Archive for December, 2010
A torrent of new rules for Wall Street and U.S. banks is pouring off Capitol Hill into the federal regulatory agencies, unleashed by the devastating 2008-2009 financial crisis.
The agencies is where the action will be this year and next as regulators, lobbyists and lawmakers struggle to implement the Dodd-Frank financial reforms.
With parallel efforts under way in Europe, Dodd-Frank — enacted on July 21 — is likely to be implemented as written, though banks are lobbying for softening parts of it to protect their profits and business models.
Here's what lies immediately ahead and a look into 2011:
DEBIT CARD FEES: Dodd-Frank ordered cuts in the fees that banks charge on debit card transactions, but left details unclear, saying fees must be "reasonable and proportional."
First we wish a safe holiday and happy, healthy and prosperous New Year to all. The IRA will be quiet until just before New Years, when we will review last year's predictions publish our prognostications about 2011.
Also, this week in The IRA Advisory Service, we discuss how the proposal by the FDIC to impose punitive insurance premiums on large banks that use all types of brokered deposits could have a decidedly adverse impact on the entire U.S. banking industry. To our friends at the FDIC we recall the old saying: Be careful what you wish for. You may get it.
We start this comment with an excerpt from Ian Jack's review of Fintan O'Toole's new book, Ship of Fools: How Stupidity and Corruption Sank the Celtic Tiger. Both are must reading for students of the crisis around the world. And conveniently enough, you have but to change the words of either of these works to include American politicians and states to show that the stories on both sides of the pond were remarkably similar.
California has been the poster child for the subprime mortgage mess since the bubble burst in 2008. However, a November report from analytics firm 1010data, conducted in conjunction with CoreLogic, show New York has bumped California out of the top five worst housing markets in the country.
According to the November report, delinquencies in both the subprime and Alt-A mortgage sectors are higher in New York than they are in California. Approximately 44% of subprime and Alt-A mortgages in New York are 60-days or more delinquent.
In California, approximately 38% of subprime mortgage loans and Alt-A mortgage loans are 60-days or more delinquent. (Click to expand)
Jonah Green, director of mortgage analytics at 1010data, attributed the firm's findings to how New York handles foreclosures. New York is one of 23 judicial states, which deals with foreclosures through the legal system and gives borrowers a trial before being foreclosed on.
California is a nonjudicial state, meaning a foreclosure doesn't need to be approved by a state court. Green said the time it takes for a servicer or lender to repossess and liquidate a home in New York is much longer than California because of the judiciary process.
"Securitized Alt-A and subprime loans that are being liquidated in New York haven't made a payment in 32 months," Green told HousingWire. "In California, however, it is only 19 months."
In 2009, the liquidation rate in California was 15 months, compared to 21 months in New York. Green said the judiciary process of dealing with foreclosures slows a state's recovery rate. Ultimately, he believes this trend will spread to other judicial states and the shadow inventory will continue to grow, slowing a recovery.
Green said delinquencies in New York are higher despite the unemployment rate being significantly lower than in California. The current rate of unemployment in New York is 8.3% and in California, it's more than 12%.
Based on these figures, he said, there should be more demand for housing in New York, and the market should have hit bottom because prices haven't gone down that much. The only reason it hasn't is because homes cannot be liquidated because borrowers are awaiting trial.
"California is more likely to recover before New York in any meaningful way because the first step is to get that supply down," Green said. "If you don't get that supply down, it prolongs recovery."
Write to Christine Ricciardi.
Simon Property Group Inc., the largest U.S. mall owner, made an offer for Capital Shopping Centres Group Plc that values the U.K. company at 2.9 billion pounds ($4.6 billion).
Simon would pay 425 pence a share in cash for London-based Capital Shopping, the U.K.’s biggest retail landlord, according to a statement today. That’s 26 percent more than Capital Shopping’s closing share price on Nov. 24, the day before Simon’s interest was disclosed. Capital Shopping has so far refused to cooperate with the Indianapolis-based company.
