by Calculated Risk on 12/06/2009 09:12:00 AM

Tom Abate writes in the San Francisco Chronicle: In economic woes, firms count on temp workers

A surge in temporary employment was one of the encouraging aspects of a Labor Department report issued Friday.

Click on graph for larger image.

This graph shows temporary help services (seasonally adjusted) and the unemployment rate. Unfortunately the data on temporary help services only goes back to 1990, but it does appear temporary help and the unemployment rate have been inversely correlated.

The thinking is that before companies hire permanent employees following a recession, employers will first increase the hours worked of current employees and also hire temporary employees. Since the number of temporary workers increased sharply, some people think this might be signaling the beginning of an employment recovery.

Tom Abate adds some caution:

BLS economist Amar Mann said an analysis by the San Francisco office suggests that employers are getting more sophisticated about using temp hiring as a clutch to downshift into recessions and upshift into recoveries.

Mann said temp jobs started down a month after overall employment dropped during the 1990-91 recession. But by the 2001 downturn, employers started cutting temps about five months before they started issuing pink slips to the general workforce.

In the current recession, he said, companies began shedding temps 12 months before they started cutting permanent payrolls.

A similar pattern prevailed in the two prior recoveries, Mann said. Temp jobs came back at the same time as overall employment after the 1991 recovery. Temporary employment rebounded five months before the general job market turned positive following the 2001 dip.

If that pattern holds, it could be next summer before general payrolls start to grow.

Mann refused to speculate about the timing, but said temps are playing an increasing role in the job cycle.

"Employers are getting more savvy about using just-in-time labor on the way down and on the way up," he said.

So use the increase in temporary help with caution.

by Calculated Risk on 12/06/2009 01:22:00 AM

From The Times: Banks face fresh Dubai debt fears

FEARS are growing among western banks that Dubai Holding, the personal investment vehicle of the emirate’s ruler, Sheikh Mohammed bin Rashid al-Maktoum, will be the next state-owned Dubai company to default.

The conglomerate went on a debt-fuelled spending spree in the past decade, borrowing $12 billion (£7.3 billion) to fund ambitious projects ...

Together, Dubai World and Dubai Holding are thought to account for 60% to 70% of Dubai’s total debt. Research from Bank of America Merrill Lynch indicates that Dubai Holding has $1.8 billion due for repayment next year.

Just more potential losses for the Royal Bank of Scotland and HSBC.

by Calculated Risk on 12/05/2009 09:09:00 PM

From the WSJ: Soured Loans Put Lenders on the Hook

As home loans sour at a rapid clip, mortgage finance giants Fannie Mae and Freddie Mac are aggressively bouncing back defectively underwritten loans to lenders. The result: higher loan-loss reserves for the lenders and new headwind for banks trying to escape the housing downturn.

For lenders such as Wells Fargo & Co., Bank of America Corp., J.P. Morgan Chase & Co. and Citigroup Inc., which are among the largest sellers of mortgages to Fannie and Freddie, this could mean buying back souring loans at a loss.
...
Through Sept. 30, Freddie Mac put back about $2.7 billion of single-family mortgages to lenders, more than double the $1.2 billion of a year earlier.
...
In 2008, Fannie Mae bounced back roughly a quarter of the loans on 94,652 real-estate owned properties, or REOs, properties that have been reclaimed by Fannie after foreclosure. Through Sept. 30, Fannie Mae REO properties totaled 98,428. Many of these loans are plain-vanilla prime 30-year fixed-rate mortgages ...

It is a small number, but it is a start. These are mostly prime loans too - most of the subprime and Alt-A loans were securitized by Wall Street, not the GSEs.

by Calculated Risk on 12/05/2009 06:29:00 PM

We've looked at this resource from Google before: Domestic Trends. Google is tracking search trends for several specific sectors of the economy.

As an example, below is a screen capture of the Auto Buyers Index.

Click on graph for larger image in new window.

This shows the seasonality of car buying, plus the Cash-for-clunkers surge in searches. Click on link for interactive graph - you can also plot the data YoY.

The YoY data for autos has recently turned slightly negative.

I also recommend real estate, rental and unemployment.

The YoY rental index has just turned positive, and the unemployment index has turned up again.

by Calculated Risk on 12/05/2009 03:06:00 PM

Jim asks: "Wouldn't it be something if the builders end up beating the banks to the buyers? The banks are satisfied to drip them out - so the builders end up flooding the market and soak up all the buyers."

by Calculated Risk on 12/05/2009 10:28:00 AM

From HousingWire: Moody’s Links Option ARM, Subprime Performance

Click on graph for larger image in new window.

Via: Housing Wire

"The total count of Option ARMs outstanding are highly concentrated among a few states. (source: Moody's)"

From the article:

[The Option ARM] sector shows “dismal” performance, with more than 40% of borrowers 60 or more days past due on payments. And many of these loans have yet to experience a recast event, when initial minimum monthly payments jump as much as 60%, according to sources interviewed by HousingWire for an upcoming issue.

“Even though borrowers with Option ARM loans have the option to make monthly payments typically lower than the accruing interest on the loan, many borrowers are choosing a different option–not making any payment at all.”
...
Negative equity is a key driver of weak performance — as well as a more predictive measure of default than unemployment — particularly among Option ARMs.
...
“There is little hope that most of these [delinquent] borrowers will start making payments again if no principal is forgiven,” Moody’s said. “Forbearance does not eliminate the obligation to repay the loan principal, it only delays it. And many delinquent borrowers are potentially so far underwater that it would take close to a decade for them to attain any positive equity in their home.”

For their borrowers, modifications that lower the interest or extend the term, just delay the inevitable - and really makes the borrowers into renters.

by Calculated Risk on 12/05/2009 08:39:00 AM

The FDIC closed six more banks on Friday, with the largest - AmTrust Bank - estimated to cost the Deposit Insurance Fund $2 billion. That brings the total FDIC bank failures to 130 in 2009.

From the Plain Dealer on AmTrust: AmTrust Bank fails, bought by New York bank

While the closure is not surprising -- given the parent company's bankruptcy filing this week -- it is still stunning to the bank's 280,000 local customers, 1,400 local employees and a community that had watched the sleepy thrift become a national powerhouse and an important philanthropic force across Northeast Ohio.
...
While depositors aren't losing anything, the FDIC fund is taking an estimated $2 billion hit, [FDIC spokesman David Barr] said. The FDIC entered into an agreement to cap New York Community Bank's potential losses on the loans it's buying. NYCB agreed to buy about $9 billion in AmTrust assets. The FDIC will keep the remaining $3 billion in loans to sell later.

Among the nation's 8,100 banks, AmTrust was the 92nd largest as of June 30. At its height, it was the 68th largest in 2006 and 2007. In the last two years it's lost nearly 40 percent of its assets and deposits as its loans lost value, CDs matured and customers left. AmTrust was simply into mortgage lending too deep, much of it risky or in markets that were about to implode.

The following graph shows bank failures by week in 2009.

Click on graph for larger image in new window.

Note: Week 1 on graph ends Jan 9th.

The bank failures seem to come in bunches, and with 3 weeks to go it seems 140+ bank failures is likely this year.

The second graph shows the cumulative estimated losses to the FDIC Deposit Insurance Fund (DIF) and the quarterly assets of the DIF (as reported by the FDIC). Note that the FDIC takes reserves against future losses in the DIF, and collects fees and special assessments - so you can't just subtract estimated losses from assets to determine the assets remaining in the DIF.

The cumulative estimated losses for the DIF, since early 2007, is now over $52.4 billion.

by Calculated Risk on 12/04/2009 11:55:00 PM

The Treasury is expected to announce the number of permanent modifications and other metrics for the Making Home Affordable program next week, but clearly the program is off to a slow start ...

From Renae Merle at the WaPo: Quarter of borrowers in anti-foreclosure plan are behind

About 25 percent of borrowers helped under the administration's massive foreclosure prevention plan have already fallen behind on their new mortgage payments, according to government data that raise new questions about the program's effectiveness.
...
For example, at a conference last month, J.P. Morgan Chase, which signed up more than 178,000 homeowners, noted that 22 percent of borrowers helped didn't make their first payment.
...
More than half of the borrowers eligible for a permanent modification by the end of the year have not submitted all of the required documents, from pay stubs to tax returns, including some who have provided nothing, government officials have said.

Floyd Norris at the NY Times has more: Why Many Home Loan Modifications Fail

Next week will be interesting ...

by Calculated Risk on 12/04/2009 09:30:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

NOTE: This was compiled prior to the six bank failures today (all six are listed).

Changes and comments from surferdude808:

The Unofficial Problem Bank List had a slight decline in the number of institutions from 543 to 542 as three institutions were added while four were dropped. Aggregate assets declined from $312.3 billion to $310.0 billion.

Additions included WaterStone Bank, SSB, Wauwatosa, WI ($1.9 billion); First National Bank of Crossett, Crossett, AR ($160 million); and Signature Bank, Windsor, CO ($91 million). Deletions are four national bank were the OCC terminated a formal agreement. However, the OCC sometimes will replace a formal agreement with a cease & desist order; hence, we will have to wait to see if any of the deletions reappear later in the month when the OCC releases its actions for November.

The deletions include Riverside National Bank of Florida, Fort Pierce, FL ($3.5 billion); First National Bank of the Rockies, Grand Junction, CO ($393 million); First National Bank of Griffin, Griffin, GA ($306 million); and Liberty National Bank, Lawton, OK ($181 million).

The other change of note is a Prompt Corrective Action Order issued by the Federal Reserve against the Bank of Illinois, Normal, IL ($247 million). Bank of Illinois has been operating under a Written Agreement as of November 14, 2009.

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay, and the Fed and OTC data is more timely. The OCC data is a little lagged. Credit: surferdude808.

Note: The FDIC announced there were 552 bank on the official Problem Bank list at the end of Q3. The difference is a mostly a matter of timing - some enforcement actions haven't been announced yet, and others may be pending.

See description below table for Class and Cert (and a link to FDIC ID system).

For a full screen version of the table click here.

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)





Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. Click on the number and the Institution Directory (ID) system "will provide the last demographic and financial data filed by the selected institution".

by Calculated Risk on 12/04/2009 07:13:00 PM

Greater Atlantic
Demoted, downsized, shrunken
Sold to Sonabank
by Soylent Green is People
From the FDIC: Sonabank, McLean Virginia, Assumes All of the Deposits of Greater Atlantic Bank, Reston, Virginia

Greater Atlantic Bank, Reston, Virginia, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of October 20, 2009, Greater Atlantic Bank had total assets of approximately $203.0 million and total deposits of approximately $179.0 million. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $35 million. ... Greater Atlantic Bank is the 130th FDIC-insured institution to fail in the nation this year, and the first in Virginia. The last FDIC-insured institution closed in the state was New Atlantic Bank, National Association, Norfolk, on August 12, 1993.

That makes six today.