The Home Front
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How I'm Using My Bailout Cash: Berkshire Bank
Continue reading… 4 CommentsFor the second installment of a series that will explore how different banks plan to use the capital that they will obtain from Treasury's TARP program, I spoke with Michael Daly, the president and CEO of Berkshire Bank, a $2.5 billion-asset bank in Pittsfield, Mass. In mid October, Berkshire completed a stock offering that raised $36 million in new capital. Shortly thereafter, it agreed to obtain even more through the TARP program.
How much capital will you obtain from Treasury?
"We will likely draw down somewhere between the minimum and $40 million.
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Many Homeowners Still in Denial About Prices
Continue reading… 1 CommentDespite all the noise about the national housing crisis, many Americans remain naively optimistic about the value of their properties.
That's the gist of a survey recently released by Zillow:
This quarter, 49 percent of homeowners said they think their own home's value has increased or stayed the same over the past year. However, nearly three-quarters (74 percent) of homes have lost value in the past 12 months, according to preliminary analysis of Zillow's Q3 Real Estate Market Reports, which will be released Nov. 12...
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Cartoon Needles Regulator Over PNC-National City Deal
Continue reading… 0 CommentsCheck out this editorial cartoon that ran in the Plain Dealer—Cleveland's hometown newspaper—poking fun at Comptroller of the Currency John Dugan's ties to PNC, which recently announced plans to acquire the struggling National City Corp. (National City is headquartered in Cleveland; PNC is based in Pittsburgh.)
For his part, Dugan has called the suggestion that his past relationship with PNC influenced his decisions regarding the deal "baseless."
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McCain Wants PNC-National City Deal Investigated
Continue reading… 9 CommentsLooks like Rep. Steve LaTourette, an Ohio Republican, isn't the only one calling for an investigation into PNC's recent deal to acquire National City Corp. GOP presidential hopeful John McCain says he supports a probe as well.
From myfoxcleveland.com:
Republican presidential candidate John McCain is calling for a congressional investigation into the sale of Cleveland's National City Bank. That sale, if it goes through, is likely to cost Cleveland thousands of jobs.Senator McCain made the statements during a one-on-one interview with FOX 8 I-Team Reporter Bill Sheil.National City is supposed to be bought by Pittsburgh's PNC bank with over $5 billion in taxpayer-funded bailout money. Asked if he supported bailout money being used for banks to buy other banks, Senator McCain said, "I do not, and I do believe we spent time on banks and bailing them out and helping other financial institutions when we should be helping the homeowners." McCain added, " I understand the local congressman (Steve LaTourette) has asked for an investigation. We should have an investigation."
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How I'm Using My Bailout Cash: Umpqua Bank
Continue reading… 8 CommentsThere's been a great deal of debate about whether the banks receiving capital under the Treasury's TARP initiative will go out and lend the cash, or simply hoard it as protection.
To that end, I've been tracking down CEOs from different companies that have announced plans to obtain this capital to find out how they plan to deploy it.
For the first installment of this series, I spoke with Ray Davis, president and CEO of Umpqua Holdings Corp., the parent of an Oregon bank with roughly $8 billion of assets. Umpqua announced Tuesday that it had been approved for a $214 million capital injection from Treasury.
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Nouriel Roubini to Congress: Pass Stimulus ASAP
Continue reading… 6 CommentsNew York University Prof. Nouriel Roubini—Dr. Doom himself—was slated to testify at a congressional hearing Thursday about the economic outlook and the need for a second stimulus package.
Here's what he told lawmakers in his written testimony:
The U.S. is currently in a severe recession that will be deeper, longer and more protracted than previous U.S. recessions. The last two economic recessions—in 1990-91 and 2001—lasted each 8 months and the cumulative fall in GDP from peak through the through was only 1.3% in the 1990-91 contraction and 0.4% in the 2001 contraction. In a typical U.S. recession in the post-WWII period GDP falls by an average of 2% and the recession lasts 10 months. The current economic contraction—that my analysis dates as having started in the first quarter of 2008 will last through the fourth quarter of 2009 with a cumulative fall in GDP of the order of about 4% that is even larger than the worst post-WWII recession (the one in 1957-68 when the GDP fall was 3.7%).
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New Anti-Foreclosure Plan Moving Forward
Continue reading… 7 CommentsLooks like there has been some progress in the foreclosure prevention plan that FDIC Chairman Sheila Bair discussed at a recent hearing on Capitol Hill.
From the American Banker:
The government is moving closer to implementing a plan to guarantee 2 million to 3 million at-risk mortgages in return for an agreement from lenders to engage in systematic loan modifications....
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Half-Point Cut by Fed; Is Bernanke Done?
Continue reading… 1 CommentThe Federal Reserve on Wednesday cut the federal funds rate by a half percentage point in an effort to stimulate the embattled U.S. economy.
Bernanke and company have now slashed the Fed's benchmark interest rate to 1 percent from 5.25 percent last September.
From the statement accompanying the release:
The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.
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Rep. John Mica on Fannie/Freddie Special Prosecutor
Continue reading… 2 CommentsLast week a handful of Republican lawmakers sent a letter to the U.S. attorney general asking him to appoint a special counsel to investigate Fannie Mae and Freddie Mac's role in triggering the current financial crisis.
From the letter:
At the center of the troubles in the mortgage-related markets may lie a cluster of maladies that never should have taken hold—fraud and mismanagement at Fannie Mae and Freddie Mac, missed opportunities to rein in these Government Sponsored Enterprises, and overzealous lending under the auspices of the Community Reinvestment Act (CRA).
Read the full letter here.
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Banks Slated for Bailout Cash: Current List
Continue reading… 0 CommentsHere's a look at the banks that have lined up capital injections from Treasury so far:
Company Billions Bank of America 25.000 Citigroup 25.000 JPMC 25.000 Wells Fargo 25.000 Goldman Sachs 10.000 Morgan Stanley 10.000 PNC 7.700 Capital One 3.550 Regions 3.500 SunTrust 3.500 Fifth Third 3.450 BB&T 3.100 BONYMellon 3.000 KeyCorp 2.500 Comerica 2.250 State Street 2.000 Marshall & Ilsley 1.700 Northern Trust 1.500 Huntington 1.400 Zions 1.400 First Horizon 0.866 City National (CA) 0.395 Valley National (NJ) 0.330 United Commercial (CA) 0.298 Umpqua Holdings Corp. 0.214 Washington Federal (WA) 0.200 First Niagara (NY) 0.186 HF Financial 0.025 Saigon National (CA) 0.012 Provident Bankshares 0.000 Approved, but hasn't accepted Old National Bancorp (IN) 0.000 Approved, but hasn't accepted Total of 250B 163.076 -
Regulator Dismisses Congressman's Allegations
Continue reading… 5 CommentsA day after his ties to PNC Financial Services Group were called into question by a Republican lawmaker, Comptroller of the Currency John Dugan released the following letter.
In it, the bank regulator calls Ohio Republican Rep. Steve LaTourette's suggestion that his decisions regarding PNC's recently announced plan to acquire National City Corp were influenced by his past dealings with the Pittsburgh bank "baseless."
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LaTourette's Letter to Paulson on PNC-Nat City
Continue reading… 4 CommentsHere's the letter that Rep. Steve LaTourette, an Ohio Republican, fired off to Henry Paulson yesterday. In it, the congressman asks the treasury secretary to launch an immediate investigation into PNC's recently announced deal to acquire National City Corp.
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Home Prices Fall Further in August
Continue reading… 0 CommentsThe S&P/Case-Shiller Home Price Indexes, which were released Tuesday, showed that home prices continued their painful declines in August. The 20-City Composite Index recorded an annual decline of nearly 17 percent.
From the report:
Nine of the 20 regions have record annual declines. Phoenix and Las Vegas are now returning -30.7% and -30.6% versus August 2007, respectively. Each of the California markets--Los Angeles, San Francisco, and San Diego—are down more than 25% from their values 12 months ago. Miami and Tampa, the two Florida markets, are down 28.1% and 18.1%, respectively.
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Congressman Wants PNC-Nat. City Deal Investigated
Continue reading… 40 CommentsRep. Steven C. LaTourette of Ohio has asked Treasury Secretary Henry Paulson to launch an immediate investigation into PNC Financial Services's acquisition of National City, which was announced last week.
LaTourette, a Republican who represents the greater Cleveland area—where National City is headquartered—said in a letter to Paulson that he fears Comptroller of the Currency John Dugan may have steered $7.7 billion in bailout funds to PNC, which was a client of his when he worked in the private sector.
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16 Regional Banks Getting Treasury Bailout Cash
Continue reading… 2 CommentsHere's a look at the regional banks in line to get capital infusions from Treasury under its plan to buy equity in U.S. financial institutions.
Company Capital 1. PNC $7.7 billion 2. Capital One $3.55 billion 3. SunTrust $3.5 billion 3. Regions $3.5 billion 5. Fifth Third $3.4 billion 6. BB&T $3.1 billion 7. KeyCorp. $2.5 billion 8. Comerica Inc $2.25 billion 9. Northern Trust $1.5 billion 10. Huntington $1.4 billion 11. First Horizon $866 million 12. City National (CA) $395 million 13. Valley National (NJ) $330 million 14. United Commercial (CA) $298 million 15. Washington Federal (WA) $200 million 16. First Niagara (NY) $186 million -
Will JPMorgan Lend Its Bailout Cash? Perhaps Not
Continue reading… 11 CommentsThe question everyone is asking about Treasury's plan to put $250 billion into U.S. financial institutions is this: Are these newly capitalized banks going to lend out this cash to the companies that badly need it—or just hoard it to protect themselves?
In a fascinating piece Friday, New York Times columnist Joe Nocera says that although Hank Paulson has been urging banks to turn these new funds into fresh loans, banks appear likely to sit on the cash. "The dirty little secret of the banking industry is that it has no intention of using the money to make new loans," Nocera writes.
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Bailout Merger No. 1: PNC and National City
Continue reading… 24 CommentsThe big question about the $250 billion that the treasury plans to inject into banks is just what those institutions will do with the funds.
Hank Paulson has been urging the industry to lend it out—rather than simply hoard it to protect against future losses. But the treasury secretary certainly hasn't been discouraging healthy banks from using it to gobble up weaker players.
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Home Sales Jump: 3 Reasons You Shouldn't
Continue reading… 9 CommentsThe National Association of Realtors' existing home sales report for September came in much stronger than expected today, with sales hitting their highest levels in more than a year.
Some highlights from the report:
Existing-home sales—including single-family, townhomes, condominiums and co-ops—rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August, and are 1.4 percent higher than the 5.11 million-unit pace in September 2007...
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FDIC: Use IndyMac Model to Prevent Foreclosures
Continue reading… 14 CommentsThe federal government;s response to the financial crisis has been criticized as focusing too much on helping out banks while neglecting the troubled borrowers facing foreclosure.
Speaking Thursday before the Senate Banking Committee, FDIC Chairman Sheila Bair outlined a new approach to tackling this painful epidemic:
From Bair's prepared testimony:
The EESA, recently passed by Congress, includes a number of provisions to encourage loan modifications. In particular, EESA addresses the issue of foreclosure mitigation and provides authority that could hold significant promise for future loan modifications. The statute grants authority to the Secretary of the Treasury to use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures.
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Treasury Secretary Henry Paulson on Charlie Rose
Continue reading… 2 CommentsTreasury Secretary Henry Paulson recently appeared on the Charlie Rose show to chat about the financial crisis and the government's response to it.
