by Calculated Risk on 2/27/2010 11:49:00 PM

Here is the Federal Reserve balance sheet break down from the Atlanta Fed weekly Financial Highlights:

Graph Source: Altanta Fed.

From the Atlanta Fed:

The balance sheet expanded $20 billion, to $2.3 trillion, for the week ended February 17.

Holdings of agency debt and mortgage backed securities increased $49 billion while short-term lending to financials, specifically the Term Auction Credit Facility, declined by $23 billion.

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by Calculated Risk on 2/27/2010 06:59:00 PM

Some fun from the Daily Show. Link here if embed doesn't load.

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by Calculated Risk on 2/27/2010 02:48:00 PM

From Alana Semuels at the LA Times : Many borrowers in default stay put as lenders delay evictions

Throughout the country, people continue to default on their home loans -- but lenders have backed off on forced evictions, allowing many to remain in their homes, essentially rent-free.

Several factors are driving the trend, industry experts say, including government pressure on banks to modify loans and keep people in their homes.

And with a glut of inventory in places like Southern California's Inland Empire, Nevada and Arizona, lenders are loath to depress housing prices further by dumping more properties into a weak market.

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by Calculated Risk on 2/27/2010 11:49:00 AM

By request here is a graph of the number of banks on the unofficial problem bank list.

We started posting the Unofficial Problem Bank list in early August 2009 (credit: surferdude808). The FDIC's official problem bank list is comprised of banks with a CAMELS rating of 4 or 5, and the list is not made public (just the number of banks and assets every quarter). Note: Bank CAMELS ratings are not made public.

CAMELS is the FDIC rating system, and stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk. The scale is from 1 to 5, with 1 being the strongest.

As a substitute for the CAMELS ratings, surferdude808 is using publicly announced formal enforcement actions, and also media reports and company announcements that suggest to us an enforcement action is likely, to compile a list of possible problem banks in the public interest. Some of this data is released with a lag, for example the FDIC announced the January enforcement actions yesterday.

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by Calculated Risk on 2/27/2010 08:33:00 AM

Here is Warren Buffett's annual letter to shareholders. The following is an excerpt on housing (Buffett focuses on manufactured housing because Berkshire owns Clayton Homes):

The [manufactured homes] industry is in shambles for two reasons, the first of which must be lived with if the U.S. economy is to recover. This reason concerns U.S. housing starts (including apartment units). In 2009, starts were 554,000, by far the lowest number in the 50 years for which we have data. Paradoxically, this is good news.

People thought it was good news a few years back when housing starts – the supply side of the picture – were running about two million annually. But household formations – the demand side – only amounted to about 1.2 million. After a few years of such imbalances, the country unsurprisingly ended up with far too many houses.

There were three ways to cure this overhang: (1) blow up a lot of houses, a tactic similar to the destruction of autos that occurred with the “cash-for-clunkers” program; (2) speed up household formations by, say, encouraging teenagers to cohabitate, a program not likely to suffer from a lack of volunteers or; (3) reduce new housing starts to a number far below the rate of household formations.

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