BloggingStocks http://www.bloggingstocks.com BloggingStocks http://www.blogsmithmedia.com/http://www.bloggingstocks.com/media/feedlogo.gif BloggingStocks http://www.bloggingstocks.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[Chasing Value: Banks, Barron's and Buffett]]>http://www.bloggingstocks.com/2010/11/26/chasing-value-banks-barrons-and-buffett/http://www.bloggingstocks.com/2010/11/26/chasing-value-banks-barrons-and-buffett/http://www.bloggingstocks.com/2010/11/26/chasing-value-banks-barrons-and-buffett/#commentsFiled under: , , , , , , ,

Banks could face another mortgage crisis, according to Barron's, if they are forced to buy back subprime, Alt-A and options adjusted home mortgage securities they've sold prior to the financial crisis, mostly as mortgage-backed securities. Already some buyers, like Fannie Mae (FNMA) and Freddie Mac (FMCC), have enjoyed some success returning defective mortgages. And this could be just the beginning.

The banks, of course, are fighting vigorously to fend off these demands. As usual, the courts will have to settle the matter. The focus of the debate seems to be founded on the issue of representations and warranties that may or may not have been violated.

There are no surprises among the 11 banks mentioned. It is the conspicuous absence of names you might expect to find that is.

Continue reading Chasing Value: Banks, Barron's and Buffett

Chasing Value: Banks, Barron's and Buffett originally appeared on BloggingStocks on Fri, 26 Nov 2010 10:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>BACBank of Americaberkshire hathawayBRK.ABRK.BCChasingValuecitigroupfeaturedGoldman Sachs GroupGSHBChsbcinthenewsjp morgan chaseJPMloansMorgan StanleymortgagesMSwachoviawarren buffettWells Fargo BankWFCFri, 26 Nov 2010 10:00:00 EST<![CDATA[Senate May Vote This Week on $30 Billion Community Bank Capital Bill]]>http://www.bloggingstocks.com/2010/07/27/senate-may-vote-this-week-on-30-billion-community-bank-capital/http://www.bloggingstocks.com/2010/07/27/senate-may-vote-this-week-on-30-billion-community-bank-capital/http://www.bloggingstocks.com/2010/07/27/senate-may-vote-this-week-on-30-billion-community-bank-capital/#commentsFiled under: , ,

The only question is -- how soon can the Congress get this deal done?

The potential 'deal' being $30 billion in new capital for community banks, who would then use it as a base to increase lending to small-sized/medium-sized businesses by up to $300 billion -- credit that's urgently needed and may prove to be a pivotal factor concerning the U.S. economic expansion's sustainability.

"If we can help the big banks, then we should certainly be able to help small-business lending," President Barack Obama said June 30, Bloomberg News reported. The Senate may consider the bill as early as this week; the program, called the Small Business Lending Fund, passed the U.S. House last month

Continue reading Senate May Vote This Week on $30 Billion Community Bank Capital Bill

Senate May Vote This Week on $30 Billion Community Bank Capital Bill originally appeared on BloggingStocks on Tue, 27 Jul 2010 13:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bankscommunity banksCongresscreditinthenewsloansObama administrationsmall businessesTue, 27 Jul 2010 13:30:00 EST<![CDATA[End in Sight for the Foreclosure Crisis?]]>http://www.bloggingstocks.com/2010/02/20/end-in-sight-for-the-foreclosure-crisis/http://www.bloggingstocks.com/2010/02/20/end-in-sight-for-the-foreclosure-crisis/http://www.bloggingstocks.com/2010/02/20/end-in-sight-for-the-foreclosure-crisis/#commentsFiled under: ,

Over the past couple of years, one of the most troubling aspects of the economy has been the ailing housing market, and in particular the large volumes of homes that have fallen victim to the foreclosure crisis. Finally we get some evidence that things may be moving in the right direction again.

While no one will argue that we are out of the woods just yet, it does appear as things are at least starting to recovery slightly.

Continue reading End in Sight for the Foreclosure Crisis?

End in Sight for the Foreclosure Crisis? originally appeared on BloggingStocks on Sat, 20 Feb 2010 12:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>foreclosureshomeshousing crisisinthenewsJay BrinkmannloansMBAmortgage bankers associationmortgagesnew foreclosuresrecessionSat, 20 Feb 2010 12:10:00 EST<![CDATA[Banks Still Not Providing Enough Credit to Small Businesses]]>http://www.bloggingstocks.com/2010/02/05/banks-still-not-providing-enough-credit-to-small-businesses/http://www.bloggingstocks.com/2010/02/05/banks-still-not-providing-enough-credit-to-small-businesses/http://www.bloggingstocks.com/2010/02/05/banks-still-not-providing-enough-credit-to-small-businesses/#commentsFiled under: ,

The political climate in Washington is hardly conducive to a joint resolution by the Democrats and Republicans honoring Moms on Mother's Day, let alone high-stakes banking issues, but one reality is clear: if banks don't starting providing more credit to small and medium-sized businesses, Congress will have to create agents -- or new institutions -- that do.

The issue is too important for the long-term health of the economy: small and medium-sized businesses account for the bulk of America's jobs and new hiring.

Presently, demand is growing incrementally, but as it increases, if business credit lines don't as well, the recovery could stall, necessitating Congressional action.

Continue reading Banks Still Not Providing Enough Credit to Small Businesses

Banks Still Not Providing Enough Credit to Small Businesses originally appeared on BloggingStocks on Fri, 05 Feb 2010 17:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>banking sectorbankscreditfeaturedloansFri, 05 Feb 2010 17:40:00 EST<![CDATA[Would you pledge your soul as collateral for a loan?]]>http://www.bloggingstocks.com/2009/07/03/would-you-pledge-your-soul-as-collateral-for-a-loan/http://www.bloggingstocks.com/2009/07/03/would-you-pledge-your-soul-as-collateral-for-a-loan/http://www.bloggingstocks.com/2009/07/03/would-you-pledge-your-soul-as-collateral-for-a-loan/#commentsFiled under: ,

This is bizarre at best but its true. In Latvia there lives a man named Viktor Mirosiichenko who heads a company called Kontora Loan Company. Who is this man and what is so unusual about him? He will make a loan to you if you sign an "agreement" and pledge "your immortal soul" as collateral.

Mr. Mirosiichenko's company employs no debt collectors for those who refuse to pay back the loan, nor will he employ violence against those who don't pay back. Signatures on the agreements show only the first name and do not show any documents.

Continue reading Would you pledge your soul as collateral for a loan?

Would you pledge your soul as collateral for a loan? originally appeared on BloggingStocks on Fri, 03 Jul 2009 16:00:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>LatviaLoansMirosiichenkoSoulFri, 03 Jul 2009 16:00:00 EST<![CDATA[It's not TARP, it's TALF -- what's a TALF?]]>http://www.bloggingstocks.com/2008/12/21/its-not-tarp-its-talf-whats-that/http://www.bloggingstocks.com/2008/12/21/its-not-tarp-its-talf-whats-that/http://www.bloggingstocks.com/2008/12/21/its-not-tarp-its-talf-whats-that/#commentsFiled under: ,

What is TALF? Term Asset-backed Securities Loan Facility (TALF) is a new $200 billion dollar lending program created by the Federal Reserve.

What does it do? Under the program, the Fed would offer low-cost loans to any U.S. company investing in securitized loans. The asset-backed securities include pools of credit card receivables, automobile loans, and student loans.

Who can participate? Any U.S. company can participate, including hedge funds but excluding offshore funds.

Why did the Fed do this? There are two main reasons behind the Fed's decision. First, even with all the money the Fed has been funneling to the banks by buying government securities, it still is not enough to get things moving. Bank balance sheets are still too constrained. Second, banks have frozen most of their lending except for low-risk customers, and even then the rates on these loans are too high.

What is the benefit of the program? Through this program the Fed hopes to get more loans written at lower rates and bring down the cost of borrowing.

The Fed has now created a new role for itself, that of loan broker, a new and heretofore untried strategy.

It's not TARP, it's TALF -- what's a TALF? originally appeared on BloggingStocks on Sun, 21 Dec 2008 13:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>asset-backed securitiesFedFederal Reservehedge fundsinthenewsloansTALFSun, 21 Dec 2008 13:10:00 EST<![CDATA[Dollar falls, then firms, as Fed commits $800 billion more to ease credit crunch ]]>http://www.bloggingstocks.com/2008/11/25/dollar-falls-then-firms-as-fed-commits-800-billion-more-to-ea/http://www.bloggingstocks.com/2008/11/25/dollar-falls-then-firms-as-fed-commits-800-billion-more-to-ea/http://www.bloggingstocks.com/2008/11/25/dollar-falls-then-firms-as-fed-commits-800-billion-more-to-ea/#commentsFiled under: , ,

The dollar fell, then firmed, against most of the world's other major currencies Tuesday at mid-day, on word of yet another U.S. government intervention to ease the financial crisis. (For full currency data, click here.)

Still, the more important theme, many economists and analysts agree, is how well the dollar has fared given the remarkable increase in debt by the United States and the supply of dollars globally.

The dollar weakened about one cent to $1.3040 versus the euro and about half a cent to $1.5160 versus the British pound on Tuesday at mid-day, after the U.S. Federal Reserve announced it would buy up to $600 billion in mortgage and mortgage servicer-related debt and up to $200 billion in consumer and small business-backed loans, to free up credit in these sectors. The dollar also fell about one cent to 95.53 versus Japan's yen, and about half a cent to $1.1881 versus the Swiss franc.

Under the new programs announced Tuesday, the U.S. Treasury will provide about $20 billion in credit protection to the U.S. Federal Reserve, using money from the $700 billion Troubled Asset Recovery Program (TARP).

In September, the Fed's balance sheet totaled $924 billion, when the first wave of the financial crisis began to freeze credit markets and decimate stock markets around the world. However, if all loan guarantees are accessed, and if all of the remaining $780 billion debt is added to the Fed's balance sheet, that balance sheet would increase to about $3 trillion.

Continue reading Dollar falls, then firms, as Fed commits $800 billion more to ease credit crunch

Dollar falls, then firms, as Fed commits $800 billion more to ease credit crunch originally appeared on BloggingStocks on Tue, 25 Nov 2008 14:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>auto loansconsumer loansdollareuroFedinthenewsloansmonetary policyMonetaryPolicystudent loansTARPterm auction facilityU.S. TreasuryyenTue, 25 Nov 2008 14:10:00 EST<![CDATA[Wachovia cans pay-what-you-want mortgage plan]]>http://www.bloggingstocks.com/2008/07/01/wachovia-cans-pay-what-you-want-mortgage-plan/http://www.bloggingstocks.com/2008/07/01/wachovia-cans-pay-what-you-want-mortgage-plan/http://www.bloggingstocks.com/2008/07/01/wachovia-cans-pay-what-you-want-mortgage-plan/#commentsFiled under: ,

In a rare indication that there may be some reasonably intelligent executives running things at America's top banks, Wachovia Corp. (NYSE: WB) has decided that it will stop offering a mortgage that allows customers to pay less each month than the bank charges in interest.

Hold on. What? The "Pick-a-Payment" mortgages allowed borrowers to choose one of four payment options each month -- as in, "Do you want to pay off your mortgage or do you want to buy a new television and every season of Golden Girls on DVD?"

You can probably guess which option many people chose. The problem was that paying less than the interest each month led to negative amortization -- owing progressively more on the house each month. Recently it's been discovered that home values are not contractually obligated to go up every year and the result is that many people could end up owing more than the home is worth, trapping them in it -- and leaving the bank with a hefty loss in the event of foreclosure.

Wachovia has hired Goldman Sachs (NYSE: GS) to evaluate its loan portfolio and suggest alternatives. I wonder how much they're paying. I could have told them that letting borrowers decide whether they want to pay the interest on their mortgages was a bad idea.

Wachovia cans pay-what-you-want mortgage plan originally appeared on BloggingStocks on Tue, 01 Jul 2008 17:08:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>inthenewsLoansMortgagesWachoviaWBTue, 01 Jul 2008 17:08:00 EST<![CDATA[Economist says months, not weeks, needed to gauge effectiveness of Fed's rate cuts]]>http://www.bloggingstocks.com/2008/02/11/economist-says-months-not-weeks-needed-to-gauge-effectiveness/http://www.bloggingstocks.com/2008/02/11/economist-says-months-not-weeks-needed-to-gauge-effectiveness/http://www.bloggingstocks.com/2008/02/11/economist-says-months-not-weeks-needed-to-gauge-effectiveness/#commentsFiled under: , ,

As the saying goes, what if you invited everyone to a party and no one showed up?

That's a little like how the U.S. Federal Reserve feels right now. The Fed has lowered benchmark, short-term interest rates substantially - - including 125 basis points of reduction in January 2008 alone - - but so far, banks, stung by subprime losses, have been reluctant to ramp-up lending, CNBC.com reported Monday.

Patience advised

Still, economist David H. Wang took issue with those arguing that the Fed's rate cuts and ongoing term auction facility that haven't worked or weren't needed.

Concerning rate cuts, Wang told BloggingStocks Monday that the banking sector had to work through "a period of loan fright" - - an irrational fear of risk - - that is, in his view, the additive inverse of "the total neglect of risk" that characterized the earlier housing boom.

"Banks need some time to improve their balance sheets. Some may accomplish this through job cuts and by operational cut-back. Many will accomplish this through curtailed lending and tighter lending standards, at least for a short period of time," Wang said. "But in time, lending to businesses and individuals will resume its normal pace."

'Gradualism' vs. shock therapy

Second, the Fed's term auction facility - - which U.S. Federal Reserve Chairman Ben Bernanke has said will remain in operation "for as long as necessary" - - is working. "The term auction facility is doing exactly what it's supposed to do... it's providing short-term loans to banks who need it, who don't want to borrow from the discount window and who can't get the money from other banks who are afraid to lend," Wang said. "And in the process, bank operations are maintained, even as they slowly and gradually digest subprime defaults and related asset write-offs."

And that last point may be the key to understanding the outlook for a resumption of normal lending conditions, he said. Given the size of likely, problematic subprime loans - - some have put the figure at $500 billion - - and the preference for gradualism, it may be two quarters or more before normal lending conditions resume. Further, the correct place to look for the start of increased lending is not the stock market's level, but commercial activity: orders for new equipment, business expansion plans, and job growth / new hiring announcements.

And while some economists argue that it would be better if the financial services sector wrote-off problem loans quicker - - i.e. 'the sooner the better for economy,' Wang does not agree.

"Shock therapy may have worked in Poland's transition from a communist centrally-planned economy to a free-market economy but we're dealing with a magnitude difference in money here," Wang said with chuckle. "The Fed's goal here is to enable banks to gradually work the bad loans out the system, while maintaining the conditions for sustainable economic growth and not causing runaway inflation. And so far, that strategy is working, in my interpretation."

Continue reading Economist says months, not weeks, needed to gauge effectiveness of Fed's rate cuts

Economist says months, not weeks, needed to gauge effectiveness of Fed's rate cuts originally appeared on BloggingStocks on Mon, 11 Feb 2008 17:18:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bernankecommercial bankingFedGDPinterest ratesloansmonetary policyPolandsubprime loansterm auction facilityU.S. economyU.S. Federal ReserveMon, 11 Feb 2008 17:18:00 EST<![CDATA[American Home Mortgage can't figure out who owns the mortgages -- so destroy 'em?]]>http://www.bloggingstocks.com/2008/02/11/american-home-mortgage-cant-figure-out-who-owns-the-mortgages/http://www.bloggingstocks.com/2008/02/11/american-home-mortgage-cant-figure-out-who-owns-the-mortgages/http://www.bloggingstocks.com/2008/02/11/american-home-mortgage-cant-figure-out-who-owns-the-mortgages/#commentsFiled under:

The fallout from the subprime crisis has gone from merely scandalous to the downright ridiculous.

American Home Mortgage has files for 490,000 loans sitting in a warehouse (at a cost of $45,000 per month), and it can't even figure out who owns the loans because they've been bought and sold so many times since they were issued sometime after September of 2005.

So American Home Mortgage has a brilliant idea for what to do with them: Burn them!

Not so fast, say Wall Street investors who claim that the files can help them prove that they are their rightful owners.

According to the Wall Street Journal(subscription required), "The Melville, N.Y., mortgage lender, which is liquidating its assets in bankruptcy proceeding, made the offer to counter opposition from former backers who said American Home's plan to destroy the files endangered their rights to enforce the loans."

The fact that it's hard to tell who owns the loans is an interesting symbol of how crazy the real estate market became: people were signing off on loans and it wasn't even clear who the ultimate lender of the money was.

This moral hazard was probably a prime contributor to rampant mortgage fraud.

American Home Mortgage can't figure out who owns the mortgages -- so destroy 'em? originally appeared on BloggingStocks on Mon, 11 Feb 2008 15:18:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>American Home MortgageAmericanHomeMortgageinthenewsloansmortgagessubprimeMon, 11 Feb 2008 15:18:00 EST<![CDATA[Fed expected to propose new mortgage rules Tuesday]]>http://www.bloggingstocks.com/2007/12/17/fed-expected-to-propose-new-mortgage-rules-tuesday/http://www.bloggingstocks.com/2007/12/17/fed-expected-to-propose-new-mortgage-rules-tuesday/http://www.bloggingstocks.com/2007/12/17/fed-expected-to-propose-new-mortgage-rules-tuesday/#commentsFiled under: , , ,

People have been wondering when, and if, the Federal Reserve would take stronger action to protect borrowers hit hard by the housing and credit crisis. The Associated Press expects new rules to be released Tuesday that would apply to all types of lenders, including banks and brokers. You may wonder what gives the Fed the right to issue these new regulations. While the Fed primarily focuses on the health of financial institutions, it also plays a lead role in two key consumer protections -- the Credit Protection Act (which includes Truth in Lending Disclosures) and the Consumer Leasing Act. In recent years it's been a wild, wild west out there as money flowed freely and a lot of loans were made that helped brokers make money more than they helped consumers find good financing options.

Rules expected to be proposed Tuesday include:

  • Barring lenders from penalizing subprime borrowers who pay off loans early. Often there is a $12,000 or more penalty for early repayment on subprime loans. I know people who could qualify for prime loans with lower rates but who are stuck with subprime loans because of a particular loan program that sounded good initially but is now beyond what they can afford. Yes they made a mistake, but paying $12,000 in penalties seems steep to me if someone wants to refinance to get out of a loan their broker steered them to.

Continue reading Fed expected to propose new mortgage rules Tuesday

Fed expected to propose new mortgage rules Tuesday originally appeared on BloggingStocks on Mon, 17 Dec 2007 10:30:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>borrowingdebtfeaturedFedfederal reserveFederalReservelendinglending rulesLendingRulesloansmortgagessubrpimeMon, 17 Dec 2007 10:30:00 EST<![CDATA[A whiff of banking reform in the air]]>http://www.bloggingstocks.com/2007/11/28/a-whiff-of-banking-reform-in-the-air/http://www.bloggingstocks.com/2007/11/28/a-whiff-of-banking-reform-in-the-air/http://www.bloggingstocks.com/2007/11/28/a-whiff-of-banking-reform-in-the-air/#commentsFiled under: , , , , ,

The ever-prescient Financial Times columnist Martin Wolf, an economist, raises, and to some degree answers, a question that no-doubt has been on the minds of U.S. investors, readers, as well as Europeans: Why does banking generate such turmoil?

Or, as Wolf put it another way: why is banking an accident waiting to happen, with the crisis in securitized lending the latest example?

The answer - - or fault, to paraphrase Shakespeare - - lies within ourselves, Wolf argues, due to the very things nations have established to protect depositors - - namely, depositors' insurance and government guarantees, which prompts banks to take high risks.

Continue reading A whiff of banking reform in the air

A whiff of banking reform in the air originally appeared on BloggingStocks on Wed, 28 Nov 2007 18:09:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Bank of EnglandBank of JapanbankingbanksBankSectorcredit marketsECBEuropeanCentralBankFDICloansMartin Wolfmortgage backed securitiesmortgage ratesmortgagessubprimesubprime mortgagesU.S. Federal ReserveWed, 28 Nov 2007 18:09:00 EST<![CDATA[Wells Fargo strong despite joining the mortgage mess]]>http://www.bloggingstocks.com/2007/11/28/wells-fargo-strong-despite-joining-the-mortgage-mess/http://www.bloggingstocks.com/2007/11/28/wells-fargo-strong-despite-joining-the-mortgage-mess/http://www.bloggingstocks.com/2007/11/28/wells-fargo-strong-despite-joining-the-mortgage-mess/#commentsFiled under: , , , , , , ,

The latest victim of the current mortgage meltdown in America is Wells Fargo (NYSE: WFC). The bank announced late last night it is was going to be losing about $1.4 billion during its fourth quarter resulting from home loans that are not getting repaid.

Despite last night's announcement, the stock is actually trading higher in today's premarket, up 0.6% (last night, traders had initially pushed the stock down about 5%). The main reason why the stock is holding up so well is the impression on Wall Street that Wells Fargo still remains in much better shape than its peers.

Luckily for Wells Fargo, the company had the foresight to sell off the majority of the $2 trillion in loans it made starting back in 2001, so it was able to avoid falling too deeply into the mortgage fiasco that has been claiming bank after bank this year.

Continue reading Wells Fargo strong despite joining the mortgage mess

Wells Fargo strong despite joining the mortgage mess originally appeared on BloggingStocks on Wed, 28 Nov 2007 09:17:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>housingHoward I. AtkinsHowardI.AtkinsinthenewsloansmortgageWells FargoWellsFargoWFCWed, 28 Nov 2007 09:17:00 EST<![CDATA[Paul Krugman fails to explain the reasons for the mortgage meltdown]]>http://www.bloggingstocks.com/2007/11/23/paul-krugman-fails-to-explain-the-reasons-for-the-mortgage-meltd/http://www.bloggingstocks.com/2007/11/23/paul-krugman-fails-to-explain-the-reasons-for-the-mortgage-meltd/http://www.bloggingstocks.com/2007/11/23/paul-krugman-fails-to-explain-the-reasons-for-the-mortgage-meltd/#commentsFiled under: ,

In today's New York Times, Paul Krugman offers an explanation for the cause of the mortgage meltdown. While I think he comes close to the mark, he misses an important point: bankers will respond to incentives.

I would love to have the talent that warrants the platform Krugman has -- to opine on economic and political matters on the pages of the New York Times. Krugman uses that platform to suggest that the reason for the bad mortgage loans is that bankers "haven't been forced to give back any of the huge paychecks they received before the folly of their decisions became apparent."

My view differs from Krugman's. There is no way bankers will give back their paychecks after they've negotiated their contracts just because Krugman wants them to. In my view, the real issue is that bankers are like any other person and they will respond to incentives. If their pay was linked to both the costs and benefits of the loans they made, then they would care about the risk that the loan might not be repaid.

Continue reading Paul Krugman fails to explain the reasons for the mortgage meltdown

Paul Krugman fails to explain the reasons for the mortgage meltdown originally appeared on BloggingStocks on Fri, 23 Nov 2007 16:18:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bankersfinancialshome loansHomeLoansinthenewsloansPaul KrugmanPaulKrugmanFri, 23 Nov 2007 16:18:00 EST<![CDATA[Tuition rising faster than financial aid: what's a student to do?]]>http://www.bloggingstocks.com/2007/10/23/tuition-rising-faster-than-financial-aid-whats-a-student-to-d/http://www.bloggingstocks.com/2007/10/23/tuition-rising-faster-than-financial-aid-whats-a-student-to-d/http://www.bloggingstocks.com/2007/10/23/tuition-rising-faster-than-financial-aid-whats-a-student-to-d/#commentsFiled under: , , ,

My husband and I don't yet have children, don't know if we want any, but I am sure of one thing: college funds for these hypothetical offspring need to be opened immediately.

The College Board said this week that the yearly cost of in-state tuition for a four-year public college jumped 6.6% from the 2006-2007 school year hitting $6,185. This follows a 5.7% increase last year from the 2005-2006 period. Private universities saw the annual tally for tuition and fees rise 5.5% to $16,640. The most affordable education can still be found at public two-year institutions, where costs rose just 4.2% from last year to $2,351 per year.

And that's just tuition and various fees. For students who live on campus (40% at public schools; 64% at private), the cost of room and board jumped 5.9% at public schools to $13,589. To live, eat, and learn on a private-school campus, it will cost $32,307 per year, also a 5.9% increase from last year.

Continue reading Tuition rising faster than financial aid: what's a student to do?

Tuition rising faster than financial aid: what's a student to do? originally appeared on BloggingStocks on Tue, 23 Oct 2007 17:56:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>collegecollege boardCollegeBoarddebteducationloanstuitionuniversityTue, 23 Oct 2007 17:56:00 EST<![CDATA[Richard Branson's Virgin Money USA looks to formalize informal lending]]>http://www.bloggingstocks.com/2007/10/16/richard-bransons-virgin-money-usa-looks-to-formalize-informal-l/http://www.bloggingstocks.com/2007/10/16/richard-bransons-virgin-money-usa-looks-to-formalize-informal-l/http://www.bloggingstocks.com/2007/10/16/richard-bransons-virgin-money-usa-looks-to-formalize-informal-l/#commentsFiled under: ,

Richard Branson is one of the most innovative, creative billionaires out there, and his latest project provides further evidence of that. Virgin Money USA, which opened for business on Monday, is designed to make it easier to lend money to friends and family more formally. A little bit like Prosper.com, Virgin Money USA will act as a conduit between parties, providing a platform and legal/tax documentation for informal loans.

According to The New York Times, "Virgin Money USA will offer personal and business loans, mortgages and reverse mortgages. The average interest rate for loans is 6 percent, and for mortgages, 5 percent. Borrowers are charged a $9 per payment administrative fee and will pay an upfront charge ranging from $99 for unsecured loans to $2,000 for large mortgages. Borrowers can select terms of their loans, including the duration and rates. The bank will not retain any of the interest."

So technically the loans will be made by Virgin (just as technically Prosper loans are made by Prosper), but the risk will all be held by the friends and family of the borrowers.

The fees ($9 per payment adds up on a small personal loan) make this look like a very questionable move for consumers. And lending money to friends and family is something that should be avoided whenever possible anyway. But in the wake of the subprime meltdown, and the need for emergency loans from friends and family, Virgin Money USA could be well-positioned for success.

Richard Branson's Virgin Money USA looks to formalize informal lending originally appeared on BloggingStocks on Tue, 16 Oct 2007 16:41:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>financinginthenewslendingloansRichard BransonRichardBransonVirginVirgin MoneyVirginMoneyTue, 16 Oct 2007 16:41:00 EST<![CDATA[Does America need a 'Mortgage Czar' to bail out foreclosures?]]>http://www.bloggingstocks.com/2007/10/04/does-america-need-a-mortgage-czar-to-bail-out-foreclosures/http://www.bloggingstocks.com/2007/10/04/does-america-need-a-mortgage-czar-to-bail-out-foreclosures/http://www.bloggingstocks.com/2007/10/04/does-america-need-a-mortgage-czar-to-bail-out-foreclosures/#commentsFiled under: , , ,

You just have to love the U.S. -- marketing runs the majority of the world's largest economy, and when subprime lenders began using low interest rates to push shoddy mortgages onto clueless homebuyers years back, millions jumped on the bandwagon. If you weren't flipping houses for a living, you were getting into a much larger home with the feeling that those larger payments and mortgage term resets were years off. We're here now, and foreclosures are up while homeowners are losing their collective shirts. Is it the housing equivalent of the Titanic sinking? Nah -- but that's what many of the media portray it to be.

But, in perfect "we can save this country" fashion, a few 'Crats on the Hill have decided that the U.S. needs a 'mortgage czar' to protect us all from getting in over our heads with goofy mortgages. The prediction is that foreclosures will continue to escalate, so some lawmakers want $200 million to help those in over their heads make sure they don't lose their homes.

Continue reading Does America need a 'Mortgage Czar' to bail out foreclosures?

Does America need a 'Mortgage Czar' to bail out foreclosures? originally appeared on BloggingStocks on Thu, 04 Oct 2007 13:31:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>countrywidedefaultsdemocratsforeclosuresinthenewslendersloansmortgage czarMortgageCzarsubprime meltdownSubprimeMeltdownThu, 04 Oct 2007 13:31:00 EST<![CDATA[Option update: SLM Corp (SLM) volatility spikes as deal won't be completed]]>http://www.bloggingstocks.com/2007/09/26/option-update-9-26-07-slm-corp-slm-volatility-aggressively-sp/http://www.bloggingstocks.com/2007/09/26/option-update-9-26-07-slm-corp-slm-volatility-aggressively-sp/http://www.bloggingstocks.com/2007/09/26/option-update-9-26-07-slm-corp-slm-volatility-aggressively-sp/#commentsFiled under: , , ,

SLM Corporation (NYSE: SLM), a leading provider of saving and paying for college programs, is recently down $1.91 to $44.36.

SLM says that the J.C. Flowers, Bank of America Corporation (NYSE: BAC), and JPMorgan Chase & Company (NYSE: JPM) buyers group does not expect to consummate the acquisition of SLM. SLM call option volume of 98,356 contracts compares to put volume of 68,654 contracts. SLM October option implied volatility was at 91 according to Track Data, suggesting larger price movements.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Option update: SLM Corp (SLM) volatility spikes as deal won't be completed originally appeared on BloggingStocks on Wed, 26 Sep 2007 16:34:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bacchasecollege loansCollegeLoanshome loansHomeLoansJ.C. Flowersloansoption implied volatilityOptionImpliedVolatilityWed, 26 Sep 2007 16:34:00 EST<![CDATA[Car buyers get dumber, and dumber, and dumber]]>http://www.bloggingstocks.com/2007/09/16/car-buyers-get-dumber-and-dumber-and-dumber/http://www.bloggingstocks.com/2007/09/16/car-buyers-get-dumber-and-dumber-and-dumber/http://www.bloggingstocks.com/2007/09/16/car-buyers-get-dumber-and-dumber-and-dumber/#commentsFiled under: , , ,

A piece on TheStreet.com confirms my suspicion that people are really not very intelligent at all. Car loans are getting longer and, according to Jesse Toprak of Edmunds.com, "Most consumers still come into dealerships and tell the salespeople that they want to pay a certain amount of money per month for their car. That is probably the single worst way to shop."

In the past five years, the length of the average car loan has increased by four months to 63.8 months. There are a number of reasons these long loans are really bad for the consumer:

  • A long loan generally means you pay more in interest. To pay the least interest, go for the shortest loan possible: Pay cash!
  • At some point, there is a good chance you will owe more on the car than it is worth, making it difficult to trade up if you want a new car.

As Toprak said, you should never ever, ever, ever, go into buy a car thinking in terms of "the monthly payment." That's how they want you to think, and it's a really good way to hoodwink yourself into buying more car than you can really afford. Call me a prude, but I'm of the school of thought that, when it comes to cars, "If you can't pay cash, that means you can't afford it."

To learn the tricks to buying a car the smart way, check out Read this Before You Buy a Car.

Car buyers get dumber, and dumber, and dumber originally appeared on BloggingStocks on Sun, 16 Sep 2007 22:20:00 EST. Please see our terms for use of feeds.

Read | Permalink | Email this | Comments]]>AutosCarsdebtlendingloansstupiditySun, 16 Sep 2007 22:20:00 EST<![CDATA[FICO takes some heat for the subprime mess]]>http://www.bloggingstocks.com/2007/09/03/fico-takes-some-heat-for-the-subprime-mess/http://www.bloggingstocks.com/2007/09/03/fico-takes-some-heat-for-the-subprime-mess/http://www.bloggingstocks.com/2007/09/03/fico-takes-some-heat-for-the-subprime-mess/#commentsFiled under: ,

Shares of Moody's (NYSE: MCO) have plunged as the ratings agencies become Public Enemy No. 1 in the quest for a villain in the subprime fiasco.

Now Forbes is wondering (subscription required) about Fair Isaac (NYSE: FIC), a rating agency for individuals that uses a complex algorithm to calculate a FICO score. As evidenced by the rising foreclosure rates on loans that were given based on people's FICO scores, it seems that the algorithm may not have had as much predictive power as they thought.

According to Forbes, "In January a contrite Fair Isaac, along with bond rating agency DBRS (formerly Dominion Bond Rating Service), produced a study that revealed some of FICO's limitations. It found, for instance, that a borrower with a high credit score is just as likely to default on a no-money-down mortgage as a lower-scoring borrower who puts down 40%. So two portfolios with identical average FICOs can behave very differently."

In other words, the average FICO score of a portfolio of loans is not an accurate predictor of risk -- a huge problem because that's exactly what many investors assumed it was.

Now Fair Isaac seems to be backing off the value of its ratings: According to a vice president at the company, "FICO scores an individual's risk over time. It's not an assessment of the riskiness of the loan made."

If a FICO score can't be used to asses the riskiness of a loan, what good is it in determining whether to lend to someone?

In the wake of the blow-ups of numerous quant funds and scandals involving rating agencies with complex algorithms, it looks like investors would do well to step away from the computer and do some old-fashioned hands-on due diligence.

FICO takes some heat for the subprime mess originally appeared on BloggingStocks on Mon, 03 Sep 2007 15:15:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>credit ratingscredit reportsCreditRatingsCreditReportsFair-IsaacFICOlendingloansMCOMoody'sSubprimeMon, 03 Sep 2007 15:15:00 EST