After declining in five of the past six months, U.S. pending home sales unexpectedly jumped 6.3% in April to reach a level of 88.2, the highest level in six months, according to the National Association of Realtors. Economists say the rising pace of foreclosures may have helped the index.
Federal regulators are warning the world to get ready for the next wave of problems in the banking world.
Up to now banks have been struggling to deal with the piles of delinquent debt from earlier subprime lending to homeowners and the dozens of federal, state, and lender originated programs being proposed are all designed to address this crisis.
That situation is only getting worse according to information released last week by the Mortgage Bankers Association (MBA).
But, while lenders and investors have been working to raise the necessary capital reserves to withstand looming write-offs and losses from this consumer-based mess, a new group of bank customers have been watching their own situation get worse.
Speaking at the Wisconsin School of Business in Madison Wisconsin, newly appointed president of the St. Louis Fed James Bullard told a crowd that the Federal Reserve's rate cuts were pre-emptive and that patience is required.
Bullard, in his first speaking engagement since becoming the St. Louis Fed president, told the crowd, "Given the current economic environment and the outlook for the next 18 months, my view is that policy is appropriately calibrated at this time. I see several reasons why maintaining the current policy is a good option for now."
We conducted an unscientific, teeny little survey of foreclosed houses last week – precisely one house – but given the figures we quoted earlier this week about the toll foreclosed homes are taking on cities, neighborhoods, and individual neighbors – we are willing to bet that what we saw in Darien, Georgia can be extrapolated to portray hundreds of thousands of foreclosed homes nationwide.
And what we see is how the policies of lenders and their real estate agents are making the foreclosure situation worse than it needs to be.
The Canadian and U.S. employment reports top a busy week on the economic data front, followed by comments from Fed speakers and U.S. wholesale inventories for May.
Echoing comments he made on May 22, Fed Governor Randall Kroszner said the U.S. housing sector will recover gradually as an excess of home inventory is reduced.
Speaking on 'Financial Market Developments and Credit Conditions' in Boston, Kroszner did not address the economic outlook or interest rates.
"Rehabilitation in the mortgage securitizations markets, which have been particularly hard hit...
Standard and Poor's cut the credit ratings of MBIA and Ambac on Thursday, just one day after fellow ratings agency Moody's said it may do the same.
"The rating actions on the companies reflect our belief that these entities will face diminished public finance and structured finance new business flow and declining financial flexibility," SP said.
Philadelphia Fed President Charles Plosser said the Federal Reserve must follow rules and exercise caution as a lender of last resort.
Speaking at the Society for Financial Econometrics Inaugural Conference in New York, Plosser said benchmarks may be needed to properly determine situations that qualify as system risks and that price stability is key to economic growth.
"I do believe...that lender of last resort policies should take a lesson from...
In a report issued Wednesday, Federal Reserve Vice Chairman Timothy F. Geithner warned banks and settlement and payment systems to review their risk management controls in an effort to avoid any potential disruptions in financial transactions.
The Bank of International Settlements report suggested that system operators, financial institutions and service providers must broaden their understanding of...
Speaking on financial stability in London, Richmond Fed President Jeffrey Lacker (non-voter) said he called on the Fed to detail its rules on intervening in the financial markets in order to minimize moral hazard and greater risk taking.
"More expansive boundaries could conceivably prevent more avoidable liquidation costs in the case of non-fundamental runs...
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