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America May Well Be Only Halfway through the House-Price Bust < SOUNDING more like a cartographer than central banker, Ben Bernanke this week showed off the Federal Reserve's latest gizmo for tracking America's property bust: a series of maps that colour-code price declines, foreclosures and other gauges of housing distress for every county in the country. The Fed chairman's goal was to show graphically that falling prices meant more foreclosures, and he went on to urge lenders to write down the principal on troubled loans where the house is worth less than the value of the mortgage. But the jazzy...

WASHINGTON -- Federal prosecutors are investigating Wachovia Corp. as part of a broad probe of alleged laundering of drug proceeds by Mexican and Colombian money-transfer companies, according to people familiar with the matter. Wachovia is one of several large U.S. banks that have come under scrutiny for their relationships with such companies. It is in discussions with the Justice Department about reforms in its compliance system and faces a possible deferred-prosecution agreement that would require extensive federal oversight. An official of Wachovia said it is cooperating in the probe. Wachovia, based in Charlotte, N.C., and some other U.S. banks severed...

Former Gov. Brereton Jones has borrowed heavily from a financially distressed bank that he and several other Democratic Party leaders founded in 2001, according to interviews and bank records. Federal regulators have criticized the directors of Frankfort-based American Founders Bank, including Jones, for inadequate supervision. The bank was badly managed and suffered "hazardous lending and lax collection practices," which left it with far too many unpaid loans, according to the Federal Deposit Insurance Corp. Among the specific concerns cited was improper reporting and recordkeeping of insider loans to bank directors and executives. The FDIC issued a cease-and-desist order to the...

The global credit crunch has eased for bankers, says Warren Buffett. “The worst of the crisis on Wall Street is over,” Buffett said. “In terms of people with individual mortgages, there’s a lot of pain left to come...

The Federal Reserve on Friday issued proposals to restrict various credit-card billing practices, including double-cycle billing and unreasonable late charges. The proposals aim to protect credit-card users and clarify costs by prohibiting actions such as raising an annual percentage rate unless certain exceptions apply, treating a payment as late unless consumers have been provided with a reasonable amount of time to make payments and unfairly maximizing charges. -SNIP- In a statement Friday, Edward Yingling, president and chief executive of the American Bankers Association, said the Fed's proposal is an "unprecedented regulatory intrusion" into the marketplace. "The proposal would greatly restrict...

Anyone that cares to learn about what is going on in the world is familiar with active jihad, the "holy war", conducted with terrorism and directed at the modern world in general and Western Civilization more specifically. But there is also another form of jihad that is part of the deliberate effort to have Islam replace all concepts of morality and the values held dear by the rest of us. The name of this silent "fifth column" effort is "Sharia Banking". Unfortunately, Sharia Banking is increasingly accepted by Western banking institutions without any real understanding of what the Muslim goal...

Wachovia Bank has settled with the Office of the Comptroller of the Currency over allegations that it allowed telemarketers to take advantage of its elderly customers, agreeing to pay a total of $144 million to end the case. The bank will settle $125 million in claims, put nearly $9 million into consumer education programs and pay a fine of $10 million, yet maintains that it did no wrongdoing and the penalties will not affect its bottom line. Wachovia had a relationship with several telemarketers and payment processors who called customers, offering discounts on discounted medical plans and other services who...

Wachovia Corp. is involved in a federal investigation launched by the Department of Justice that targets money-laundering by drug organizations, according to The Wall Street Journal. The Charlotte, N.C., company is under scrutiny for its involvement with Colombian and Mexican money-changing establishments known as “casas de cambio,” located along the Mexican/U.S. border. These organizations may be used by drug cartels to launder their money. One such exchange, Casa de Cambio Puebla, a Mexican chain, was recently the subject of a court case in Miami in which $23 million in assets were seized. The money was spread out over 23 Wachovia...

There has been much talk about Shari’a-compliant finance (SCF) in recent months, but many Americans are still in the dark about exactly what it is and what it portends for the American economy and the freedoms Americans enjoy. This may be why the judge in the Holy Land Foundation trial in Dallas last fall declared a mistrial and five of six defendants face a retrial (one was found not guilty of most of the charges against him). Terror expert Douglas Farah surmised at the time that part of the reason might have been because “perhaps the prosecution tried to cram...

Obama's subprime pal PENNY PRITZKER Finance chief's bank failed in 2001, costing 1,400 customers some of their savings April 28, 2008 BY ABDON M. PALLASCH Political Reporter/apallasch@suntimes.com White House hopeful Barack Obama talks a lot on the campaign trail about how failing banks have used subprime loans to victimize customers. "Part of the reason we got a current mortgage crisis has to do with the fact that people got suckered in to loans that they could not pay," he told a crowd in Reading, Pa., last week. "There were a lot of predatory loans that were given out, a lot...

BANK AND OTHER FINANCIAL STOCKS rallied strongly Thursday on further optimism that the corner has been turned in the credit crisis. ...Ironically, financials jumped following a Wall Street Journal story Thursday suggesting the Federal Reserve will lower its key interest rate target only another 25 basis points (a quarter percentage pointLower interest rates are the traditional tonic for financials. But the stock market seems to have inferred that, if the Fed trims the overnight federal funds rate only one more time, it would signal it signals its work is done... After all, the Fed under Chairman Ben Bernanke not only...

No bear wants to be a perma-pessimist, ever waiting for the sky to fall. So, sunk in a deep armchair with an optimistic bottle of Rioja (Baron De Ley Reserva), I have tried to tot up reasons why the great credit smash-up of 2007-2008 may now be safely over, heralding sunlit uplands once again. 1) Ben Bernanke has carried out the most dramatic rescue since the creation of the US Federal Reserve. His emergency rate cuts - 125 basis points over eight days in January - was a "game changer", as they say in London’s American Quarter, Canary Wharf. By...

The Daily Record in Baltimore, Maryland recently published a story by Brendan Kearney that oddly seems to present a conflict between a bank employing Islamic Shari'ah law with its American investments and some black American borrowers and painting it as a racist issue. Sadly, the real story, that of Islamic law being imposed on American investors, is sidelined in order to pursue the race card. (Full story reprinted at BlackEnterprise.com) As The Record reports, a black couple in Baltimore -- I identify their race because it is pivotal to how the Record reports the story -- had contracted with the...

Bank of America, slammed by writedowns and rising credit costs, on Monday said earnings dropped nearly 80 per cent in the first quarter to $1.2bn. The largest US bank by market value said provision for credit losses soared by $4.78bn to $6.01bn, driven by problems in home equity and small business loans as well as loans to homebuilders. The bank had $1.47bn in writedowns on its collateralised debt obligations and $439m on its leveraged loan commitments. The numbers were down significantly from the fourth quarter, in which BofA had $5.15bn in writedowns leading executives at the bank to stage a...

There's a lot of talk about a "credit crunch" and speculation about what it means for the U.S. and global economies. To summarize it, I would say: "The banks have no reserves other than debt." This chart shows the total "non-borrowed" reserves in the U.S. banking system (as an aggregate of the entire financial system). Negative non-borrowed reserves indicates basically that the reserves are borrowed for the first time in U.S. economic history. The sharp drop shown here indicates the beginning of the credit crunch in late 2007:

There has been a lot of talk in the news recently about the Federal Reserve and the actions it has taken over the past few months. Many media pundits have been bending over backwards to praise the Fed for supposedly restoring stability to the market. This interpretation of the Fed's actions couldn't be further from the truth. The current market crisis began because of Federal Reserve monetary policy during the early 2000s in which the Fed lowered the interest rate to a below-market rate. The artificially low rates led to overinvestment in housing and other malinvestments. When the first indications...

"Oh, no! Two dollars!" So cried investors three weeks ago. The Federal Reserve had just announced that it was lowering the discount rate by a quarter of a point and had arranged for the sale of Bear Stearns to JPMorgan Chase. Stock futures jumped on news of the discount rate cut and Bear sale until investors heard the price. The market's anxiety was justified. If a legendary Wall Street investment bank that investors valued at over $100 per share just last December was suddenly worth next to nothing, what were the other Wall Street firms, such as Goldman Sachs, Merrill,...

SEATTLE (AP) -- Washington Mutual Inc., the country's largest savings and loan, said Tuesday it will receive $7 billion in new capital from an investment group led by private equity firm TPG. The new investment will boost the Seattle-based bank's capital at a time when it has been hit hard by rising delinquencies and defaults among mortgages. The bank said it will lose $1.1 billion during the first quarter and take a provision for loan losses of $3.5 billion. Washington Mutual will sell equity securities to an investment fund managed by TPG Capital and to other investors in order to...

Germany's second biggest state-owned bank, Bayerische Landesbank, revealed Thursday that the global credit crunch (more...) has cost the bank €4.3 billion ($6.7 billion) -- far more than it had previouly predicted and more than any German state-owned bank has suffered so far. BayernLB, which is based in Munich, reported writedowns of €2.3 billion in 2007 and another €2 billion for the first quarter of this year as a result of the fallout from the US housing market crisis.

WASHINGTON (AP) - Big Wall Street investment companies are borrowing a bit more from the Federal Reserve's emergency lending window. The Federal Reserve reports that those firms averaged $38.1 billion in daily borrowing over the past week from the new lending program. That compared with $32.9 billion in the previous week and $13.4 billion in the first week the lending facility opened.

MERCED, Calif. (AP) - The end came in a blink outside the Merced County courthouse. Only six people showed up for the foreclosure auction, Janice Pimentel and her son Nick included. By chance, the Pimentels' dairy farm was the first property offered. The auctioneer, a young man in aviator sunglasses and blue jeans, read their address and paused for bids. When none came, the Joe T and Janice R Pimentel Dairy Farm, 21 years in the life of the family, officially became the property of its main creditor, a local lender. "Well," Janice Pimentel said, "that's that." The Pimentels' farm...

Mr. Chairman, I have never been opposed to regulation, although my idea of regulation differs from that of many people in Washington. The free market and its forces of supply and demand are the most effective regulator of the private sector, and have never been known to fail absent government intervention. But piling more public sector regulation on the private sector will have a detrimental effect on the health of our financial system and sow the seeds for the next financial meltdown. What we in Washington should be discussing is increased regulation and scrutiny of public sector regulatory and oversight...

WASHINGTON — A senior Treasury Department official called Iran "the central banker of terrorism" in testimony Tuesday before the Senate Finance Committee, but said the United States is succeeding in chasing money tied to the Al Qaeda terror group. Outlining some of what Iran is known to be doing to support anti-American and anti-Israeli fighters, Treasury Under Secretary for Terrorism and Financial Intelligence Stuart Levey said Iran "uses its global financial ties and its state-owned banks to pursue its nuclear and ballistic missile programs, and to fund terrorism." He also told lawmakers that Iran uses front companies and "cut-outs" to...

ZURICH, Switzerland (AP) -- Swiss bank UBS AG said Tuesday it expected to post first quarter net losses of 12 billion Swiss francs (US$12.1 billion; euro7.65 billion) and would seek 15 billion Swiss francs (US$15.1 billion; euro9.55 billion) in new capital. Switzerland's largest bank, which has been hard hit by the U.S. subprime mortgage crisis, also said it sees losses and writedowns of approximately US$19 billion (euro12 billion) on U.S. real estate and related credit positions. Chairman Marcel Ospel will not seek re-election at the April 23 annual general assembly of shareholders and will be succeeded by Peter Kurer, who...

Bank Reform: Treasury Secretary Henry Paulson has proposed sweeping new financial reforms that would in many ways be an improvement over the dysfunctional system we now have. But we do have some concerns.Surveying the wreckage of America's financial industry, Paulson wants to reshape the entire regulatory system and give sweeping new powers to the Federal Reserve. We're not against new thinking when it comes to financial regulation. Quite frankly, since 1960 there has been at least one major financial crisis each decade that has exposed glaring weaknesses in our postwar financial regulations. Still, the idea that the government can simply...

The US Federal Reserve is examining the Nordic bank nationalisations of the 1990s as a possible interim solution to the US financial crisis. The Fed has been criticised for its rescue of Bear Stearns, which critics say has degenerated into a taxpayer gift to rich bankers. A senior official at one of the Scandinavian central banks told The Daily Telegraph that Fed strategists had stepped up contacts to learn how Norway, Sweden and Finland managed their traumatic crisis from 1991 to 1993, which brought the region's economy to its knees. It is understood that Fed vice-chairman Don Kohn remains very...

Fremont General Corp. and its Fremont Investment & Loan subsidiary have been categorized as an "undercapitalized" depository insititution by the Federal Deposit Insurance Corp. and was directed to recapitalize the bank by May 26, or sell, the company said Friday. The directive also sets limitations and restricts the bank's business, restricting the interest rates it may pay on deposits, preventing capital distributions to the company and affiliates, preventing bonuses or increased compensation for directors and officers, and also limits transactions between the bank and its affiliates, according to a release. The limits will stay in place until the bank is...

How is Money Created? By Mike Hewitt The Federal Reserve Bank of Chicago used to publish a pamphlet entitled Modern Money Mechanics, which explains M1, M2, and M3. It is a truly fascinating read. That pamphlet is no longer in print, and the Chicago Fed has no plans to re-issue it. However, electronic copies are available (see link).In it, the process by which the Fed creates money "out of thin air" is detailed. Consider the opening paragraph:"Money is such a routine part of everyday living that its existence and acceptance ordinarily are taken for granted. A user may sense...

BERLIN (Reuters) - Germany's Finance Ministry said on Saturday a magazine report that the government wants the Bundesbank to sell some of its gold reserves to help ease pressure on the federal budget was untrue. Der Spiegel magazine reported in a preview of its latest edition that Finance Ministry State Secretary Werner Gatzer had proposed selling part of the central bank's gold reserves, currently worth around 65 billion euros ($103 billion). According to the plan, the proceeds could then be either invested to earn interest or debt could be paid off freeing up cash that would have been used to...

GENEVA — Like Paul Revere, Konrad Hummler sounded the alarm last week as he made his way by train and by plane to his bank’s branches across Switzerland. This country’s storied role as secret banker to the world’s wealthy is under threat like never before, Mr. Hummler warned. Mr. Hummler, the jaunty, blunt-spoken managing partner of Wegelin & Company, a small private bank in St. Gallen, has watched a German tax-evasion scandal evolve into a debate about banking secrecy here. Worried that the treasured discretion of Swiss banks is under assault, Wegelin’s foreign clients have been inquiring about their money....

Treasury Warns Of Deception By Iran Treasury Warns Banks That Iran Is Engaging In Deceptive Practices To Skirt Sanctions WASHINGTON, Mar. 27, 2008 (AP) The Bush administration issued a fresh warning Thursday to U.S. banks that Iran is using "an array of deceptive practices" to hide its alleged involvement in nuclear proliferation and terrorist activities. The Treasury Department's Financial Crimes Enforcement Network alleged that Iran is resorting to such alleged practices to evade detection and skirt financial sanctions. "The government of Iran disguises its involvement in proliferation and terrorism activities through an array of deceptive practices specifically designed to evade...

LONDON (Reuters) - Maybe, just maybe, the financial world is not about to implode. Such is the level of disaster mongering surrounding the latest phase of the eight-month-old credit crisis that you could be forgiven for thinking we will all soon be hoarding food and reverting to a barter economy. At the very least, some market pricing and financial commentary has invoked a systemic collapse akin to 1929's stock market crash and the Great Depression that followed. Let's put that in context. U.S. historians estimate that in the first 10 months of 1930 some 744 U.S. banks failed -- rising...

Excerpt - The two proposed buyers of Clear Channel Communications filed two lawsuits on Wednesday against six banks that agreed to finance the company’s $19.5 billion buyout. Bain Capital and Thomas H. Lee Partners, two private equity firms, sued the bank consortium in New York state court for breach of contract, accusing them of refusing to honor their commitment to finance the deal. Additionally, the two firms and Clear Channel itself sued the banks in Bexar County, Texas, where the broadcaster is based, accusing the banks of interfering with the closing of the takeover. ~ snip ~

Citigroup has called for radical measures to end Britain's financial crisis, rebuking the Bank of England for moving too slowly to meet liquidity needs and waiting too long to head off an economic downturn. "The downside risks to UK growth are sufficiently severe that the Bank of England should now be adopting a more determined approach to easing financial market strains. Relative inaction has a cost," said the bank's chief UK economist, Michael Saunders. Citigroup said the BoE should adopt a slate of targeted measures The blunt criticisms come as Britain's interbank borrowing market began to sieze up again. Comment:...

Bank of America Corp (BAC.N: Quote, Profile, Research), the largest U.S. retail bank, may set aside a record $6.5 billion in the first quarter to cover possible future loan losses, including in its mortgage and home equity portfolios, according to a banking analyst. Richard Bove of Punk Ziegel & Co also slashed his earnings forecasts for the bank through 2010, though he still expects a first-quarter profit. He said actual losses in the portfolios should be "somewhat less" than the amount he expects set aside, suggesting the bank would be conservative in its forecast of future credit trends. "I do...

March 23, 2008 Banking crisis: it’s déjà vu all over again American Account: Irwin Stelzer THE assets making up the balance sheet of a leading bank are unmarketable. Other banks refuse to trade with it, and become so concerned about shoes yet to drop they refuse to lend to even creditworthy borrowers. Not to worry: JP Morgan rides to the rescue, and with some cash from the US Treasury thrown in, arranges a takeover of the troubled bank. And so the panic of 1907 ended. Almost exactly 100 years later, a similar scenario plays out. Bear Stearns becomes illiquid, and...

LIKE Noah building his ark as thunderheads gathered, Bill Gross has spent the last two years anticipating the flood that swamped Bear Stearns about 10 days ago. As manager of the world’s biggest bond fund and custodian of nearly a trillion dollars in assets, Mr. Gross amassed a cash hoard of $50 billion in case trading partners suddenly demanded payment from his firm, Pimco. And every day for the last three weeks he has convened meetings in a war room in Pimco’s headquarters in Newport Beach, Calif., “to make sure the ark doesn’t have any leaks,” Mr. Gross said. “We...

Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis. Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets.

"European bankers and the dollar holocaust" OK, this article isn't finished yet, but I was thinking like "why not publish what I've written so far beforehand, the topic is a highly important one and people here on Free Republic aren't whiners, sure they'll forgive me for saving this draft for later forum abuse and instead I could go treat my sore European intellect to some Absolut and b-movies". I'm on holiday, actually. The unfinished article (please comment!!): "Personally, I'm not born of banking stock. My forebears here in Sweden (yes, I am, again, trying to write an article in English...

The center of focus this past week on Wall Street – and indeed, much of the financial world – was whether or not Bear Stearns will go belly-up. As questions arose about the quality of its $395 billion of assets that were carried on only $12 billion of equity, its customers and other brokers became unwilling to accept the counterparty risk that arises from transacting with Bear, while its lenders began worrying about repayment. Being leveraged to that extent, even a small decline in the value of its assets can significantly erode the firm's equity base. But given that Bear...

NEW YORK (Reuters) - Financial firms face a "new world order" after a weekend fire sale of Bear Stearns and the Federal Reserve's first emergency weekend meeting since 1979, research firm CreditSights said in a report on Monday. More industry consolidation and acquisitions may follow after JPMorgan Chase & Co (JPM.N) on Sunday said it was buying Bear Stearns (BSC.N) for $236 million, or $2 a share, a deep discount from the $30 price on Friday and record share price of about $172 last year. "Last evening the Bear Stearns situation reached a crescendo, as JPMorgan agreed to acquire the...

ZURICH (Dow Jones) — The Swiss bank UBS is considering cutting as many as 8,000 jobs to save costs, and will not rule out a possible split of its wealth management and investment banking business, a Swiss newspaper reported Sunday. -snip- Among banks worldwide, UBS is one of the worst hit by the financial markets crisis that started with the demise of the market for risky home loans in the United States. The bank has written down more than $18 billion on such assets last year, and analysts expect more to come.

Throughout Wall Street's history, major financial system upheavals often have culminated with the spectacular failure of a marquee name. That was the case in December 1994, when Orange County filed for bankruptcy protection after getting caught on the wrong side of a sharp jump in interest rates. In September 1998, the Federal Reserve helped arrange a bailout of the giant investment fund Long-Term Capital Management after it neared collapse from bad bets in wildly swinging markets. In those and similar instances the big-name debacles marked the peak of the financial system crises, not the start of something worse. But this...

Posted On: Saturday, March 15, 2008, 3:26:00 PM EST Market Panic Forces Governments Into Action Author: Monty Guild Dear CIGAS; We are watching the biggest panic in global financial markets that has occurred in my 65 years of life and 50 years of stock, bond and commodities investing. It’s the Saint Patrick’s Day weekend and old Saint Patrick would probably be fascinated to see all the rich and worldly people running around in a panic. Yesterday, JP Morgan and the U.S. Federal Reserve began a credit lifeline to Bear Stearns. This is a long and complicated story but I will...

US investment bank Bear Stearns has had to be rescued from collapse by the US central bank. But how serious is this development for the future of the banking system, and what does it say about the credit crunch? How big is Bear Stearns? Bear Stearns is one of the major US investment banks which have dominated Wall Street for generations. Founded in 1923, it is one of the leading global banking firms that operates at the wholesale level, dealing with governments, companies and other financial institutions. Its core business lines include buying and selling stocks, government and corporate...

In a dramatic move Friday, J.P. Morgan Chase & Co. and the Federal Reserve Bank of New York stepped in with emergency funds to keep beleaguered investment bank Bear Stearns Cos. afloat. The move, during a week of worry about whether Bear could continue to meet its obligations, took the credit crisis to a new, more serious stage and was a reminder of how quickly an erosion of confidence can undermine even leading financial institutions. The involvement of the Fed -- coordinating with the Treasury Department and the Securities and Exchange Commission -- made clear authorities were concerned about the...

Experts: Indictments Loom For Spitzer Disgraced Former Governor Could Face Myriad Of Charges Reporting Don Dahler NEW YORK (CBS) ? Eliot Spitzer's resignation Wednesday spares him and the state the spectacle of an impeachment, but what about an indictment? It was a rare and unequivocal declaration by U.S. Attorney Michael Garcia: "There is no agreement between this office and Gov. Eliot Spitzer, relating to his resignation or any other matter." And in Spitzer's own words: "Over the course of my public life, I've insisted, I think correctly, that people regardless of their position or power take responsibility for their conduct."...

Gov. Eliot Spitzer ended up as the subject of an investigation into a prostitution ring because his bank branch in Manhattan turned him in to the Internal Revenue Service as someone who might be engaged in suspicious currency transactions, according to sources familiar with the investigation.

Citigroup, the financial giant that is one of the nation's largest banks and one of New York City's largest private-sector employers, is facing more trouble, with an analyst at Merrill Lynch forecasting an $18 billion write-down in the first quarter for Citi on top of the $18 billion in write-downs the company has already announced.

NEW YORK (Reuters) - Washington Mutual Inc's board of directors approved a plan which helps protect its management's bonus targets from the impact of the subprime loan fallout, according to a filing with U.S. regulators. The board's human resources committee on February 26 approved bonus targets, some of which will be calculated to exclude expenses related to business re-sizing or restructuring, foreclosed real estate assets and loan loss provisions other than related to its credit card business. The filing, made with the Securities and Exchange Commission on Monday, refers to targets for WaMu chief executive Kerry Killinger, chief financial officer...