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Thread: GFC timeline

  1. #1

    Default GFC timeline

    the following timeline is not intended to be definitive

    the timeline commences in Dec '06

    the timeline comprises excerpts from a number of articles published at the time (note, no articles have been reproduced in full)

    the dates given are for the publication dates of the articles

    whilst no links have been provided for the articles, the headline, byline (where available) and publishing organisation have been included

    the timeline will be updated on an ongoing basis

  2. #2

    Default Re: GFC timeline

    Is there meant to be a link or attachment here? Or are you posting the timeline yourself?

  3. #3

    Default Re: GFC timeline


    December 2006


    - "Bankers report mortgages being paid late or not at all", by Jeremy W Peters, NYT

    The number of people paying their mortgages late - or not paying them at all - picked up in recent months, a trend that is expected to continue well into next year ... Among subprime homeowners, designated as such because their questionable credit would otherwise disqualify them from obtaining a mortgage, delinquency rates were much higher. Subprime borrowers who had past-due payments rose to 12.6 percent, from 11.7 percent in the sceond quarter ... among subprime adjustable mortgages, 13.2 percent were delinquent ... subprime loans ... have become the fastest-growing segment of the mortgage industry ... Mr Duncan [Doug, chief economist, Mortgage Bankers Association] said that $1.1 trillion to $1.5 trillion worth of residential debt was eligible to reset next year ... delinquencies were most common ... in the south, where the spillover efects from Hurricane Katrina continue ...
    - "Study predicts foreclosure for 1 in 5 subprime loans", by Ron Dixon, NYT

    ... The report, written by the Center for Responsible Lending, a research group based in Durham, NC, was based on data supplied by Moody's Economy.com ... report is the first nationwide study on the performance of subprime mortgages ... about 2.2 million borrowers who took subprime loans from 1998 to 2006 are likely to lose their homes ... subprime loans now make up more than a quarter of the mortgage market, more than $600 billion in 2005 ... most recent Home Mortgage Disclosure Act data from lending institutions show that over half of African-Americans and 40 percent of Hispanics received subprime loans ... center suggests that risky lending practices could lead to the worst foreclosure crisis in the modern mortgage market. Douglas Duncan, chief economist for the Mortgage Bankers Association, called the center's study overly pessimistic. "Every forecast models makes assumptions, but it seems they picked the worst case scenario," Mr Duncan said ... state regulators have cracked down on what they see as predatory practices by many lenders ...


    January 2007


    - "Barclays to buy subprime lender", NYT

    Barclays Bank announced it would buy the Equifirst Corporation, the subprime mortgage lending unit of Regions Financial, for $225 million ... Equifirst is the 12th-largest subprime mortgage originator in the US ...
    February 2007


    - "HSBC reports rise in troubled loans", Reuters

    HSBC Holdings, a bank based in Britain, said on Wednesday that its charge for bad debts would be more than $10.5 billion for 2006, some 20 percent above analysts' average forecasts, because of problems in its mortgage portfolio ... [HSBC] said apart from its mortgage services operations in the US, the performance of HSBC's businesses for 2006 was in line with expectations

    - "Losses in home loans prompt HSBC to shake up management of unit", by Nicola Clark, NYT

    A day after HSBC issued its first-ever profit warning ... Michael Geoghegan, the chief executive of HSBC, sought to soothe analysts' concerns yesterday, saying that the loan-loss difficulties were isolated to its American consumer finance arm, the HSBC Finance Corporation ... Since then [2003 HSBC takeover of Household International], the industrywide volume of mortgage lending to the riskiest category ... has tripled to 24 percent of the $10.2 trillion mortgage market from 8 percent three years ago, according to Inside Mortgage Finance, a trade publication ...

    - "Home lenders hit by higher default rates", by Vikas Bajaj and Julie Creswell, NYT

    ... Shares of Novastar Financial, which makes loans to people with weak credit, fell almost 43 percent yesterday after the company announced a surprise loss of $14.4 million for the fourth quarter and told investors that it might not make enough money to pay dividends for the next four years ... echoed reports issued earlier this month by New Century Financial and HSBC Finance ... default rate jumped for loans made in 2006, as lenders allowed more borrowers to take out loans without documenting ther incomes or making a down payment ... many subprime lenders were not obligated to follow the tougher regulations that apply to commercial banks ... [Novastars] biggest shareholder, Dreman Value Management of Jersey City, has been trying to liquidate its 5.8 percent stake ... Investors who had been paying attention would have noted that the delinquency rate for loans made in 2006 had jumped to 7 percent from 2 percent in 2005 ... "When we initially shorted the stock, it was obvious that there was going to be some distress here," said Whitney Tilson, who heads the hedge fund firm T2 Partners and who took a small short position in the stock in the last couple of weeks. "But when a company announces that they're not going to have taxable income for four years, that's amazing." ...

    - "2 executives are ousted at HSBC", by Julia Werdigier, NYT

    ... Bobby Mehta was stepping down as head of its North American business and as chief executive of HSBC Finance. Sandy Derickson, chief executive of HSBC Bank USA and vice chairman of HSBC Finance, is also leaving ... Washington Mutual, Novastar Financial and New Century Financial are among other large subprime lenders that have disclosed problem loans ... it acquired the finance company Household International for $14.2 billion in 2003. At that time, Household was the biggest subprime mortgage lender in the country ...


    - "Freddie Mac tightens standards", by Vikas Bajaj, NYT

    ... Freddie Mac, one of the largest buyers of mortgages, said yesterday that it would tighten lending standards and stop buying certain kinds of risky home loans made to borrowers with weak, or subprime, credit records ... "Lenders and originators are being significantly penalized for the loose standards that we saw last year," said Brian J Carlin, head of fixed-income trading at JPMorgan Private Bank ... concerns persisted yesterday amid a sharp sell-off in stock markets around the world ... Fannie Mae and Freddie Mac buy bonds backed by subprime loans ... they bought $119.8 billion of subprime bonds in 2006, down from $169.4 billion in 2005 and $175.6 billion in 2004, according to Inside Mortgage Finance ... Fremont General Corporation, a large provider of subprime mortgages through brokers and lenders, postponed filing earnings for the fourth quarter and for 2006 ... Fannie Mae said subprime loans represented just 2.2 percent of its business and it would not change its approach to the market until its regulator ... hands down guidance ... [Feddie Mac] holding about $184 billion of subprime securities in its portfolio ... its new, stricter standards come into effect for loans written on Sept 1 and after ...

  4. #4

    Default Re: GFC timeline

    2007 cont'd

    March 2007


    - "Soothing words and a stock market rebound", by Jenny Anderson and Vikas Bajaj, NYT

    ... DJIA, which tumbled as much as 545 points on Tuesday, closed yesterday up 52.39 points, or 0.4 percent ... many [Wall Street executives and analysts] contend that the problems [subprime] are well contained and do not yet pose a significant threat to investment banks or the broader global financial system ... cost of insurance against potential bond default on Bear Stearns debt, for example, increased 40 percent recently, from about 22 basis points in mid-January to more than 31 on Tuesday, according to Lehman Bros data. Insurance costs for major firms with exposure to the subprime market, like Lehman Brothers, Morgan Stanley, Goldman Sachs and Merill Lynch increased similarly ... now a major concern is whether the problems of subprime lending will spill over into the broader mortgage maket, which at $6.5 trillion at the end of 2006 is the biggest bond market ... in December, Merrill Lynch completed a $1.3 billion acquisition of First Franklin ... Morgan Stanley bought Saxon Capital for $706 million. Bank executives say they anticipated the problems in subprime and they have been buying lenders because they want to better control lending standards in the industry ... Citigroup said that it would provide working capital and a credit line to ACC Capital Holdings, which owns Ameriquest and Argent Mortgage ... Guy Moszkowski, an analyst with Merill Lynch, downgraded Goldman Sachs, Bear Stearns and Lehman ... because he believes the problems of subprime lending are spreadint to "Alt-A" mortgages ... Lehman, RBS Greenwich Capital Markets, Morgan Stanley and Merill Lynch were the biggest underwriters of mortgage-backed securities in 2006, with Lehman controlling 10.7 percent of the market ... "The economics of the business are moving in favour of well-capitalized entities who don't have to go outside" for other services, said Gyan Sinha, who heads asset-backed securities at Bear Stearns ... one gauge of the subprime business is an index that tracks bonds backed by subprime loans, the ABX.HE ... the cost to insure a low-rated, "BBB-" portion of the bonds junped to nearly $1,983 for $10,000 of bonds, from $1,641 on Monday and $410 at the end of December, according to the Markit and CDS IndexCo ... much depends on the strength of these bonds' structure, which is determined largely by agencies like Moody's Investor Service, Standard & Poor's and Fitch Ratings ...

    - "A steadier day for stock markets, but a sense of unease lingers", by ViKas Bajaj and Jermey W Peters, NYT

    ... In an indication the market may be in for a tough road, Countrywide Financial, the nation's largest stand-alone mortgage company, disclosed in a securities filing that 22.6 percent of the subprime mortgages it services for other lenders were in default or foreclosure at the end of last year, up from 17.2 percent in 2005 ...

    - "Authorities investigate big lender", by Vikas Bajaj and Juile Creswell, NYT

    Federal prosecutors and securities regulators are investigating stock sales and accounting errors at the New Century Financial Corporation, the biggest mortgage company that specializes in lending to people with weak, or subprime, credit ... last month several bigger companies, including New Century, started reporting problems ... the company said on Feb 7 that it would restate earnings for three quarters, which sparked a huge sell-off in its shares ... shares have fallen more than 53 percent since the start of the year ... shares were down $3.73, or 25 percent, to $10.92, in after-hours trading ... errors in how the company accounted for home loans that it was forced to buy back from Wall Street firms that buy its loans and package them into bonds ... will have to seek a second set of waivers from banks that provide it credit lines totaling $17.4 billion if it does not file financial reports by March 15 ... Morgan Stanley, Goldman Sachs, Barclays Capital and Deutsche Bank own about 16 percent of the company ... Citigroup recently bought a 5.1 percent stake ... Greenlight Capital, a prominent hedge fund, owns 6.3 percent ...
    - "US urges lenders to revise standards on granting credit", by Vikas Bajaj, NYT

    ... it was unclear how effective regulators will be in changing lending practices given that a majority of the subprime loans are made by lenders that are not chartered as banks, credit unions or savings institutions, over which federal regulators have jurisdiction ... they do not oversee the mortgage lenders and brokers that make up a majority of the subprime business, according to the Federal Reserve. Those businesses are overseen by state regulators ... regulators are not demanding an end to prepayment penalties or adjustable-rate loans, but they want companies to disclose fees and the potential for "payment shock" more fully and clearly than they do now

    - "Mortgage crisis spirals, and casualties mount", by Julie Creswell and Vikas Bajaj, NYT

    ... "We made so much money you couldn't believe it. And you didn't have to do anything. You just had to show up." [Kal Elsayed, former executive, New century Financial, Ferrari driver] ... the explosive growth in subprime lending turned mortgage bankers and brokers into multimillionaires seemingly overnight ... New century has emerged as a poster child for the lenders that rode that boom to the top and are now in free fall ... for those who cashed out before the market turned, the ride up was particularly sweet. The three founders of New Century, for example, together made more than $40.5 million in profits from selling shares in the company from 2004 to 2006 ... they collected millions of dollars more in dividends, salaries, bonuses and perks ... Angelo R Mozilo, the chief executive of Countrywide Financial, the nation's largest stand-alone mortgage company and one of the largest subprime lenders last year. He reaped more than $270 million in profits from sales of stock and the exercise of stock options from 2004 to the start of this year ... "Everyone has run for the hills," said William D Dallas, whose company, Ownit Mortgage, filed for bankruptcy protection in December after it lost financing from Merrill Lynch and other banks ... the first nine months of last year, Wall Street banks and investors that it [New century financial] does business with forced it to buy back $469 million in loans it had sold to them, up from $240 million for the same period in 2005. The company was able to sell back about half of those loans at a discount of 26.5 percent. How it handled the remainder - about $227 million - is now under scrutiny. According to accounting rules the company should have valued the loans on its books for what they were worth today, not their previous face value. But it did not ... the company's financing agreements require that it not lose money for any rolling six-month period ...the late 1990s, New Century narrowly survived accounting concerns and a scare in the bond market after Russia's default in 1998 ...

    - "Subprime lender under inquiry puts some workers on leave", Bloomberg news

    ... Fremont General Corporation, the financial services holding company, put some of its residential loan staff on paid leave yesterday "pending further information" and said that it would stop offering subprime mortgages ... "Good company, strong work ethic and they looked after their people. And we made good money. And it's a shame that the Feds are on a witch hunt against us." [Sean Rones, account executive, Fremont, SUV driver] ... yesterday, the Citadel Investment Group, a hedge fund, agreed to buy the ResMae Mortgage Corporation, which is in bankruptcy protection, for about $180 million, topping a bid from the Credit Suisse Group ... 98.5 cents in the dollar for the company's $160 million loan portfolio [plus $20 million for the lending business] ... one of more than 20 [lenders specializing in subprime loans] that have shut down, scaled back or been sold off since last year ...

    - "Fed chief seeks to limit mortgage agencies", AP

    Ben S Bernanke, chairman of the Federal Reserve, urged Congress on Tuesday to bolster regulation of the mortgage giants Fannie Mae and Freddie Mac, and suggested limiting their holdings to guard against their debt posing any danger to the overall economy ... he wanted to be clear that by suggesting the change in Fannie Mae's and Freddie Mac's portfolio holdings, he was not advocating a change in the exposure of the mortgage giants' subprime loans

  5. #5

    Default Re: GFC timeline


    - "Lender stops accepting mortgage applications", by Vikas Bajaj and Julie Creswell, NYT

    New Century Financial, the troubled mortgage company, said yesterday it had stopped accepting new loan applications as it tried to negotiate terms with banks that had cut off its access to billions of dollars in funds ... company's stock tumbled 25 percent ... it could finance only a portion of its loans this week because its banks, which also include UBS, Barclays Bank, Citigroup and Bank of America, would not let it have access to credit lines ... issued $3.7 billion in loans in February, down 7.5 percent from the same month in 2006. The company also faced $150 million in margin calls this week, about $80 million of which it has met ... yesterday David Einhorn, the president and co-founder of the $4.7 billion hedge fund Greenlight Capital, disclosed in a securities filing that he had resigned from New Century's board ... shares closed down $1.29 to $3.87 ... fallen 88 percent since the end of 2006 ...
    - "Winners amid doom and gloom", by Jenny Anderson, NYT

    ... Paulson & Company, an $11 billion hedge fund in NY, had such a strong belief that the subprime market would fall apart that it started two funds last summer concentrated solely on expecting such a collapse. Paulson's Credit Opportunities funds, now with more tha $1 billion, were up 67 percent for February and about 82 percent for the year to date ... July 2005, TPG-Axon, a $7.5 billion hedge fund founded by a former Goldman Sachs trader, Dinakar Singh, invested $100 million in ResMae Financial Corporation ... also bet aginst the subprime sector to offset its exposure ... TPG-Axon funds are up about 6 percent through February ... Scion Capital, a $700 million hedge fund [long-short value fund] in Cupertino, Caif, founded a by a former neurologist, Michael J Burry ... May 2005, Mr Burry ... used credit derivatives to short - bet against - subprime mortgage tranches ... ultimately entered into eight credit derivative agreements ... the first nine months of last year, Scion Value fund and the Scion Qualified Value fund were down 16.4 percent ... fund ended the year down about 17 percent ... rumours abounded that two significant investors wanted to pull their money ... Scion made a radical decision: It put the poorly performing credit derivative positions in a side pocket ... which locks up investor money until Scion decides to unwind it ... through February, the funds are up 19 to 20 percent (investment is expected to remain in place until 2008) ...

    - "Lender faces credit crisis with banks", by Julie Creswell and Vikas Bajaj, NYT

    ... New Century said in a securities filing yesterday that all its lenders had frozen their credit lines and were demanding that it buy back $8.4 billion in loans that it issued using the money it borrowed from the banks ... Morgan Stanley, which offered a financing package totaling $975 million last week ... the next two weeks, many large Wall Street banks will report first-quarter earnings, and they may make the case that their exposure to the subprime sector will be limited, in part, because they have acted quickly to stop financing mortgage companies ... a week after the company said it would have to restate its financial statements for the first nine months of last year, Goldman Sachs extended to May 14 a credit line to New Century that was set to expire on Feb 15 ... the investment bank changed aspects of the agreement to give itself greater control over the relationship and allow it to get out of the agreement at the first hint of trouble ... Feb 19, Citigroup acquired 5.1 percent ... March 6, Citigroup demanded New Century put up more cash through a $80.3 million margin call and demanded that the company buy back $717 million in loans ... Goldman also made a margin call and sent notice to the company that it was in default of its credit arrangements ... help came from Morgan Stanley, which provided $265 million in new financing and replaced Citigroup's $717 million credit line ...

    - "Bad loans put Wall St in a swoon", by Vikas Bajaj, NYT

    ... DJIA dropped 242.66 points, or 1.97 percent, to 12,075.96 and the S&P 500-stock index fell 28.65 points, or 2.04 percent, to 1,377.95 ... Yesterday's report by the mortgage bankers [Association] found that about 0.54 percent of all home loans entered foreclosure in the fourth quarter, the highest ever in the 37-year history of the survey ... Accredited Home Lenders, said that it was facing a cash squeeze because of margin calls from its banks and was considering "strategic alternatives." Shares in the company fell 65.2 percent to $3.97. Residential Capital, the mortgage division of GMAC, reported an operating loss of $651 million for the fourth quarter, in contrast to a profit of $118 million a year ago ... General Motors will inject $1 billion into GMAC ... subprime loans ... foreclosure rose to 17.86 percent, from 16.42 percent ... "I can't predict the future, but as we sit here today, we really have not seen any contagion to the credit markets," David A Viniar, Goldman's chief financial officer, said during a conference call with analysts and jounalists about the firm's record quarterly profits. But investors pushed Goldman shares down 1.8 percent, to $199.03
    - "Markets sag as mortgage anxiety spreads", AP

    ... light, sweet crude fell 98 cents to settle at $57.93 a barrel on the NYMEX. The benchmark 10-year Treasury note rose 17/32, to 101 3/32. The yield, which moves in the opposite driection, fell to 4.495 percent, from 4.55 percent ...

    - "Loan unit drags down H&R Block", by Julie Creswell, NYT

    ... while its tax business is showing signs of improvement, H&R Block cannot get rid of its subprime mortgage group, Option One, fast enough. H&R Block disclosed yesterday that its loss widened to $60.3 million in the third quarter ... their goal of selling the unit [Option One] for $1.3 billion this month ... last week, General Electric, which bought the subprime lender WMC Mortgage in 2004, announced large layoffs in the division ... Lehman Brothers, a major player in mortgages and their securitization, reported strong first-quarter results ... Dow closed up 57.44 points, or 0.48 percent, to 12,133.40, and the S&P 500 stock index closed up 9.22 points, or 0.67 percent, at 1,387.17 ... Lehman Brothers ended down 28 cents, at $71.72 ... reported record earnings of $1.2 billion for the first quarter, a 5.6 percent rise from a year earlier ... "There's near-term trepidation as people digest what is happening," Mr O'Meara [Christopher, chief finanical officer, Lehman's] said. "We think this is temporary." ... H&R Block entered the subprime mortgage industry in 1997, when it acquired Option One ... "Option One pretty much drove H&R's shares higher between 2002 and about 2005," said Scott Scheenberger, an analyst with CIBC World Markets ... it was exploring a sale of Option One in November. At that time, several Wall Street firms including Lehman and Merrill Lynch were snapping up subprime lenders ...

    - "Bear Stearns profit rises 8% despite weak subprime market", AP

    ... Its profit rose to $548.5 million, or $3.82 a share, from $508.7 million, or $3.54 a share, a year earlier. Revenue in the period [first-quarter], which ended Feb 28, rose to $2.48 billion from $2.19 billion last year ... "Last year, we reduced our exposure in the subprime market, cutting our origination and securitization almost in half," he [Samuel L Moilnaro Jr, chief financial officer, Bear Stearns] said. "We think we've done a good job navigating what have been very difficult market conditions. We're feeling comfortable where we are." ...

    - "Mortgage shares rise again as subprime lender gets a line of credit", Bloomberg news

    ... Fremont General Corporation ... said yesterday that Credit Suisse had increased a line of credit to the company to $1 billion ... Accredited Home Lenders Holding Company ... had agreed to sell $2.7 billion of mortgages to pay back creditors ... shares in Fremont ... rose $1.50, to $8.90. Accredited ... rose $1.47, to $10.90 a share ...

    - "When regulators knock twice", by Gretchen Morgenson, NYT

    ... Fremont General, a financial company with a big subprime unit that it is trying to sell, is up 51 percent since it dislcosed it had received a cease-and-desist order form the FDIC after the markets closed on March 2 ... "Fremont Investment & Loan has significant balance sheet strength and funding capacity that we believe will enable us to exit the subprime lending business in an orderly and disciplined way," Louis J Rampino, chief executive of Fremont, said ... management certainly has experience exiting a business at the request of regulators [2000, Fremont's workers' compensation unit placed under Cailf Dept of Insurance supervision] ... both cases, Fremont used questionable practices to generate great revenue growth, benefitting executives. Shareholders were left holding the bag ... last year, Fremont vaulted to third place in the subprime lender league ... on Jan 4 [2007], Mr McIntyre and Mr Rampino sold large stakes in the company ...
    - "A surge in foreclosure filings", by Lisa Prevost, NYT

    ... report issued by the Mortgage Bankers Association last week showing that the percentage of foreclosures initiated nationwide in the last three months of 2006 was the worst for any quarter since the group started reporting the numbers 37 years ago ... filing is merely the first step in a process that could ultimately end in a repayment plan or modified loan rather than the loss of the home ...

  6. #6

    Default Re: GFC timeline


    - "Job cuts at lender", AP

    ... [Fremont General] sent notices to employees who were put on paid leave this month ... it intends to leave the business [residential loans] whether it finds a buyer or not

    - "Fannie Mae ends purchases of loans by New Century", by Reuters

    New Century financial, once the nation's largest independent provider of subprime mortgages, was dealt a fresh setback yesterday when Fannie Mae said it would no longer buy its loans made to borrowers with poor credit ... People's Choice, a privately held subprime lender, filed for bankruptcy protection, joining more than two dozen home financiers ... Accredited Home Lenders Holding, which has been struggling, said it had won fresh financing from a San Francisco hedge fund ... Wells Fargo ... said it was eliminating 121 jobs ... on top of 323 previously announced job cuts ... news yesterday sent its [New Century] stock down 22 percent, to $1.69 ... Mortgage Lenders Network USA, Ownit Mortgage Solutions and ResMae Mortgage, which have already filed for bankruptcy protection ... Accredited rose after it said it had secured a five-year, $200 million loan from Farallon Capital Management. The loan carries an interest rate of 13 percent ... top five subprime companies [asked by Senate banking Committee to explain their lending practices] ... are New Century, HSBC Holdings, Countrywide Financial, WMC Mortgage and First Franklin

    - "Fremont selling $4 billion of its subprime loans", Reuters

    Fremont General, which is seeking a buyer for its subprime mortgage unit, said yestrady that it would sell $4 billion of subprime mortgages ... sale will result in a $140 million pretax loss, less than investors expected ... helped push up shares of the company ... by 16 percent, to $10.19 ... Accredited Home Lenders Holding, of San Diego, closed up 11 percent, to $11.96, after a second hedge fund in two days reported a sizable equity stake ... projected loss [Fremont] reflected that the loans were priced around 97 cents on the dollar ... Sept 30, Fremont had $5.54 billion of loans for sale on its balance sheet, and $5.96 billion held for investment ... assets totaled $12.8 billion ... more than two dozen [financial companies] have gotten out of the subprime business in the last year ... Citadel Investment Group, a roughly $12 billion dollar Chicago hedge fund ... took a 4.5 percent stake in Accredited ... Tuseday, Accredited said it had received a $200 million loan from a San Francisco-based hedge fund, Farallon Capital Management, which had a 6.9 percent stake ... Accredited said it would take a $150 million pretax charge for selling $2.7 billion of its loans ... the loans were priced at roughly 94 cents on the dollar ... [Fremont] hired Credit Suisse to help sell its subprime unit ... had notified some of the unit's 2,400 employees that they would lose their jobs on May 18 ... would comply with an order form FDIC barring it from risky lending

    - "The subprime loan machine", by Lynnley Browning, NYT

    ... Mr Jones [Edward N, former NASA engineer] and his son Michael, designed a program that used the internet to screen borrowers with weak credit histories in seconds ... early 1999, his company, Arc Systems, had its first big customer: First Franklin Financial, one of the biggest lenders to home buyers with weak, or subprime, credit ... by retrieving real-time credit reports online, then using algorithms to gauge the risks of default ... allowed subprime lenders like First Franklin to grow at warp speed ... since 1999, Mr Jone's software had been used to produce $450 billion in subprime loans ... Automated underwriting "replaced the ways we used to extend credit," said Prof Nicolas P Retsinas, director of the Joint Center for Housing Studies at Harvard ... [New Century Financial] promised mortgage brokers on its web site that with its FastQual automated underwriting system, "We'll give you loan answers in just 12 seconds!" ... some big Wall Street banks and housing lenders bought the software, then developed their own systems ... 2001 Fannie Mae survey found that automated underwriting reduced the average cost to lenders of closing a loan by $916. The software quickly weeds out the very riskiest of applicants and automatically approves the rest. "You don't have to chase every lead - just greenlight 'em," Mr jones of Arc Systems said in an interview ... "Without the technology, there is no way we would have been able to do the amount of business we did and continue to do," Scott Berry, executive vice president for artificial intelliegnce at Countrywide Financial, told a trade publication, Bank Systems & Technology, in the summer of 2004 [150,000 loans monthly by mid-2004, using MindBox's system] ... Arc Systems ... earns $10 to $30 each time a borrower submits a loan application ... "Automated underwriting put the credit score on such a pedestal that it obscured the other important things, like is the income actually there," said Professor Retsinas ... since the subprime housing market began falling apart late last year, Arc Systems' sales have dropped 30 percent ...
    - "Senate questioning on mortgages puts regulators on the defensive", by Vikas Bajaj, NYT

    ... even as lawmakers expressed outrage at the problems being encountered by low-income homeowners, they signalled that they would not rush to impose new legislation on the industry ... regulators could address most excesses under existing laws ... official representing the Federal Reserve struggled to repsond to a series of rapid questions from senators ... [offical, Roger T Cole] noted that the agency had taken six enforcement actions against mortgage issuers in five years, repeatedly warned banks about lax lending standards and initiated outreach and educational efforts aimed at borrowers ... Fed and other banking regulators have issued draft regulations that would make it harder to offer adjustable rate loans ... [the second hearing] held on subprime mortgages this year ... Sandor E Samuels, executive managing director at Countrywide, said the Fed's proposed regulations would shut out a big group of low-income and minority borrowers from home ownership ...

    - "Morgan Stanley to sell subprime lender's loans", Reuters

    Morgan Stanley said yesterday it would auction $2.48 billion of residential mortgages from the troubled subprime lender New Century Financial ... collateral pledged to Morgan Stanley for a $2.5 billion credit line ... Accredited Home Lenders Holding and Fremont General, announced agreements this month to sell subprime loans at a steep discount to raise cash ... first round bids for the [New century] loans are due Thursday, and the top three parties will be invited to submit final offers. Morgan stanley reserves the right to enter its own bid in the final round ... [New Century] stopped making loans two weeks ago, and said it had less than $60 million in cash on hand ... four large subprime lenders have sought bankruptcy protection since late December ...

    - "Regulators favours standards against predatory lending", Bloomberg news

    The chairwoman of the Federal Deposit Insurance Corporation, Sheila C Blair, said Tuesday that Congress should set standards to protect borrowers against predatory lenders, becoming the first top regulator to urge a legislative solution for the subprime problem ... SEC is examining whether appropriate disclosures were made to investors who bought portfolios of subprime mortgages packaged into securities ... New Century Financial, a subprime lender that is struggling to avoid bankruptcy, disclosed on March 13 that the SEC had requested documents as part of a "preliminary investigation." ... Federal Reserve's chief bank supervisor, Roger T Cole, concede that the central bank could have stepped in earlier to prevent the subprime-mortgage meltdown by curbing lax lending standards ... however the Fed's chief consumer affairs officer, Sandra F Braunstein, told lawmakers the central bank had no timetable for setting new rules. Ms Braunstein ... cautioned that the threat of lawsuits stemming form perceived violations of new rules "could end up cutting off, constraining credit." ...
    - "Lender said to be weighing a bankruptcy filing soon", by Vikas Bajaj and Julie creswell, NYT

    New Century Financial, the troubled subprime mortgage company, could file for bankruptcy protection as early as the end of this week ... stopped making loans this month after federal prosecutors and regulators began investigating it ... banks that provided it with credit lines totaling $17.4 billion started repossessing or selling the collateral ... Barclays Capital has taken ownership of mortgages with face value of $900 million. Morgan Stanley, which lent the company $265 million this month, is auctioning $2.48 billion worth of loans this week, and Natixis Real Estate Capital, a unit of a French bank, is auctioning $800 million in loans ... most valuable asset is the software platform it uses to make loans ... last year, New Century was the second-largest lender of martgages, after HSBC, to people with weak, or subprime, credit, making a total of $51.6 billion in loans, according to Inside Mortgage Finance ... fell 15 cents yesterday, to $1.41. At the end of last year, the shares were trading at $31.59 ... improperly accounted for loans it was being forced to buy back from Wall Street investors because too many borrowers were deafulting on their mortgages too quickly ...

  7. #7

    Default Re: GFC timeline


    - "Manageable threats seen by Fed chief", by Jeremy W Peters and Edmund L Andrews, NYT

    ... [Bernanke] said Wednesday that he did not expect the escalating problems in the mortgage lending business to spread to the rest of the economy ... inflation is still the predominant concern ... DJIA dropped 96.93 points, or nearly 0.8 percent as well, to 12,300.36 ... "The impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained," he [Bernanke] said ... he believed "it's worth looking at" whether Congress should give the Fed the authority to enforce regulations on mortgage lenders that are not part of a banking institution ... broadly, the Federal Reserve chairman said that imposing government restrictions had the potential to damage the housing market ... "This is a terrible instance where a lack of oversight has led to a wild west mentality among unscrupulous lenders and, frankly, the exploitation of large numbers of financially unsophisticated borrowers," Mr Schumer [Sen Charles E, Dem (NY), Joint Economic Committee] said ...
    April 2007


    - "Home lender is seeking bankruptcy", by Julie Creswell and Vikas Bajaj, NYT

    ... Plagued by a spike in loan defaults and a loss of confidence among its financial patrons on Wall Street, New Century filed for Chapter 11 protection in Federal Bankruptcy Court ... it would dismiss 3,200 employees, or slightly more than half of its staff ... outlined a plan to liquidate itself over the next 45 days in auctions for its three principal assets: the platform it used to make home loans, the operation that serviced mortgages and the interest it held in pools of loans sold to investors ... originated $60 billion in mortgages last year ... second only to HSBC Finance ... Barclays Capital, the London-based bank, said that it had closed its purchase of EquiFirst, a subprime mortgage lender, for $76 million, which is a third of the $225 million it agreed to pay in January ... "This was a very hard step for me personally and clearly not the outcome I would have preferred," Brad A Morrice, New Century's president and chief executive ...

    - "Atlanta-based lender closes after fund sources dry up", AP

    ... privately owned Southstar [Funding], based in Atlanta, which offered subprime and other mortgage products, closed out all accounts on Monday after its investment partners cut off financing because of payment defaults ... Southstar generated close to $7 billion in mortgage loans and employed as many as 800 people a year ago ... two of the main purchasers of its loans recently refused to finance pools of money committed to the company, unless it reimbursed them upfront for all existing repurchase obligations ... efforts to sell the company to two potential buyers fell through on Friday and Sunday ...

    - "Home loans: a nightmare grows darker", by Gretchen Morgenson, NYT

    ... subprime mortgages account for only one-eigth of total mortgages outstanding, they represent 60 percent of foreclosures, according to the Center for Responsible Lending, a nonprofit and nonpartisan organization ... in 1995, president Bill Clinton directed [his government] ... to develop the National Homeownership Strategy, "an unprecedented public-private partnership to increase homeownership to a record-high level over the next six years," as described in an August policy brief of that year ... one [initiative] was to make financing arrangements for borrowers more affordable and flexible ... 2004, the homeownership rate reached 69.2 percent, a record ... according to experts on lending practices, the products devised to propel homeownership did so only as long as housing prices kept rising ... "These loans are designed to make borrowers refinance and keep the loan production mill churning," Mr Lawler [Thomas A, founder, Lawler Economic and Housing Consulting Daily, newsletter] said ...

    - "Bankruptcy trustee opposes New Century's sale of mortgages", Bloomberg news

    New Century Financial ... should not be allowed to sell $50 million worth of mortgages to a subsidiary of the Royal bank of Scotland ... should be forced to eliminate or reduce a $1 million breakup fee ... and to say how it will protect consumer financial data ... Carrington Capital Management had offered about $133 million for the loan servicing unit ... Greenwich Capital [RBS subsidiary], has agreed to pay $50 million for about 2,000 mortgage loans, most of which are in default ...
    - "Defaults rise in next level of mortgages", by Vikas Bajaj, NYT

    ... American Home Mortgage, a lender based in Melville, NY, said that it will earn less and pay out a smaller dividend because it was being asked to buy back and write down the value of certain loans. Those loans are known as Alternative A, or Alt-A ... [shares] tumbled 15.2 percent, to close at $21.92 ... disclosure last week by M&T Bank, a regional bank based in Buffalo, that it would write down Alt-A loans and no longer sell them because bids for the mortgages came in lower than it had expected ... Alt-A loans are made to borrowers with credit ratings that fall between prime and subprime ... February, 2.6 percent of Alt-A loans were delinquent by 60 or more days, up from 1.22 percent a year before, according to FirstAmerican LoanPerformance ... "This is a definite sign that at least in the secondary market the subprime issues are spilling over," he [Zach Gast, analyst, Center for Financial Research and Analysis] said ...

    - "Novastar may put itself up for sale", Reuters

    Novastar Financial, the struggling subprime lender, said yesterday that it was exploring strategic alternatives, including a possible sale of the comapany. The company said it had also obtained a $100 million financing commitment arranged by Wachovia Capital Markets ... last month laid off 17 percent of its workforce ... first-quarter volume [nonconforming loans] fell 21 percent, to $1.44 billion ... shares rose 91 cents, or more than 18 percent, to $5.94, in after-hours trading ...

    - "Help for subprime mortgage holders", Bloomberg news

    Freddie Mac, the mortgage giant, said yesterday that it would buy as much as $20 billion in subprime mortgages, while a lender, Washington Mutual, offered to refinance $2 billion in loans as the mortgage finance industry made its biggest gesture to help borrowers with poor credit histories ... Freddie Mac's program, scheduled to begin in July ... Washington Mutual has about $20.4 billion in subprime home loans ... about 9 percent of the $217 billion loan portfolio. Its program will be available only to subprime-mortgage customers whose payments are up-to-date

    - "2 subprime lenders announce job cuts; call centers closed", Bloomberg news

    General Electric's subprime unit, WMC Mortgage, closed three centers yesterday and cut 771 jobs ... Residential Capital home-lending unit of GMAC announced it would eliminate as many as 700 workers, or 5 percent of its American work force ... in addition to the reduction of 460 jobs announced in March [by WMC] ... cuts follow a $651 million fourth-quarter operating loss at ResCap [GMAC] ... General Motors sold a Majority stake in GMAC ... in November to a group led by Cerberus Capital Management ...

    - "H&R Block to sell subprime lender unit", Reuters

    H&R Block Inc said yesterday that it would sell its subprime lender, the Option One Mortgage Corporation, to the private equity firm Cerberus Capital Management ... Cerberus will pay the value of the assets - $ 1.27 billion as of Jan 31 - less $300 million, H&R Block said. Tangible net book value will probably be lower than the January level when the deal closes, analysts said ...

    - "Mortgages' mystery: the losses", by Gretchen Morgenson, NYT

    ... report from asset-backed-securities analysts at Lehman Brothers last week estimated that some $19 billion in losses are sitting in loan pools assembled in 2005, 2006 and early 2007. Most of these losses are in collateralized debt obligations ... the $18.8 billion accounts for about 5.5 percent of all mortgages issued and outstanding in the period ... Notwithstanding all the news about defaults, delinquencies and foreclosures, the rating agencies have not downgraded many mortgage loans because, they say, they do not expext their original assumptions regarding the loans' performance to change substantially. As Susan Barnes, a managing firector at S&P, told Congress last week, the firm had downgraded just 0.3 percent of the subprime issues it rated, as of April 12 ...

  8. #8

    Default Re: GFC timeline

    May 2007


    - "Mortgage firm's assets sold", NYT

    ... People's Choice Financial Corporation, the subprime lender reorganizing in bankruptcy, said that Equity One ... would pay $14.1 million to buy its principal assets, subject to court aproval ...

    - "East coast money lent out west", by Vikas Bajaj, NYT

    ... What used to be a profitable partnership between subprime lenders and Wall Street banks has now degenerated into a cross-country blame game ... William D Dallas, the founder and chief executive of Ownit, acknowledges loosening lending standards but says he did so reluctantly and under pressure from his investors, particularly Merrill Lynch, which wanted more loans to package into lucrative securities ... A spokesman for Merrill Lynch denied Mr Dallas's assertions ... Tom Marano, who heads the mortgage business at Bear Stearns, disputed the contention that Wall Street pressure led to the loosening of credit standards ... Big banks and hedge funds are buying up bankrupt or ailing mortgage companies that did not have enough capital ... he [Dallas] created Ownit to serve borrowers who earned less than $100,000 and had less than $100,000 in assets, a group he calls the "mass nonaffluents." ... "This is what a bankrupt subprime company looks like," Mr Dallas said. "No employees, and lots of files."

    - "Fed chief adresses foreclosures", by Jeremy W Peters, NYT

    ... With Congress preparing to take up legislation that would more closely monitor mortgage lending, Ben S Bernanke argued that any new rules must be narrowly written ... "We must be careful not to inadvertently suppress responsible lending or eliminate refinancing opportunities for subprime borrowers," he said ... "I believe that in the long run, markets are beter then regulators at allocating credit," he said ... She [Michelle Meyer, Lehamn Brothers] said that overly ambitious regulations could have the unintended consequences of cutting off credit ... "The vast majority of mortgages, including even subprime mortgages, continue to perform well," he [Bernanke] said. "We believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy."

    - "Troubled lender sells division and brings in new leadership", Bloomberg news

    ... Fremont agreed last month to sell its home lending and mortgage servicing business to the hedge fund Ellington Capital Management for an undisclosed sum ...
    June 2007


    - "Big investors jump back into shaky home loans", by Vikas Bajaj and Julie Creswell, NYT

    ... Among those making the biggest bets is Cerberus Capital Management ... acquired control of the subprime lender Residential Capital last year ... [through] an investment consortium that bought a 51 percent stake in GMAC ... also owns Aegis Mortgage, a subprime lender based in Houston, announced plans to acquire Option One, the troubled mortgage subsidiary of H&R Block ... these acquisitions would make Cerberus the biggest subprime lender ... according to first-quarter lending statistics from Inside Mortgage Finance ... "They have certainly double-downed and have bought some extremely attractive operations" [Brenda B White, managing director, Deloitte & Touche Corporate Finance] ... investors like Cerberus, Ellington Capital and the Citadel Investment Group see an ideal buying opportunity ... "The investment banks that were buying last year were buying at the high," said Mr Burns [Barrett, chief executive, Vantage Score] ... industry officials say new entrants to the subprime business may be in for nasty surprises if they think the current difficult stretch represents a bottom ... "The reality is that the mortgage business for the forseeable future is not a growth business," said Jeffrey Kirsch, president of American Residential Equities, which buys defaulted mortgages ... New Century Financial ... failed to attract bids for its loan origination unit in a bankruptcy auction ... Second Curve capital [hedge fund], that bought an 8.5 percent stake in Accredited [Home Lender] ... has increased its stake in the company to 11.2 percent ... Citadel, an aspiring financial conglomerate based in Chicago, picked up the lending business of ResMae for just $22 million. Ellington Management, a hedge fund based in Greenwich, Conn ... agreed to pay an undisclosed sum for the lending busines of Fremont General ...

    - "Beware of exploding mortgages", by Gretchen Morgenson, NYT

    ... During the next five years, some $1 trillion in adjustable-rate mortgages will reset .. too early to estimate how many foreclosures will take place as a result, but last year there were 1.2 million, according to RealtyTrac ... almost 4 percent of the loans made in the second half of 2006 were more than two months delinquent ... fully 35 percent of the most recently issued loan pools in the index [ABX] have delinquency rates that exceed target levels specified when they were sold to investors ... "We have basic safety regulations for nearly every product a consumer can buy, except the ones that ruin them financially," Ms Warren [Elizabeth, Harvard Law School Professor and bankruptcy expert] said ... Some states are taking the matter of protecting consumers into their own hands ...

    - "Bankrupt lender dismisses 2 executives", Dow Jones

    New Century Financial, the bankrupt housing lender, disclosed yesterday that it had fired its chief executive and an executive vice president ... "without cause" ... Last month the United States Trustee overseeing the New Century bankruptcy had sought the ouster of Mr Morrice [Brad A, chief executive] ... turned down by ... United States Bankruptcy Court ...

    - "Wall St firms hurt by the subprime lending fallout", by Jenny Anderson, NYT

    ... Yesterday, Goldman Sachs reported that profits were flat from a year ago, as the weak mortgage market helped drive down fixed-income revenues by 24 percent. Bear Stearns, a smaller firm but one with significant market share in the mortgage market, reported a 10 percent drop in net income, excluding a one-time charge ... Goldman reported profit of $2.3 billion, or $4.93 a diluted share, up 3 percent from a year ago, and down 26 percent from a very strong first quarter. Bear Stearns reported earnings of $362 million, or $2.52 a diluted share, down more than 32 percent from the same quarter a year ago ... Earlier this week, Lehman Brothers reported earnings of $1.3 billion, or $2.21 a share, a 31 percent increase from the same quarter in 2006 ... Subprime loans entering foreclosure rose to a five-year high of 2.43 percent, up from 2 percent in the previous quarter, accoring to the Mortgage Bankers Association ... A set of Bear Stearns hedge funds are in the process of trying to sell a highly leveraged portfolio of bonds backed by subprime mortgages ... portfolio, worth $4 billion to $6 billion leveraged, is down about 23 percent and recently suspended redemptions ... Bear Stearns spokesman declined to comment ... Goldman Sachs' fixed-income revenues have enjoyed a compound annual growth rate of 29 percent since 2002 ... "As long as we continue to see that kind of benign environment - good availability of economic liquidity - I don't think it will have much of an effect on our business," Mr Viniar [chief financial officer] of Goldman Sachs said

  9. #9

    Default Re: GFC timeline


    - "Slumping confidence in bonds tied to subprime mortgages", by Vikas Bajaj, NYT

    ... The index series, ABX, measures the implied cost of insuring investments in 20 bonds ... traded relatively infrequently by a small group of sophisticated players ... ultimate holders of these bonds ... are pension funds, hedge funds, insurance companies and other institutional investors ... end of trading yesterday, the index that tracks the portions rated BBB- of 20 bonds issued in late 2006 was down 7 percent, according to the Markit Group and CDS IndexCo ... it would cost an investor $2,052.88 to insure $10,000 worth of bonds, up from $1,790.28 a week earlier ... "This is not a cataclysmic event, it's a slow bleed," said Karen Weaver, the global head of securitization research at Deutsche Bank. Since the start of April, Fitch ratings has issued 404 downgrades of subprime bonds and 113 upgrades ...

    - "Mortgages give Wall St new worries", by Vikas Bajaj and Julie Creswell, NYT

    ... Yesterday, two hedge funds operated by a division of Bear Stearns ... fought for their survival as three lenders - Merrill Lynch, Citigroup and JPMorgan Chase - asked Bear Stearns to put up more capital ... Bear Stearns Asset Management told creditors they had lined up $500 million in new capital from a consortium led by Citigroup and Barclays ... unclear whether ... [it] will be enough to put off plans by Merrill Lynch to seize and auction $400 million of the Bear funds' assets ... the High-Grade Structured Credit Strategies Enhanced Leverage fund of Bear Stearns ... tumble[d] 23 percent in the year through the end of April ... [the fund] raised $600 million in investments when it was started 10 months ago , leveraged itself, or borrowed, about $6 billion from Wall Street ... May, the fund stopped allowing redemptions ... "This isn't an Enron corporate bond that goes into default overnight. This is a process that takes 30, 60, and 90 days of delinquencies before it goes into foreclosure." [Jeffrey Gundlach, chief investment officer, TCW Group] ...

    - "Some lenders dislike plan to save Bear Stearns fund", by Julie creswell and Vikas Bajaj, NYT

    ... [yesterday] Merrill Lynch signaled that it would move forward with plans to auction $850 million in subprime securities it held as collateral ... some lenders ... are not happy with some terms of the Bear Stearns bailout plan ... [Bear Stearns] executives had offered to inject $1.5 billion in new loans into the fund ... [fund's investors] would have had their own exposure reduced but would have had to agree not to demand more cash or collateral from the fund for a year ... the company [Bear] and individual executives invested just $40 million in it ... [Bear's shares] declined 2.2 percent, to $146.70, in the last two days ...

    - "Bear Stearns staves off collapse of 2 hedge funds", by Vikas Bajaj and Julie Creswell, NYT

    ... As the morning unfolded, lenders to two hedge funds at a unit of Bear Stearns ... tried to ascertain what they could expect if they auctioned off mortgage securities with a face value of up to $2 billion. The solicitations were hastily withdrawn when investors reacted with little enthusiasm. But by the end of the day, some of the less-risky securities did change hands ... Deutsche Bank was said to be shopping $600 million in assets ... DJIA fell 146 points, to 13,489.42 ... deal that JPMorgan Chase reached with Bear Stearns Asset Management allowed it to sell $400 million collateral back to the hedge funds for cash ... Goldman Sachs and Bank of America reached similar deals, though details remained unclear ... it would take time - perhaps several days - for potential buyers to drill down into some of the more complex securities in order to value them before any bids could be prepared ... One worry about the possible unwinding of the Bear funds is that it will cascade into larger liquidations ... Merrill is quietly showing it [the assets] to a small group of potential buyers ... Such an approach helps to keep the pricing of the securities under wraps, allowing Wall Street firms to avoid marking down their own stakes ... At the end of the day, Merrill sold only a small portion of the $850 million in assets it had seized ... "Yes, there was too much leverage in the market. Yes, there was too much appetite for risk and yes, that risk was underpriced," said Mark Adelson, a senior analyst at Nomura Securities in NY. "But there has not been a lick of spillover of this situation in the corporate bond market or stock markets so I don't think people need to starting hoarding food, water and ammunition because the end is coming."

    - "$3.2 billion move by Bear Stearns to rescue fund", by Julie Creswell and Vikas Bajaj, NYT

    Bear Stearns Companies, the investment bank, pledged up to $3.2 billion in loans yesterday to bail out one of its hedge funds that was collpasing ... agreed to buy out several Wall Street banks that had lent the fund money ... negotiating with banks to rescue the second, larger fund started last August, which has more than $6 billion in loans ... DJIA fell sharply after the announcement of the bailout and closed down 185.58 points. Shares of Bear Stearns closed down $2.06, to $143.75 ... The first fund, the Bear Stearns High-Grade Structured Credit fund - the one bailed out yesterday - was started in 2004 and had done well ... Bear Stearns funds ... had invested in collateralized debt obligations, or CDOs, which invest in bonds backed by hundreds of loans and other financial instruments ... Last year, $316.4 billion in mortgage-related CDOs were issued, about 77 percent more than the year before, the Securities Industry and Financial Markets Association said ... March, the older fund registered its first loss ... April, the older fund was down 5 percent for the year, and the newer fund had fallen 10 percent ... May, however, more significant problems began to emerge. The Swiss investment bank UBS shut its hedge fund arm, Dillon Read Capital Management, after bad subprime bets led to a $124 million loss ... most startling development was a sharp restatement in April of the second [Bear] fund. The firm revalued some securities and told investors that the fund was down 23 percent, not 10 percent as it had said earlier ... May, the firm froze all redemption requests ...

    - "Subprime fallout could hit shares", by Conrad De Aenlle, NYT

    ... "We just don't have any idea when the washing machine will finish its cycle. It could be two weeks or two years." [Henry J Hermann, chief executive, Waddell & Reed] It is also unclear who might be taken to the cleaners ... No change in key interest rates is forseen when the Fed meets on Thursday ...
    - "When models misbehave", by Gretchen Morgenson, NYT

    ... why the firm's [Bear Stearns] risk management proffesionals seem to have been AWOL in recent months as subprime mortgage loans plummeted in value ... the rating agencies, which investors rely on to be prescient cops on the beat, are stunningly behind on downgrading mortgage-backed securities and the pools that own them ... 90 percent of the [Bear] fund consisted of securities with AA or AAA ratings ... Officials at ratings agencies have said in the past that their ratings reflect their estimates of future performance, not market pricing ... tomorrow, fresh data on mortgage delinquencies is due ...

    - "A stock filing gone awry for Bear Stearns", by Gretchen Morgenson, NYT

    Early in May, as Bear Stearns executives scrambled to meet redemption requests ... a money management company affiliated with the Wall Street firm filed its intention to sell $100 million worth of shares to public investors ... Everquest Financial's initial public offering statement on May 9 disclosed that substantially all the assets in its $700 million portfolio had been bought from the Bear Stearns High-Grade Structured Credit Strategies fund and the High-Grade Structured Credit Strategies Enhanced Leveraged fund ... Yesterday afternoon, Everquest withdrew its offering ... analyst at Portales Partners, Charles Peabody, said in a note to clients last week that Everquest appeared to be an investment vehicle used in part "as a way for Bear Stearns to offload some of its own mortgage exposure." ... Everquest ... was to be run by ... Ralph R Cioffi, a senior managing director at Bear Stearns who also oversaw the troubled hedge funds ... While the Everquest filing did not discuss the hedge fund losses at Bear Stearns, it did highlight the enviable returns generated in recent years by Bear Stearns Asset Management ...

    - "Pimco forsees widening subprime harm", Reuters

    ... Mr Gross, the chief investment officer of Pacific Investment Management Company, known as Pimco, also criticized rating agencies for failing to warn investors about the riskiest segments of the credit markets, saying they were wooed by "the makeup" and "six-inch hooker heels." ...

  10. #10

    Default Re: GFC timeline


    - "A new genre on Wall St: bailout blog", by Julie Creswell, NYT

    ... The Securities and Exchange Commission has started an informal inquiry into issues surrounding the Bear hedge funds and how the industry is valuing mortgage-related securities ...
    - "Housing and hedge funds", Editorial, NYT

    ... in the end, intervention on behalf of Wall Street would be an outrage, because Wall Street - abetted by lax federal regulation - is largely to blame for this fiasco ... In the past two years, Wall Street firms have issued investments similar to the Bear Stearns holdings, worth about $500 billion on paper. If those were to tank, the damage could be felt broadly ... The country needs vastly better regulation than it now has ...

    - "Salvaging a prudent name", by Landon Thomas Jr, NYT

    "I plan on sticking around," said James E cayne, chief executive of Bear Stearns ... "I'm angry," he said as he took a deep puff on a freshly lit Montecristo cigar ... world-class bridge player who did not finish college and whose first job was as a travelling salesman selling copiers ... "I feel that peope now look at me with a question mark." ... The firm has paid fines for its ties to fraudulent brokerage houses and investment firms that engaged in illegal mutual fund trading ... he ... says Bear Stearns is well placed to survive as an independent entity ...

    - "A big early climb turns into a loss", Bloomberg news

    ... S&P 500 lost 2.36 points, or 0.2 percent. The Dow average slipped 13.66 points, or 0.1 percent, to 13,408.62 ... yield on the benchmark 10-year Treasury note fell 0.08 percentage points, to 5.02 percent. The price rose 19/32, to 95 30/32 ... Bear Stearns declined $4, or 2.8 percent, to $140 ... Merrill Lynch ... losing $2.44, or 2.8 percent, to $83.58. Lehman Brothers dropped 12 cents to $75.80 ... Oil prices climbed above $70 for the first time since September ...
    - "US tightens rules on subprime mortgages", by Floyd Norris, NYT

    Federal banking regulators set final rules on subprime mortgages yesterday, turning aside banking industry efforts to weaken them ... most important change ... adjustable-rate mortgages should be given only to borrowers who would qualify to meet the loan terms even after the rate resets higher ... Federal Reserve chose not to use the authority it has under a 1994 law to impose the rules on all mortgage lenders, said Michael D Calhoun, president of the Center for Responsible Lending ... Some banks had voiced fears that requirements to inform of the options they had amounted to "suitability rules", similar to those brokers must meet ... regulators said, however, that they were not seeking to impose a suitability standard, only to assure borrowers they were informed of relevant facts about the costs and risks of mortgages ...

    July 2007


    - "Only one word for subprime mess", by Gretchen Morgenson, NYT

    ... In March ... Henry M Paulson Jr, the Treasury secretary, said the subprime mess was "largely contained." In April, Richard W Fisher, president of the Federal Reserve Bank of Dallas, called the situation "mostly contained." Ben S Bernanke ... has also used the word to describe the subprime problem ... last week, Timothy Bitsberger, treasurer of Freddie Mac ... called subprime woes "severe, but contained." ... E Stanley O'Neal, CEO of Merrill Lynch, said at the same conference that the slump was "reasonably well contained." ... how big a container?

    - "Inquiry into lender", Reuters

    ... New Century Financial ... said yesterday that the SEC had elevated its investigation of the company to formal status ... New Century said the agency orally advised the company's outside counsel of the formal inquiry on June 21 ...

    - "Rate agencies move toward downgrading some mortgage bonds", by Vikas Bajaj, NYT

    ... Standard & Poor's said that it would probably downgrade bonds totaling a relatively small $12 billion ... Moody's Investors Service, followed suit later in the day, saying that it would downgrade 399 bonds with a face value of $5.2 billion and put another 32 bonds on watch ... S&P 500-stock index declined 1.42 percent, to 1,510.12, and the Dow Jones Industrials fell 1.09 percent, or 148.27 points, to 13,501.70 ... Lehman Brothers ... fell 5 percent ... Bear Stearns declined 4.1 percent ... As the agency [Standard & Poor's] conducted its review, it increasingly discovered more instances of fraud and misrepresentation in loans from some mortgage companies ... the $12 billion in bonds that S&P said it would probably downgrade account for just 2.1 percent of the $565.3 billion in mortgage securities rated by the firm from October 2005 to the end of 2006 ... "I don't think this is a the-sky-is-falling story," Mark H Adelson, a senior analyst at Nomura Securities said. "If they started listing AAA paper, that would be the sky falling." ... [S&P] expects the pools of subprime mortgages that back billions of dollars in bonds, on average, to suffer losses of 11 percent to 14 percent. By contrast, executives at Moody's have recently said they expected losses of 6 percent to 8 percent ...

    - "Ratings cut near for debt products", Bloomberg news

    Moody's Investors Service may reduce the ratings of $5 billion of collateralized debt obligations ... would affect 184 tranches of 91 CDO's representing about 3.6 percent of rated CDO's containing asset-backed securities ...

    - "Fitch may downgrade bonds tied to subprime mortgages", Bloomberg news

    Fitch Ratings ... said yesterday that it might downgrade bonds valued at $7.1 billion because of rising delinquencies and defaults on subprime mortgages ... put 170 subprime transactions "under analysis" ... 19 CDO's were placed on review ... Moody's also said that units of Washington Mutual and General Electric were among four subprime lenders [also New century and Fremont General] whose loans helped prompt Moody's ... to downgrade mortgage securities ... Many of the bonds that S&P is reviewing are made up of loans originated by New Century ... and Fremont ...
    - "General Electric to sell WMC Mortgage, a subprime loan unit", NYT

    ... decision to sell the unit, WMC Mortgage, was announced by the company yesterday in an e-mail message to employees ... General Electric entered the subprime market three years ago ... In the past year, WMC Mortgage laid off more than 1,200 workers ... company has been aggressively selling loans on its books, decreasing its portfolio by $3 billion, and leaving the unit with less than $1.5 billion ...

  11. #11

    Default Re: GFC timeline


    - "World stocks hit life high, oil eyes record", Natsuko Waki, Reuters

    ... Upbeat second-quarter earnings boosted US stocks to record highs on Friday, helping calm fears housing-related fallout could trigger a credit crunch and spread to the wider community ... London brent crude had risen above $78 a barrel ... Investors expect the Fed to leave interest rates on hold for the rest of the year ...
    - "Dollar consolidates near lows as markets eye Bernanke", AFP

    The dollar held steady near recent lows on the euro and pound Monday as markets awaited a midweek appearance by Federal Reserve chairman Ben Bernanke in the US Congress ... the dollar has fallen sharply on concerns that the troubled US housing sector could spread into the wider American economy ... interest rates [expected] to rise in the eurozone from their current 4.0 percent ...

    - "Alliance Bancorp, a mortgage lender, files for liquidation", Dow Jones/AP

    Alliance Bancorp, a residential mortgage lender based in Brisbane, Calif, has filed for Chapter 7 bankruptcy ... listed assets and debts of more than $100 million each ... "Unfortunately the latest market was more than we were able to overcome," the chief executive, Lisa Duehring, sa[id] ... formerly the United Financial Mortgage Corporation, specialized in lending to so-called Alt-A borrowers ...

    - "Banking regulators to increase scrutiny of subprime lenders", AP

    ... focussing on companies that operate outside federal banking oversight ... pilot program ... is scheduled to commence in the fourth quarter and affect about 12 lenders ... Last month, Rep Barney Frank, chairman of the House Financial Services Committee, threatened to strip the Federal Reserve of its authority to write rules against mortgage abuses if the central bank did not act quickly ... 75 percent [of subprime loans in 2005] were made by state-licensed lenders and subsidiaries of federally regulated banks that operate with limited federal regulation ... Regulators in 26 states have pledged to adopt lending standards similar to those adopted last month by federal banking regulators ...
    - "Bear Stearns says battered hedge funds are worth little", by Gretchen Morgenson, NYT

    Bear Stearns told clients in its two battered hedge funds late yesterday that their investments, worth an estimated $1.5 billion at the end of 2006, are almost entirely gone ... May and June had been devestating for the portfolios ... High-Grade Structured Credit Strategies fund, was down 91 percent by the end of June ... High-Grade Structured Credit Strategies Enhanced Leveraged fund ... has no investor capital left. "In light of these returns, we will seek an orderly wind-down of the funds over time," a letter to Bear Stearns clients said ... Bear's letter said the "unprecedented declines in the valuations of a number of highly rated (AA and AAA) securities" contributed to June's woeful performance ... At their peak, the funds were valued at $16 billion, including the leverage that they used ... after-market trading, Bear Stearns shares fell 3.6 percent, to $134.90 ... down about 14 percent for the year ... the ABX index ... hit fresh lows ... part of the index that tracks A-rated segments of mortgage securities issued in late 2006 and early 2007 fell to 68.5 cents on the dollar, down form 72.36 cents Friday ...
    - "Dollar slides vs Euro, pound on subprime worries", by Masayuki Kitano, Reuters

    ... The dollar suffered as Bear Stearn Cos Inc said in a letter to investors on Tuesday that two of its hedge funds that bet heavily on risky subprime loans now have "very little value." ...
    - "Dollar pressured by Bernanke warning on US housing slump", AFP

    ... Bernanke warned that the downturn in the US housing market, a key concern of investors at the moment, could deepen, but he also reiterated that inflation was the central bank's main worry ... Fed also downgraded its growth forecast for the US economy this year a notch to 2.25-2.5 percent, below a February forecast of growth of 2.5-3.0 percent ...

    - "Dollar slumps to near-record euro low", AFP

    ... Analysts at BNP Paribas said Bernenke's comments revealed a "significant change in tone from the Fed, where previously Bernanke and other Fed members had attempted to play down the problems in subprime, describing them as 'contained.'" ...
    - "IMF to revise forecasts amid 'global boom'", by David Dieudonne, AFP

    The International Monetary Fund is revising its economic growth forecasts amid a "global boom", the IMF chief economist said Thursday, suggesting a bump up in official estimates. "We were criticized for being optimistic at the the time of our spring forecast," Simon Johnson told reporters, referring to IMF April forecast of world growth at 4.9 percent this year and in 2008. "Let me just say we are quite pleased that we are optimistic," he told reporters, without giving precise fugures ...

    - "Market shock: AAA rating may be junk", by Floyd Norris, NYT

    ... By the magic of securitization, sow's ears could become silk purses, or at least look like them ... the vast majority of the money that financed risky loans appeared to be invested in investment-grade paper ... ratings agencies are threatening to downgrade some AAA-rated paper, and there is rising nervousness about bonds issued by companies like MBIA and Ambac that guaranteed some of those AAA securities ... index of shares in six financial insurers has lost a tenth of its value since the end of May ... This week the DJIA traded above 14,000 for the first time ...

    - "Euro hits new dollar record on jitters over US economy", AFP

    ... The latest bad news came on Tuesday when Countrywide Fianancial Corporation, a leading US mortgage lender, slashed its full year earnings outlook and reported a 33 percent fall in second-quarter profit, heightening fears of a spillover efect in the economy ... Treasury Secretary Henry Paulson expressed confidence Monday in the dollar's prospects despite the new highs reached by the euro and predicted the subprime troubles would not infect the broader economy ...

    - "Stopping the subprime crisis", by Joshua Rosner, NYT

    ... the ratings agencies are far from passive arbitrators in the markets. In structured finance, the rating agency can be an active part of the construction of a deal. In fact, the original models used to rate CDO's were created in close cooperation with the investment banks that designed the securities ... actively advise issuers of these securities on how to achieve their desired ratings. They appear to be helping investment banks, hedge funds and fund companies, all of which have a fiduciary obligation to investors, to develop the worst possible product that would still achieve a certain rating ... slightly more than a handful of American non-financial corporations get the highest AAA rating, but almost 90 percent of CDO's that receive a rating are bestowed such a title ... structured securities ratings [are] their fastest-growing line of business ... Rating agencies are typically paid by issuers and only for initial ratings ...
    - "Top lender sees mortgage woes for 'good' risks", by Vikas Bajaj, NYT

    Countrywide Financial, the nation's largest mortgage lender, said yesterday that more borrowers with good credit were falling behind on their loans ... S&P 500-stock index fell 30.53 points, or 2 percent, to 1,511.04 ... home prices were falling "almost like never before, with the exception of the Great Depression." [Angelo R Mozilo, chief executive, Countrywide, conference call with analysts] ... Countrywide fell 10.5 percent, or $3.56 yesterday, to $30.50 ... about 5.4 percent of [Countrywide's] home equity loans to customers with good credit ... were past due at the end of June, up from 2.2 percent at the end of June 2006 ... more than a fifth of subprime loans were past due at the end of June, up from 13.4 percent a year earlier ... [Countrywide's] second-quarter earnings fell 33 percent, to $485 million ... In the last five years, Mr Mozillo has exercised options and sold shares for a profit of nearly $380 million, according to data compiled by Thomson Financial. Starting last fall, Mr Mozilo significantly increased the number of shares he was selling ...
    - "Dollar rises against euro as credit fears spread", AFP

    ... But such fears spread across internatinal currency markets Wednesday, as analysts warned the US subprime shake out could ripple through the global financial market, prompting other currencies to weaken against the dollar. Traders appeared to largely brush off a worse than expected report on the troubled US housing sector ... existing US home sales dropped 3.8 percent to an annualized pace of 5.75 million last month ...
    - "IMF hikes outlook for world economic growth to 5.2 percent", by Veronica Smith, AFP

    ... The US growth forecast for 2008 was left unchanged at a 2.8 percent pace. Charles Collyns, the IMF Deputy Director of research, said at a news conference that the IMF was "expecting quite a sharp bounceback" in the US economy in the April-June period ... "a pickup in the second half of the year to maybe 2.5-2.75 percent" ... downside risks to the favorable global outlook remain modest ... the Fund also signaled a growing risk on financial markets "as credit quality has deteriorated in some sectors" ...

  12. #12

    Default Re: GFC timeline


    - "Euro finds footing after falling to two-week low against the dollar", AFP

    ... The gloom over the US housing sector deepened after official data showed sales of new homes dropped 6.6 percent in June ... over the last year, sales of new homes plunged 22.3 percent ... the yen also benefited from the risk-aversion trend and indications that Japan's central bank would raise its super-low interest rate, held at 0.5 percent since February ...

    - "Wells Fargo to limit subprime lending", AP

    ... Wells Fargo ranks among the sector's largest lenders but has been relativley unscathed by the bad loans ... the subprime wholseale lending business represents 1.6 percent of the bank's $397.6 billion in mortgage lending in 2006 ... it still planned to issue subprime loans, but not through brokers
    - "PIMCO's Gross says stocks are appropriately valued", by Burton Frierson, Reuters

    ... Speaking on CNBC television, Bill Gross, chief investment officer for Pacific Invetment Management Co [world's biggest bond fund manager], also said he does not believe an economic recession is looming ... his comments came a day after US and global stock markets swooned, corporate credit markets tumbled and goverment bonds soared. Major US stock indexes fell by more than 2 percent each ... benchmark government yields fell to their lowest in two months, ending Thursday just above 4.8 percent ... Gross' comments come three days after he said defaults on subprime mortgages were spreading into US credit markets, producing a "sudden liquidity crisis" ... the concern also afflicted high-grade corporate bonds, widening the yield spread on top-quality bonds by about 5 basis points
    - "Stocks tumble in Asia on US housing woes", AFP

    ... US shares plunged Thursday by more than 300 points, although they pared losses in late trade, with investors gripped by anxiety over the housing market ... Nomura Holdings Inc, Japan's biggest securities firm, said earlier this week it may exit he US sub-prime market after incurring large losses put at 260 million dollars ... in Sydney, the benchmark S&P/ASX 200 closed down 175.6 points or 2.8 percent, an even bigger drop than in the aftermath of the slump on Shanghai financial markets in February ...

    - "Analysts see choppy markets waters but no systematic crash", by Veronique Dupont, AFP

    ... European exchanges on Friday pared their losses after steep declines of between 2.0 and 3.0 percent the day before ... the sell-off the previous day was triggered by a 6.6 percent fall in sales of new homes in the US in June ... world stocks markets have been moving noticeably higher in recent months ... DJIA has gained 22 percent in the past year ... for Mathilde Lemoine, chief economist at the HSBC Bank, the housing and credit crises in the US are "rather localised" and are not likely to spread throughout the global financial system - even if they do trigger a downturn in US consumer spending ...

    - "Asian markets recover modestly after dip", by Matt Moore, AP

    Asian markets bounced back after last week's global selloff but Eurpoean stocks struggled Monday ... UK's FTSE 100 index fell 0.4 percent to 6,192.50 ... shares of retail bank Deutsche Postbank AG plunged more than 4 percent on concerns about exposure to US sub-prime fears ... some of those concerns subsided Monday in Asia as investors bought stocks that appeared oversold ... DJIA slid 1.5 percent Friday, bringing the index's decline for the week to 4.2 percent - the largest percentage drop since late March 2003 ... S&P/ASX 200 rose 25.9 points or 0.4 percent to 6,108.8 ...
    - "HSBC says profits up 13 pct, but bad debts jump", by Steve Slater, Reuters

    ... HSBC, which blamed bad US mortgage loans for its first ever profit warning earlier this year, said pretax profit rose 13 percent to $14.16 billion in the six months to June 30 ... its charge for bad debts was $6.35 billion in the first half of the year, up 63 percent from $3.89 billion in the same period last year ... its handling of US housing problems was on track ... "the stock appears to be enjoying a relief rally - relief that bad debts were not even worse," said Keith Bowman, equity analyst at stockbroker Hargreaves Lansdown ...
    - "IMF chief warns of globalization risks", by Carmel Crimmins and Karen Lima, Reuters

    ... Rodrigo Rato said the trouble in the US sub-prime housing market was an example of such risks ... speaking later to reporters he played down the risks posed by losses in the US mortgage market ... "the scale of any potential sub-prime losses in our opinion looks to be much lower than earlier saving and loans crises" ...

    - "Subprime grenades", Editorial, Financial Times

    ... In the space of a couple of days, $3bn Boston hedge fund Sowood Capital has shut itself down after losing more than 50 percent of its capital, while a parcel of subprime debt has blown up in the face of IKB, a german bank. These losses are rather encouraging. They are encouraging because the pain is dispersed, spread among institutions of different kinds in different countries and buffered by those institutions' capital. That makes a contagion, where losses at Fund A mean it cannot service its loans from Bank B, which in turn calls in debts from Company C, unlikely, and should prevent the current, healthy repricing of risky assets from turning into a crisis. So far new tools for transferring risk such as credit default swaps, which insure investors against a company going bankrupt, seem to have done a good job of spreading risks from subprime borrowers and leveraged buyouts far and wide. That should make the financial system more resilient than it has been during credit wobbles in the past ...

    August 2007


    - "European, Asian markets slip again", by Matt Moore, AP

    ... banking stocks slid on news that American Home Mortgage Investment Corp had missed margin calls from its lenders and was considering liquidation ... FTSE 100 index fell 1.2 percent to 6,283.70 ... Deutsche Bank AG fell more than 2 percent even after its second-quarter profit surged 31 percent ... the bank said its exposure to the subprime mortgage market was not significant ... BNP Paribas fell nearly 1.2 percent after posting a 20 percent jump in second-quarter net profit and saying that it is hardly affected by the current subprime mortgage crisis ... DJIA fell 0.2 percent to 13,180.04 ... worries about contagion rose after Fortress Investments Ltd, the high-yield fund manager of Macquarie Bank Ltd, said late Tuesday that investors in its two funds face losses of up to 25 percent ... the bank's shares tumbled 10.7 percent, helping drag down S&P/ASX 200 index 3.3 percent
    - "HBOS banks profits rise, shrugs off economic woes", AFP

    ... HBOS, a major provider of home loans in Britain, would meanwhile not suffer from the falling US subprime mortgage market, the bank's chief executive, Andy Hornby, said Wednesday ... Hornby on Wednesday said that the world stock market downturn will help, not hinder the private equity arm of HBOS ...
    - "IMF plays down sharemarket falls as APEC finance meet opens", AFP

    ... Commenting on sharemarket volatility caused by concerns about the US subprime mortgage market, Lipsky said the IMF had predicted months ago that a correction in credit markets was possible ... the IMF stood by a forecast released last week that the world economy would grow 5.2 percent in 2007 and 2008. He said some large economies needed to look at increasing interest rates in response to inflationary pressures ...
    - "IMF says US economic outlook 'favorable', but warns on housing", AFP

    ... The IMF's annual snapshot on the US economy ... "The most likely scenario is a soft landing, with growth recovering and inflation easing," the report said. "Propsects for the US economy are favorable." ... The Federal Reserve has kept its short-term funds interest rate pegged at 5.25 percent for over a year ...
    - "Stock futures slide in global sell-off", Reuters

    ... Bear Stearn Cos Inc, recently embarassed by the collapse of two hedge funds, said on Tuesday it had halted redemptions in a third hedge fund after jittery investors wanted to pull out their money. The fallout from the global credit crunch widened as Australia's Macquarie Bank warned that retail investors in two debt funds face losses of up to 25 percent ... stocks had risen Monday and during the first half of Tuesday's sessions, but the relief rally was cut short when American Home Mortgage Investment Corp said it may have to liquidate assets ...
    - "Strong world econ containing subprime risk: Paulson", by David Lawder, Reuters

    ... Speaking to reporters in Beijing, where he ran into stiff resistance in persuading Chinese officials to let the yuan strengthen more quickly, Paulson said markets were unwinding excesses in US mortgage and leveraged buyout financing ... Paulson added that he did not see anything that caused him to reconsider his view that the economic damage from the housing correction was "largely contained," despite losses in a number of financial institutions ... The US Senate Banking Committee voted 17-4 on Wednesday to approve a bill that would make it harder to avoid citing China as a currency manipulator ...

  13. #13

    Default Re: GFC timeline

    01/08/07 cont'd

    - "World stocks in meltdown over US economy fears", by Ben Perry, AFP

    ... Sydney's main stock market meanwhile dived 3.3 percent after market favourite Macquarie Bank said two high-yielding funds faced losses of up to 300 million dollars. Shares in Macquarie Bank, known for its deal making and massive executive pay-checks, shed 10.7 percent as a result, enough to prompt Australian Treasurer Peter Costello to offer assurances that all was well ...

    - "Asian shares up after US gains", by Michael Urquhart, Reuters

    ... Ratings agency Moody's also provided some relief, saying that the implications of the US subprime mortgage crisis would be limited for Asian banks because of their small exposure to this sector ... Australia's S&P/ASX 200 flat ... rising interest rates dampen the attraction of zero-yielding gold holding steady at $664.80 an ounce ...
    - "Eurpoean stocks claw back ground before rate calls", AFP

    ... Trading was subdued ahead of interest rate decisons from both the ECB and the BOE, which were widely forecast to freeze borrowing costs at 4.0 percent and 5.75 percent respectively ... banks were on the rise ... Barclays added 0.66 percent to 682 pence as it revealed a 13.2 percent increase in first half net profit to 2.943 billion pounds ... Societe Generale shares leapt 3.75 percent to 129.2 euros after the french bank posted second-quarter net profit up 32.7 percent at 1.744 billion euros ... DJIA jumped 1.14 percent to close at 13,362.37 ... S&P 500 index gained 0.72 percent to finish at 1,465.81 points ...
    - "BOE keeps interest rates at 5.75 percent", by Matt Moore, AP

    ... The Bank of England left its key rate unchanged at 5.75 percent following last month's quarter-point increase. As for the ECB, some are convinced that the subprime mortgage lending woes affecting US markets are limited in reach and won't worry the bank that oversees policy for the 13-nation euro zone ... Trichet [ECB president] told german newspaper Die Zet last week that the major market moves had been nothing more than a 'healthy correction.' He added, however: "I remain cautious: It is no time for complacency." ...
    - "Finance chiefs vie to soothe martgage, credit 'crisis'", by Justin Cole, AFP

    ... French banking group Societe Generale said Thursday it had "low exposure to the current credit market crisis," partly becasue of its limited US business. Switzerland's second-largest bank, Credit Suisse, said it remained "very cautious" about US mortgage market woes ... "Corrections happen on stock markets, stock markets are not a one-way bet, people should know that," Australian Treasurer Petere Costello warned ... analysts at Lehman Brothers suggested the housing hangover may worsen. "Dismal data suggest further pain ahead for the housing market. Fears of a broader credit crunch and greater losses on Alt-A mortgages continue to rattle financial markets," the Lehman analysts said in briefing note to clients ...

    - "American Home Mortgage says it will close", by Eric Dash, NYT

    American Home Mortgage Investment, the troubled mortgage lender based in Melville, NY, will close today ... it would lay off all but 750 of its 7,000 emlpoyees "in light of liquidity issues resulting from disruptions" in the secondary mortgage market ... shutting down all but its thrift and servicing businesses ... no longer taking any loan applications ... Last Friday, the company halted its quarterly dividend payment in a last-ditch effort to come up with capital. Several big investment banks issued margin calls on the debt ... Accredited Home Lenders Holding ... being acquired by Lone Star Funds, said its own sale was in jeopardy ... In the first three months [of the year], the company [American Home Mortgage] made $16.7 billion in home loans, up 27.2 percent from the same period in 2006 ...

    - "Credit and growth fears hit stocks, dollar, oil", by Jeremy Gaunt, Reuters

    ... benchmark Brent crude oil down $1.28 a barrel at $73.47 ... Monday's ructions, for example, followed sharp losses on Wall Street on Friday after ratings agency Standard & Poor's warned that mortgage credit problems could hurt investment bank Bear Stearn's profits. Bear Stearns, which was one of the first to be hit by the subprime upheaval, said it was weathering the storm but that credit markets were in their worst shape in two decades ... FTSE 100 index was 0.3 percent lower ... euro zone government bond yields weakened as demand grew ...
    - "Dollar slides against the euro", AFP

    The dollar dropped to a four-month low point Monday against the yen and slid against the euro amid increasing concerns about the US economy ... the euro was faring well across the board, surging to two month highs against the pound as the currency benefited from safe-haven flows as well as much stronger than expected German industrial data ... ongoing credit problems and stock market losses had benefited the yen overnight as investors edged away from risky carry trades ...
    - "Dollar slides to four-month-low against euro", AFP

    ... Analysts expect the US Federal Open Market Committee on Tuesday to leave the key federal funds rate unchanged at 5.25 percent ...
    - "European stocks mixed amid US economy concern", AFP

    ... Franco-Belgium banking group, Dexia, saw its share price jump by 4.31 percent to 20.38 euros on expectations that it will shrug off concerns over its subprime activities. Dexia said it would issue a press release addressing concerns over US subprime mortgages late on Monday ... the leading DJIA plunged by 2.09 percent to 13,181.91 points last Friday ... S&P's 500 index dropped 2.66 percent to 1,433.06 ...
    - "European stocks struggle; Asia drops", AP

    ... DJIA lost 280 points on Friday after Bear Stearns chief financial officer said credit markets were the worst he'd seen in 22 years ... compared with February's stock market meltdown, also spurred by subprime woes, "there is a little more of a fundamental fear here that a tightening in credit conditions will derail what so far remains a very strong global economy," Cohen [David, director of Asian forecasting at Action Economics in Singapore] said. But the data do not show that any crisis is under way, Cohen said ... Australia's key index fell 1.7 percent to 5,920.2

  14. #14

    Default Re: GFC timeline


    - "American Home Mortgage seeks Chapter 11 bankruptcy protection", AP

    American Home Mortgage Investment filed for Chapter 11 bankruptcy protection yesterday ... two other lenders - Aegis Mortgage and the mortgage unit of National City - said yesterday that they had stopped taking or had suspended loan originations ... at the top of the list [of AHM creditors] are Deutsche Bank and JPMorgan Chase ... it had lined up $50 million in debtor-in-possession financing from WL Ross & Company, led by the billionaire Wilbur L Ross Jr ... Its shares, which closed 2006 at more than $35, fell to 44 cents before trading was suspended yesterday ... Aegis Mortgage, whose owners include the private equity firm Cerberus Capital Management ... [AHM] joins more than 50 lenders in bankruptcy this year ... was not a subprime lender ... Last week, the company said that many of its lenders wanted their money back and that it was unable to deliver as much as $800 million in promised loans ... Dexia, a bank based in Belgium, said yesterday that it was well protected against subprime risks ... Luminent Mortgage Capital ... said yesterday that it has suspended its quarterly dividend ... it faced a "significant increase" in margin calls on its highest quality assets ... A week ago, Luminent said the dividend was secure ...
    - "Credit worries, imported form US, lead German firm to shut fund", by Mark Landler, NYT

    Germany ... suffered another blow on Monday when an asset management firm in Frankfurt closed a fund to temporarily halt withdrawals ... Frankfurt-Trust, said the withdrawals from the fund, FT ABS-Plus, reflected jitters about the subprime ... "We did it because we wanted to protect the investors." [Rainer Gogel, funds manager] ... did not know when the fund, which is currently worth 160 million euros, would reopen ... Last week ... IKB Deutsche Industriebank ... disclosed deteriorating subprime investments ... Two other asset-backed securities funds ... run by Union Investment and HSBC Investments Deutschland - were closed last week ... "It's a bit like discovering Easter eggs," said Boris Boehm, a money manager at Nordinvest in Hamburg ... Commerzbank said its exposure to the subprime market accounted for a tiny fraction of its balance sheet, as did three of Germany's largest insurers: Allianz, Munich Re and Hannover Re ... IKB's shares jumped 11 percent ...
    - "Dollar steady ahead of US interest rate decision", AFP

    ... Bear Stearns analyst Steve Barrow said the Fed was likely to take a "halfway house position," retaining its concerns over inflation but at the same time being mindful of the risks posed by the recent trouble in financial markets. Though any signal of a possible rate cut may be seen as potentially helpful in propping up the US economy, if the Fed suggests that the recent trouble on credit markets is the reason for this it could spook the market, sparking further dollar selling and risk reduction, Barow said ...
    - "Dollar strengthens against euro as Fed keeps rates unchanged", AFP

    ... The Fed cited continuing inflation pressures in deciding to keep rates unchanged ... the Federal Open Market Committee (FOMC) voted unanimously to keep rates unchanged. In explaining its position, the Fed said the world's largest economy seems likely to continue expanding at a "moderate" clip, and that its key priority remains the fight against inflationary threats. But policymakers acknowledged recent mortgage and credit-related problems which have been plaguing US stock markets. "Financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing," the Fed said. "Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters" ...

    - "German fund stops payout, citing mortgage market unease", Bloomberg news

    WestLB Mellon Asset Management suspended redemptions of an asset-backed securities fund yesterday ... WestLB Mellon, which has about $55 billion under management, is a Eurpoean joint venture of WestLB, based in Dusseldorf, Germany, and the Bank of New York Mellon Corporation ... WestLB Mellon Compass fund: ABS, was almost 80 percent invested in mortgage-backed securities at the end of March ... fund, which has assets of about 214 million euros ... "We are not at all invested in the US subprime market," Uwe Fuiten, the Dusseldorf-based head of investment management at WestLB Mellon said ... IKB Deutsche Industriebank ... chief financial officer, Volker Doberanzke, had resigned ... it would delay releasing financial results by a month ...
    - "Mortgage insurer's deal in doubt", AP

    The private-mortgage insurer MGIC Investment said on Tuesday that it did not believe it had to complete its $4.9 billion purchase of the credit risk manager Radian Group after their joint interest in a mortgage investor became all but worthless ... their investments in the subprime mortgage investor C-Bass ... a $1 billion partnership ... banks [made] margin calls on credit lines held by C-Bass ...
    - "Bush confident of market recovery", by Jeannine Aversa, AP

    ... "I'm not an economist, but my hope is that the market, if it functions normally, will be able to yield a soft landing," Bush told a small group of reporters ... "So the conditions for a - you know - for the marketplace working through these issues are good, and that's how I look at it," Bush said ... nation's [US] unemployment rate edged up to 4.6 percent in July ...
    - "Bush says economy strong despite stock swings", by Glenn Somerville, Reuters

    ... "We've got a record that proves taxes can be cut, economies grow, deficits reduced and wars fought," Bush told a small group of reporters invited to a 45-minute session with him at Treasury ...
    - "Dollar falls as report suggests Beijing threatening asset sales", AFP

    ... The dollar fell on foreign exchange markets after Britain's Daily Telegraph newspaper reported that Chinese Communist Party officials had hinted Beijing may use its 1.33 trillion dollars of foreign reserves "as a political weapon" to deter the US Congress from taking action [for allegedely artificially suppressing the yuan to bolster exports] ... Bush responded that China would be "foolhardy" to attempt to weaken the US currency ... analysts say the BOE will likely raise rates, from a current 5.75 percent, in a bid to tame inflationary pressures ...
    - "Euro rises against dollar after Fed keeps rates unchanged", AFP

    ... Dealers said a decision by Australia's central bank to hike interest rates to a decade-high level of 6.5 percent boosted the local dollar ... in its quarterly Inflation Report, the central bank [BOE] said the annual rate of inflation would only fall back towards the 2.0 percent target in two years' time if rates rose once more in the next few months, taking the base rate to 6.0 percent ...
    - "Home loan demand surges as interest rates dive", by Julie Haviv, Reuters

    US mortgage applications rose for the first time in three weeks as interest rates fell sharply and demand surged for home purchase and refinance loans, an industry group said on Wednesday ... MBA seasonally adjusted index of mortgage applications increased 8.1 percent to 656.5 ... National Association of Realtors last week said pending sales of previously owned US homes rose at their fastest pace in more than three years in June ...
    - "Paulson: Economy solid despite housing", Reuters

    ... "The fundamentals of the economy are very solid," Paulson said in an interview with CNBC. "The markets have been unsettled ... largely because of disruptions in the subprime space. Risk is being re-priced." ... Paulson also said China would like to increase its investment in the US, and dismissed a report that China had considered liquidating its vast US Treasury holdings if Washington imposed trade sanctions ...

  15. #15

    Default Re: GFC timeline


    - "BNP freezes $2.2 bln of funds over subprime", by Sudip Kar-Gutpa and Yann Le Guernigou, Reuters

    France's biggest listed bank, BNP Paribas, froze 1.6 billion euros worth of funds ... frozen funds amount to less than 0.5 percent of funds under management for the eurozone's second biggest bank by value, but later in the day a separate European fund valued at 750 million euros was frozen too, and a Dutch bank pulled its planned new listing after suffering subprime losses ... Germany's Bundesbank held a meeting of those involved in the rescue of Europe's highest profile subprime victim yet, lender IKB ... "The complete evaporation of liquidity in certain market segments of the US securitization market has made it impossible to value certain assets fairly, regardless of their quality or credit rating," [BNP] said in a statement ... the three funds had declined rapidly in size in the past few weeks to 1.593 billion euros at August 7, down from 2.075 billion at July 27 ... the funds affected were Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia ... ECB said it planned a quick liquidity-providing tender at 4.0 percent to bring some calm to money markets ... German bank Sal Oppenheim said it had temporarily closed a 750 million-euro-asset-backed securities fund it managed for Austrian investment foundation Hypo KAG ... chief executive of French insurer AXA said on Thursday that there was no systemic crisis at the moment while the finance chief of Germany's Commerzbank said the problems in the US subprime market were not a "major issue"
    - "French bank suspends funds exposed to US mortgages", AFP

    ... BNP's announcement adds to these fears and follows a similar decision last Friday by the German mutual fund Union Investment which froze one of its funds ... BNP said it would provide further information on the situation in a month's time, and will resume calculation of the net asset value "as soon as liquidity returns to the market." ...
    - "Bank freezes funds, markets plummet on subprime fears", by Greg Farrell, USA Today

    ... Two financial services firms in Germany have also halted redemptions from funds connected to the US subprime market. Those moves come on the heels of the collapse of two Bear Stearns hedge funds ... "The single worst thing that a financial company can do is refuse to pay back the investor," says Richard Bove, banking analyst at Punk Ziegel. "When you start to refuse to give people their money back, the crisis of confidence you're creating is substantial." ... The credit market problems will probably blow over in a month or two, says Jack Malvey, chief global fixed income strtegist at Lehman Bros: "When you look into the history of these corrections, from 1973 to 2002, we've had about 14 of them, and they tend to burn themsleves out over one to three months. We moved from pricing credit to perfection in May, to pricing to reality by mid-July, and we're pricing to high anxiety now. This is a clean out of some excesses. It's probably therapeutic."
    - "Asian markets tumble as credit fears return", Reuters

    ... France's biggest listed bank, BNP Paribas, froze $2.2 billion worth of funds on Thursday, citing the US subprime mortgage sector woes ... prompted action from major central banks to calm markets, with the Eurpoean Central Bank injecting record amounts of cash to prevent a financial system seizure ... Australia's key S&P/ASX 200 index skidded 2.4 percent ... on Wall Street, the blue-chip Dow slid 2.8 percent ...
    - "Bush says markets can withstand credit concerns", by Emily Kaiser, Reuters

    ... "I'm told there is enough liquidity in the system to enable markets to correct." [Bush said] ... Bush acknowledged problems in the housing market but repeated his view, which he had expressed a day earlier, that the market was likely to experience a "soft landing" ... the ECB injected a record $130.6 billion of liquidity into Europe's money markets ... Federal reserve added $24 billion to the banking system on Thursday, but analysts viewed the move as a normal operation and not an offering of liquidity ... "We are not seeing a so-called 'credit crunch' in the US money market," said Michael Darda, chief economist at MKM Partners in Greenwich, Connecticut ... fannie and freddie have pushed their federal regulator to lift a cap on their investments so they can buy more loans ...
    - "Credit fears grip Asian stocks", by Ian Chua, Reuters

    ... "The injections by the ECB and the Fed are a little surprising, and make me wonder if they know something that the rest of the market doesn't," said Edward Meir, commodities analyst at MF Global. Central banks in Japan and Australia added more than usual amounts into their banking systems ... Chicago Board Options Exchange Volatility Index, Wall Street's main gauges of investor anxiety, spiked to its highest since early 2003 ... Macquarie Bank down 6.3 percent ... "What we're seeing is an unwinding of carry trades, and as a result, commodity, oil and stocks are being sold. The only financial instrument that is being bought is bonds," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities Co Ltd ... brent crude edged up 11 cents to $70.32 ... spot gold edged up to $663.30 an ounce ...
    - "Credit fears hit global markets", by David Teather and Andrew Clark, Guardian Unlimited

    Central banks on both sides of the Atlantic pumped billions into the finanacial system to calm nerves, but their actions only served to heighten alarm, prompting a fresh plunge ... DJIA plummeted by 387 points to 13,270 ... FTSE 100 in London finishing down 122.7 at 6,271.2 ... There were also reports that the US bank, Goldman Sachs, has suffered losses in two of its hedge funds. Goldman is said to have sold down positions at its North American Equity Opportunities and Global Alpha funds, both of which rely on computer models rumoured to have struggled with recent volatility ... ECB's intervention was the largest one-day amount ever stumped up by the institution ... world's biggest insurer, AIG, felt obliged to reassure investors that it had ample cash today ... Mervyn King, the governor of the BOE, went against the prevailing winds yesterday, when he maintained that there was no international financial crisis ... market in Germany was rife with rumours of particular banks being in trouble. West LB was forced to deny that it was heavily exposed to the sub-prime market ...
    - "Dollar, yen gain as investors turn risk averse", AFP

    ... Traders even cited vague rumours of an emergency rate cut in the US, although this is considered very unlikely. "This is of course a highly unlikely move, but the fact that such a rumour is circulating at all is significant," said analyst Martin Slaney of GFT Global Markets ...
    - "Financial experts examine unsteady stock market", MacNeil Lehrer Newshour online, PBS

    ... "There have been plenty of times in recent memory when the market has been much more volatile than this ... we had the Worldcom bankruptcy. The Enron thing was still winding up. We had AIG. We had many other companies having scandals. Compared to that, I think a French bank that can't redeem hedge funds is like a parking ticket [Jeffrey Kosnet, senior editor, Kiplinger's Personal Finance] ...
    - "Subprime: The ugly american hits Europe", by Will Andrews, BusinessWeek

    ... The ECB's thinking about the crisis clearly has been evolving fast. According to Action Economics, the ECB actually drained funds in this week's regular tender operation and "clearly deemed liquidity to be appropriate." But the unusual fact that the ECB then pledged to allot 100% of all bids, rather than alloting a fixed amount, highlights that the ECB felt compelled to counter the mounting uncertainties ... Itraxx Crossover index, which measures credit spreads on 50 Eurpoean corporate high-yield debt issues, widened sharply after the Paribas funds freeze and a Wall Street Journal report that Goldman Sachs' Global Alpha fund lost 16% ... overnight lending rates in Britain and Europe soared 50 and 70 basis points, respectively, after the Paribas news ... futures prices now imply 100% odds of a quarter-point rate cut by the Fed at next month's FOMC meeting ... S&P strategist Alexander Young says that given the illiquid, opaque nature of many of the funds and CDOs that hold this subprime paper, the extent of this problem is very difficult to gauge ...
    - "World stocks tumble on US credit contagion worries", AFP

    ... The ECB cash injection led some to some to conclude "that perhaps conditions are worse than what were previously thought, especially after the Fed said on Tuesday there was no real concern that the situation on the credit market will weigh on the expansion of the US," said Michael Malone, an analyst at Cowen Co ... "Given the kind of state of the market, you only have to mention subprime for people to start panicking," said analyst Millan Gudka at investment bank Dresdner Kleinwort ... Merrill Lynch dropped 4.46 percent, Lehman Brothers 7.15 percent and Goldman Sachs 5.72 percent ... AIG Inc shed 3.28 percent. BNP Paribas dived 3.87 percent ...

  16. #16

    Default Re: GFC timeline

    due to the massive nature of the this timeline (it currently runs to in excess of approx 80 ASF-equivalent pages), the word-limit-per-post nature of posting on ASF (making posting it massively time consuming), coupled with the non-interest at ASF in this timeline, the timeline has been posted elsewhere (it is current as of this week)

    if need be, search-engine it

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