Subprime Problems » Uncategorized

FASB: We warned you about subprime

Hansen — Fri, 02 May 2008 17:13:32 +0000

Financial Accounting Standards Board (FASB) chairman Robert Herz reminded everyone that it put out a ‘reminder’ in December 2005 warning about the risks of subprime mortgage backed assets. Okay, you really have to wonder if anyone actually took this seriously or read the memo. Clearly FASB did not see the true extent of the problem and if they did, why were they simply putting out a 6-page ‘unusual reminder.’ Still, maybe the CFOs, investors, banks, foreign governments all should begin paying more attention to the origanization that builds so-called generally accepted accounting principles.

IMF: Credit Crisis to Cost Near $1 Trillion

Hansen — Tue, 08 Apr 2008 13:21:37 +0000

The International Monetary Fund is reporting today that the credit crisis may cost an aggregate of $1 trillion to the United States. The credit crisis emerged in the second half of 2007 due to a variety of consequences. The credit crisis stemmed, primarily, from the housing market and problems surrounding subprime mortgages. The total losses for the housing market were pegged at near $550 million.

Subprime Defaults in New Zealand: 9.1%

Hansen — Mon, 07 Apr 2008 13:36:47 +0000

I was exploring some blogs looking for some more hints at the problems with subprime and came across a blog noting 9.1% default rates in New Zealand. This is a startling rate and will certainly send shockwaves into Oceania.

25+ (Not So) Fun Subprime Facts

Hansen — Thu, 20 Mar 2008 15:34:37 +0000

241 major US lending firms have imploded

2,500,000 estimated number of homes lost to foreclosure in subprime meltdown

433 percent increase in subprime mortgages from 2000-2006

25 percent of all mortgages that subprime made-up in 2006

52 percent of all mortgages made to African-Americans that were subprime in 2006

80% drop in subprime mortgages in UK

66% drop in new housing permits in Riverside County CA

$19,893,000,000.00 loss in Bear Sterns value from 52-week high to now

12/14/2004 date “Subprime Market Grows Despite Troubles” article ran in USA Today

$285,000,000,000.00 total subprime writedowns as of now according to S&P

388,888,888 number of shares of McDonald’s you could have bought with the amount of market cap wiped out in Countrywide stock

4 number of government bail outs German bank IKB has needed thus far because of subprime writedowns

25,000 number of jobs lost (will be lost) at Citigroup from 4/07-4-08

20% rate at which Port of NY/NJ paid to sell its bonds on 2/12, up from 4.25%

17 number of companies that the FBI has launched a criminal probe on regarding the subprime fall-out

70,000 number of homes foreclosed on in Cayohoga County (Cleveland) in Ohio

90% amount UBS’ chairman’s pay was cut after record loss because of subprime writedowns

63% amount Washington Mutual CEO’s pay was cut

$5.25 million amount WM CEO still made

¥96 amount the dollar is now trading below thanks, in part, to subprime losses

12 years the last time the dollar was this weak versus the Yen

300 the number of basis points the Fed has cut rates in the last six months

6 the number of months, out of 6, that the Fed has cut rates

0% or less is the current ‘real’ interest rate

68% the ‘correction’ in stock price faced by US Homebuilders from 07/05-01/08

$423,000,000,000.00 amount the fed has committed to providing liquidity to credit markets because of subprime meltdown.

60 the percentage of total Treasury securities on the Fed’s balance sheet that covers the above commitment.

Bank of China: More Subprime Pain to Come

Hansen — Mon, 17 Mar 2008 13:55:14 +0000

Last week I noted that Standard and Poor’s called a near end to the subprime write downs. We shall get a better picture of this during the week when the investment banks begin to report earnings. The head of the Bank of China, however, noted that the US subprime mess has not fully run its course and that investors should watch for a “fall out.”

S&P Says End Near for Subprime Write Downs

Hansen — Fri, 14 Mar 2008 02:06:33 +0000

Standard and Poor’s, who was completely absent and pitifully incompetent in adjusting its ratings prior to the subprime meltdown has made the bold prediction that write downs of subprime securities may be near. Why anyone should put any credence into what this near worthless ratings agency has to say is beyond me. S&P has already had to bump up their forecast of total subprime write downs by nearly 10% since it called it a $285 billion loss two months ago. But, hey, if they’re right, thanks S&P you truly are world class!

Crazy Subprime Legislators South Carolina Style

Hansen — Mon, 18 Feb 2008 20:52:12 +0000

Thank you Brad Warthen for calling out some of the inanity on Capital Hill and among US bankers. This subprime problem has been caused by shear economic madness and greediness among all parties. But when will the madness end? It seems not likely at time soon. In his blog post today Warthen calls out Rep. Ballentine on his recent comments regarding subprime.

Total Subprime Loss: $400 Billion

Hansen — Mon, 11 Feb 2008 14:22:20 +0000

The G7 stated that the tot global subprime mortgage loss could reach $400 billion. That is:

1/3 of the entire US budget for 1 year;

over 73 times the entire GDP of Sierra Leone;

more than the GDP of all 17 west African countries;

slightly less than the cost of the Iraq War thus far;

16x higher than the Harvard University endowment;

over 17x the amount of foreign development aid given out by the US;

814,332 median value homes in Boston, MA;

10x more than the cost of every home for sale in Chicago, IL

Subprime Crisis Hinders Islamic Securities Growth

Hansen — Tue, 05 Feb 2008 02:56:12 +0000

Securitization of Islamic assets has been hindered, of late, because of the credit crisis catalyzed by the subprime meltdown in the US. Islamic financing companies, which prefer to be backed by physical assets (land -> mortgages), are finding a much tougher time selling their proposed securities to investors. Funny enough, some Islamic banks touted their avoidance of subprime liabilities, but this shows the story is much deeper.

The Subprime Crisis in Graphics

Hansen — Wed, 19 Dec 2007 02:13:49 +0000

This is one of the best representations of the subprime problems in the US, a good chunk of it is in graphics.