June 2008

Minutes from a high-stakes Federal Reserve meeting on the emergency rescue of Bear Stearns are out this morning, and they are revealing. They provide fresh detail on what went on behind the scenes of the Fed-orchestrated shotgun wedding between JPMorgan Chase and Bear Stearns, including fears of a "contagion" spreading through the market if Bear Stearns was allowed to collapse. The contagion ... read more

The new housing bailout bill would let mortgage lenders off the hook for sour mortgages, as it would let the Federal Housing Administration assume the risk for these bad debts, shifting the burden to taxpayers and bond investors. However, two "discussion documents" about a potential housing bailout bill, both of which are stamped "confidential and proprietary" that Bank of America ... read more

Expect the Fed to not cut or increase rates today, as it indicates that inflation is a bigger concern than recession. Though market watchers expected a hike in rates to stop inflation, a hike would be an extraordinary move in advance of the US presidential election. What this means is the economy will continue to muddle along for at least the next year or so, with flat to middling economic ... read more

If you had placed a bet that the financials' writedowns would be kitchen-sinked this year, over, done, that's it, you are likely mistaken. That's because the next wave of writedowns will come from negative amortization loans, a type of adjustable rate loan which require tiny monthly payments insufficient to even pay-off interest costs. Fox Business anchor Stuart Varney first alerted me to this ... read more

The Federal Bureau of Investigation's probe of the subprime mortgage industry could uncover fraud involving Wall Street investment banks, private equity firms or hedge funds, the head of the bureau said. The FBI probe comes as losses and write-downs from the housing and credit could eventually hit the $1 tn mark, the International Monetary Fund reports. More than 100 U.S. mortgage lenders have ... read more