Friday, February 29, 2008

Predictions of Massive Bank Failures

Between 100-200 bank failures are predicted for the next 12 - 24 months.

Looks like the line may increase at the soup kitchen.

Friday, February 22, 2008

Current Subprime Mess Eclipsing S&L Crisis

Why is it that we are so stupid? It seems we can't learn from our past mistakes. This credit crunch was brought on by the same idiotic lending practices that caused the S&L crisis and now we have even bumped it up a notch.

Subprime Lawsuits Already Outpacing S&L Litigation

Even as the stock prices of investment banks began to fall and foreclosures started to rise, everyone knew what was coming next.
So a study released by Navigant Consulting Inc. last week was hardly a shock. The study shows that the number of subprime mortgage-related lawsuits filed in federal courts in the last few months have already outstripped the number of savings and loan (S&L) suits in the early 1990s.
According to the study, there were 97 such cases filed in the first half of 2007; a number that nearly doubled in the second half of the year to 181 for a total of 278 filings in 2007. There were 559 cases handled by the Resolution Trust Company during the S&L collapse, but these cases were over multiple years. Also, the subprime figures compiled by Navigant include only filings in federal courts.
Jeff Nielsen, managing director of Navigant Consulting said in a press release, "The S&L crisis has been a high water mark in terms of the litigation fallout of a major financial crisis. The subprime-related cases appear on their way to eclipsing that benchmark."
Forty-three percent of the 278 suits were borrower class actions, 22 percent were securities cases, and 22 percent were commercial contract disputes. The remainder was bankruptcy, employment, and other cases.
The study found that virtually every participant in the subprime mess is being sued. Fifty-six percent of the defendants are Fortune 1000 firms with mortgage bankers and loan correspondents representing the largest category of companies at 32 percent. However, mortgage brokers, lenders, homebuilders, servicers, title companies, appraisers, and loan servicers are all getting a share of the subpoenas.
Nielsen said "This appears to be just the beginning. We are already observing a steady acceleration of continuing litigation activity into 2008. The course of regulatory investigations, the prospect of government intervention and marketplace variables may affect the volume of filings, but the explosion of cases in 2007 suggests a daunting forecast of what is still to come."
Navigant Consulting is a NYSE firm providing consulting services to government agencies, legal counsel, and large companies. It focuses on industries undergoing substantial regulatory and structural change.

Thursday, February 7, 2008

How Low Will it Go?

I find it amazing to see how far off the highs the home prices have fallen in their respective markets. Around here, all the hobos are taking bets on the rates of decline. Take a look at the charts below and see how your area is faring.

The S&P/Case-Shiller® Home Price Indices measures the residential housing market, tracking changes in the value of the residential real estate market in 20 metropolitan regions across the United States.

These indices use the repeat sales pricing technique to measure housing markets. First developed by Karl Case and Robert Shiller, this methodology collects data on single-family home re-sales, capturing re-sold sale prices to form sale pairs.

This index family consists of 20 regional indices and two composite indices as aggregates of the regions. The S&P/Case-Shiller Home Price Indices are calculated monthly and published with a two month lag.

New index levels are released at 9am Eastern Standard Time on the last Tuesday of every month. In addition, the S&P/Case-Shiller® U.S. National Home Price Index is a broader composite of single-family home price indices for the nine U.S. Census divisions and is calculated quarterly.