banking environment dictates proactive measures to strengthen capital and mitigate risk."
Sovereign has already stopped issuing auto loans in seven states -- Arizona, Florida, Georgia, Nevada, North Carolina, South Carolina and Utah -- as defaults mounted.
In the quarter, Sovereign's net interest income came to $466 million, down from $487 million a year ago. Noninterest income before security gains was $153 million, up from $149 million.
For the year, Sovereign posted a net loss of $1.3 billion, or $2.85 per share, after a profit of $137 million, or 30 cents per share, a year ago.
Shares of Sovereign lifted along with the general market, up $1.01, or 10 percent, to $11.13 on Wednesday amid heavy trading volume. They have traded in a 52-week range of $8.71 to $26.70.
http://biz.yahoo.com/ap/080123/earns_sovereign_bancorp.html
Bond insurers surge on hopes for bailout
Counterparties meet regulators in New York; $15 bln plan reportedly proposed
By Alistair Barr, MarketWatch
Last update: 5:32 p.m. EST Jan. 23, 2008
SAN FRANCISCO (MarketWatch) -- Shares of bond insurers surged on Wednesday, adding fuel to a major late-session rally in the U.S. stock market, on hopes that a bailout package orchestrated by regulators will rescue the ailing industry.
Big banks and brokers that are counterparties to bond insurers met with Eric Dinallo, New York's state insurance regulator, said David Neustadt, a spokesman for the agency. He declined to say what was discussed, but reiterated the regulator's goal of restoring stability and injecting more capital into the $2.3 trillion market.
During afternoon trading, the Financial Times reported that Dinallo pressed the banks to provide $5 billion in immediate capital to support the bond insurers and to ultimately commit up to $15 billion. Neutstadt declined to comment on the report.
Ambac Financial (ABK 13.70, +5.73, +71.9%) , one of the largest bond insurers, saw its stock leap 72% to close at $13.70. Shares of MBIA Inc. (MBI 16.61, +4.08, +32.6%) , a rival, jumped 33% to $16.61.
Smaller bond insurers also rallied strongly. Security Capital Assurance (SCA 3.79, +1.64, +76.3%) gained 76% to close at $3.79 and ACA Capital (ACAH 0.85, +0.25, +41.7%) advanced 42% to 85 cents.
At issue is an industry whose trials in recent weeks have significantly added to investor anxiety about the collapse of mortgage-related assets.
Bond insurers have been under intense pressure amid mounting concerns that mortgage-related losses will undermine their business models. Fitch Ratings cut New York-based Ambac's crucial AAA rating last week, and rival ratings agencies have warned they may have to do the same.
The stakes remain high because bond insurers are so intertwined with the rest of the financial markets. The companies guarantee billions of dollars of complex mortgage-related securities held by some of the world's largest investment banks and back more than $1 trillion of muni bonds.
In light of the widespread damage that might be inflicted by the collapse of a major bond insurer, regulators have begun working to avoid such an outcome.
Ambac "is in desperate need of $5 billion or more of capital or a guarantee from a very strong (backer) to preserve market confidence," said Egan-Jones Ratings, a rating agency that's paid by investors rather than issuers. "Some sophisticated investors claim that Ambac and MBIA must be saved or the write-downs and margin postings will be debilitating to most investment and commercial banks."
Some investors have also shown interest in the sector.
Wilbur Ross, highly successful as an investor in so-called distressed businesses, said on Tuesday that he wants to invest in some bond-insurance companies and could pick a candidate within the next week.
Also Tuesday, Ambac's interim chief executive, Michael Callen, said the company's considering strategic alternatives. He said the company is talking with "very credible" parties and "pools of capital."
http://www.marketwatch.com/news/story/bond-insurers-surge-hopes-bailout/story.aspx?guid=%7B3F39F792%2D86F3%2D4ED3%2DAEFA%2D2B1E68F55505%7D&dist=morenews_ts
Corporate bond defaults to rise
Economic slowing, credit crunch take two companies bankrupt this week
By Laura Mandaro, MarketWatch
Last update: 5:41 p.m. EST Jan. 23, 2008P
SAN FRANCISCO (MarketWatch) - More companies are expected to default on their bonds this year as developed economies slow and credit conditions remain tight, pressures that pushed two North American companies into bankruptcy this week and that promise to keep roiling financial markets, analysts said.
"You'll see a lot more credit defaults over the next 24 months as economic conditions soften," said Sean Egan, managing director at ratings agency Egan-Jones Ratings.
In past years, aggressive private equity buyers and fairly lenient lending standards helped struggling corporations stay afloat, he said.
That's all changed. The U.S. economy looks increasingly likely to fall into a recession, Europe is cooling and both lenders and private equity buyers remain on the sidelines. On Wednesday, Cerberus Capital Management Chairman John Snow said banks needed to "purge" about $200 billion of loans they can't sell to investors before the hot pace of leveraged buyouts resumes, reported Bloomberg.
Highest bond defaults
Trailing 12-month default rates
Forest/building/homebuilders 2.52%
Aerospace/auto/capital goods/metal 1.25%
Leisure/media 0.79%
Health care/chemicals 0.77%
Financial institutions 0.59%
Consumer/service sector 0.54%
Data: Standard & Poor's
For individual companies, reduced consumer spending and manufacturing activity have been crimping sales, while a continued credit crunch makes it harder for companies to refinance high-priced loans, say analysts.
Standard & Poor's on Tuesday forecast the default rate on speculative-grade bonds, commonly known as junk bonds, will rise to 3.4% this year - a big move up from last year's rate of 0.97%, which was a 25-year low. Last year only 22 defaults were recorded globally, the lowest default count in 11 years, said the rating agency.
Changes in the credit markets, an increase in refunding needs and a higher risk of recession account for the worsened outlook for bond defaults, says Diane Vazza, head of fixed income research at Standard & Poor's. In fact, she views the Federal Reserve's surprise 75 basis-point cut, announced Tuesday, "as indicative of the accelerating risk of recession."
An increase in bond defaults is likely to keep up pressure on the equity markets, which have been shocked by repeated bad news about subprime mortage defaults, mortgage-backed securities losses, and more lately, mounting risks from bond insurers and credit default swaps.
When a big company defaults on its debt, that action generally triggers an event in credit default swaps - the contracts that give the buyer of the swap a form of insurance against the possibility a specific issuer will renege on its debt. But following the near failure of bond insurer ACA Capital Inc. (ACAH 0.85, +0.25, +41.7%) , market participants have increasingly worried that counterparties in credit default swap contracts won't pay up.
"There is great uncertainty about the impact of those [bond] defaults in a world of structured finance and credit-default swaps," said Joseph Mason, a professor of finance at Drexel University. "Where credit default swaps were issued for speculation, losses in the sector will magnify - rather than offset - losses from any given default," he said in emailed comments.
Fresh failures
Montreal-based printer Quebecor World Inc. (IQW 0.10, -0.03, -25.9%) (CA:IQW) and Eagan, Minn. restaurant-chain Buffet Holdings are the latest examples of what happens when a weaker economy combines with a tough market for getting new loans.
On Monday, Quebecor said it was filing for bankruptcy protection in Canada and the United States after failing to secure a $388 million (C$400 million) bail-out package and warning it was running out of cash. The 28,000-employee company, which produces printed materials like direct mail and magazines, has been struggling with slowing demand, higher energy costs and a strong Canadian dollar. Last month, a planned sale of some European operations fell through.
"This is an industry in secular decline, hurt by the online and electronic move in advertising," said Tom Ferguson, an analyst with high-yield research firm KDP Investment Advisors. "Margins are under pressure from all corners," he said.
Still, he said he was a "bit surprised" that Quebecor couldn't come up with new funding, particularly since just two years ago, bond investors flocked to buy new Quebecor debt.
Part-owner Quebecor Inc. (CA:QBRA: news, chart, profile) had tried to arrange rescue financing with a private equity firm but said some of Quebecor World's lenders had balked at the financing arrangement.
Quebecor's failure to come up with financing to forestall bankruptcy, "speaks volumes about the current status of the credit market," Ferguson said.
Tighter credit market conditions are curtailing the ability for companies to get new financing across a range of industries. Moody's Investors Service said Wednesday that the number of speculative-grade companies with weak liquidity ratings rose by 77% in the second half of 2007 compared to the first half.
This jump signals more companies are vulnerable to default, noted the ratings agency. Quebecor World, for instance, received a weak rating last June.
Meanwhile, a slowdown in consumer purchases is sapping profits at some retail companies. Buffet Holdings, Inc., the privately-held operator of restaurant chains including HomeTown Buffet and Tahoe Joe's Famous Steakhouse, filed for Chapter 11 in Delaware Tuesday.
Belt-tightening by consumers, who have seen gasoline prices top $3 a gallon and home prices fall, has translated to lower sales for restaurant chains. Last year, Specialty Restaurant Group and The Roadhouse Grill filed for U.S. bankruptcy.
Top among the reasons its operations went south, said Buffet Holdings Tuesday, was a "significant decline in discretionary spending among its core consumers."
An increase in corporate defaults is also likely to have a ripple effect on the large but obscure market for credit default swaps.
The Quebecor default, for instance, has triggered a credit event in credit default swaps, according to analysts at Bank of America Corp. This means that the holders of credit default swaps linked to Quebecor defaulting on its debt stand to get paid for those swaps, while the sellers of credit default swaps must pay up.
Laura Mandaro is a reporter for MarketWatch in San Francisco.
http://www.marketwatch.com/news/story/more-companies-seen-reneging-bonds/story.aspx?guid=%7BE201A068%2DB88E%2D4BA3%2DB2BB%2D7037D92C7A51%7D&siteid=yhoof
Capital One Financial 4Q down 42%
NEW YORK, Jan 23 (Reuters) - Capital One Financial Corp, the largest independent U.S. bank card issuer, said on Wednesday that fourth-quarter earnings fell 42 percent on rising credit card losses and charges related to a shut-down of its subprime mortgage unit.
The McLean, Virginia, company also said its loan portfolio and revenue growth would slow to "low single digits" this year, reflecting a weaker environment.
Fourth-quarter net income fell to $226.6 million, or 60 cents a share, from $390.7 million, or $1.14 a share, in the year-earlier period. The results matched analyst forecasts, according to Reuters Estimates, and were in line with the company's profit warning on Jan. 10.
Excluding a 25 cents a share loss related to GreenPoint Mortgage, which was shut down, income from continuing operations fell to $321.6 million, or 85 cents, from $402.6 million, or $1.17, a year earlier.
Analyst Chris Brendler of Stifel Nicolaus said the results, and Capital One's more cautious outlook, will prompt him to reduce his estimates for 2008.
"They guided us to card losses higher than I was looking for. Seems the stresses I had modeled for were not enough. Things will continue to get worse," Brendler said.
Total managed loans held for investment rose 4.6 percent to $151.4 billion during the quarter, driven by U.S. car and auto lending. Total revenue, on a managed loans basis, rose 5.7 percent in the fourth quarter thanks to wider margins and seasonal loan growth in U.S. cards.
The quarterly provision for loan losses rose to $1.9 billion, covering $1.3 billion in write offs and an increase to reserves of $650 million.
"As the economy has weakened, we have selectively pulled back loan growth and maintained appropriately conservative underwriting standards," said Capital One CEO Richard Fairbank in a statement. (Reporting by Joseph A. Giannone; Editing by Andre Grenon)
That's it -- buyers have been defeated
Asian stocks swept up in global selloff as US recession fears mount UPDATE2
January 22, 2008: 01:39 AM EST
SINGAPORE, Jan. 22, 2008 (Thomson Financial delivered by Newstex) -- Asian stocks tumbled for a second straight session Tuesday, swept up in the global selloff sparked by worry that the US is headed for a recession that will dent export markets across the world.
With the US closed Monday for the Martin Luther King holiday, Asian markets took their cue from Europe and Latin America -- benchmarks in France, Germany and Brazil plunged about 7 percent overnight, their worst declines since just after the terror attacks of Sept 11, 2001.
'There is a growing fear out there that the slowdown in the US is now spreading to other parts of the world,' said Howard Gorges, vice chairman at South China Securities. 'Sentiment on the global economy and stock markets has suddenly become panicky.'
The Hang Seng plunged 8 percent to 21,904.
'That's it -- buyers have been defeated. They have finally run out of money and brokers are now making margin calls,' said Andrew Clarke, trader with SG Securities.
The S&P/ASX 200 was down 7.1 percent at 5,186.8 and the All Ordinaries lost 7.3 percent to 5,222, their worst performance since October 1997.
The Australian market has fallen for twelve straight sessions.
'It's hard to describe it as anything else but complete carnage,' said Justin Gallagher, head of sales trading at ABN Amro. (NYSE:ABN)
The Nikkei was last down 4.9 percent at 12,672, trading below 13,000 for the first time since October 2005.
The South Korean Kospi was down 4.5 percent at 1,608.56, the Shanghai Composite lost 5.5 percent to 4,644 and the Taiwanese Taiex was down 6.5 percent to 7,581.96.
The Philippines Composite was down 5.5 percent at 2,978 and the Singapore Straits Times lost 4.8 percent to 2,776.37, a level last seen in December 2006.
The Jakarta Composite fell 9.1 percent at 2,259.65.
'If, during the bull market last year, almost all stocks were worth buying, now everything is a 'sell',' said Cece Ridwanulloh, a fund manager at Ekokapital Sekuritas in Jakarta.
Global markets slumped Monday as investors concluded that the 145 billion-dollar stimulus package unveiled by President Bush on Monday comes too late to stop the world's biggest economy from sliding into recession.
Investors are increasingly nervous about the financial sector following massive writedowns by the big US investment banks in the fourth quarter.
'Unless the US government decides to inject public funds into resolving the subprime loan issue, fears about the credit crunch may not go away,' said Osamu Tamada, a Mizuho Investors Securities strategist.
US poised for losses
The US market is expected to fall hard when it resumes trade later today. Futures on the Dow Jones Industrial Average were last quoted down 516 points, while S&P futures were down 66 points, signalling heavy selling at the open.
Investors are not just nervous about the likelihood of a US recession. They are also worried that banks around the world are facing another round of writedowns on securities related to the US subprime sector.
On Monday, German state-owned bank WestLB said it expects a pretax loss of about 1 billion euros for 2007, mostly due to 1 billion euros in subprime-related writedowns.
Other German banks, including SachsenLB and Landesbank Baden-Wuerttemberg, have had to make painful adjustments because of their exposure to the subprime meltdown.
Elsewhere in Europe, UBS (NYSE:UBS) , Barclays (NYSE:BCS) and Royal Bank of Scotland have also recorded billions of dollars in writedowns.
Speculation is growing that some of France's big banks are poised to announce writedowns.
Societe Generale shares tumbled Monday on talk that it has bigger exposure to the troubled sector than previously understood.
SocGen shares fell 8 percent, extending an 8.6 percent loss from Friday, while BNP Paribas (OOTC:BPRBF) lost 9.6 percent.
Even more ominous is the precarious outlook for the big US bond insurers after Fitch downgraded Ambac last week after it scrapped a plan to raise capital.
Analysts are expecting other ratings agencies to follow suit, a move which would mean the bonds guaranteed by Ambac will also be downgraded -- forcing the holders of those bonds to write down their value.
The seven Triple-A-rated bond insurers back about 2.4 trillion dollars of debt, 'so it's easy to see the scale of the problem we all face if this house of cards is allowed to collapse,' said analysts at Deutsche Bank. (NYSE:DB)
'The risks are so serious that one has to believe that negotiations to avoid it are currently going on behind closed doors,' they said in emailed comments.
Fear factor
'The market is being driven by fear right now and the current fear is of a major insolvency in the US,' said Andrew Pease, an investment strategist at Russell Investment Group in Sydney.
'It will be interesting how the US market opens up tonight but what's more important is how it finishes - a lot now depends on the Fed (US Federal Reserve) because that's the one organisation that can break the current catalyst for change.'
The Federal Open Market Committee meets on Jan 30 with some market commentators expecting it to decide on a federal funds target rate cut of as much as 75 percentage points.
Pease said markets panic at times even though market fundamentals remain sound with forward price earnings multiples very low, even taking into account the possibility of a 20 percent downgrade in current estimates.
'Our advice to our investors is just to sit tight and focus on longer-term fundamentals and don't panic,' he said.
'We know that markets move through waves of fear and greed every now and then and right now there's as much fear as there's ever been.'
Asian stock markets have fallen hard in 2008 so far.
The Nikkei has lost 17.5 percent, extending the 11 percent decline suffered in 2007. The Indian Sensex is down 22 percent, the Philippines down 18 percent and the Kospi off 16 percent.
Even the Shanghai Composite, the market darling for the last two years, is down 12 percent so far.
Financials battered
Against this background, financial stocks slumped across Asia. Bank of China, which has the biggest subprime exposure among Chinese lenders, lost 8.6 percent to 3.08 Hong Kong dollars.
China's biggest bank Industrial and Commercial Bank of China (OOTC:IDCBF) fell 11.1 percent to 4.32 dollars.
HSBC Holdings shed 6.3 percent at 106.40 dollars.
Ping An Insurance Group extended its fall, down 11.8 percent to 60 dollars, as investors feared its plan to sell new shares and bonds worth about 160 billion yuan may dilute earnings.
In Australia, ANZ Bank lost 3.4 percent to 25.33 Australian dollars and Commonwealth Bank lost 3.3 percent to 49.13. National Australia Bank (OOTC:NABZY) fell 4.9 percent to 33.47.
In Tokyo, Mizuho Financial Group (NYSE:MFG) was down 5.4 percent at 439,000 yen, Mitsubishi UFJ Financial down 2.4 percent at 893, and Sumitomo Mitsui Finanical Group down 4.1 percent at 728,000. Japan's biggest stock broker Nomura Holdings (NYSE:NMR) was down 3.9 percent at 1,415.
Exporters were hurt by the strong yen. Sony (NYSE:SNE) declined 5.1 percent to 5,210, printer maker Canon shed 4.3 percent at 4,250, construction machinery maker Komatsu slipped 6.9 percent to 2,235 and Toyota Motor (NYSE:TM) was down 290 yen or 5.5 percent at 4,970.
ciara.linnane@thomson.com
Ambac posts $3.3 bln loss
Reuters Tuesday January 22 2008
By Dan Wilchins
NEW YORK, Jan 22 (Reuters) - Bond insurer Ambac Financial Group Inc on Tuesday reported a quarterly loss of $3.3 billion after recording massive credit derivative write-downs and setting aside more money for credit losses.
The $3.3 billion loss comes as the company faces serious questions about its future profitability. Ambac, the second-largest bond insurer in the world, lost a crucial top credit rating from Fitch for its main insurance unit on Friday. The company also scrapped plans to raise $1 billion of capital, citing market conditions.
More ratings cuts may be on the horizon for Ambac's main units. Moody's Investors Service and Standard & Poor's are also considering cutting Ambac Assurance Corp's top debt ratings.
The bond insurer's difficulties have come after Ambac used credit derivatives to guarantee a series of portfolios of asset-backed securities. Those securities were linked to subprime mortgages, and have weakened dramatically in the widening credit crisis.
Ambac said in its earnings statement on Tuesday that it hopes to regain its top rating from Fitch, and is looking at strategic alternatives from "a number of potential parties."
Ambac wrote down $5.2 billion of credit derivatives, and set aside $208.5 million for losses.
On a per-share basis, Ambac's fourth-quarter loss was $31.85.
In the year ago quarter it earned $202.7 million, or $1.88 a share. (Reporting by Dan Wilchins and Christian Plumb; editing by John Wallace and Dave Zimmerman)
http://www.guardian.co.uk/feedarticle?id=7245836
Merrill reports $10 billion loss
Nation's largest brokerage also takes $14.6 billion in writedowns on subprime mortgages and hedges gone bad.
CNNMoney.com writer
January 17 2008: 8:26 AM EST
Merrill Lynch's woes continued Thursday as the company reported an operating loss of more than $10 billion dollars.
The firm also took a writedown of more than $11 billion on its mortgage-related securities.
NEW YORK (CNNMoney.com) -- Merrill Lynch & Co. reported a quarterly operating loss of more than $10 billion Thursday that was much worse than expected, while it announced an $11.5 billion writedown related to the subprime crisis.
Merrill (MER, Fortune 500) shares lost more than 4 percent in pre-market trading on the news.
For the quarter, Merrill posted a loss from continuing operations of $10.3 billion, or $12.57 a share.
On a net basis, the company reported a loss of $9.91 billion, or $12.01 a share.
In the year-earlier period, Merrill reported a net profit of $2.3 billion, or $2.41 a share.
The results were far worse than anticipated. Merrill was expected to report a loss of $4.57 a share on revenue of $702.1 million, according to analysts polled by earnings tracker Thomson Financial.
Merrill, the nation's largest brokerage, also said it would writedown $11.5 billion on its collateralized debt obligations and subprime residential mortgages. The company also reported a $3.1 billion writedown on hedges with financial guarantors.
Prior to Merrill's announcement, there had been intense speculation that the company could write down as much as $15 billion during the quarter.
For the year, Merrill recorded an operating loss of $8.05 billion or $10.73 a share.
John Thain, the firm's recently-installed chairman and chief executive, called the annual results "unacceptable." But said he was encouraged that a number of the company's divisions delivered impressive results.
"As I look ahead to 2008, the firm is intensely focused on continuing this momentum and delivering growth and increased profitability for our shareholders and employees," Thain said in a prepared statement.
Thursday's results mark the first quarterly results since Thain arrived at the firm in December, after the departure of Stanley O'Neal, who stepped down amid the firm's $2.3 billion loss and $7.9 billion writedown in the third quarter.
Since Thain's arrival, he has taken a number of steps to shore up the company's capital.
Earlier this week, Merrill announced it had raised $6.6 billion in capital from outside investors, including the Kuwait Investment Authority, Mizuho Corporate Bank and and T. Rowe Price Associates.
The multi-billion dollar cash injection came on the heels of the $6.2 billion investment Merrill received last month from Singapore's Temasek Holdings and Davis Selected Advisors.
Merrill's results cap a particularly busy week for the financial services sector. Earlier this week, Citigroup (C, Fortune 500) recorded a $9.8 billion loss and took an $18.1 billion writedown on its subprime positions. Both JPMorgan Chase (JPM, Fortune 500) and Wells Fargo (WFC, Fortune 500) fared markedly better even though profit fell by more than a third each.
Seattle-based Washington Mutual (WM, Fortune 500) is due to report its fourth-quarter results after the closing bell Thursday.
http://money.cnn.com/2008/01/17/news/companies/merrill_earnings/?postversion=2008011708
Can WaMu Go It Alone?
Wall Street is speculating that the bank will go the way of Countrywide Financial and be acquired by a larger player, perhaps JPMorgan Chase
January 17, 2008, 12:01AM EST
businessweek.com
by Christopher Palmeri and Mara Der Hovanesian
Washington Mutual's (WM) long-running TV ad campaign features a smiling, young banker poking fun at his stuffy, suit-wearing rivals. But despite the hip image, Washington Mutual is looking a lot more like other big players in financial services these days, posting huge loan losses, scrambling for fresh capital, and answering to investigators in several states.
The pressing issue for WaMu is whether it will remain independent. With Bank of America (BAC) scooping up troubled mortgage lender Countrywide Financial (CFC) for $4.1 billion, Wall Street speculation is now focused on WaMu, whose shares have fallen nearly as far as Countrywide, from 45 a year ago to 13 on Jan. 16. Last week, CNBC (GE) reported that WaMu had held "very preliminary" merger talks with JPMorgan Chase (JPM). Both firms declined to comment.
A buyout would be an astonishing reversal of fortune for WaMu's hard-charging chief, Kerry Killinger. After rising to the top job in 1990, Killinger built the small Seattle thrift into a $330 billion-in-assets juggernaut, with a string of more than 30 acquisitions, including Home Savings Mortgage in California and Dime Bancorp (DIMEZ) in New York. With those successes, Killinger became a guru for new management practices in banking. He overhauled the typical bank branch, adding coffee bars, play areas for kids, and tellers in khaki pants, while pitching customer-friendly products such as free checking accounts.
WaMu's Big Exposure in California and Florida
Killinger, who earned spare cash rehabbing homes while attending graduate school at the University of Iowa, also strived to be a top player in mortgages. He acquired subprime lender Long Beach Mortgage in 1999 and made many of the aggressive loans that have now come back to haunt the industry.
On Jan. 17, WaMu has indicated it will post loan loss reserves of $1.6 billion for the fourth quarter, four times the amount of a year prior. Nonperforming loans were 1.65% of WaMu's assets in last year's third quarter, twice the level in 2006. That compares with 0.88% of assets at Wells Fargo (WFC), 0.63% at Wachovia (WB), and 0.43% at Bank of America—all of which have focused less on home lending.
Some 70% of WaMu's loans are in California and Florida, two states with sinking property values and an abundance of risky loans. WaMu still has about $20 billion in subprime loans, $5.8 billion of which could reset at higher rates over the next three years.
Dealing with Legal Hassles
With the bank's finances weakening, Killinger moved into crisis mode. In December he announced a major restructuring of the mortgage operation, getting out of subprime loans entirely, closing half of WaMu's 336 loan centers, and laying off 2,600 people, about 22% of the mortgage staff. He slashed the dividend and raised $2.9 billion in a preferred stock offering.
The nation's second-largest mortgage lender in 2003, WaMu dropped to sixth place last year. "They've really just given up in terms of being a top lender," says Guy Cecala, publisher of Inside Mortgage Finance, an industry newsletter.
With WaMu's default rates climbing, government investigators are taking a closer look. In November a lawsuit by New York Attorney General Andrew Cuomo accused WaMu of colluding with First American (FAF). The AG contends First American inflated the value of mortgage appraisals so WaMu could increase loan values. First American said the allegations in the complaint had "no foundation in fact or law." After the lawsuit, WaMu severed its relationship with the firm, saying it was "surprised and disappointed by the allegations in the complaint."
It's not WaMu's only legal headache. In January it was one of 20 lenders cited in a lawsuit by the city of Cleveland. The suit says lenders created a "public nuisance" by making loans to borrowers who couldn't afford them. Killinger has now focused his strategy on WaMu's 2,200 retail branches. WaMu is selling more credit cards, checking accounts, and services for small businesses. In short, if it survives, WaMu may look a lot more like those stodgy bankers in the suits.
http://www.businessweek.com/bwdaily/dnflash/content/jan2008/db20080116_577720.htm?campaign_id=relatedtest_BW
M&T Bank 4th-qtr profit sinks 70 pctReuters Monday January 14 2008
By Jonathan Stempel
NEW YORK, Jan 14 (Reuters) - M&T Bank Corp, the first large U.S. bank to report fourth-quarter results, said on Monday that profit tumbled 70 percent, hurt by debt write-downs and turbulence in residential real estate markets.
Shares of M&T fell to their lowest level in more than five years.
The mid-Atlantic U.S. bank, which counts Warren Buffett's Berkshire Hathaway Inc among its largest investors, said net income fell to $64.9 million, or 60 cents per share, from $213.3 million, or $1.88, a year earlier.
Operating profit totaled $83.7 million, or 77 cents per share, the Buffalo, New York-based bank said. According to Reuters Estimates, profit excluding items was $1.50 per share, 35 cents below the average analyst forecast.
"Turmoil in the residential real estate market" hurt results, Chief Financial Officer Rene Jones said on a conference call. "It is difficult to predict the depth and breadth of the current credit cycle."
Shares of M&T fell $2.14, or 2.9 percent, to $71.61 in morning trading on the New York Stock Exchange, and touched their lowest level since October 2002.
M&T Bank said it has $64.9 billion in assets and more than 650 branches in seven mid-Atlantic states and Washington, D.C.
It was one of the few large U.S. banks that had not cautioned investors in advance how credit and mortgage market turmoil would hurt fourth-quarter results. The bank's results may foreshadow those at rivals, most of which are expected to report lower earnings by the middle of next week.
M&T reduced profit by $78 million, or 71 cents per share, to write down collateralized debt obligations, which are complex securities composed of various forms of debt, including mortgages. Other banks have also tens of billions of dollars of CDO write-downs, and analysts expect more.
Results were also reduced by 27 cents per share for credit losses, as the amount set aside for credit losses more than tripled to $101 million.
They also reflected charges of 13 cents per share for M&T's exposure to antitrust litigation involving credit card network Visa Inc and American Express Co, and 8 cents per share for acquisitions.
Berkshire owned a roughly 6.3 percent stake in M&T Bank as of Sept 30, according to Thomson ShareWatch. Only Allied Irish Banks Plc and M&T Bank Chief Executive Robert Wilmers held larger stakes, Thomson ShareWatch said.
Lending income rose 1 percent to $470.2 million, though net interest margin fell to 3.45 percent from 3.73 percent a year earlier, and 3.65 percent in the third quarter.
Fee and other income fell 37 percent to $160.5 million, but would have risen 12 percent absent the CDO write-down. Expenses rose 16 percent to $445.5 million.
Through Friday, M&T shares had fallen 38 percent in the last year, compared with a 28 percent drop in the Philadelphia KBW Bank Index .BKX>.
http://www.guardian.co.uk/feedarticle?id=7224192
Capital One slashes profit outlook
Credit card issuer says it won't meet its 2007 forecast because of a rise in loan delinquencies and weakening economy.
CNNMoney.com January 10 2008: 9:29 AM EST
McLEAN, Va. (AP) -- Capital One Financial Corp. said Thursday that its 2007 earnings will fall short of its previous expectations because of increased loan delinquencies and additional legal reserves in the fourth quarter.
The news from the McLean, Va.-based credit card company is the latest sign of turmoil in the nation's credit markets, and confirmed fears by some analysts that the collapse of the subprime mortgage market has hurt other credit classes.
It also renewed jitters that slowing economic growth may hurt upcoming corporate earnings reports more than previously thought.
It also drove Capital One (COF, Fortune 500) shares down almost 8 percent in premarket trading, where they fell $3.45 to $39.90, which would be below their previous 52-week low of $41.23.
Capital One, a credit card issuer that continues to expand into retail banking, issued a statement just after midnight saying it expects to report fourth-quarter profit of 60 cents per share and full-year earnings of about $3.97 per share, below its prior forecast of "about $5 per share."
The company said it is taking a $1.9 billion provision for loan losses in the fourth quarter, including about $1.3 billion in charge-offs. It is also adding about $650 million to its charge-off allowance because of recent delinquencies in its consumer lending businesses and "continued deterioration" of approximately $700 million of home equity lines of credit originated by its GreenPoint Mortgage unit, which shut down in August.
The company said it now expects charge-offs of about $5.9 billion in 2008 amid expectations that the U.S. economy will be weaker. That's up from the $4.9 billion to $5.5 billion Capital One predicted in November.
The warning comes on the heels of Countrywide Financial Corp.'s (CFC, Fortune 500) disclosure Wednesday that the percentage of borrowers who missed payments on home loans last month rose. The nation's biggest mortgage lender said some 6.96 percent of the loans in its servicing portfolio were delinquent last month, up from 5.02 percent in December 2006.
In its announcement Thursday, Capital One said it had initiated a $60 million legal reserve for possible damages in pending litigation involving the Visa credit card network, of which Capital One is a member. The company previously said it was taking a fourth-quarter pre-tax charge of about $80 million for liabilities in connection with the antitrust settlement that Visa reached in November in American Express Co. (AXP, Fortune 500)
Capital One is scheduled to report fourth-quarter results Jan. 23
http://money.cnn.com/2008/01/10/news/companies/capital_one.ap/index.htm?postversion=2008011009
Merrill may write down $15 billion
Broker expected to take staggering loss on bad mortgage bets when it posts results next week, paper reports.
CNNMoney.com January 11 2008: 8:36 AM EST
NEW YORK (CNNMoney.com) -- Merrill Lynch is expected to report a bigger-than-expected $15 billion writedown when it reports quarterly results next week, according to a report in The New York Times.
The hit is bigger than the $12 billion writedown many Wall Street analysts are expecting, the report said.
Merrill is expected to post a steep fourth-quarter loss when it posts results next Thursday, due largely to bad bets made on mortgage investments.
As a result of the deep loss, the nation's largest broker is looking to raise additional capital from an outside investor, the newspaper said, citing people who had been briefed on the matter.
Sources told the Times that the company was in talks with overseas investors in Asia and the Middle East as well as American private equity firms in an effort to raise $4 billion.
This would not be the first time Merrill looked to outside investors for help. In December the company announced it had received at least $4.4 billion from Singapore's state-run Temasek Holdings.
Merrill Lynch (MER) shares finished 3 percent higher in Thursday trade on the New York Stock Exchange
http://money.cnn.com/2008/01/11/news/companies/merrill_writedown/index.htm
Countrywide discloses rising delinquencies and foreclosures.
Its stock falls to $5.12 as investors continue to flee.
By E. Scott Reckard, Victoria Kim and Tom Petruno, Los Angeles Times Staff Writers
January 10, 2008
Countrywide Financial Corp.'s future was called into question again Wednesday after it reported another rise in loan delinquencies and foreclosures, fueling fresh speculation that the company was headed toward bankruptcy.
The nation's biggest mortgage lender was "withering" and "might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks," said Egan-Jones Ratings Co., an advisor to pension funds and other big investors.
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Weiss Research, which rates the condition of lenders, said the Calabasas company "is on a collision course with bankruptcy," adding that it "exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year."
Countrywide did not respond to a request for comment. As bankruptcy rumors swept the financial markets Tuesday, it issued a general denial that it was near collapse.
Yet the stock fell as low as $4.43 on Wednesday, before rebounding to close down 35 cents at $5.12, an 11-year low. The shares had lost 28% on Tuesday.
Weiss said Countrywide borrowers had little to fear if the company should fail, noting that its loan servicing business was valuable and would continue on even in bankruptcy. But it said anyone negotiating a new loan should be cautious because "that process could easily be disrupted."
Speculation about Countrywide's future echoes concerns first raised last summer, when funding dried up from the Wall Street firms that had provided money for the company to make loans. Those same firms also had been big buyers of Countrywide's mortgages as fodder for debt securities sold to investors.
Countrywide squeaked through that crisis by drawing down a huge emergency bank credit line, getting a $2-billion investment from Bank of America Corp. and accelerating a plan to beef up deposits at its Countrywide Bank subsidiary, enabling it to fund all its own loans.
That tactic has generated results. The bank's retail deposits increased $7.7 billion in the fourth quarter to $33 billion. But it has been achieved at high cost.
Countrywide is offering a 5.45% annualized yield on three-month, $10,000 certificates of deposit, the highest in the U.S. and far above the national average yield of 3%, according to Informa Research Services.
On Wednesday, some customers at Countrywide Bank's Glendale branch said they were concerned and closely following the news, trying to determine whether the favorable terms offered were worth the risk.
Fred Campi of Silver Lake decided it wasn't. He was at the bank to withdraw four certificates of deposit, cashing out a total of $60,000.
Countrywide's individual accounts are federally insured for up to $100,000. But Campi, an administrative aide at Los Angeles City College, said he didn't want to risk losing access to his funds, even temporarily.
"I don't know if it's worth the crapshoot," Campi said. "If six months from now they're back on their feet, I'll be back."
Another customer, retired lawyer Rico Fabian, said he was sticking by the lender for now. But he asked the bank's associates detailed questions about whether his money would be safe as he made a deposit.
"I'm watching the news carefully. If I find a better investment option, I'll move my money, but they're offering good fixed annuities," the 75-year-old Los Angeles man said.
Pierre Habis, head of retail deposits at Countrywide Bank, said it had continued to attract new deposits this week despite the latest bankruptcy rumors.
The cash inflows have so greatly exceeded expectations, he said, that the bank planned to begin trimming its CD rates in the next week.
If Countrywide lowers CD rates, that could help damp concerns that the company is facing a funding crisis.
Countrywide's stock slump on Wednesday, meanwhile, appeared to be triggered by the release of its December lending summary.
http://www.latimes.com/business/la-fi-countrywide10jan10,1,919989.story?coll=la-headlines-business&ctrack=1&cset=true
MBIA unveils plans to protect ratings
January 09, 2008: 03:22 PM EST
Jan. 9, 2008 (Thomson Financial delivered by Newstex) --
NEW YORK (AP) - MBIA Inc. plans to book more than $4 billion in losses, slash its dividend and sell $1 billion in bonds as part of a strategy unveiled Wednesday to shelter the bond insurer's crucial financial strength rating.
But analysts said investors doubted all of the bad news was out, and the shares fell sharply.
The Armonk, N.Y.-based insurer, under pressure from the ratings agencies to prove it has enough cash to pay potential insurance claims, will cut its quarterly dividend to 13 cents from 34 cents, saving an estimated $80 million a year. MBIA writes insurance policies that promise to reimburse bondholders when borrowers default.
The company will also sell $1 billion in bonds, and buy reinsurance to free up $50 million to $150 million of the company's cash.
Combined with a $1 billion investment from Warburg Pincus, MBIA said it believes these moves will mollify the major ratings agencies, allowing the company to maintain its 'AAA' financial strength ratings.
MBIA expects to reserve $737 million to pay claims for the fourth quarter, mainly because of anticipated losses on insured bonds backed by home equity lines of credit.
The company also said the market value of its portfolio of 'credit derivatives' -- or contracts protecting debt -- plunged $3.3 billion in the fourth quarter.
The dent in MBIA's credit derivatives portfolio is much higher than expected, Banc of America Securities analyst Tamara K. Kravec wrote in a client note. MBIA said the $3.3 billion in losses are only on paper; the company expects something like $200 million in actual losses on the portfolio.
Fitch Ratings, which on Dec. 20 gave MBIA six weeks to raise $1 billion or face a downgrade, said the planned $1 billion bond sale will be enough to protect the company's 'AAA' rating. The bonds are subordinated to all the company's other debt -- meaning if it becomes insolvent the bonds would not be repaid until the company paid off all other debt and claims.
Top-caliber ratings from the ratings agencies, which judge how likely MBIA is to cover all its insurance claims, are critical for a bond insurer. A downgrade from any of the major agencies would make it difficult for the company to win new business.
William Blair & Co. analyst Mark Lane said that while MBIA appears likely to sidestep a downgrade for now, people are still worried about what could be around the next bend.
'There's really no bottom in sight,' he said. 'People are thinking, 'Is another round going to happen in the next six to nine months?' The answer to that is, 'Who knows?''
Bond insurance has been one of the hardest-hit industries during the subprime mortgage crisis. Shares of MBIA, Ambac Financial Group Inc. (NYSE:AKT) (NYSE:AKF) (NYSE:ABK) , Security Capital Assurance Ltd. (NYSE:SCA) and ACA Capital Holdings Inc. (OOTC:ACAH) have all lost at least 75 percent of their value in the past year.
Seeking to capitalize on the disruption in the industry, Warren Buffett's Berkshire Hathaway Inc. (OOTC:HWYI) (NYSE:BRK A) established a bond insurer late last year to insure municipal bonds. The insurer at first will be capitalized with $105 million, which according to a Friedman Billings Ramsey report will enable the company to write $16 billion in business.
By comparison, Ambac and MBIA together insure $700 billion in municipal bonds, according to Friedman Billings Ramsey.
MBIA also said Wednesday that federal regulators have been probing how thoroughly the insurer disclosed the risks it faced.
In a filing with the Securities and Exchange Commission, MBIA said it furnished the SEC and the New York Insurance Department with information tied to the Warburg Pincus investment, as well as a disclosure to investors dated Dec. 10.
A deputy superintendent for the New York Insurance Department said it wanted to make sure the Warburg Pincus investment was still intact. The department is not investigating MBIA, he said. A spokesman for the SEC said the agency had no comment.
MBIA shares fell 5.9 percent to $13.16. At one point on the day the stock reached $11.11, its lowest trade since 1991.
http://money.cnn.com/news/newsfeeds/articles/newstex/AFX-0013-22142847.htm
Banks start 2008 under pressure
National City slashes dividend, sets layoffs; Zions, Horizon unveil charges
By Greg Morcroft & Alistair Barr, MarketWatch
Last update: 12:41 p.m. EST Jan. 2, 2008
NEW YORK (MarketWatch) -- Banks kicked off 2008 on a downbeat note, as a handful of lenders disclosed new write-downs, provisions and plans to shore up weakened capital bases.
"The fourth quarter will likely shape up to be one of the worst in recent memory," Mark Fitzgibbon, banking analyst at Sandler O'Neill & Partners, wrote in a note to clients on Wednesday.
National City Corp. (NCC 14.50, -0.85, -5.5%) garnered the most attention as its board voted to slash its quarterly dividend in half. The company also said it's laid off 900 workers and will bolster capital as it becomes the latest to detail its exposure to the subprime-mortgage debacle.
'Bank managers will make this the mother of all kitchen-sink quarters.'
— Mark Fitzgibbon, Sandler O'Neill
Meanwhile, Zions Bancorp (ZION 42.40, -1.98, -4.5%) announced $55 million of new write-downs and charges, while Horizon Bancorp (HBNC 24.30, +0.29, +1.2%) set aside an extra $1.4 million to cover potential loan and lease losses.
Banks and thrifts will likely report fourth-quarter earnings per share that fall 1.2% below the same period in 2006, while the industry's non-performing assets will likely rise by more than 60%, according to Fitzgibbon estimates. And forecasts for banks' 2008 earnings are too high, he warned.
With U.S. stocks trading broadly lower to kick off 2008, National City's shares fell 5.8% to $15.51 during midday trading. Horizon declined 4.7% and Zions dropped 3.4%.
Cleveland-based National City declared a dividend of 21 cents a share, payable Feb. 1 to stockholders of record as of Jan. 14. The payout previously was 41 cents a share.
"We fully recognize that the dividend is an important element of return for shareholders, and we did not take the decision to reduce it lightly," said Chief Executive Peter Raskind said in a written statement. "However, our board and management strongly believe that this action is necessary to help meet the challenges ahead and to continue as a strong competitor in the financial-services industry."
'It is clear that origination volumes will be lower.'
— Peter Raskind, National City
To raise capital, the company said that in the first quarter it will accelerate previously disclosed plans to increase capital ratios to the high end of their respective target ranges: 5% to 6% for tangible common equity and 7% to 8% Tier 1 risk-based capital. It said it has hired Goldman Sachs to provide advice on these moves.
"We remain committed to the mortgage business, as the home mortgage is an essential consumer product," Raskind said. "However, it is clear that origination volumes will be lower going forward, and we are configuring our mortgage business to operate profitably in that environment."
National City said it anticipates mortgage originations in 2008 of approximately $15 billion to $20 billion.
The measures are just the latest at the bank, which already cut 800 positions and set cost saving goals last year. Companies in the mortgage and housing sectors have cut more than 120,000 jobs this year.
Problems at National City became clear in September, when executives unveiled an unexpected $200 million charge at its mortgage operations.
In October, National City said third-quarter profit fell 80%, largely due to a big loss at its mortgage-banking business. The firm reported a loss of $152 million in mortgage banking.
The bank also has said that it has assembled a full-time team to manage loan portfolios left over from the mortgage operation and that it "has significantly built reserves for expected losses on these portfolios."
Because of rising loan defaults, banks are forced to write down the value of portfolios holding loans. Banks will also need to increase cash reserves to cover any losses in those portfolios from charge-offs.
"Bank managers will make this the mother of all kitchen-sink quarters," Sandler O'Neill's Fitzgibbon said on Wednesday.
"They will take as many hits to earnings as possible, with an eye toward lowering the bar for 2008 and clearing the decks for smoother sailing," he added. "We will see a litany of items that will hit earnings in the fourth quarter, including charges related to shutting down lines of business, write-downs or charges related to the sale of certain assets, unusually high loan-loss provisions, severance costs, securities portfolio restructuring charges, etc."
Back on balance sheet
Late Monday, Zions said it will take a pre-tax write-down of $33 million related to Lockhart Funding, an off-balance sheet investment vehicle known as a commercial paper conduit.
These conduits borrow money short term in asset-backed commercial paper markets and invest the cash in longer-term assets, such as mortgage-backed securities and collateralized debt obligations, or CDOs.
Salt Lake City-based Zions said it bought $840 million of securities from Lockhart because the conduit couldn't get enough new financing in commercial paper.
The securities are guaranteed by U.S. government agencies or are AAA rated, the bank noted. They were bought by Zions below book value, leading to the $33 million write-down.
Zions also unveiled another $7 million write-down related to a $25 million CDO it bought from Lockhart.
A $15 million pre-tax expense will also be recorded in the fourth quarter to reflect the fair-market value of another troubled CDO, Zions said.
Auto loans go bad
Michigan City, Ind.-based Horizon said late Monday that the $1.4 million of extra provisions cover deterioration in its portfolios of wholesale mortgages and auto loans.
"In recent months, Horizon has experienced an increasing trend in repossessions and voluntary surrenders of vehicles, which has caused an increase in losses," the lender explained.
Total provision expenses for the fourth quarter will be nearly $1.8 million, up from $550,000 in the third quarter, the bank added.
Despite the additional charge, Horizon said earnings for 2007 will exceed those for 2006.
http://www.marketwatch.com/News/Story/inauspicious-start-2008-national-city/story.aspx?guid=%7B3C297560%2D2997%2D4994%2D8B60%2D1DDEBC0E8F72%7D
Credit Card Payments Missed at Alarming Rate
Unpaid Credit Cards Bedevil Americans
By RACHEL KONRAD and BOB PORTERFIELD
Posted: 2007-12-23 17:25:03
SAN FRANCISCO (Dec. 23) - Americans are falling behind on their credit card payments at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come.
An Associated Press analysis of financial data from the country's largest card issuers also found that the greatest rise was among accounts more than 90 days in arrears.
Experts say these signs of the deterioration of finances of many households are partly a byproduct of the subprime mortgage crisis and could spell more trouble ahead for an already sputtering economy.
"Debt eventually leaks into other areas, whether it starts with the mortgage and goes to the credit card or vice versa," said Cliff Tan, a visiting scholar at Stanford University and an expert on credit risk. "We're starting to see leaks now."
The value of credit card accounts at least 30 days late jumped 26 percent to $17.3 billion in October from a year earlier at 17 large credit card trusts examined by the AP. That represented more than 4 percent of the total outstanding principal balances owed to the trusts on credit cards that were issued by banks such as Bank of America and Capital One and for retailers like Home Depot and Wal-Mart.
At the same time, defaults - when lenders essentially give up hope of ever being repaid and write off the debt - rose 18 percent to almost $961 million in October, according to filings made by the trusts with the Securities and Exchange Commission.
Serious delinquencies also are up sharply: Some of the nation's biggest lenders - including Advanta (ADVNB), GE Money Bank and HSBC - reported increases of 50 percent or more in the value of accounts that were at least 90 days delinquent when compared with the same period a year ago.
The AP analyzed data representing about 325 million individual accounts held in trusts that were created by credit card issuers in order to sell the debt to investors - similar to how many banks packaged and sold subprime mortgage loans. Together, they represent about 45 percent of the $920 billion the Federal Reserve counts as credit card debt owed by Americans.
Until recently, credit card default rates had been running close to record lows, providing one of the few profit growth areas for the nation's banks, which continue to flood Americans' mailboxes with billions of letters monthly offering easy sign-ups for new plastic.
Even after the recent spike in bad loans, the credit card business is still quite lucrative, thanks to interest rates that can run as high as 36 percent, plus late fees and other penalties.
But what is coming into sharper focus from the detailed monthly SEC filings from the trusts is a snapshot of the worrisome state of Americans' ability to juggle growing and expensive credit card debt.
The trend carried into November. As of Friday, all of the trusts that filed reports for the month show increases in both delinquencies and defaults over November 2006, and many show sequential increases from October.
Discover accounts 30 days or more delinquent jumped 25,716 from November 2006 and had increased 6,000 between October and November this year.
Many economists expect delinquencies and defaults to rise further after the holiday shopping season.
Mark Zandi, chief economist and co-founder of Moody's Economy.com Inc., cited mounting mortgage problems that began after this summer's subprime financial shock as one of the culprits, as well as a weakening job market in the Midwest, South and parts of the West, where real-estate markets have been particularly hard hit.
"Credit card quality will continue to erode throughout next year," Zandi said.
Economists also cite America's long-standing attitude that debt - even high-interest credit card debt - is not a big deal.
"The desires of consumers to want, want, want, spend, spend, spend - it's the fabric of our nation," said Howard Dvorkin, founder of Consolidated Credit Counseling Services in Fort Lauderdale, Fla., which has advised more than 5 million people in debt. "But you always have to pay the piper, and that can be a very painful process."
Filing for bankruptcy is no longer a solution for many Americans because of a 2005 change to federal law that made it harder to walk away from debt. Those with above-average incomes are barred from declaring Chapter 7 - where debts can be wiped out entirely - except under special circumstances and must instead file a repayment plan under the more restrictive Chapter 13.
Personal finance coaches say the problem is most grave for individuals who are months delinquent or already in default - like Kenneth McGuinness, a postal clerk from Flushing, N.Y.
His credit card struggles began nine years ago, when he charged his son's college tuition and books. He thought he was being clever: His credit card's 6 percent "teaser" interest rate was lower than the 8.6 percent interest on a college loan.
McGuinness, 61, soon began using Citibank and Chase cards for food, dental work and copays on doctor visits and minor surgeries. Interest rates surged to 30 percent. Now he's $37,000 in debt and plans to file for bankruptcy in February.
"I tried to pay what I could and go after the high-interest accounts first," McGuinness said. "But it just kept getting higher and higher, and with late charges and surcharges I was going backward."
In the wake of the jump in defaults on subprime mortgage loans made to borrowers with poor credit histories, banks have been less willing to allow consumers to consolidate credit card debt into home equity loans or refinanced mortgages. That is leaving some with no option but to miss payments, economists said.
Investors also are backing away from buying securitized credit-card debt, said Moshe Orenbuch, managing director at Credit Suisse. But that probably has more to do with concerns about the overall health of the U.S. economy, he said.
"It's been getting tougher to finance any kind of structured finance - mortgages, automobile loans, credit cards, student loans," said Orenbuch, who specializes in the credit industry.
Capital One Financial Corp. reported that delinquencies and defaults are highest in regions where troubled mortgages are concentrated, including California and Florida.
Among the trusts examined, Bank of America Corp. had the highest delinquency volume, with overdue accounts valued at $5 billion. Bank of America defaults in October were almost 200 percent higher than in October 2006.
A spokesman for Charlotte, N.C.-based Bank of America declined to comment.
Other trusts - including those linked to Capital One (COF), American Express Co., Discover Financial Services Co. (DFS) and those containing "branded" cards from Wal-Mart Stores Inc., Home Depot Inc., Lowe's Companies Inc., Target Corp. and Circuit City Stores Inc. - also reported striking increases in year-over-year delinquency and default rates for October. Most banks and other financial institutions holding credit card debt on their own books also reported double-digit increases in delinquencies.
The one exception in October was JPMorgan Chase & Co.'s (CCF) credit card trust, which reported declines in both delinquencies and defaults. A Chase spokesperson attributed this to its focus on prime borrowers and aggressive account management.
By contrast, Capital One executives told analysts last month that the company projected 2008 write-offs of credit card debt to be at least $4.9 billion. This projection, analysts were told, took into account growing delinquencies and potential effects if the housing market continued its downward slide.
Capital One spokeswoman Julie Rakes said the increase in delinquencies could be due to an accounting change last summer, which shortened the grace period between when statements were issued and the due date.
Capital One also reported that the number of accounts 90 days or more in arrears had increased between October and November. More than 1.2 million of Capital One's 30 million accounts were either delinquent or in default.
Many personal financial coaches <b.expect this trend to accelerate in 2008 - particularly among people who took out untraditional loans whose interest rate has risen, requiring owners to pay mortgages several hundred dollars more than just a year ago.
"You're looking at more and more distress - consumers desperately trying to preserve their credit lines, but there's nowhere else to go," said Robert Manning, director of the Center for Consumer Financial Services at Rochester Institute of Technology. "It's like a game of dominoes."
http://money.aol.com/news/articles/_a/unpaid-credit-cards-bedevil-americans/20071223165009990001?ncid=NWS00010000000001
Merrill May Get Capital Infusion
Friday December 21, 10:17 am ET
Merrill Lynch May Get Capital Infusion From Singapore's Temasek, Report Says; Shares Rise
NEW YORK (AP) -- Merrill Lynch & Co. shares rose Friday on a report that the nation's biggest brokerage is seeking a $5 billion investment from Singapore state-owned investment agency Temasek Holdings.
The investment bank is said to be in advanced talks with Temasek about a capital infusion to help cushion it from credit-market related losses, according to a report in The Wall Street Journal. It would become the latest global bank to turn overseas for cash to bail it out of huge losses related to the subprime mortgage crisis.
Merrill Lynch shares rose $1.19, or 2.2 percent, to $55.69 in morning trading on hope the cash infusion would help cushion any further losses linked to the credit turmoil. Merrill has already taken $7.9 billion of writedowns from bad bets on risky mortgage-backed securities.
A spokeswoman for Merrill Lynch declined to comment. Telephone calls to Temasek went unanswered.
Global banks have written down an estimated $105 billion this year alone from exposure to mortgage-backed securities. And, there have already been a string of deals between sovereign funds -- mostly from Asia and the Middle East -- announced in recent months.
Temasek's board has already given preliminary approval for an investment into Merrill, according to the report, which cited unnamed people familiar with the situation. However, pricing, timing and regulatory issues remain to be negotiated, the report said.
A deal with Temasek may not happen yet, the report said, adding that Merrill may be in discussions with other government investment funds besides Temasek.
Analysts have predicted that Merrill's mortgage writedowns may double with another $8 billion or more in the fourth quarter. Merrill's third-quarter writedowns led to a loss of $2.3 billion.
Any potential deal between Merrill Lynch and Temasek would continue a trend of global banks seeking foreign capital. Morgan Stanley on Wednesday announced a $5 billion investment from China's government-controlled investment vehicle to help replenish its capital.
In October, Bear Stearns Cos. agreed to a $1 billion investment from China's government-controlled Citic Securities Co. Citigroup Inc. received a $7.5 billion capital infusion from the investment arm of the Abu Dhabi government last month.
UBS AG last week announced that the Government of Singapore Investment Corp., the city-state's other state investment fund, is investing $9.75 billion for a 9 percent stake in the Swiss banking giant.
Analysts said Merrill needed the potential investment.
"We suspect (Merrill's) current capital position is adequate from a regulatory standpoint but, similar to (Bear) and (Morgan Stanley), its position is likely not sufficient from an industry competitive standpoint without a deal," Wachovia Capital Markets analyst Douglas Sipkin said in a note to clients.
http://biz.yahoo.com/ap/071221/merrill_lynch_investment.html?.v=5
Sovereign funds have been providing troubled U.S. and European banks with much-needed cash. Over the past month, the Abu Dhabi Investment Authority bought a stake in Citigroup Inc. for $7.5 billion; the Government of Singapore Investment Corp. invested $9.75 billion in UBS AG; and this week China Investment Corp. paid $5 billion for a stake in Morgan Stanley.
Sallie Shares Plunge After CEO Talks
By ALAN ZIBEL 12.19.07, 1:59 PM ET
SLM 23.52 - 5.35
WASHINGTON -
Shares of Sallie Mae plunged to a five-year low Wednesday after the student lender's CEO said a dividend cut may be needed to bolster finances crimped by rising loan defaults and borrowing costs.
In the wake of a failed $25 billion buyout and a reduced profit forecast for 2008, Sallie Chairman and CEO Albert L. Lord tried to calm investors during a conference call. But analysts expressed dissatisfaction with Lord's answers, or lack of them, to their questions.
A group of investors led by private-equity firm J.C. Flowers & Co. reneged on its offer to buy Sallie - and brushed off Sallie's attempt to revive the transaction at a lower price - in part because of a new law that reduces federal subsidies on student loans.
Last week, Sallie, formally known as SLM Corp., slashed its profit forecast by more than 13 percent, blaming the revised subsidy law and the need to hold onto more cash to offset bad student loans.
Shares of Reston, Va.-based Sallie fell $5.63, or 19 percent, to $23.24, far below the $60-per-share offer made in April by the Flowers group.
Despite the company's financial weakness and falling stock price, Lord said Wednesday that the company would consider using shares to buy out smaller players in the student lending industry.
"This is a very challenging time," he said. "The goal here is to get out of deal mode, and into the growth mode."
Lord said the company plans to "look at the dividend in the second half of the year," as it seeks to boost its financial cushion.
Analysts voiced frustration with what they considered to be a lack of details from Lord, especially about the company's ability to package student loans into investments. The market for all kinds of risky debt has plummeted as defaults on home loans, credit-card debt, auto loans and student loans have risen.
"We're trying to figure out what your stock is going to be worth and you've got to give us some guidance," one analyst said during the conference call. "You've got to give some numbers."
Friedman, Billings, Ramsey & Co. analyst Matt Snowling told clients a research note after the call that "Rather than providing the reassurance and details investors were looking for...(Sallie Mae's) management created more uncertainty."
Snowling, who downgraded the company's shares to "market perform" also lowered his 12-month price target for the stock by $12 per share to $26 per share.
Lord acknowledged investors' displeasure at the start of the call.
"I'm quite aware that on the back end of a failed transaction that there are a lot of unhappy people," said Lord, who gained control of the company in a 1995 proxy contest. "(It's) ironic, because it was originally unhappy shareholders who originally put me in this seat in the first place."
Lord, who assumed the chief executive's seat on Friday and said he plans to stay in the position for at least two years, called his sale of more than 1.2 million shares of company stock to meet margin calls "embarrassing and troublesome to me personally" but not a reflection of diminished confidence in the company's long-term future.
He also pledged to improve the company's credit ratings, which were lowered earlier this year on concerns that buyout would lead the company would take on more debt. Standard & Poor's rates the company's debt 'BBB+,' the third-lowest investment-grade rating.
The failed buyout has landed in court, where Sallie is arguing that the investor group should have to pay a $900 million breakup fee. A trial could start late next year in Delaware Chancery Court.
The flagging financial outlook for the company, which lost $344 million in the third quarter, could bolster the investor group's legal argument - namely, that it shouldn't have to pay a fee for abandoning the deal because of significant changes in economic and regulatory conditions affecting Sallie.
A landmark student-loan law that took effect Oct. 1 cut billions of dollars in federal subsidies for student lenders like Sallie. And defaults are mounting on student loans, while credit-market tremors similar to those linked to the mortgage crisis have begun to show up in the $85 billion student-loan market.
Lord promised more details at an investor meeting in New York in mid-January. However, after numerous aggressive questions, Lord said analysts will "be going through a metal detector" before that meeting.
A company spokesman said that remark was intended as a joke.
Steven Davidoff, a law professor at Wayne State University who has followed the Sallie takeover battle closely, said "it's a bit odd for Lord to go on the stand and not have the information that he knows people are going to ask. He might have been better off just staying home."
http://www.forbes.com/feeds/ap/2007/12/19/ap4458496.html
Sallie, formally known as SLM Corp.
Bond Insurers are in a heap of trouble
Monday December 17, 12:44 pm ET
Shares of Bond Insurers Climb After Moody's Affirms Ratings for Ambac, Assured Guaranty
NEW YORK (AP) -- Shares of bond insurers climbed Monday after a major credit agency maintained its ratings on Ambac Financial Group Inc., offering hope that the biggest impediment hampering the stocks could soon be eliminated.
Moody's Investors Service on Friday affirmed Ambac's "AAA" financial strength rating. Moody's also maintained its ratings on Assured Guaranty Ltd. and MBIA Inc., though Moody's put a negative outlook on MBIA.
Stocks in the sector have plummeted in the past few months on the prospect of ratings downgrades as Moody's, Standard & Poor's, and Fitch Ratings consider whether this year's credit crisis will undermine bond insurers' financial strength.
Few sectors are more reliant on financial strength ratings than bond insurers, as the companies underwrite insurance policies promising to repay bond owners when bond issuers default.
As credit quality deteriorates across the country, investors are worried bond insurers will have to foot the bill for missed payments on bonds and other contracts.
At Friday's close, MBIA's stock was down 62 percent and Ambac's stock was down 74 percent for the year.
Friedman Billings Ramsey analyst Steve Stelmach on Monday upgraded Ambac to "Outperform" from "Market Perform," saying it appears the company will manage to maintain enough cash to mollify the credit agencies and keep its rating.
Shares of Ambac Financial jumped $3.41, or 15 percent, to $26.22. The stock is still down 59 percent since the beginning of October.
Shares of MBIA added $1.07, or 3.9 percent, to $28.67. Shares of Assured Guaranty climbed 90 cents, or 3.6 percent, to $25.62. Shares of Security Capital Assurance Ltd. rose 9 cents, or 2.2 percent, to $4.21.
http://biz.yahoo.com/ap/071217/bond_insurers_sector_snap.html?.v=1
S&P Downgrades ACA to Junk Status
Wednesday December 19, 2:06 pm ET
By Stephen Bernard, AP Business Writer
S&P Downgrades ACA Financial to Non-Investment Grade "CCC" Rating From Investment Grade "A"
NEW YORK (AP) -- A major insurer of bonds was downgraded to "junk" status on Wednesday, a move that could potentially cost banks and local governments billions of dollars.
Credit rating agency Standard & Poor's slashed its credit rating for bond insurer ACA Financial Guaranty Corp. to a non-investment grade "CCC" from investment grade "A."
The downgrade of ACA led S&P to cut ratings on nearly 3,000 municipal bonds, which could may spark a municipal borrowing crisis, according to Peter Schiff, chief executive of Euro Pacific Capital.
"Many municipalities get high credit ratings because their bonds are insured," said Schiff. "Higher borrowing costs for cities will force them charge higher property taxes, which will increase the strain on consumers. And some cities may be shut out of the credit markets."
The new strain on civic funding comes at the same time that plummeting home sales and values and rising mortgage defaults threaten to drain local coffers of property taxes. Many cities have been banking on higher property taxes, but now homes are being valued lower and this also reduces funds available to the cities, he said.
The developments also imperil the already troubled market for securities that use mortgages as collateral. It now is growing more likely that mortgage insurers also will be unable to provide financial backing for home loans, making more problems for homeowners as well as the mortgage-backed securities market, Schiff said.
The downgrade of ACA will essentially not allow it to continue insuring bonds, since most people will not buy insurance on bonds from a firm that does not have top-quality ratings.
Downgrades of bond insurers can also lead to losses at the companies who use them. Only minutes after S&P's downgrade of ACA, CIBC World Markets said insurance for $3.5 billion in securities it holds backed by subprime mortgages may no longer be viable.
"It is not known whether ACA will continue as a viable counterparty to CIBC," the Canadian firm said. CIBC said there is a "reasonably high probability" it will take a large charge for the period ending Jan. 31.
The S&P action on ACA comes amid reports investment banks, including Merrill Lynch & Co. and Bear Stearns Cos., were in talks to bail out the struggling bond insurer. Merrill Lynch and Bear Stearns were not immediately available to comment. ACA did not immediately return calls seeking comment.
As part of a mass review of the bond insurers, S&P also placed Financial Guaranty Insurance Co. on negative credit watch. FGIC currently carries a "AAA" rating. A negative watch means there is a one-in-two chance the rating could be downgraded in the next three months.
Ambac Financial Group Inc., MBIA Insurance Corp. and XL Capital Assurance Inc. were all placed on a negative outlook by S&P, though their ratings remained unchanged. A negative outlook means there is a one-in-three chance ratings will be cut in the next two years.
Shares of ACA were trading over-the-counter at 54 cents in afternoon trading. ACA shares had traded as high as $16.55 earlier in the year.
AP Business Writers Jeremy Herron and Leslie Wines contributed to this report from New York.
http://biz.yahoo.com/ap/071219/bond_insurers_ratings.html
Analysts forecast C$2bn writedown at CIBC
By Stacy-Marie Ishmael in New York
Sunday Dec 16 2007 14:10
CIBC, Canada's fifth-largest bank, is facing subprime-related writedowns in excess of C$2bn (US$1.97bn) next year, analysts said.
CIBC has already written down almost C$1bn of investments linked to the US mortgage market - more than any other Canadian (NYSE:BCM) bank. Analysts expect it will face more and could even have to realise losses next year.
Earlier this month, Gerry McCaughey, CIBC chief executive, said the bank had "underestimated the extent to which the subprime market might deteriorate and the degree to which that would impact securities that were structured to be very low risk".
CIBC declined to comment on the reports, including one by its own investment banking arm.
Darko Mihelic, at CIBC World Markets, said: "We estimate [it] could lose as much as C$2.4bn pre-tax in the first quarter of 2008".
Mr Mihelic, who has been covering CIBC since 2001, does not have an investment opinion on the stock.
The Toronto-based bank said it had $9.8bn in hedged derivatives contracts linked to American subprime mortgages at the end of its fourth quarter.
These contracts could face "significant'' future losses, the company said.
André-Philippe Hardy, of RBC Capital Markets, said: "CIBC's exposure to collateralised debt obligations backed by assets related to US real estate and residential mortgages is by far the largest of the Canadian banks".
Mr Hardy expected this exposure to result in C$2.3bn in pre-tax writedowns in the first quarter of next year.
Jason Bilodeau at TD Newcrest, expects writedowns of at least C$2.6bn and as much as C$7bn.
In all, the subprime crisis could prove to be a bigger headache for the bank than the collapse of Enron: in August 2005, the bank took a C$2.4bn charge to settle claims related to the failed energy trader.
But CIBC's Mr Mihelic said the bank's problems extended beyond its investments in troubled securities.
About a third of the bank's hedged securities is insured by ACA Capital, according to analysts.
ACA is a single-A rated company, compared with other bond insurers such as MBIA and Ambac, which hold triple-A ratings.
For a fee, such companies agree to repay the interest and principle on insured securities in the event of an issuer default.
In November, after ACA reported a $1bn third-quarter loss, Standard & Poor's said ACA could be downgraded. ACA has said it would not be able to meet collateral requirements if its rating falls below A minus.
If the insurer is downgraded and defaults, CIBC would have to bring all its ACA-guaranteed securities back on to its books.
ACA declined to comment.
http://us.ft.com/ftgateway/superpage.ft?news_id=fto121620071425008694
Banks in talks about bailout of bond insurer ACA
Wed Dec 19, 2007 10:33am EST
NEW YORK, Dec 19 (Reuters) - Merrill Lynch (MER), Bear Stearns (BSC) and other large banks are in talks about bailing out bond insurer ACA Capital Holdings, the New York Times reported on Wednesday, citing two people briefed on the situation.
The insurer has guaranteed $26 billion in mortgage securities, and its troubles could require the banks to take on billions of dollars in losses they had insured through ACA, the Times reported.
A spokeswoman for Merrill Lynch reached by Reuters declined comment. ACA and Bear Stearns did not immediately return phone calls seeking comment.
A Bear Stearns spokesman told the Times it was a very small creditor and counterparty to ACA. "As such, our exposure is limited," he said.
ACA Capital Holdings lost $1 billion in the most recent quarter and its financial guarantor subsidiary is in danger of losing its key "A" rating from Standard & Poor's. If so, banks that bought credit protection from ACA Financial Guaranty Corp. would have to take back losses from the insurer, the newspaper said.
A large number of counterparties who have derivative contracts with bond insurers would have to take losses on the contracts if the insurers lose their top ratings. One analyst said that could lead to some form of a bailout.
"It does seem to us that the markets have a vested interest in preventing the industry from imploding," wrote CreditSights analyst Rob Haines in a recent report.
Canadian Imperial Bank of Commerce (CM.TO: Quote, Profile, Research) said on Dec. 6 an unidentified A-rated bond guarantor which is at risk of being downgraded had insured $3.5 billion of its subprime holdings. Analysts said Canada's fifth-largest bank would have to take a write-down of up to $2 billion if the guarantor, which they said was ACA, was downgraded.
ACA executives said in a conference call last month that losses on insured collateralized debt obligations would be insignificant.
ACA Capital was delisted by the New York Stock Exchange last week because of a drop in its market capitalization and shareholder equity.
Shares in Merrill Lynch and Bear Stearns were both up slightly in early trading on Wednesday. Shares in ACA ACAH.PK, which trade over the counter, rose more than 200 percent to 99 cents.
(Reporting by Dena Aubin; additional reporting by Karen Brettell; Editing by Tom Hals)
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN1959777920071219
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Living in a Bubble? a massive housing bubble: #msg-26227381 Subprime lenders have been both blessing and bane in the housing industry for many years, enabling lenders to rake in huge profits while saddling consumers with exorbitant loan terms and high interest rates. Now, as the housing market slows to a crawl, many subprime lenders are collapsing faster than homes made of substandard materials, and the signs point to even more pain in the housing market as a result
AHMIQ AMOA ANH C CFC DFCLQ ETFC FBC FHN FMNT FMT FRE HCM IDMCQ IMB IMPM KFN LUMCQ MTB NOVS RAMR SLM SOV TARRQ THMR WB WAMUQ WFC
AHMIQ - American Home Mortgage #board-9990 http://www.americanhm.com
AMC - American Mortgage Acceptance http://www.americanmortgageco.com
ANH - Anworth Mortgage Asset Corp. http://www.anworth.com
BAC - #board-6675 Bank of America, "...the second-largest U.S. bank..." http://www.BankofAmerica.com "...the nation's biggest credit card business..."
C - Citigroup Inc. #board-428 "Citigroup, the biggest bank in the United States" http://www.citigroup.com
CFC - Countrywide Financial Corp. #board-9998 ".. the biggest U.S. mortgage lender..."
http://www.countrywide.com "...originated one out of every six residential mortgages..."
DFCLQ - Delta Financial Corp. #board-1894 http://www.deltafinancial.com
ETFC - E TRADE Financial Corp. #board-10096 http://www.etrade.com
FBC Flagstar Bancorp Inc.
FHN First Horizon National Corp
FMNT - Fremont General Corporation #board-10062 http://www.fremontgeneral.com
FNM - Fannie Mae "Together Fannie Mae and Freddie Mac own or guarantee about 40 percent of the $11.5 trillion US home loan market." "Fannie, the No. 1 financer and guarantor of U.S. home loans"
FRE - Freddie Mac "Freddie Mac, the second-largest source of money for U.S. home loans behind Fannie Mae"
HCM - Hanover Capital Mortgage Holdings Inc. #board-10080 http://www.hanovercapital.com
IMB - IndyMac Bancorp Inc. #board-10092 http://www.indymacbank.com "IndyMac, the nation's ninth largest originator of mortgages" "the second-biggest independent mortgage company"
IMH - Impac Mortgage Holdings #board-10019 http://www.impaccompanies.com
KFN - KKR Financial Corp. #board-10088 http://www.kkrfinancial.com
LEND - Accredited Home Lenders Holding Co #board-8673 http://www.accredhome.com
LUM - Luminent Mortgage Capital Inc. #board-9991 http://www.luminentcapital.com
MTB - M&T Bank Corp . http://www.mandtbank.com
NCC - National City Corp. http://www.nationalcity.com
NOVS - NovaStar Financial Inc. #board-6258 http://www.novastaris.com
RAMR - RAM Holdings Ltd. #board-10081 http://www.ramre.bm
SLM - Sallie Mae
SOV - Sovereign Bancorp
Banco Santander, S.A. (NYSE: STD) and Sovereign Bancorp Inc., ("Sovereign") (NYSE: SOV), parent company of Sovereign Bank ("Bank"),
announced today that Banco Santander will acquire Sovereign in a stock-for-stock transaction. Santander currently owns 24.35% of Sovereign's
ordinary outstanding shares.
TARR - Tarragon Corp. #board-5951 http://www.tarragoncorp.com
TMA - Thornburg Mortgage Inc. #board-10082 http://www.thornburgmortgage.com
WB - Wachovia Corp. #board-6206 "...the nation's fourth-largest bank..." http://www.wachovia.com
WM - Washington Mutual Inc. #board-11133 "..the largest U.S. savings and loan.."
"...The nation's second-largest mortgage lender in 2003, WaMu dropped to sixth place last year..." http://www.wamu.com
WFC - Wells Fargo & Company #board-6335 "...the nation's fifth largest bank..." "...Wells Fargo made more than $200 billion in home loans from January to September in 2007, making it the second largest home loan lender, following Countrywide Financial, which is cutting 12,000 jobs after losing $1.2 billion in the third quarter..."http://www.wellsfargo.com
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A dollar crisis leading to a depression... http://www.youtube.com/v/HTkPYnNmOBM
Mortgage Meltdown of 2007 - The Perfect storm http://www.youtube.com/watch?v=oGQT9LGL6u0
SIV's explained, lol http://www.youtube.com/watch?v=SJ_qK4g6ntM
http://housingpanic.blogspot.com
Bond (CDO) insurance companies (ABK MBI ACAH SCA)
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Solar Stocks #board-11148
Peak Oil #board-6609
Real Estate Bubble #board-7285
Subprime Fallout #board-10886
HomeBuilders #board-1680
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