Both borrowers and lenders resort to desperate measures
|March 10, 2009||Posted by Jeffery J. Smith under Progress Report, The Progress Report|
Both borrowers and lenders resort to desperate measures
2009, late winter, this downturn keeps breaking records
People look everywhere for succor — except to economic justice? We trim, blend, and append five 2009 articles from: (1) Reuters, Mar 8, on protests; (2) AP, Mar 5, on foreclosures; (3) MarketWatch, Mar 3, on home sales by Ruth Mantell; (4) AP, Feb 20, on failed banks by Madlen Read; and (5) AP, Mar 5, on Euro banks by George Frey and Pan Pylas.
by Reuters, by AP, by Ruth Mantell, by Madlen Read, and by AP
- Protesters target US foreclosed-homes auctioneer
Protesters in Manhattan marched outside an auction of foreclosed homes, chanting and carrying signs reading, “Banks get bailed out, people get thrown out.”
The Bail Out the People Movement said their argument was not with would-be homebuyers but with banks and their backers. Major insurer American International Group and banking giant Citigroup Inc have received billions of US government funds.
“I’m sorry for anybody losing their home,” said one man going into the auction, adding he had a low-paying job. “This is probably my only way to ever get my own home.”
BOPM called on Washington to declare a moratorium on foreclosure and evictions. They said the foreclosures are in violation of the federal Housing and Economic Recovery Act.
The group plans to stage a major demonstration on Wall Street on April 3.
- Mortgage woes break records again in 4Q
A record 5.4 million American homeowners with a mortgage, or nearly 12%, were either behind on their payments or in foreclosure at the end of last year. Most were in the South despite low land prices there; however, employment was lower.
The Mortgage Bankers Association said the percentage of loans at least a month overdue or in foreclosure was up from 10% in the July-September quarter and up from about 8% a year earlier.
The delinquency rates for fixed-rate mortgages, not just the notorious ARMs, climbed in Q4.
- US Jan pending home sales down 7.7%
The number of new sales contracts on existing homes fell a seasonally adjusted 7.7% in January, the National Association of Realtors said. Their index is down 6.4% from a year earlier.
The Commerce Department estimated that sales of new homes fell 10.2% in January to a record-low annual rate, despite a record drop in prices. Sales were down 48.2% compared with a year earlier.
- The 2009 tally of failed US banks now at 14
Regulators closed Silver Falls Bank in Silverton OR — the 14th federally insured institution to fail this year, and the second based in Oregon.
Silver Falls Bank, a community bank that opened in May 2000, had $131.4 million in assets (loans, mostly) and $116.3 million in deposits as of Feb 9. The last Oregon-based bank to close was Beaverton-based Pinnacle Bank last week.
Citizens Bank of Corvallis OR is assuming Silver Falls Bank’s deposits, taking over its three branches, and buying about $13 million in assets, including cash, securities, (not all that secure lately), and overdraft loans.
The Federal Deposit Insurance Corp, appointed receiver of Silver Falls Bank, will retain the bank’s remaining assets. The FDIC estimated the Silver Falls Bank’s failure will cost them $50 million.
The bank failure wave began last year, when 25 US banks were seized by regulators — more than in the previous five years combined.
Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept 30. That was a nearly 50% jump from the second quarter and the highest tally since late 1995.
The FDIC has estimated they will lose as much as $40 billion through 2013. To replenish the fund — which now stands at a five-year low of about $35 billion — the agency has raised the insurance premiums banks and thrifts must pay.
JJS: Could cheap and plentiful money help?
- European, British central banks cut interest rates to record lows
The European Central Bank cut its main interest rate by a half percentage point to 1.5%. The Bank of England took its benchmark rate to 0.5% — both are historic lows.
Bond and currency markets priced in the possibility that the ECB will cut rates again in the months ahead. The euro slid 1.2% to $1.2498, having fallen earlier to a low of $1.2479 — its lowest level since late November. Lower rates work against a currency’s exchange rate by lowering the interest paid on loans denominated in that currency.
Earlier, the Bank of England said it would spend 75 billion pounds on debt, such as government securities and corporate bonds, by crediting the middleman banks’ accounts — effectively creating new money for banks to lend.
The European Central Bank can’t buy government bonds and buying assets in one country might open it to accusations of favoritism.
Since October, the ECB has cut its benchmark rate by 2.75 percentage points, much less than the Bank of England’s 4.5 percentage point cumulative reduction.
JJS: So much effort to achieve the impossible — perpetual growth — when we should accept slow-downs as natural as sleep and winter and learn to enjoy them. Economic justice could do that for us. Imagine no taxes on our efforts but a fair share of the commonwealth. Greater leisure from geonomics, anybody?
Jeffery J. Smith runs the Forum on Geonomics.
Conventional authorities admit to lands role in recession
Mainstream voices offer solutions as the economy worsens
Lets hope their cure is not worse than the disease
What are your views? Share your opinions with The Progress Report!