Gross lending for house purchases is slowly recovering in the United Kingdom due in part to rising mortgage approvals, but refinance activity remains subdued, leaving the overall mortgage lending volume at early 1990s-levels throughout June and July, according to Bank of England research.
The news comes as a Morgan Stanley ($25.16 0.09%) financial adviser survey showed investors are returning to the structured product market, including mortgage-backed securities.
Bruce Witherell joins Freddie Mac ($0.00 0%) as chief operating officer, effective September 14.
Witherell has served as managing director and global co-head of Morgan Stanley’s ($25.16 0.09%) residential mortgage business since 2006. Prior to that, he spent 15 years at Lehman Brothers in a variety of leadership roles, including CEO of Lehman Brothers Bank.
When the Treasury introduced the Troubled Asset Relief Program (TARP) last fall, its goal was to provide funds to institutions so they could clear the toxic assets off their books. But by the time the legislation creating TARP was passed in October, Treasury went with a different strategy, distributing funds to banks so they could build up loss reserves.
Even as banks are beginning to repay the government for the TARP investments, many of those bad assets remain on the books.
New York-based Morgan Stanley ($25.16 0.09%) reported a $159m quarterly loss, or $1.37 per share, after TARP capital repayments.
Morgan Stanley closed its deal with Citigroup for controlling interest in Smith Barney on May 31, a transaction worth $11.1bn, according to Citi’s Q209 report, issued last week. The deal closed earlier than expected.
On the back of the sale of Smith Barney brokerage unit, Citigroup ($51.79 0.19%) posted a $4.3bn Q209 profit, or $0.49 per share.
Citi completed its sale of Smith Barney to Morgan Stanley ($25.16 0.09%) on June 1, earlier than the original estimated close in Q309. That deal earned the bank $11.1bn pre-tax, $6.7bn after taxes.
Citi's quarterly profit shows an improvement from a $2.5bn loss in Q208. The banking giant reported total revenue of $30bn in Q209, up $12.4bn from Q208, but that included the one-time sale of Smith Barney.
After a review of 13 US residential mortgage-backed securities (RMBS) transactions, Standard and Poor’s lowered its ratings on 120 of the securities’ classes last week.
The collateral backing the vintage 2005-2007 securities are primarily Alt-A, first-lien residential mortgages.
S&P said it made the downgrades after reviewing the mortgage loan collateral in the securities and believes the investments will lose value because of an increase in delinquencies and the current negative condition of the housing market.
[Update 1 adds details regarding BofA and Morgan Stanley.]
Hours before US Treasury Department secretary Timothy Geithner warned today that toxic asset-purchasing plans are beginning to look less appealing to banks, the Federal Reserve outlined criteria it will use to evaluate applications by the 19 largest banks to redeem US Treasury capital.
Fifth Third Bancorp ($18.36 -0.025%) and Huntington Bancshares ($7.69 -0.04%) revealed late Wednesday capital-raising action plans.
After failing to successfully endure the government's stress tests, meant to evaluate the potential performance of the nation's 19 largest banks under more severe economic conditions, Fifth Third was told on May 7 it must raise a capital buffer in sum of $1.1bn.
As the deadline for capital plans under the government's stress test requirements approaching, the line of banks jostling toward the TARP exit sign grows.
Additionally, three large institutions, Goldman Sachs ($160.73 1.83%), JP Morgan Chase ($52.99 0.7%) and Morgan Stanley ($25.16 0.09%) are the subjects of the newest reports circulating around possible TARP repayments.
Monoline bond insurer MBIA faces a lawsuit by 18 financial firms over its decision to split its mortgage exposures off of its municipal-bond insurance portfolio.
The allegations claim MBIA's split and the resulting transfer of $5bn out of its main insurance business to a muni-bond insurance company constituted an unlawful effort to escape contractual obligations to cover mortgage security-related losses, according to a report filed at the Wall Street Journal.
