The Washington Times reports that Phil Gramm, UBS AG (NYSE: UBS) vice chairman and senior economic advisor to John McCain (R.-AZ), thinks we're a nation of whiners. Gramm's UBS is a leader on three important fronts in the effort to destroy the U.S. economy: the $1.3 trillion subprime mortgage catastrophe, the $330 billion Auction Rate Securities (ARS) freeze, and a tax evasion scheme of unknown magnitude.

The Washington Times quotes Gramm as saying: "We have sort of become a nation of whiners. You just hear this constant whining." UBS probably pays Gramm well for his services so I can see where he's coming from. He is making money and he's the only one who matters. But if you think he is helping McCain, think about these things:

H&R Block (NYSE: HRB), whose colleagues include Intuit (NASDAQ: INTU) and Jackson Hewitt (NYSE: JTX), reported Q4 and full-year earnings on Monday. The numbers looked pretty good to me. For Q4, revenues increased 11% to $2.6 billion and earnings per diluted share from continuing operations increased 17% to $2.11. According to this article, analysts' expectations were beat by $0.08. For the full year, the top line expanded by 10%, coming in at $4.4 billion. Earnings per diluted share from continuing operations jumped 21% to $1.39.

The tax specialist said it worked with 23.5 million clients, the most ever in its corporate history. That's a nice indication of health for the company, I suppose, but here's a better one. The board decided to juice the dividend. The annual payment will now be $0.60 per share, translating to a 5% increase. Okay, 5% isn't too exciting, I'll grant you, but H&R Block has now increased its payments to shareholders every year for over a decade.

But, as the company stated in its release, although it intends on repurchasing shares over the next few years, it will remain "particularly disciplined" about the subject in the next fiscal year. Essentially, that means shareholders should not expect a lot of share repurchases for a while. H&R Block is reacting to the fact that it is still rebooting itself after being victimized by the subprime mortgage crisis. I'd rather hear a more aggressive stance in terms of buyback plans, but I'd say there is prudent motive in such posture given the company's state.

It's heartbreaking to hear about the increasing numbers of homeless people as a result of the subprime mortgage crisis and the ensuing foreclosures. It's even more distressing to read that 2 million children will be affected as a result.

Many who join the ranks of the homeless are actually middle-class families. Many are renters of homes that were foreclosed. Practically all of them never expected to be in this situation. According to a study released in April by the National Coalition for the Homeless, "76% of displaced homeowners and renters are moving in with relatives and friends. About 54% are moving to emergency shelters. About 40% are already on the streets."

Well, I find this whole situation infuriating for several reasons. One is personal responsibility. I can't help but wonder how a middle-class family with two earners does not save enough for a rainy day. And if you can't manage that, what were you doing buying a 3,000-square foot house in the first place?

Another reason this is all so infuriating is lack of proper laws to protect tenants of foreclosed homes. What are renters to do if they're not even notified in time to arrange their affairs? What are they to do if they lose their deposits? What are they to do if the new owner doesn't assume the rental responsibilities? More protection is required in such situations.

Then there is good old plain greed and callousness. Somehow, they always seem to go hand in hand. The housing market is oversupplied, we hear. There is a great deal of inventory standing empty. Many foreclosed homes stand empty. So it wasn't enough that lenders, with their greed, brought the country to this mess, now they can't even see a way to redeem themselves. It's true, they're not in the business of renting homes out, but if there are empty homes, and there are homeless people, then perhaps they should. Or at least find a way to get those empty homes filled out.

Knowing them, they'll likely to still manage exploit the public even in this while making a buck or two for themselves, then why not do something good for a change?

Angelo Mozilo's nine lives may be about to run out. So far the CEO of Countrywide (NYSE:CFC) has avoided the most severe taint from the collapse of his mortgage company and its questionable practices.

The State of Illinois, the land of Lincoln, will bring civil charges against Mozilo and the firm he started. According to The Wall Street Journal, In a draft of the complaint, Illinois alleges that the company engaged in "unfair and deceptive practices" in the sale of mortgage loans.

One of the main pieces of the complaint is that mortgage brokers pushed loans on people, even it they could not afford them.

Of course, as is always true with charges bought by attorneys general, there is some politics behind the claim. There have been a number of Countrywide foreclosures in the Illinois.

To some extent the politics do not matter. Based on other investigations of Countrywide, it appears that management did quietly push its people to move loans out like cars off an assembly line.

What is most troubling is that no one in government anywhere caught onto the practice earlier.

Douglas A. McIntyre is an editor at 247wallst.com.

Barclays (NYSE:BCS) become the most recent bank to raise billions of dollars, bring in $8.8 billion from investors including the sovereign funds in Qatar and Singapore.

"Through our capital raising ... we strengthen our capital base and give ourselves additional resources to pursue our strategy of growth through earnings diversification," Barclays Chief Executive John Varley said, according to The Wall Street Journal.

That is a nice way to say the bank was running out of money.

The news says more about the future than it does the past. A bank as large as Barclays would not raise such a large sum if it believed the credit crisis was largely over. The firm clearly expects more fall-out from mortgage-related paper and LBO loans. Why else dilute the shareholders?

At least the fact that large funds will still put money into banks is good news.

If the tea leaves from the bank's actions are correct, the opinion among many Wall Street analysts that the financial crisis will extend into next year is right.

Douglas A. McIntyre is an editor at 247wallst.com.

Harvard has come out with a study that says the housing crisis will be prolonged. According to Reuters, the research says, "Record foreclosures and limited access to credit will make it harder than usual to rebound from this U.S. housing market slump."

It is comforting when some of the smartest people in the world come to the same conclusion that everyone else has already reached.

The Harvard work is based on the premise that a combination of high foreclosures and tight credit will keep housing down longer than in the past. That may be true.

The people at Harvard can afford houses. No one else can.

Douglas A. McIntyre is an editor at 247wallst.com.

Some analysts thought that once banks moved though their bad bet on subprime paper, they might start to see improvements in their earnings. Not so fast. Plain old loans for houses and condos are going bad so fast that lenders are about to get hit again on the bottom line.

The Wall Street Journal points out in one of it top stories that "Federal regulators warned Thursday that banking-industry turmoil would continue as financial institutions come to terms with piles of bad loans they made to finance the construction of homes and condominiums."

Many investors may say that the information is obvious, and that it was expected that falling real-estate prices would hurt banks. But the real victims may be bank shareholders. As large lenders take more losses on their portfolios, they will have to raise more capital and further dilute shareholders. Banking stocks which are down two-thirds from their highs could drop even further.

Now that banks are selling off these large loans, the quarterly reports for companies like Wachovia (NYSE:WB) and Wells Fargo (NYSE:WFC) are about to get hammered again. Wachovia trades at below $22, down from a 52-week high of more than $54. Wells Fargo has fallen from a 52-week high of almost $38 to $27. Regional banks like National City (NYSE:NCC) have had it worse. It shares have fallen from a one-year high of $34.62 to $5.25.

Selling in those stocks in not over. Not even close.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

With the U.S. congress trying to please all constituencies in this election year, especially those who took subprime mortgages and can't afford the monthly payments, where is congressional help for military families to save their homes from foreclosure?

A disturbing article on Bloomberg states, "In the midst of the worst surge in mortgage defaults in seven decades, foreclosures in U.S. towns where soldiers live are increasing at a pace almost four times the national average, according to data compiled by research firm RealtyTrac Inc. in Irvine, California."

With the stress of potential foreclosure on their minds, don't you think that this may impact their ability to fight in Iraq?

The article continues, "The Servicemembers' Civil Relief Act protects soldiers and sailors from losing homes for nonpayment of mortgages only while on active duty and for 90 days after they return home."

Ninety days?

Bloomberg News reports that banks have kept $35 billion worth of asset write-downs from making the leap from their balance sheets to their income statements. Accounting rules permit this but it delays the inevitable -- in which a write-down on the balance sheet flows to the income statement. The reason banks are using this delaying tactic is that they can't raise enough capital to close the gap. But until they do, others will be wary of dealing with them.

Here are some examples:

• Citigroup Inc. (NYSE: C) subtracted $2 billion from equity for the declining value of home-loan bonds in its May 2 10Q without mentioning the deduction in the earnings statement or conference call with investors that followed; and.
• ING Groep NV placed 3.6 billion euros ($5.6 billion) of negative valuations in its capital account, while disclosing only an 80 million-euro depletion to income

U.K. home repossession claims by mortgage lenders increased 16% from a year ago to their highest level since the early 1990s, Bloomberg News reported Friday.

The U.K.'s Ministry of Justice said possession claims, the first step in the foreclosure process, increased to 38,688 in Q1 2008, from 27,530 in Q1 2007, Bloomberg News reported.

Anglo-American housing slump

London-based economist Mark Chandler told BloggingStocks Friday the large foreclosure rise indicates that the air is easing out of the housing balloon, and that the housing correction that began in the United States, is "clearly washing shore in the U.K."

AIG (NYE: AIG) was the most respected insurance firm in the world when it was run by Hank Greenberg. But he is gone, along with the respect.

AIG managed to lose $7.8 billion in the last quarter, an impressive amount even by the standards of current bank and brokerage deficits. According to The Wall Street Journal, "The giant insurer also announced that it would raise $12.5 billion in capital to replenish its balance sheet."

Of course, the reason for the losses was, among other things, investment in instruments based on mortgages.

One odd piece of news that came out of the awful quarter from the insurance firm was that it would raise its dividend. It is hard to imagine where that cash will come from.

The smoke signal sent up by AIG is that the crisis involving US financial firms is not over. AIG did not say that the future was bright and the sun was coming out from behind dark clouds. Pessimism was the emotion of the day.

Watch for more big losses from banks and brokerage in the second quarter. AIG is a canary in a coal mine.

Douglas A. McIntyre is an editor at 247wallst.com.

The ever-incisive FT columnist Martin Wolf offers prudent and timely advice concerning the reforms needed to ease credit market doldrums and right the global financial state of things.

One key practice Wolf would like to see addressed is bank / mortgage lender selling of mortgages they originate.

Designers of the practice had good intentions: It was designed to free-up capital so banks / mortgage lenders could have more money available for future homebuyers. A noble intention.

Unfortunately, as tradition reminds us, the road to perdition (and record housing sector slumps) is paved with good intentions. The problem, Wolf notes, is that the originate-and-distribute model encouraged banks / mortgage lenders to originate (in many cases for handsome fees) high-risk, very-poor-credit-quality mortgages with reckless abandon, because originators knew that the loan would be sold, and its status as a performing asset would be entirely someone else's problem. Save the best (mortgages), get rid of the rest.

It's not surprising, Wolf notes, that the originate-and-distribute model became laden with sloppy, irresponsible and even fraudulent loans. Wolf's reform: originators must be required to retain a portion of the equity of securitized loans. Hence, if / when they go bad, the originator loses money too.

Economic Analysis: Wolf's proposed financial / bond market reform is on the mark. If every party, including the originator, has a stake in a mortgage's repayment status, that will lead to higher-quality loans, while at the same time retaining the secondary market's benefit of freeing-up capital for new mortgages.

Countrywide (NYSE:CFC) got called before Congress. All of the elected officials and their staff members wanted to know how the mortgage firm screwed up by lending people without the resources money to buy homes. Was there fraud involved? Did brokers inflate buyers' salaries? Did they take down any pertinent information at all?

As would be expected, Countrywide said it had not done anything illegal. All that happened was that its people made a few mistakes. All that has been fixed and everything is fine.

According to The Wall Street Journal, Countrywide "told a U.S. Senate Judiciary subcommittee Tuesday that the company is taking steps to address concerns that misconduct in bankruptcy proceedings by mortgage companies is exacerbating the nation's foreclosure crisis." In other words, the company gave out loans which people could not pay and then beat them up with fees which they could hardly afford when they got behind on payments.

The FBI and a number of other agencies looking into Countrywide's practices. They obviously are not willing to settle for the company's comments before Congress. These investigators think that the mortgage operation knew a great deal about what it was doing and was doing it on purpose to make more money.

Countrywide can testify all it wants. There is no poll of home buyers, federal investigators. or Congressmen that will show anything other than the belief that the company is not telling the truth. Not even close.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

U.S. Federal Reserve Chairman Ben Bernanke is urging both mortgage lenders and government officials to step-up efforts to help homeowners avoid foreclosure, Bloomberg News reported Monday.

Bernanke, in a speech in New York on Monday night, also underscored his preference to have lenders forgive a portions of mortgages for selected struggling homeowners, Bloomberg News reported. Bernanke qualified his remarks by stating that the proposal should be tightly targeted to avoid providing an incentive for default.

Bernanke's speech came about one week after the Bank of America (NYSE: BAC), a major mortgage lender, announced it will modify at least $40 billion in troubled mortgage during the next two years to keep customers in their homes, Bloomberg News reported Monday. The action could help as many as 265,000 homeowners, the bank said.

The New York Times reports that Federal National Mortgage (NYSE: FNM) and Federal Home Loan Mortgage (NYSE: FRE) have a tiny sliver of capital to support a mountain of mortgages. To put it in perspective, their level of borrowing is almost twice that of the enormously over-leveraged investment banking and hedge fund industries. With the collapse of the housing market, Freddie and Fannie are in trouble. And when you get to the scale of these two, so is America.

As I posted last month, it could cost $1 trillion to bail out Fannie and Freddie. These hybrid organizations are a key cog in the mortgage industrial complex (MIC) that has gotten the world into its current capital crisis. Fannie and Freddie buy "conforming" mortgages from their originators and then package and sell the mortgages as securities. But these two have a mere $83 billion in capital to support $5 trillion worth of debt and other commitments.

This 60-to-1 ratio is almost twice the 32-to-1 ratio of the highly leverage investment banks and hedge funds. And like any company with hard-to-value assets, Fannie and Freddie have unrealized losses. In their case, those total $20 billion -- they've already taken $9 billion worth so far this year. By 2007 they had guaranteed or invested in $717 billion of subprime and Alt-A loans, up from almost none in 2000. And many of those are not worth that much.