by Calculated Risk on 10/21/2008 09:26:00 AM

From Bloomberg: National City, Fifth Third, KeyCorp Post Losses on Bad Loans

National City posted a $729 million loss and set plans to cut 4,000 jobs, or 14 percent of the workforce, according to a statement today. Fifth Third said it may ask to be included in the Treasury's plan to buy stakes in U.S. banks, and KeyCorp will limit new student loans and scale back lending for boats and recreational vehicles.
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Fifth Third in Cincinnati ... reported a loss of $56 million ... and Cleveland-based KeyCorp's loss was $36 million ...

The confessional is still busy, especially for regional banks.

by Calculated Risk on 10/21/2008 09:20:00 AM

It had been a few days without a day new Fed funding facility ...

From the Fed: Federal Reserve announces the creation of the Money Market Investor Funding Facility (MMIFF)

The Federal Reserve Board on Tuesday announced the creation of the Money Market Investor Funding Facility (MMIFF), which will support a private-sector initiative designed to provide liquidity to U.S. money market investors.

Under the MMIFF, authorized by the Board under Section 13(3) of the Federal Reserve Act, the Federal Reserve Bank of New York (FRBNY) will provide senior secured funding to a series of special purpose vehicles to facilitate an industry-supported private-sector initiative to finance the purchase of eligible assets from eligible investors. Eligible assets will include U.S. dollar-denominated certificates of deposit and commercial paper issued by highly rated financial institutions and having remaining maturities of 90 days or less. Eligible investors will include U.S. money market mutual funds and over time may include other U.S. money market investors.

by Calculated Risk on 10/21/2008 12:41:00 AM

Here are the graphs for housing starts and builder confidence based on the data released while out I was out hiking last week.

Click on graph for larger image in new window.

Total housing starts were at an annual pace of 817K units in September, the lowest rate since Jan 1991 (798K SAAR).

Starts for single family structures (544K) were the lowest since Feb 1982 (541K). The Census Bureau has been tracking starts since Jan 1959, and the lowest month for single family structures was Oct 1981 (523K units SAAR) - so it is possible that a new record low will be set in October 2008.

The second graph shows the builder confidence index from the National Association of Home Builders (NAHB).

Builder confidence index was at a record low in October.

Usually housing bottoms look like a "V"; this one will probably look more like an "L". (this refers to activity like starts and sales, but will probably also be apparent in the confidence survey).

by Calculated Risk on 10/21/2008 12:11:00 AM

From The Times: Iceland agrees emergency $6bn deal with IMF

The credit crunch claimed its first sovereign scalp last night as Iceland readied itself to accept an International Monetary Fund (IMF) bailout. ... The IMF may provide about $1 billion in emergency cash for Iceland with the balance lent by Norway, Sweden and Denmark and additional money possibly coming from Russia and Japan.
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The IMF is likely to attach stringent conditions to the loan, including the stipulation that Iceland quickly deleverage its three nationalised banks Kaupthing, Landsbanki and Glitner.

Quite a fall for Iceland.

Note: I'm back from my hiking trip in Zion and Bryce. I'll post a few pictures when I get a chance. Best to all.

by Calculated Risk on 10/20/2008 05:31:00 PM

From the WSJ Real Time Economics: Fitch: Housing Prices Have 10% to Go Before Stabilizing

“Fitch’s analysis shows that the 29% rise in prices realized between 2004 and 2006 ... has been reversed. With prices returning to early 2004 levels, Fitch believes that most of the additional 10% decline ... will occur over the next eighteen months. Fitch then expects declines thereafter to moderate.”

by Calculated Risk on 10/20/2008 03:41:00 PM

From DataQuick: Southland home sales up, prices down; foreclosures now half the market (hat tip Peter Viles at L.A. Land)

Southern California home sales shot up by an unprecedented 65 percent last month from the dismal, record lows of a year ago, when a credit crunch slammed the brakes on home financing. September sales also posted a rare gain over August as price cuts lured more buyers. Foreclosure resales rose to half of all transactions.

A total of 20,497 new and resale houses and condos closed escrow in the six-county Southland in September, up 5.8 percent from 19,366 in August and up 64.6 percent from 12,455 in September 2007, according to San Diego-based MDA DataQuick, a real estate information service.

Last month's sales were the highest for any month since December 2006 and the year-over-year gain was the highest for any month in DataQuick's statistics, which go back to 1988. However, last month's sales were still the second-lowest for any September since 1996 and were 17 percent below the 20-year sales average for that month.
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"The pitifully low September 2007 sales numbers weren't tough to beat. More impressive was that this September's sales volume bucked the seasonal norm and rose above August. Steep price declines, especially inland, have improved housing affordability quite a bit and may keep sales levels well above the record lows we saw late last year and early this year. It will depend on the severity of this economic downturn," said John Walsh, MDA DataQuick president.

"You have to view last month's sales in the proper context," he cautioned. "They represent escrow closings, which reflect purchase decisions made in mid-to-late summer. That was before the dramatic worsening of the nation's economic crisis in recent weeks. Over the next few weeks our sales data will begin to show how the meltdown in financial markets this fall has impacted housing demand."
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Fifty percent of all existing homes that closed escrow in September had been foreclosed on at some point in the prior year. That's up from 45.5 percent in August and 12.6 percent in September last year.

At the county level, such foreclosure resales ranged from 36.8 percent of September resales in Orange County to 68.9 percent in Riverside County. In Los Angeles County foreclosure resales were 39.1 percent of all resales; in San Diego 47.3 percent; San Bernardino 63.1 percent and in Ventura County 44.0 percent.
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Indicators of market distress continue to move in different directions. Foreclosure activity is at or near record levels ...

DataQuick shows median house prices have fallen significantly in SoCal, but these median prices are distorted by the mix of houses sold.

by Calculated Risk on 10/20/2008 12:38:00 PM

The yield on 3 month treasuries: 0.93% up from up from 0.72% (BETTER)

The TED spread: 3.04 down from 3.59 yesterday (BETTER)

The two year swap spread from Bloomberg: 111.5 down from 122.2 (BETTER)

Activity in the Treasury's Supplementary Financing Program (SFP). This is the Treasury program to raise cash for the Fed's liquidity initiatives. If this program slows down borrowing, I think that would be a good sign.

Here is a list of SFP sales. Another $40 billion announced today/ No Progress.

The A2P2 spread is 4.36 for Friday from 4.49 for Thursday. slightly better.

Industry contacts. I'm tracking some financing deals there are being held up right now. If these deals complete that would be a good sign (I'll post something when this happens). No improvement yet.

I'll add a couple more indicators, but this is progress.

Note: I'm returning from Zion and Bryce today. I'll be home tonight. Sorry for not responding to all the emails.

by Calculated Risk on 10/20/2008 10:14:00 AM

From the WSJ: Bernanke Signals Support For Second Stimulus

U.S. Federal Reserve Chairman Ben Bernanke on Monday threw his support behind a second round of fiscal stimulus by the government to limit the risk of a "protracted" slowdown in the economy.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Mr. Bernanke said in prepared remarks to the House Budget Committee.

Mr. Bernanke offered many caveats, however. Any stimulus should be "well-targeted," he said, and focused on ways to "help improve access to credit by consumers, homebuyers, businesses, and other borrowers."

Meanwhile, "any program should be designed, to the extent possible, to limit longer-term effects on the federal government's structural budget deficit," Mr. Bernanke said.

Although there are some signs of a thaw in the credit markets, most indicators suggest the economy is already in free fall.

by Calculated Risk on 10/20/2008 08:44:00 AM

From MarketWatch: More signs of thaw apparent as money-market tensions ease

The London interbank offered rate, or Libor, for three-month dollar loans fell to 4.05875%, down sharply from 4.41875% on Friday.
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The rate remains abnormally high, but it's climbed down from peaks set earlier this month as financial institutions all but halted loans to each other amid fears of further bank failures.

The TED spread is now down to 3.2. Still very high, but showing progress.

by Calculated Risk on 10/19/2008 09:56:00 PM

From Bloomberg: ING Gets $13.4 Billion Injection From the Netherlands

ING Groep NV, the biggest Dutch financial-services firm, will get 10 billion euros ($13.4 billion) from the Netherlands after warning Oct. 17 of its first quarterly loss ...

ING will scrap this year's final dividend and sell the government non-voting preferred securities that won't dilute existing shareholders and will lift the bank's core Tier 1 capital to about 8 percent ... The securities pay 8.5 percent annual interest, Dutch Finance Minister Wouter Bos told reporters today.

The bailout continues ...