On Wednesday, for one day at least, mortgage-led financials reversed course on Wall Street -- in a big way -- and shed a week's worth of pummeling at the hands of skittish investors worried about oil and rising inflation, as well as a mortgage market stuck firmly in the mud.
For one day, stronger-than-expected results from Wells Fargo & Co. ($40.24 0.23%) were seemingly enough to make equity investors forget about woes in mortgage and housing; oil prices that have fallen more than $10 in two days, easing concerns over inflation, certainly helped matters as well.
Looks like Bernanke has a reason for concern. Via the Associated Press:
The Labor Department reported that soaring costs for gasoline and food pushed inflation at the wholesale level up by a bigger-than-expected 1.8 percent in June, leaving inflation rising over the past year at the fastest pace in more than a quarter-century.
Much of the financial sector took a pounding Monday, as investors parsed through the Friday failure of IndyMac Bank and worried about a similar fate for other large banks with significant mortgage exposure.
It's over for the Pasadena-based thrift that once ruled the Alt-A mortgage roost. On Friday evening, the Federal Deposit Insurance Corp. closed Indymac Bancorp Inc. ($0.00 0%) and its $32.01 billion in total assets, and total deposits of $19.06 billion.
A company many in the industry probably haven't heard of is set to become one of the nation's largest independent retail mortgage operations -- almost overnight. How? By snapping up all of the retail mortgage branches of troubled Indymac Bancorp Inc. ($0.00 0%), which disclosed only only day earlier that it would exit substantially all of its mortgage origination activity.
In the wake of the troubles now facing Indymac Bancorp Inc. ($0.00 0%), Senator Charles Schumer (D-NY) came out Tuesday suggesting that the bank's troubles "were not replicated by other regional banks."
"Neither depositors nor investors should read IndyMac’s unique troubles as an omen for other institutions," he said in a statement released by his office early Tuesday afternoon, clearly looking to assuage investor concern and perhaps looking to take a conciliatory tack with frustrated banking regulators.
The credit crunch is setting up to hit mid-tier regional and local community banks with force this earnings season, as the number of construction & development loans tied to a ravaged residential housing market begin to go bad in droves; builders, after all, are running out of reserves.
Columbia Bancorp ($0.00 0%) warned Tuesday morning that souring performance on its real estate development loans would likely swing it into the red when it reports second quarter results on July 23, and said it would slash its dividend to $.01 per share as a result.
The nation's largest independent mortgage operation in the wake of Countrywide Financial's acquisition by Bank of America Corp. ($13.24 0.03%) lasted less than a week. It may never had a chance, either, given the headwinds that coalesced against it in recent weeks.
Origen Financial, Inc. ($1.50 -0.031%) said Wednesday that it had completed a previously-announced sale of its servicing platform assets to Green Tree Servicing LLC, a well-known servicer of manufactured housing loans, other residential and consumer loans.
The deal involves approximately $1.6 billion of manufactured housing loans, Origen said in a press statement. Green Tree will also assume the lease for Origen's Fort Worth, Texas-based servicing facility.
As if IndyMac Bancorp Inc. ($0.00 0%) didn't have enough problems of the real variety right now -- trying to find sources of capital among them, as bank losses tied to Alt-A mortgages mount -- the Center for Responsible Lending on Monday took aim at what many expect to be the next target for consumer groups' ire, now that Countrywide Financial is no more.
