Free Republic

Rep. Maxine Waters, D-Calif., has a habit of redoubling her efforts when her ideas fail. That’s especially true given that she now chairs the House Financial Services Committee. One of her top priorities is bullying banks into boosting mortgage lending to marginally qualified borrowers based on race or ethnicity. And her main vehicle for that now is a proposed subcommittee on diversity and inclusion. In a prepared statement on January 30, she declared, “I am proud to say that this will be the first Subcommittee of its kind in Congress.” One hopes it will be the last. For if she...

In front of a ballroom full of N.C. bankers in January 2006, Wachovia chief executive Ken Thompson warned of the dangers of “toxic” home loans. A problem with so-called option adjustable-rate mortgages, he told the group, was that homeowners can end up owing more at the end of the month than the beginning, which can be a “tough situation” for customers and lenders. “I have literally been amazed at the terms offered by some mortgage lenders, thankfully not at Wachovia and thankfully not so much in North Carolina,” he said. Four months later in May 2006, Thompson took a $24...

Bank of America Corp has put up for sale at least $1 billion worth of toxic mortgage assets, the New York Post said on Monday, citing sources. Bids are due by the end of December for the assets, which includes already written-off loans and mortgage-servicing rights, the paper said.

Their profits have rebounded, but shaky home-equity and credit-card debt—for starters—could change that. At first glance, banks seem to be recovering nicely from the financial crisis. But investors cheered by optimistic earnings reports could soon face a painful surprise. Many banks appear to be postponing inevitable losses on home-equity loans and commercial mortgages. Others face new trouble in consumer banking, especially credit cards. "Banks know they've got big holes on their balance sheets," says Paul Miller, an analyst for FBR Capital Markets. The hopeful news is that overall bank industry earnings tripled, to $2.8 billion in the third quarter, compared...

Japan's economy was paralyzed for a decade as banks failed to deal with their troubled loans. That's why it's nothing short of stunning to discover some U.S. banks are doing the same thing now.

Federal bank regulators announced a crackdown on loose lending standards on subprime home mortgages, as two major lenders struggled to cope with losses and regulatory problems. New Century Financial Corp., one of the nation's largest subprime lenders, announced that it has been informed of a federal criminal inquiry into its accounting and trading in its securities. New Century also said that a failure to obtain waivers from lenders could prompt its auditors to warn of "substantial doubt" over its ability to remain in business. Another big lender, Fremont General Corp., said it plans to stop making subprime residential loans and...