Reuters Investigates

Insight and investigations from our expert reporters

How long can banks keeps ignoring home equity loans?

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 US_MORTGAGEA1010

By Matthew Goldstein

The $425 billion in home equity loans and other second mortgages sitting on the balance sheet of the  four biggest U.S. commercial banks is the big gorilla in the room that no one wants to talk about. (See our latest special report here.)

The banks, for their part, generally have downplayed concerns about so-called second liens on mortgages. Bankers point out that less than 5 percent of home equity loans and other second mortgages are delinquent and lenders have been taking charge-offs for second liens deemed uncollectable.

But critics argue the banks are whistling past the graveyard in dealing with their large exposure to second liens and pinning too much on an economic rebound to keep these loans above water.  The critics say that with so many borrowers underwater on their primary mortgage, it is inevitable that banks will have to take writedowns on home equity loans, especially when the first loans are modified and reduced in size.

The big worry then is that any substantial writedowns by banks could eat away at precious capital they’ve built up since the financial crisis nearly brought many big lenders to the brink two years ago.

Sleepy in Seattle — the future of Microsoft

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MICROSOFT/SPECIAL-REPORTThe world’s biggest software maker once inspired fear in tech land. Today it’s mostly yawns. Is Microsoft no longer a growth company? Should Google be nervous, too? And are Steve Ballmer’s days at the helm numbered?

Seattle correspondent Bill Rigby’s special report has some answers.

Spoiling the party

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Last month The New York Times had a story about Arizona Republicans putting up homeless people as candidates for the Green Party in elections there. Now Murray Waas, our Barlett & Steele award winner, has a special report about Democratic Party shenanigans. 

USA-ELECTIONS/TRICKSWaas went to Pennsylvania’s 7th district to show how Democrats helped get Tea Party activist Jim Schneller (left) on the ballot, hoping to siphon off votes from the Republican candidate.

Poor Haiti, again

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By Pascal Fletcher

HAITI/ SPECIAL REPORTIf any country deserves the description “blighted”, or a “blot on the conscience of the world”, it is surely Haiti, that pocket of poverty lying in the blue Caribbean just two hours flying time from the richest country on the planet.

Less than 10 months since a huge earthquake jolted the small but densely populated nation of 10 million people, toppling brick homes like cards in the hilly capital Port-au-Prince and killing more than half a million souls, a deadly cholera epidemic is now killing more Haitians by the dozen as an aghast world looks on in another paroxysm of sympathy.

Inside the Pirates’ Web

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CHINA-PIRACY/Reuters trade correspondent in Washington Doug Palmer had an unusual assignment: buy a fake Louis Vuitton handbag on the Internet, and take it to a LVMH store for a comparison test, before handing it over to U.S. authorities.

    What was startling was how easy it was to find websites selling a dazzling array of stuff online. This is the new face of
piracy and its costing businesses billions.   No need to skulk around back alleys or some pirate’s rental van to browse through footwear, watches, DVDs and whatnot. Just pick out your LV shoulder tote from a virtual catalog on a website based in China. It looks and feels like the real thing at a fraction of the price.

America’s “Dreamless Dead”

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Washington economics correspondent Emily Kaiser delves into plutonomies and what pollster John Zogby calls the “Dreamless Dead” for her special report on income inequality in the United States.

 
 

Here are some interesting numbers from the OECD on how the wealth gap in America compares to other countries. (Full disclosure — I’m British)

Following the money in O’Donnell’s campaign

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Mark Hosenball has been in Delaware and Pennsylvania reporting on the midterm election campaign for our special report “Conservative donors let Christine O’Donnell sink.”

If that’s not enough O’Donnell for you, here’s his report from a bastion of conservative thinking in Delaware:

from MacroScope:

Dallas Fed president takes dig at consultants

Federal Reserve

The president of the Dallas Fed took a dig at consultants at a speech to business economists in New York on Tuesday.

"Just as bookies in Vegas adjust their lines for the playoffs, the oddsmakers on the Street are constantly reassessing their positions regarding monetary policy,"  Richard Fisher said.

Mongolia’s El Dorado stirs shareholder battle

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friedlandIn Mongolia’s South Gobi desert lies Oyu Tolgoi, touted as having the world’s largest untapped copper and gold deposits. Little wonder then that this “El Dorado” has become a boardroom battleground between the relatively unknown Ivanhoe Mines and its biggest shareholder, the giant Australian mining company, Rio Tinto.  

Our attempts to get near this mine or elicit any comment from Ivanhoe were about as fruitless as the Spanish conquistadors attempts to find the legendary “El Dorado”, or “Lost City of Gold” in the 16th century. Twice Ivanhoe stopped our reporters from visiting the mine with delegations from the investment community, saying reporters were not  allowed to mingle with bankers on visits to the mine. We don’t know why that would be. We mingle with them pretty often in other contexts and usually find each other’s company amusing and mutually informative.