Subprime Problems » The Fed

Subprime Mortgage Index Rallies

Hansen — Thu, 27 Nov 2008 00:01:39 +0000

More government money pledged to subprime assets helped to boost the subprime mortgage index on Tuesday. Most indexes jumped 4 to 6 points on the news that the Fed will inject another $200 billion into the subprime mortgage industry, backing some assets that look terrible to any sane investor. The subprime mortgage fall out continues and makes all those eschewing the idea of subprime contagion looking like absolute fools.

The White Knight Fed To Become Subprime Cop

Hansen — Fri, 28 Mar 2008 01:43:38 +0000

Members of the Federal Reserve Board of Governors have begun talking about the Fed’s plans to begin working with state agencies to ensure that new standards to prevent subprime lending abuses. As we all know new subprime regulations are only as good as the enforcement that protects them. We shall see.

Bill Poole on Subprime Fall Out

Hansen — Fri, 07 Mar 2008 14:02:57 +0000

Bill Fool, err Poole, St. Louis Fed President noted that the subprime pain is not over yet and urged policy makers to step-in and regulate the (subprime) mortgage industry to ensure stability. Poole does believe that there is a future for the subprime end of the mortgage market and that it can operate effectively and safely under the right regulation and guidance. Believe it or not Poole is retiring this month after a 10-year term on the Federal Reserve board. He will not attend the March meeting where most expect a 50 bps rate cut and some are now saying 100 bps is a very real possibility.

Congress and Subprime – Passing the Buck

Hansen — Mon, 25 Feb 2008 02:31:58 +0000

Over at twofish’s blog we see an interesting note that discusses why Congress won’t be rushing into subprime reform anytime soon. He tends to think that the Fed will continue to take control (and the blame) of this problem.

It’s Not Going To Be Pretty: Mortgage Resets

Hansen — Sun, 25 Nov 2007 18:31:43 +0000

The Big Picture blog is reporting on a story in the Wall St. Journal stating: “A boatload of 2/28 APR mortgages are about to reset next year, and its not going to pretty.” This has been pretty widely known, I believe. The question is whether or not the market has priced any of this in already? It seems like the markets have hammered the banking stocks some to this fear, but I fear that further downside is to come if the Fed does not cut rates. The market is predicting an 80% chance that the Fed will cut, so if that does not happen before the turn of the years, credit markets could further be strained.

Here Come the Subprime Mortgage Resets

Hansen — Mon, 22 Oct 2007 17:38:43 +0000

Housing problems are not over. I know that we would all like to think that they are, but they are not. An interesting graph from CreditSuisse via Econbrowser shows the dramatic increase in subprime resets that we are about to witness in 2008. This will further roil the housing and the financial markets. Do not listen to those who explain that this is already priced into the stock market, either – it isn’t. Not after Uncle Ben pulled his rabbit.

Mortgage Defaults Stabilizing in US

Hansen — Tue, 25 Sep 2007 00:22:01 +0000

The Associated Press is reporting that default rates in the US mortgage market are stabilizing. It seems unlikely that the recent Fed rate cut will do much to affect this number. Only about 5 percent of all US mortgages are subprime and only about 1/5 of those loans are in default, or around 1% of all US mortgages.

Greenspan Admits Slow Pick-Up On Subprime Problems

Hansen — Sun, 16 Sep 2007 23:49:25 +0000

In tonight’s 60 minutes, Alan Greenspan admitted that he was slow to pick-up on the dangers of subprime problems. Rate cut after rate cut marshalled in by Greenspan as Federal Reserve Board Chairman, has been frequently brought up as the genesis of the subprime debacle. According to Greenspan on the show, “he didn’t really get it” with regard to the burgeoning subprime market and its risks.

Fleckenstein Says Fed Bail Out Wouldn’t Even be Enough

Hansen — Tue, 14 Aug 2007 12:36:52 +0000

Traders are bitching for a Bernake bail out, but Bill Fleckenstein says the credit problems go much deeper than the Fed can touch…

Read commentary

Fed and Rate Cut

Hansen — Mon, 13 Aug 2007 12:54:15 +0000

I fear a possible rate cut and tend to NOT think the Fed will act now or in September. The WSJ (free today!) has a nice little article entitled “Fed Treads Moral Hazard” for you to get some perspective on this. Some institutions need a spanking and the Fed shouldn’t provide them with a cushion to cover their arses.