Skip to comments.Sector Snap: Mortgage Banks Fall
Posted on 11/26/2007 10:55:25 AM PST by Moonman62
Continued Worries About the Weakening Mortgage and Housing Markets Send Bank Shares Lower
NEW YORK (AP) -- Shares of banks that have large mortgage-origination operations continued to take a beating in midday trading Monday amid continued worries in the declining mortgage and housing markets.
Many of the banks have taken and plan to take more writedowns related to the value of bonds and securities backed by subprime mortgages -- loans given to customers with poor credit history. Those writedowns and rising provisions to cover defaulted loans are likely to pressure fourth-quarter earnings.
Adding to the problem are worries over Fannie Mae and Freddie Mac's ability to purchase loans. The government-sponsored enterprises were downgraded Monday to "Neutral" from "Buy" by UBS analyst Eric Wasserstrom. Wasserstrom said the pair face increasing credit pressures because of expected writedowns.
Fannie and Freddie had become nearly the only outlets for banks to sell mortgages in recent months because of rising defaults. If the pair's earnings fall too far because of writedowns, they might have to scale back purchasing new loans to replenish cash reserves.
Many lenders, such as Countrywide Financial Corp., curtailed subprime lending operations and instead focused on originating mortgages that fit Fannie and Freddie criteria because the market for Fannie and Freddie loans was still strong. Now, that avenue might be shrinking as well.
Shares of Countrywide fell 57 cents, or 5.9 percent, to $9.08. Shares have traded between $8.21 and $45.26 during the past year.
Any near-term relief still looks unlikely. Citi Investment Research downgraded homebuilders Monday, which further backs worries over the decline in the housing market and thus a slowdown in mortgage lending.
Among other banks that have large mortgage lending operations, shares of Citigroup Inc. fell 88 cents, or 2.8 percent, to $30.82.
JPMorgan Chase & Co. shares declined 78 cents to $41.17.
Wells Fargo & Co. shares fell 77 cents, or 2.5 percent, to $30.07.
Shares of Washington Mutual Inc. fell 88 cents, or 4.8 percent, to $17.33.
The shakeout continues.
As I watch the market lose on a regular basis.
And I see the dollar crumbling in value.
And I see my neighbors, nieces and nephews unable to find work or pay their bills.
I wait for freepers to come on here and tell me that the economy is in great shape. Off shoring didn’t hurt us a bit, and Walmart is still full of cheap crap.
They cant find any work?
Job market is still healthy. Unemployment is only 4 something percent.
“They cant find any work?”
Generalizations are difficult. Each person has a different skill set, and different goals. My brother in law found work, in Arkansas. His family is in Ohio, but that’s a small sacrifice right? Heck, I bet some of the lesser qualified people looking for work can find jobs in Mexico and China, right?
Oh, there are jobs available, you can make $8/hr at WalMart. McDonald’s is always hiring. These jobs don’t replace lost jobs, and aren’t suitable for raising a family.
But you knew all that, right?
“Job market is still healthy. Unemployment is only 4 something percent.”
Emperically I tell you that’s wrong, at least in my world. In Northeast Ohio, the job market is weak. And the unemployment rate doesn’t tell the whole story. What about those who are under employed or gave up or ran out of unemployment benefits?
Unless they are 5-Star blithering morons, they could get jobs in Houston.
I am an independent who sells cabinets and countertops to both homeowners and “flip house” investors. I know my phone ain’t ringing. My particular thing is less subject to competition from cheaper illegal labor than most other aspects of construction. Roofers, drywall, concrete and masonry guys have just closed down altogether. My bills are piling up. I do wonder, though, how much of this is “election year politics”. If Democrats have “given up hope of losing in Iraq”, maybe the economy will work as an issue. I do hold Bush at fault for his failure on immigration as part of the problem.
Yes, the 4% is nationwide. It would not apply in say Detroit or Maine for example where socialism reigns supreme. But in my state the unemployment rate is actually lower than the national average.
Overall we certainly do not have a Hoover-like economy. No way with a nation-wide 4% unemployment rate.
“I wait for freepers to come on here and tell me that the economy is in great shape. Off shoring didn’t hurt us a bit, and Walmart is still full of cheap crap.”
I and my partner (both over 55 years old) got laid off from IBM back in May after I had transferred my last two accounts out of the country and have been trying to get a job ever since. It’s the first time I’ve ever been on unemployment and I don’t like it. I’m still searching but at 57 I think it’s going to take a while.
The economy sure is great though, isn’t it? :)
“Unemployment is only 4 something percent.”
Doesn’t the government stop counting you a unemployed after a year?
Yes, isn't it amazing that headlines about the war which have dominated for years are becoming unfashionable now that the surge is obviously working?
Hitlery and her MSM goons have shifted gears; time to replace the headlines with months and months of doom and gloom about the economy instead. Sooooooooo predictable.
However, I believe the credit crunch is starting too early. I think Hitlery would have preferred it begin after Christmas and peak just around August-Sept. I don't think the timing is going to work for her.
“Oh, there are jobs available, you can make $8/hr at WalMart. McDonald’s is always hiring. These jobs don’t replace lost jobs, and aren’t suitable for raising a family.”
One thing a lot of tech companies do is lay off employees then offer to bring them back as contractors at a much reduced salary and you pay your own health insurance. The companies get the benefit of technical expertise and the recruiters get a slice of the pie too.
Puts/shorts/ultraETFs....this neighbor is very happy...
Oh, there are jobs available, you can make $8/hr at WalMart. McDonalds is always hiring. These jobs dont replace lost jobs, and arent suitable for raising a family.
But you knew all that, right?
I know that I would do any legal job to bring money into my household (be it Walmart or McDonald's) while I pursued other more gainful employment. And the brother in law that went to Arkansas for work, good for him. It might be a tough pill to swallow in the short term, but he did seek out employment for his skill set and is producing for his family.
No one has guaranteed you a rosy life in north east Ohio and I feel for your areas economic condition. Best of luck to you and yours, hopefully you can weather the economic storm out your way with the decisions you make.
How does that stack up against $0.00/hr?
“How does that stack up against $0.00/hr?”
Stupid comments like that really test one’s ability to avoid ad hominem attacks.
I’ll just say that that comment is just about as stupid as anything I’ve seen over at the DU.
“Puts/shorts/ultraETFs....this neighbor is very happy...”
Good for you. Glad your interest is firmly centered on self.
It is self absorbtion, and self interest that has led us to the place where our politicians operate based solely on self interest, and almost never consider what’s good for the country.
Well done, hope your kids can prosper in what’s left of the country you leave them.
“Best of luck to you and yours, hopefully you can weather the economic storm out your way with the decisions you make.”
Wait, you assume too much. This is a concept that’s pretty foreign on FR, so let me be explicit. I am doing well. Yeah, my 401k is getting beat up, but I shouldn’t need it for at least 12 years, so I am not worried. My kids are doing reasonably well. I don’t have a lot of debt, aside from a modest mortgage, I am debt free. I make more than I ever did, and notice it doesn’t go as far with the increases in healthcare, and energy, but I really am quite comfortable.
I am worried about my neighbors, and my extended family. I’m worried about my community. Yes, I know it doesn’t fit with the “I got mine, sorry about your luck”, attitude that seems to thrive here, but that’s how I am. I actually care about my neighbors, and my country. And I realize how the quality of life, and the infrastructure of our country is impacted when people substitue $17/hr jobs with $8/hr jobs.
Another assumption that I find a few have made here, (and many use to stereotype conservatives), is that since the jobs are $8/hr that people I know won’t take them. Wrong. They do take those jobs, and they do work second jobs, but survival at that rate is tenuous at best.
“I do hold Bush at fault for his failure on immigration as part of the problem.”
Unfortunately for Americans, both parties have decided to screw us on that one. There will be no relief, and I believe that historians will mark it as one of the milestones that changed America for the worse.
Normally I’d go for some sarcasm to tweak the crowd that’s telling us how good this economy is doing. Notice they focus on jobs, but didn’t touch the market tanking, or the dollar crumbling.
I refrain from sarcasm because I don’t want to make light of your situation. It’s a very serious problem, and you have my prayers that you weather the storm. Good luck.
Don’t disagree, but I also don’t know how suddenly having Walmart sell American good thrice as expensive (furthering inflation) would help any...
“Im still searching but at 57 I think its going to take a while.
The economy sure is great though, isnt it? :)”
You know the free trader response, it’s your fault, you let yourself get overpriced. Now you need to retrain. The translation is: “Tough luck, but I’m making money on my IBM stocks, so I don’t really care about you.”
I wish you well.
“Dont disagree, but I also dont know how suddenly having Walmart sell American good thrice as expensive (furthering inflation) would help any...”
The first observation is an easy one. American made goods don’t seem to have the same health issues. I do know that issue is played to the hilt, but that doesn’t mean it’s not real.
Second, Walmart sells the same stuff as anyone else. The key difference is Walmart encourages cuts in price and quality of goods delivered to their stores. Since Walmart is so big, what Walmart demands, Walmart gets. If I make widgets in Ohio for $3/unit, and Walmart wants it for $2/unit, Walmart will suggest quality cuts I can make, and Walmart will also suggest manufacturing cost cuts, (aka offshoring). Short term, we get cheap crap. Long term, that guy that was going to take a mortgage from you, can’t because the widget manufacturer moved to China, and he’s now working for McDonald’s. So, now he will continue to rent. And you’ll write one less mortgage.
On the other side, had he kept his job, everything else he’d have bought would cost more and he still might not be able to afford a house.
Just joshing a bit, I do understand your point, but it’s more complex than that.
“Just joshing a bit, I do understand your point, but its more complex than that.”
If a country manufactures less than it used to, has less jobs available that afford a middle class lifestyle, and buys in large quantites from a philosophical opposite, how can that be good?
It seems to me that we declare things complex when sometimes they’re just distasteful.
I think I saw where our area is one of the worst for the business you’re in? I know you’re considering relocating. I don’t blame you, but a chain really is only as strong as it’s weakest link. If you move to Houston, as one poster suggested, you will improve your circumstances. But if Ohio, and Michigan continue to falter, isn’t America only as strong as the worst of the states?
I’m already in Maryland now.
“Im already in Maryland now.”
That’s good, I guess? But the point still stands.
Of course. Yet, it’s still more complex than that.
While I agree on quality issues re: Chinese products, there is something to be said for the fact that there are things we are good at making, and things we aren’t good at making.
Case in point: Say you and I are countries, and we both manufacture the same product. I can sell it for $5 and you can sell it for $4 to our neighbors. (countries)
Who’s going to sell more products, assuming they’re otherwise the same?
It’s absolutely both parties to blame for it. Not a shred of doubt about that. I think the Chief Executive, though, has not only the authority but the responsibility to execute - that is, enforce - the law. If he had done so, it might have caused a stink in the Congress, but there would at least be a debate with would hold these so-called “lawmakers” accountable in some way. Instead, we have worthless “laws” and “sanctuary cities” everywhere.
I am genuinely grateful for your prayers. I still have 2 teenagers to try to help get on their feet somehow and it’s not looking any easier. I wonder what I’ve brought my kids into here, but I’ve gotten this far, which is more than I ever thought I’d be capable of, so I’ll continue to try putting one foot in front of the other and trust Him.
“Whos going to sell more products, assuming theyre otherwise the same?”
There are a lot of factors in cost of production. The offshoring of jobs takes advantage of the regulatory and labor costs in China, Mexico, India, etc.
We all know, or most of us do, that wealth isn’t zero sum. If my country gets richer, yours doesn’t have to get poorer, by the same token, both of us can be poorer. Wealth can be lost, as well as created.
If I make it for $5, and then you make it for $4, and another country makes it for $3 and so on, until it’s at it’s lowest, say, $2.77. And you do that with enough things, who’s going to buy these things?
Wasn’t it said that one of the best things Henry Ford did was pay his workers enough to buy his product?
Yes, but what can you do about it?
“Yes, but what can you do about it?”
Rational legislation can help. I know, this is a slipperly slope. I realize government screws up whatever it touches. I don’t have all the answers, but I have to believe that carefully placed tarriffs, (yes, taxes on you and me), quality standards, and business incentives, (more taxes), can help. This would be very delicate, and very complicated, but isn’t this the kind of thing Congress should be doing, instead of trying to figure out how to impeach Cheney, or trying to condemn the Turks for what was done to the Aremenians in 1910?
If I pay more for some goods, but that extra cost translates into more customers, I think it’s a win. The alternative is, we do absolutely nothing and watch as our standard of living reaches an equilibrium with China and Mexico. I don’t know if you noticed, but life in those countries, even for people of means, isn’t the best.
I remember interviewing for jobs in Maryland. One of them was for a builder, but the pay scale was so low I’d never afford even the entry-level home I would be originating loans for.
I thought there was something inherently wrong with that.
Customer: “So, would you recommend a *** Home?”
Me: “Sure, they’re of the utmost quality.”
Customer: “So where do you live?”
Customer: “So you don’t live in a *** Home? If they’re so good, why don’t you live in one?”
Me: “I can’t afford one. This company doesn’t pay me enough to buy one.”
Where is this at exactly? I can tell you I work in mgmt in retail in 18 states and we've seen significant upward pressure on pay in the last couple of years due to unavailability of jobworkers - from cashier all the way to store management and beyond.
$8 an hour for fast food or retail is like 16-21 year old VERY entry level. If you have any work experience at all you can be a shift lead or assistant department manager and make $10-$20 an hour. Some McDonald’s (and most other retail/food) general managers for example make well over 6 digits a year and a minimum of around $50k a year. While it may not be an ideal job, it’s better than nothing and can quickly lead to a much higher paying job (and yes with benefits).
Market isn’t tanking. It’s simply doing a long overdue short term corrctly. Dow, Nasdaq is still up YTD. S&P is flat. The falling dollar has been great for exports and the trade deficit. The world isn’t ending.
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