by Calculated Risk on 1/09/2010 09:46:00 PM

Off topic: In 2006, Calvin Trillin predicts ... (click link if embed doesn't work)

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
Moment of Zen - Calvin Trillin's Prediction
www.thedailyshow.com
Daily Show Full Episodes Political Humor Health Care Crisis

by Calculated Risk on 1/09/2010 06:27:00 PM

Tough times for the "have nots" ...

For the Unemployed, New Job Often Means a Pay Cut

but not so bad for the "haves" ...

From Louise Story and Eric Dash at the NY Times: For Top Bonuses on Wall Street, 7 Figures or 8?

Bank executives are grappling with a question that exasperates, even infuriates, many recession-weary Americans: Just how big should their paydays be? Despite calls for restraint from Washington and a chafed public, resurgent banks are preparing to pay out bonuses that rival those of the boom years.

And in the UK from James Quinn at the Telegraph: Record bonus pot at JP Morgan

JP Morgan's pay-out looks set to be the highest ever offered by the bank. Based on analyst consensus, it will be 28pc up on 2008 and 2007 levels ... The investment bank's refusal to rein back bonuses is likely to be seen as an act of defiance both by the US and UK governments.

It must feel good to be a bankster! (thread music)

by Calculated Risk on 1/09/2010 02:21:00 PM

CR Note: This is a guest post from albrt.

CR sent along this story concerning a foreclosure case in California (ht Lyle). The homedebtor enjoyed some initial success arguing a non-judicial foreclosure was a violation of due process. As it happens I'm out of the country, so this will be a relatively short post.

The homedebtors are named Huxtable and Agnew. Interestingly, Agnew is also listed as the "lead attorney" for the plaintiffs. The plaintiffs defaulted in late 2007, and the bank began a non-judicial foreclosure process in late 2008. The plaintiffs filed suit in federal court to stop the foreclosure, naming as defendants Timothy Geithner, the FHFA the lender and the servicer. The plaintiffs were allegedly denied a HAMP modification, and they claim the government and the bank violated the plaintiffs' right to "due process under the Fifth Amendment for failing to create rules implementing HAMP that comport with due process."

The bank tried to have itself dismissed from the case because Fifth Amendment procedural due process applies to the government, not private companies. For whatever reason, this bank apparently considers itself a private company and not part of the federal government at this time. The judge refused to dismiss the case because the plaintiffs might be able to prove the government has "insinuated itself into a position of interdependence" with the bank. The phrase seems apt, felicitous even, and perchance in the fulness of time may prove to be widely applicable. But this is only a very preliminary decision, and the court will need to take a look at the relationship between this particular bank and the government.

The court may also need to consider whether the plaintiffs have any constitutionally protectable interest. The Fifth Amendment says, among other things, that no person may be "deprived of life, liberty, or property, without due process of law." A deeply underwater homedebtor facing a lawful non-judicial foreclosure process may not have much property interest in the home. It is possible to have a property interest in certain types of government benefits if the benefits are an entitlement explicitly created by law. It is not clear whether HAMP creates such an entitlement, and that may end up being the main issue in the case.

Due process was a mildly hot topic in the comments a few weeks ago, so I'll provide some additional thoughts on the subject next weekend. Please leave questions and suggestions in the comments here and I'll check back later.

The text of the Huxtable case is available at a foreclosure consultant site here, which also has a number of other foreclosure cases. I haven't been able to follow the comments while traveling, and I probably won't be able to monitor the comments for this short post, so sorry if I've overlooked a hat tip.

CR note: The opinion is interesting reading! This is a guest post from albrt.

by Calculated Risk on 1/09/2010 12:02:00 PM

There have been a number of comments about the recent collapse in the labor force participation rate. The rate has declined from 65.4% in July to 64.6% in December.

If the participation rate was at the same level as in July, the unemployment rate would probably be around 10.8%.

This gives me an excuse for a long term graph.

Click on graph for larger image in new window.

This graph shows the total participation rate, and for men and women, starting in 1948. Although there are still far more men in the labor force than women (we are talking labor force, not payroll jobs!), the participation rate for men has been declining for decades. The participation rate for women was increasing steadily until the late 90s, and has decreased slightly since then.

However, since July, the participation rate for both men and women has fallen sharply. For men, the rate has fallen from 72.0% to 71.0%, or a decline of 801,000 men.

For women, the rate has fallen from 59.2% to 58.6%, or a decline of 491,000 women.

This is a total of almost 1.3 million people who have left the labor force since July. This is a key reason the unemployment rate is only at 10.0%.

by Calculated Risk on 1/09/2010 09:32:00 AM

Forgot to mention yesterday that unemployment in the eurozone also hit 10%:

From the Financial Times: Eurozone unemployment hits 10%

The Netherlands’ jobless rate is 3.9 per cent ... Spanish unemployment ... is at 19.4 per cent, nearly three times its level before its credit-fuelled economy collapsed. Germany has 7.6 per cent unemployment.
...
The jobless rate has been contained by extraordinary measures that have protected the labour market, most notably the sharp rise in “short-work” schemes, where governments subsidise employers to keep workers on their payrolls through the downturn.
excerpted with permission

More from Eurostat: Euro area unemployment rate up to 10.0% (pdf)

Click on graph for larger image in new window.

These figures are published by Eurostat, the statistical office of the European Union.

Among the Member States, the lowest unemployment rates were recorded in the Netherlands (3.9%) and Austria (5.5%), and the highest rates in Latvia (22.3%) and Spain (19.4%).

Compared with a year ago, all Member States recorded an increase in their unemployment rate. The smallest increases were observed in Germany (7.1% to 7.6%), Luxemburg (5.2% to 6.0%) and Malta (6.2% to 7.0%). The highest increases were registered in Latvia (10.2% to 22.3%), Estonia (6.5% to 15.2% between the third quarters of 2008 and 2009) and Lithuania (6.4% to 14.6% between the third quarters of 2008 and 2009).

by Calculated Risk on 1/09/2010 02:10:00 AM

Jim writes: "Old what's-her-name left a long trail of wreckage in her fraudulant ways of 2007 - this is the last of 10 houses sold with 100% financing where they increased the sales price by $100,000 over list, pocketed the difference, and promised the buyers that they would rent them out to lease-optionors. All but one was foreclosed, that one the owner coughed up $300,000+ to save his credit."

by Calculated Risk on 1/08/2010 09:17:00 PM

A Lost Horizon
Emerald City's Shangra-La
No eternal life
by Soylent Green is People

Earlier employment posts:
• Employment Report: 85K Jobs Lost, 10% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.
• Seasonal Employment-Population Ratio, Part Time Workers, Temporary Workers
• Unemployed over 26 Weeks, Diffusion Index, Seasonal Retail Hiring

From the FDIC: Washington Federal Savings and Loan Association, Seattle, Washington, Assumes All the Deposits of Horizon Bank, Bellingham, Washington

Horizon Bank, Bellingham, Washington, was closed today by the Washington State Department of Financial Institutions, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of September 30, 2009, Horizon Bank had approximately $1.3 billion in total assets and $1.1 billion in total deposits....

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $539.1 million. ... Horizon Bank is the first FDIC-insured institution to fail in the nation this year, and the first in Washington. The last FDIC-insured institution closed in the state was Venture Bank, Lacey, on September 11, 2009.

by Calculated Risk on 1/08/2010 07:15:00 PM

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

Changes and comments from surferdude808:

The Unofficial Problem Bank List changed by a net of one institution this week to 576 with assets of $304.8 billion.

Additions include North Valley Bank, Redding, CA ($910 million); First Trade Union Bank, Boston, MA ($690 million); Wheatland Bank, Naperville, IL ($481 million); and Decatur First Bank, Decatur, GA ($241 million).

Removals are terminations of Formal Agreements issued by the OCC against First National Bank of Baldwin County, Foley, AL ($263 million); Capitol National Bank, Lansing, MI ($229 million); and First National Bank of Wyoming, Laramie, WY ($218 million). These removals could be temporary as the OCC may be converting the action against these banks from a Formal Agreement to a Consent Order. The OCC is much prompter in posting its terminations than its new actions.

Other changes to list this week are Prompt Corrective Action orders being issued against banks-- Mainstreet Savings Bank, FSB, and Sun American Bank -- that are
already operating under a formal action.

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.

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 1/08/2010 04:14:00 PM

First a summary of employment posts, and some other stories:
• Employment Report: 85K Jobs Lost, 10% Unemployment Rate for graphs of unemployment rate and a comparison to previous recessions.

• Seasonal Employment-Population Ratio, Part Time Workers, Temporary Workers

• Unemployed over 26 Weeks, Diffusion Index, Seasonal Retail Hiring

And other stories:
• From SacBee: Schwarzenegger declares budget emergency, proposes deep cuts

• From Bloomberg: Soured Non-Agency Mortgages Rise to 1.81 Million

• From Bloomberg: Tishman, BlackRock to Miss Stuyvesant Town Payment

HAMP 2nd Lien Program Update

In an email exchange with me, Treasury spokesperson Meg Reilly clarified the status of the HAMP 2nd Lien program today. Ms. Reilly told me the program is "moving forward", and although there are no "official contracts signed yet, ... servicers are committing to the program". She characterized the email received¹ by Tom Lawler from HAMP administration as "misleading" (I think that means "incorrect").

Ms. Reilly also wrote:

The Second Lien program is moving forward. Treasury has been working to create program infrastructure and technology, including a new platform that matches second liens to first liens modified under HAMP. Because there has not been a systematic method of notification to second lien holders when a first lien on the same property is modified, ramp up has taken some time. We have made enormous progress and continue to move forward with innovative technological development and program implementation and expect to finalize servicer contracts soon.

¹ Mr. Lawler has shared with me his email exchange with HAMP administration. His questions were straightforward concerning the status of the 2nd lien program: "Is there a list of servicers who have signed up for the Second Lien Modification Program? (2MP) The last time I checked with y'all, no one had signed up yet." And the response was: "That program is currently on hold and there is no list of servicers that registered before it was placed on hold." I considered the "on hold" important news, although Treasury has clarified that today. (ht to Diana Golobay at HousingWire who contacted Treasury first).

by Calculated Risk on 1/08/2010 03:00:00 PM

The Federal Reserve reports:

Consumer credit decreased at an annual rate of 8-1/2 percent in November. Revolving credit decreased at an annual rate of 18-1/2percent, and nonrevolving credit decreased at an annual rate of 3 percent.

Click on graph for larger image in new window.

This graph shows the year-over-year (YoY) change in consumer credit. Consumer credit is off 3.9% over the last 12 months - and falling fast. The previous record YoY decline was 1.9% in 1991.

Consumer credit has declined for a record 10 straight months - and declined for 13 of the last 14 months and is now 4.5% below the peak in July 2008. It is difficult to get a robust recovery without an expansion of consumer credit - unless the recovery is built on business spending and exports (seems unlikely).

Note: The Fed reports a simple annual rate (multiplies change in month by 12) as opposed to a compounded annual rate. Consumer credit does not include real estate debt.