Almost a year after the federal government launched its rescue of the housing market, nearly one in four new mortgages is insured by the Federal Housing Administration.
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FHA loans also have become more popular because of the demise of many subprime lenders, which sometimes allowed buyers to purchase a property with nothing down and no documentation of income.
Remember what went wrong with the subprime housing market? People getting easy credit with "no skin" in the game buying houses they couldn't afford. Oh sure, there was massive fraud too, but that wasn't the cause of the bubble.
And yet, the federal government seems determined to do the exact same thing that got us into trouble in the first place. Only this time it is your taxpayer dollars that are financing it.
Nonfarm private employment decreased 298,000 from July to August 2009 on a seasonally adjusted basis. The estimated change of employment from June to July was revised by 11,000, from a decline of 371,000 to a decline of 360,000.
What is interesting are dueling MSM reports on the ADP statistics.
This little tidbit from the Fed almost slipped through without notice yesterday.
The Federal Reserve purchases fixed-rate, non-callable, senior benchmark securities issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. Prior to August 31, 2009, purchases were focused on off-the-run securities in that category. Going forward, purchases will include on-the-run securities in that category. This change represents a technical adjustment designed to mitigate market dislocations and to promote overall market functioning. Over the course of the program, the Federal Reserve may change the scope of purchasable securities.
It was only a month ago that the Fed was monetizing treasury notes via the back door.
It's possible that the Geithner plan will "work" in the sense of re-starting the Wall Street bubble machine, this time with a limitless line of direct credit from the Federal Reserve. If that happens, it will defer an even more serious day of reckoning, as the cost of the Fed's immense credit creation comes due. But the greater likelihood is that the plan will merely enrich some speculators, but neither bring zombie banks back to life, nor get a normal banking and credit system operating again. And then the administration will need to come back to Congress, this time with less credibility, with the economy in even worse shape, having burned through more than a trillion dollars.
We are stupid! We've been punked! Punked by the financial oligarchy. Punked by financial conglomerates. And yes, punked by the Obama Administration.
Currently, there is a story on EP about private equity firms feeding at the trough. It talks about FDIC's loss share agreements. These are very generous sweetheart agreements whereby the FDIC, and more directly taxpayers, assume losses of assets sold to private equity firms and other acquirers of failed bank assets. Here is a little taste of these loss share agreements:
The FDIC released new rules, of course on Friday when no one was watching. HuffPo:
As the Wall Street Journal reports this morning, in what are called a "loss-share" agreements, buyers of failed banks are getting billions of dollars in government guarantees to snatch up the bank's bad assets. To entice buyers, the Federal Deposit Insurance Corporation is offering to cover around 80 percent of the losses associated with buying a bank. The result, the WSJ points out, is a massive subsidy to the private equity industry, and a huge risk to the American taxpayer.
As bank failures have mounted this year, much has been made of the FDIC's dwindling Deposit Insurance Fund. But, as the WSJ reports, the FDIC's potential risk through loss-share agreements "is about six times the amount remaining in its fund that guarantees consumers' deposits."
While people go begging for work, losing their homes, getting laid off, our bailed out bank executives made millions. The Washington-based Institute for Policy Studies has a new report, America’s Bailout Barons.
Their key findings:
The Bounty for Bailout Barons: From 2006 through 2008, the top five executives at the 20 banks that have accepted the most federal bailout dollars since the meltdown averaged $32 million each in personal compensation. One hundred average U.S. workers would have to labor over 1,000 years to make as much as these 100 executives made in three.
The auto sales numbers are out and the SAAR is 14.1 Million, the most since May 2008 according to Bloomberg.
SAAR stands for seasonally adjusted annual sales rate, extrapolated from month sales data.
Much of this is due to Cash for Clunkers. Without cash for clunkers we have estimated:
GM and Ford each said that without the rebates, the annual sales rate in August would have been 10.5 million vehicles, an improvement from the 9.7 million rate in June, the last month without the incentives.
GM expects U.S. auto sales to total 10.5 million for 2009, while Ford projects the figure to be 10.5 million to 11 million. Last year’s total was 13.2 million. Both automakers projected sales to be stronger in the year’s second half.
The SAAR rates were July, 11.2 million and a 9.6 million average for the entire 2009 year before cash for clunkers.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 3.2 percent to 97.6 from a reading of 94.6 in June, and is 12.0 percent higher than July 2008 when it was 87.1. The index is at the highest level since June 2007 when it was 100.7.
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NAR estimates that about 1.8 to 2.0 million first-time buyers will take advantage of the $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.
The Industrial Supply Management report is out and it's pretty good news! Manufacturing is finally expanding. Any reading above 50 indicates growth. The bad news is they are still laying people off, employment is still contracting. New Orders are way up, to 64.9 from 55.3 last month.
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