Financials Still In Eye of Subprime Storm [Housing Tracker]

Subprime and Financials 

MBIA Sold $4 Bln Of Assets To Meet Obligations.  “MBIA Inc (MBI) said on Monday that after selling $4 billion of assets in Q2, it now has enough cash and collateral to meet the extra requirements triggered by its recent downgrades. WSJ reported that the bond insurer was raising cash through municipal bond sales last week to make billions of dollars in payments triggered by its rating downgrade by Moody's Investors Service. Because of the sales, MBIA will record pre-tax net realized losses on its second-quarter income statement of approximately $300 million. But this should not have a material impact because the losses "did not differ substantially" from unrealized losses already taken, MBIA said.”  (Reuters, June 30^th)

Exit From Subprime Business Helps H&R Block Swing to Profit.  “H&R Block Inc. (HRB) Monday said it swung to a fiscal fourth-quarter profit on fewer losses from discontinued operations and increased business at its mainstay tax operations, and announced plans to repurchase $2 billion in stock over the next four years and boost its dividend by 5.3%... Total clients rose 3.8%, with half the increase due to people filing federal income-tax returns to qualify for the stimulus rebates. During the quarter, HRB added about $203 million to its reserves in anticipation of future losses from discontinued operations, bringing the total to more than $240 million… HRB sold its mortgage servicing business April 30.”  (Wall St. Journal, June 30^th)

Real Estate Market Threatening Georgia Banks.  “Federal regulator data: Nearly $1 out of every $5 on Georgia banks' loan books bankrolled homebuilders and real estate developers — by far the highest proportion in the state in at least 30 years… Today, the banks have double the concentration of those loans [than during the S&L crisis in the 1980s]… In April, SunTrust Banks bought GB&T Bancshares after GB&T lost $12.5 million in 2007… [due] to problem loans and operations… Nine Georgia banks were among the top 25 banks on a list research firm SNL Financial published earlier this month based on their high "Texas ratios" — a measure used during the savings-and-loan meltdown in the 1980s to gauge increased risk of insolvency.”  (Atlanta Journal Constitution, June 29^th)

IndyMac Shares Drop-off Causes Alarm.  “Sen. Charles Schumer sent letters to federal regulators asking them to more closely monitor the financial health of IndyMac, (IMB) the thrift operator… IndyMac had $10.4 billion of loans, or "advances," from the Federal Home Loan Bank of San Francisco at the end of Q1. Such loans are backed by collateral, typically mortgage loans. Sen. Schumer asked the bank and finance board whether the credit and collateral terms for IndyMac "accurately reflect the associated risks." Sen. Schumer said it is "troubling" that deposits placed by brokers account for about 37% of IndyMac's total deposits. Brokered deposits are considered more susceptible to sudden withdrawals.”  (Wall St. Journal, June 27^th)

AIG Braces to Cover $5 Billion in Subprime-Related Write-downs.  “Insurance giant American International Group, Inc.(AIG) is the latest company to face significant financial losses because of ties the company's insurance units have in the subprime lending sector. Christopher Swift, VP for life and retirement services at the insurance platform, admits the insurance giant  will cover “as much as $5 billion of any losses on sales of the investments,” Bloomberg said. The portion that AIG must cover is dramatically higher than the $500 million assessment made earlier this year.”  (Default Servicing News, June 27^th)

SEC Inquiries Stemming From Subprime Crisis Surge.  “Sources: The U.S. SEC’s docket of probes stemming from the subprime- mortgage crisis has grown at least 40% since January amid mounting investor losses and the collapse of Bear Stearns Cos.. The SEC has more than 50 open inquiries relating to the credit-market turmoil, compared with about three dozen in January. SEC lawyers are examining suspected fraud, market manipulation and breaches of fiduciary duty.”  (Bloomberg, June 26^th) 

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Comments

[fatcat]

Good article ,as usual,thanks Judy.Probably a lot of people don't leave comments,but like me,they use your posts as a resource.

On HRB,they will be hurt ,going forward ,by online filing,which is growing exponentially.Their customers will be the welfare class as time goes on.It already may be 65% and growing.I'm talking from experience from being in the pawn shop business for 15yrs.We cash many of the checks they issue...

[vcsillag]

Please go to theimbreport.com/
and investigate the REAL situation
and let us know what you think.
Also look the new fileling of IMB
thanks

"IndyMac Shares Drop-off Causes Alarm. “Sen. Charles Schumer sent letters to federal regulators asking them to more closely monitor the financial health of IndyMac, (IMB) the thrift ....."

[Judy Weil, SA Editor]

Thanks Fatcat!
So can you tell us what other macro trends you're seeing? Housing? Foreclosures? Rebate checks? Anything you've noticed would be really interesting to hear about.
JW