by Calculated Risk on 2/20/2010 02:26:00 PM

Earlier today, according to Reuters, Der Spiegel magazine reported an aid package for Greece was being worked out: Up to 25 billion euros in aid mulled for Greece: report (ht Rajesh)

Now from Bloomberg: Germany Doesn’t Have Plan to Aid Greece, Finance Ministry Says

Germany’s Finance Ministry said it has no specific plans for helping Greece combat its deficit crisis, denying a magazine report ... It’s “incorrect” that Germany is considering a “concrete” plan for countries sharing the euro to pump billions in financial aid to Greece, ministry spokesman Martin Kreienbaum said in an e-mailed statement. “The Finance Ministry has taken no decisions in this regard,” the statement said.
...
Greece is “not requesting money from any European Union taxpayer,” government spokesman George Petalotis said in an e- mailed statement today

Apparently nothing has changed. Greece has a debt offering coming up next week, from the Financial Times: Greece set for critical test with bond issue

Greece is close to attempting ... to raise €3bn-€5bn ($4bn-$6.7bn) as early as next week.
...
Greece’s debt crisis remains acute [with] €20bn of bonds to be rolled over in April and May.
excerpted with permission

The EU gave Greece a March 16th deadline to show progress on their budget deficit and I don't expect anthing to be announced until after that deadline.

by Calculated Risk on 2/20/2010 11:01:00 AM

There have been 188 bank failures in this cycle (starting in 2007):

FDIC Bank Failures by Year
2007	3
2008	25
2009	140
2010	20
Total	188

Click on graph for larger image in new window.

The first graph shows bank failures by week in 2008, 2009 and 2010.

The FDIC started fast in 2010, but slowed down when the snow storm hit D.C.

My prediction is the FDIC will close more banks in 2010 than in 2009 (more than 140), but fewer banks than in 1989 - peak of the S&L crisis (534 banks).

The second graph shows bank failures by year since the FDIC was started.

The 140 bank failures last year was the highest total since 1992 (181 bank failures).

For those interested in bank failures by number of institutions and assets, the December Congressional Oversight Panel’s Troubled Asset Relief Program report through Nov 30th for 2009 (see page 45).

by Calculated Risk on 2/20/2010 07:46:00 AM

Jeff Collins, at the O.C. Register, has a Q&A with Wayne Yamano, vice president at John Burns Real Estate Consulting: Loan mods won’t halt foreclosures, study shows

Register: Your study says that five million of the 7.7 million delinquent homes will go through foreclosure or a “foreclosure-related procedure.” How is this likely to occur?

Wayne: Most shadow inventory will get out onto the market as an REO or short sale. In any event, it results in the homeowner losing their home, and that home being added to the supply of homes available for sale.

Register: Do the remaining 2.7 million borrowers get their loan payments caught up?

Wayne: Of the 7.7 million delinquent homeowners, we actually think that only about 1.6 million will be able avoid losing their homes, and that the remaining 6.1 million will lose their homes. We say that there is 5 million units of shadow inventory because we estimate that about 1.1 million delinquent homeowners already have their homes listed for sale, and we would not classify those homes as “shadow.”

Register: When will this wave of foreclosures hit, and how will this shadow inventory affect home prices?

Wayne: We don’t believe that the shadow inventory will be dumped onto the market all at once. Although we don’t believe modification efforts will truly save a lot of homeowners from losing their homes, we do believe that these programs are effective in delaying foreclosures and pushing out the additional supply to later years.

Burns Consulting doesn't think there will be flood of homes hitting the market - they expect these homes will be lost over a few years - so in their view there will not be "another leg down in pricing".

by Calculated Risk on 2/19/2010 10:49:00 PM

Note: Two different stories with a theme ...

First, from an article in the Arizona Daily Star: Chandler man arrested for gutting foreclosed home (ht Mellanie)

Police say 35-year-old Daniel I. Clark was booked on suspicion of defrauding a secured creditor and criminal damage. Police say a neighbor of Clark's stopped an officer on patrol and reported that Clark was "deconstructing" his house.

And here is the video of the bulldozer guy in Cincinnati featured on WKRP, uh, WLWT.com:

by Calculated Risk on 2/19/2010 08:05:00 PM

Not the Delaware
Washington Bank crossed over
But the Rubicon

The La Jolla Bank
A name sounding so happy
New mood: not jolly
by Soylent Green is People
From the FDIC: FirstMerit Bank, National Association, Akron, Ohio, Assumes All of the Deposits of George Washington Savings Bank, Orland Park, Illinois

George Washington Savings Bank, Orland Park, Illinois, was closed today by the Illinois Department of Financial Professional Regulation – Division of Banking, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of December 31, 2009, George Washington Savings Bank had approximately $412.8 million in total assets and $397.0 million in total deposits. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $141.4 million. ... George Washington Savings Bank is the 19th FDIC-insured institution to fail in the nation this year, and the second in Illinois. The last FDIC-insured institution closed in the state was Town Community Bank and Trust, Antioch, on January 15, 2010.

From the FDIC: OneWest Bank, FSB, Pasadena, California, Assumes All of the Deposits of La Jolla Bank, FSB, La Jolla, California

La Jolla Bank, FSB, La Jolla, California, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of December 31, 2009, La Jolla Bank, FSB had approximately $3.6 billion in total assets and $2.8 billion in total deposits. ...

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $882.3 million. ... La Jolla Bank, FSB is the 20th FDIC-insured institution to fail in the nation this year, and the second in California. The last FDIC-insured institution closed in the state was First Regional Bank, Los Angeles, on January 29, 2010.

La Jolla Bank is a pretty good size failure. That makes four today ... hey, OneWest ... get out your tinfoil hats!

by Calculated Risk on 2/19/2010 07:05:00 PM

La Coste in Texas
Alligator shirt emblem?
A penniless bank
by Soylent Green is People
From the FDIC: Community National Bank, Hondo, Texas, Assumes All of the Deposits of the La Coste National Bank, La Coste, Texas

The La Coste National Bank, La Coste, Texas, was closed today by the Office of the Comptroller of the Currency, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of December 31, 2009, The La Coste National Bank had approximately $53.9 million in total assets and $49.3 million in total deposits....

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $3.7 million. ... The La Coste National Bank is the 18th FDIC-insured institution to fail in the nation this year, and the first in Texas. The last FDIC-insured institution closed in the state was Madisonville State Bank, Madisonville, on October 30, 2009.

Another small bank ...

by Calculated Risk on 2/19/2010 05:42:00 PM

Bad debt drowns one more
Marco Community fails
Mutual absorbs.
by Soylent Green is People
From the FDIC: Mutual of Omaha Bank, Omaha, Nebraska, Assumes All of the Deposits of Marco Community Bank, Marco Island, Florida

Marco Community Bank, Marco Island, Florida, was closed today by the Florida Office of Financial Regulation, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. ...

As of December 31, 2009, Marco Community Bank had approximately $119.6 million in total assets and $117.1 million in total deposits. ..

The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $38.1 million. ... Marco Community Bank is the 17th FDIC-insured institution to fail in the nation this year, and the third in Florida. The last FDIC-insured institution closed in the state was Florida Community Bank, Immokalee, on January 29, 2010.

It is Friday.

by Calculated Risk on 2/19/2010 04:36:00 PM

From WLWT.com: Frustrated Owner Bulldozes Home Ahead Of Foreclosure (ht Philip, Rob Dawg)

[Terry Hoskins] used a bulldozer two weeks ago to level the home he'd built, and the sprawling country home is now rubble, buried under a coating of snow.

"As far as what the bank is going to get, I plan on giving them back what was on this hill exactly (as) it was," Hoskins said. "I brought it out of the ground and I plan on putting it back in the ground."

Hoskins' business in Amelia is scheduled to go up for auction on March 2, and he told Fuller he's considering leveling that building, too.

There is a video at the link above and here are some photos.

From Diana Olick at CNBC: Housing Bailout Grows

Today President Obama stood in Nevada, ground zero for the foreclosure crisis, a state with 13 percent unemployment, and announced another pricey program to keep borrowers in their homes.

... This one gives $1.5 billion to the hardest hit states ... to "help address the problems facing the hardest hit housing markets." White House officials describe this as states that have "suffered an average home price drop of over 20 percent from the peak."

Click on graph for larger image in new window.

This graph is from Doug Short of dshort.com (financial planner). His comments:

This chart is an offshoot of my Four Bad Bears. It shifts the point of alignment from the pre-bear highs to the bear bottom in the Oil Crisis and Tech Crash, the first major low in the 1929 Dow, and the March 9th closing low for our current Financial Crisis.

As the chart illustrates, the S&P 500 lows in 1974 and 2002 marked the beginnings of sustained recoveries. The Dow low in 1929 failed 11 months later.

by Calculated Risk on 2/19/2010 02:28:00 PM

In early 2008 there was sharp drop in U.S. vehicle miles driven. That was one of the key signs of demand destruction for oil that led me to predict oil prices would decline sharply in the 2nd half of 2008.

With oil prices at $77 per barrel, I've started looking for possible signs of demand destruction again (see: Oil Prices Push Above $81 per Barrel).

The Department of Transportation (DOT) reports that vehicle miles driven in December were unchanged from December 2008:

Travel on all roads and streets changed by 0.0% (-0.1 billion vehicle miles) for December 2009 as compared with December 2008. ... Cumulative Travel for 2009 changed by +0.2% (6.6 billion vehicle miles).

Click on graph for larger image in new window.

This graph shows the comparison of month to the same month in the previous year as reported by the DOT.

As the DOT noted, miles driven in Dovember 2009 were unchanged compared to December 2008, and miles driven have declined 1.0% compared to December 2007 - and are down 3.2% compared to December 2006. This is a multi-year decline.

So far there is no evidence of significant demand destruction for oil, however the lack of growth in miles driven is suggesting a sluggish recovery.

by Calculated Risk on 2/19/2010 12:11:00 PM

Much was made this morning about the decline in the 30 day delinquency "bucket" (percent of loans between 30 and 60 days delinquent). Hopefully this graph will put the problem in perspective ...

Click on graph for larger image in new window.

Loans 30 days delinquent are still elevated, and still above the levels in 2007 - and at about the level of early 2008 - when prices were falling sharply.

The 60 day bucket also declined in Q4, but it is still above the levels of 2008.

As MBA Chief Economist Jay Brinkmann noted, the 90 day and 'in foreclosure' rates are at record levels. Obviously the lenders have been slow to start foreclosure proceedings - and the 90+ day delinquent bucket is now very full. And lenders have been slow to actually foreclose - and the 'in foreclosure' bucket is at record levels.

What impacts prices are distress sales; homes coming out of the 'in foreclosure' bucket without being cured. Since the lenders slowed foreclosures to a trickle, prices have stabilized or even increased slightly in some areas.

But these record levels of long term delinquencies are why Brinkmann cautioned about house prices. This morning he pointed out on the conference call that there are a record 4.5 million homes seriously delinquent or in foreclosure. The loans on some of these homes will be cured - perhaps by HAMP modifications of by other lender modification programs - but many of these homes will go to foreclosure or be sold as short sales putting pressure on house prices.