The WSJ and the NYT each have articles running tomorrow highlighting the ease with which borrowers are walking away from their mortgages. Both are highlighting the services of YouWalkAway.com, which for a $1000 fee will help borrowers do exactly that.
Yesterday Barney Frank, chairman of the House Financial Services Committee and therefore a very powerful Democratic voice on the economy, was quoted as saying the government
“is not helping enough people. We’re not going to get out of this [credit] crunch until we stop this cascade of foreclosures.”
To date, three banks I can think of have remained largely unscathed by credit-related writedowns. Goldman Sachs, JP Morgan and Credit Suisse, while Lehman’s writedowns have been small relative to others. My hunch, and it’s nothing more than a hunch, is that none of these companies will escape without writing down anything.
…..that will drop, that is. A fascinating and very readable piece by Gretchen Morgenson in today’s NYT gives the lowdown on systemic risks posed by credit default swaps.
Bad news cascading its way through the market this morning. But equities still seem positively resilient at this writing, with the Dow off a mere 44 points. A taste of today’s news releases:
The New York Federal Reserve reported early Friday that its general business conditions index tumbled to -11.72, falling below zero for the first time since May 2005, from a reading of 9.03 in January. The index was well below the median forecast of 6.5 in a Dow Jones Newswires survey.
Folks, it’s time to dig up the phone numbers for your congressman and your Senators. According to the Journal “worried bankers are…urgently shopping proposals to Congress and the Bush administration that could shift some of the risk for troubled loans to the federal government.” That is, to taxpayers.
One proposal, advanced by officials at Credit Suisse Group, would expand the scope of loans guaranteed by the Federal Housing Administration. The proposal would let the FHA guarantee mortgage refinancings by some delinquent borrowers.
On the heels of yesterday’s front page article in the Journal about widening credit woes, the NYT has a front page article of its own this morning noting that mortgage troubles aren’t limited to so-called subprime borrowers:
The credit crisis is no longer just a subprime mortgage problem.