Wealthiest Americans aren't immune from mortgage crisis

April 24, 2008
Wealthiest Americans aren't immune from mortgage crisis

GREENWICH, Connecticut: With the mortgage crisis still spreading, even homes in one of the wealthiest towns in the United States can fall into foreclosure. But to be in charge of auctioning off such homes to the highest bidder is a far greater challenge here in Greenwich than in most other places.

Just ask John Thygerson, who parked his Jeep sport utility vehicle in front of an empty $1.6 million, 4-bedroom colonial on the flawless spring Saturday last week. As a foreclosure auctioneer, he was scheduled - for the third time since January - to sell the house. But the owner, a construction business owner who has fallen on hard times, made a last-minute mortgage payment and the foreclosure was postponed yet again.

Investment firms tapping Fed for billions

March 27, 2008
Investment firms tapping Fed for billions

WASHINGTON - Big Wall Street investment companies are taking advantage of the Federal Reserve's unprecedented offer to secure emergency loans, the central bank reported Thursday.

Those firms averaged $32.9 billion in daily borrowing over the past week from the new lending facility, compared with $13.4 billion the previous week. The program, which began last Monday, is part of the Fed's effort to aid the financial system.

On Wednesday alone, lending reached $37 billion.

Federal Reserve offers $100 billion more to commercial banks

March 28, 2008
Federal Reserve offers $100 billion more to commercial banks

WASHINGTON: The Federal Reserve announced Friday it will auction an additional $100 billion (€63.31 billion) in April to cash-strapped banks as it continues to combat the effects of a credit crisis.

The central bank said it would make $50 billion (€31.65 billion) available at each of two auctions, on April 7 and April 21.

Through the end of March, the Fed has provided $260 billion (€164.6 billion) in short-term loans to commercial banks through the innovative auction process. It also has employed Depression-era provisions to provide money to investment banks.

Taxpayers May Be Liable From Bear, Mortgage Rescue

March 26, 2008
Taxpayers May Be Liable From Bear, Mortgage Rescue

March 26 (Bloomberg) -- Even as the Bush administration insists it won't risk public funds in a bailout, American taxpayers may already be liable for billions of dollars stemming from Federal Reserve and Treasury efforts to quell a financial crisis.

History suggests the Fed may not recover some of the almost $30 billion investment in illiquid mortgage securities it received from Bear Stearns Cos., said Joe Mason, a Drexel University professor who has written on banking crises. Treasury's push to have Fannie Mae and Freddie Mac buy more mortgage bonds reduces the capital the government-chartered companies hold in reserve at a time when foreclosures and defaults are surging. Senators are promising to investigate.

If Everyone's Finger-Pointing, Who's to Blame?

January 22, 2008
If Everyone's Finger-Pointing, Who's to Blame?

A wave of lawsuits is beginning to wash over the troubled mortgage market and the rest of the financial world. Homeowners are suing mortgage lenders. Mortgage lenders are suing Wall Street banks. Wall Street banks are suing loan specialists. And investors are suing everyone.

Two questions lie at the heart of many of the cases. The first is whether lenders and investment banks alerted borrowers and investors to the risks posed by subprime loans or securities backed by them. The second is how much they were legally obliged to disclose. "Those are the two issues that are frequently raised," said Jayant W. Tambe, a partner at the law firm Jones Day.

As defaults and foreclosures rise, the various players in the housing market are all pointing fingers at each other. State prosecutors like Andrew M. Cuomo, the attorney general of New York, are investigating whether investment banks that packaged mortgages into securities disclosed the risks to investors and credit ratings agencies. Investment banks, in turn, are accusing lenders and mortgage brokers of shoddy business practices.

"What strikes me here is that this a tainted system from A to Z," said Tamar Frankel, a law professor at Boston University. "Everybody blames everybody else. If you look at what is being said, there isn't one who doesn't blame another and there is half-truth in everything."

Bush mortgage plan includes rate freeze

December 5, 2007
Bush mortgage plan includes rate freeze

WASHINGTON - The Bush administration has hammered out an agreement with industry to freeze interest rates for certain subprime mortgages for five years in an effort to combat a soaring tide of foreclosures, congressional aides said Wednesday.

These aides, who spoke on condition of anonymity because the details have not yet been released, said the five-year moratorium represented a compromise between desires by banking regulators for a longer time frame of as much as seven years and industry arguments that the freeze should only last one to two years.