by Calculated Risk on 12/09/2009 07:04:00 PM

From KTLA: Home of Subprime Lender Targeted by Violent Robbers (ht WestSac_grrl)

Three suspects are under arrest after a violent home invasion robbery in a gated Newport Beach community ... The home is owned by Daniel Sadek, a prominent former subprime lender.
...
Police did not immediately know whether the men who invaded Sadek's home were collecting on a debt or were there to rob him. They were taking cash and jewelry ...

Sadek made and lost a fortune in the subprime mortgage business. Quick Loan Funding, which he founded in 2002, wrote about $4 billion in subprime mortgages before it collapsed in 2007

The house was the scene of a fire two weeks ago.

There is no evidence of a connection to the collapse of Quick Loan.

by Calculated Risk on 12/09/2009 03:53:00 PM

From Maria Bartiromo at CNBC: Citi Plans to Repay TARP Via Stock Offering: Sources

Citigroup plans to pay back some of the $45 billion in TARP money it received last year by raising capital through a stock offering, CNBC has learned.

An announcement could come as early as Thursday.

Are the regulators sure they have enough capital?

by Calculated Risk on 12/09/2009 03:02:00 PM

With the Ten Year Treasury yield at 3.42%, I was wondering what that would mean for mortgage rates.

Click on graph for larger image.

This graph is from Political Calculations: Predicting Mortgage Rates and Treasury Yields (based on one of my posts).

Using their calculator and a Ten Year Yield of 3.42%, we would expect the 30 year Freddie Mac fixed mortgage rate to be around 5.38%. Of course it is lower than expected - as it has been from most of the year - and some of the difference from the expected rate is probably due to the Fed's MBS purchases (also prepayment speed is a factor - and also just randomness).

The following table shows the difference between the expected and actual rate for the last 6 months. This suggests that mortgage rates will rise about 30 to 50 bps relative to the Ten Year Treasury yield when the Fed stops buying MBS.

	Ten Year Treasury Yield	Expected Mortgage Rate	Freddie Mac Mortgage Rate	Spread
May	3.28%	5.28%	4.86%	0.42%
June	3.71%	5.59%	5.42%	0.17%
July	3.54%	5.46%	5.22%	0.24%
Aug	3.58%	5.49%	5.19%	0.30%
Sep	3.39%	5.36%	5.06%	0.30%
Oct	3.37%	5.34%	4.95%	0.39%
Nov	3.40%	5.36%	4.88%	0.48%
Average				0.33%

by Calculated Risk on 12/09/2009 12:40:00 PM

“Has there been one financial leader to say this is really excessive? Wake up, gentlemen. Your response, I can only say, has been inadequate.”
Paul Volcker, former Fed Chairman, Dec 8, 2009

From The Times: ‘Wake up, gentlemen’, world’s top bankers warned by former Fed chairman Volcker

“I wish someone would give me one shred of neutral evidence that financial innovation has led to economic growth — one shred of evidence,” said Mr Volcker ... He said that financial services in the United States had increased its share of value added from 2 per cent to 6.5 per cent, but he asked: “Is that a reflection of your financial innovation, or just a reflection of what you’re paid?”

And from the Telegraph: Ex-Fed chief Paul Volcker's 'telling' words on derivatives industry

"You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk."
...
Mr Volcker argued that banks did have a vital role to play as holders of deposits and providers of credit. This importance meant it was correct that they should be "regulated on one side and protected on the other". He said riskier financial activities should be limited to hedge funds to whom society could say: "If you fail, fail. I'm not going to help you. Your stock is gone, creditors are at risk, but no one else is affected."

by Calculated Risk on 12/09/2009 09:27:00 AM

From the Association of American Railroads: Rail Time Indicators

Click on graph for larger image in new window.

This graph shows U.S. average weekly rail carloads. This can be a little misleading because the data is impacted by the Thanksgiving holiday, and most of the decline is in coal. (see the notes below)

From AAR:

• In November 2009, U.S. freight railroads originated 1,089,077 carloads, an average of 272,269 carloads per week. That’s down 8.2%, or 96,900 carloads, from November 2008’s 1,185,977 carloads (when the weekly average was 296,494 carloads) and down 17.4% from November 2007’s 1,318,023 total (a weekly average of 329,506 carloads).

• Coal had 78,535 fewer carloads in November 2009 than November 2008, accounting for most of the 96,900 total carload decline for the month.

• U.S. intermodal traffic (which isn’t included in carload figures) totaled 794,184 trailers and containers in November 2009, an average of 198,546 per week. That’s down 6.7% from November 2008 (when the weekly average was 212,879 units) and down
14.1% from November 2007, when the weekly average was 231,124.

• Freight railroading is a 24/7/365-days a year business, but Thanksgiving week is always one of the lowest-volume weeks of the year and therefore holds down the November average.

• If Thanksgiving week were excluded, November would have been the highest volume month for U.S. railroads since November 2008 for both carload and intermodal traffic.

The AAR report has a number of other graphs for various sectors like autos and housing. As an example they compare U.S. Housing Starts with U.S. and Canadian Rail Carloads of Lumber, Wood & Forest Products.