Tuesday, October 20, 2009

Summary and Too Small To Fail?

by Calculated Risk on 10/20/2009 10:18:00 PM

A couple of interesting articles and a daily summary ...

  • From MarketWatch: Treasury to introduce program to help small banks
    The ABA and other bank lobby groups for small banks are seeking to have Treasury develop a program to provide TARP funds to small stressed banks -- those with less than $5 billion in assets -- on the cusp of a default that haven't received TARP funds.
    And I thought everyone agreed that the FDIC closing small failing banks - albeit slowly - was an example of how bank problems should be resolved. Now we have "Too small to fail"?

  • Philly Fed Chairman Charles Plosser, in a speech tonight, questioned the effectiveness of many of the recent Fed actions: Sound Monetary Policy for Good Times and Bad
    As the crisis unfolded and problems arose in different parts of the financial system, the Fed responded by trying to increase liquidity in several markets through special lending programs. These programs may have had some stabilizing effects on markets and may have lowered some spreads. Yet, without defining in advance a systematic and consistent approach to such lending, these programs also raised uncertainty — in this case, about who would or would not have access to the various facilities. This was illustrated when the Term Asset-Backed Securities Loan Facility (or TALF) was announced. Many market participants lobbied for expanding the categories of securities eligible for the program. Did these multiple lending programs keep lenders on the sidelines waiting to see which asset classes the Fed would support and which it would not? Did this delay the healing of the financial markets?
  • Bank of England Governor Mervyn King criticized the lack of reform and 'too big to fail'. Here is the text of King's speech. Or see The Telegraph and The Times for excerpts.

  • Housing Starts were flat in September. And I also posted a short comment on why the focus should be on housing starts (and new home sales), and not existing home sales - and why (briefly) I think a V-shaped recovery is not going to happen: Housing and the Economy

  • I posted some HAMP Modification Documents and some discussion of a trial modification. Note: Reposted documents with all personal information removed.

  • There was much more discussion of the first-time home buyer tax credit today. The White House expects to announce a decision in the next couple of weeks.

  • DataQuick reported that California Mortgage Defaults Trended Down in Q3 . This will be a record year for default notices, and DataQuick also noted that defaults are moving up into higher priced areas.

    Note: I recently changed the page layout. It now has the last 5 posts, and then short excerpts and links to previous posts.