by Calculated Risk on 3/25/2012 07:16:00 PM

From the Financial Times: Merkel set to allow firewall to rise

Senior European officials ... would allow the €440bn [EFSF] ... to keep running when a new permanent €500bn fund, called the European Stability Mechanism, starts up in the middle of this year.

[With] about €200bn committed to Greek, Irish and Portuguese bailouts, the total available would be €740bn. ... the system to fall back to €500bn once the EFSF expires in mid-2013.
excerpt with permission

This is probably still not enough to bailout Spain or Italy.

And from Bloomberg:

German Chancellor Angela Merkel and her finance minister, Wolfgang Schaeuble, have abandoned their opposition to combining the two funds, Der Spiegel reported yesterday, citing unnamed government officials. The two leaders have agreed that the EFSF and ESM may be “in operation” for a transitional period, the magazine reported.

The focus by policy makers and investors has shifted over recent weeks from Greece to Spain, where Prime Minister Mariano Rajoy is struggling to reduce the country’s budget deficit in the face of a looming recession.

Rajoy faces his first general strike on March 29 as unions protest against changes to employment laws making it cheaper to fire workers and cut wages. Three months after coming to power, he is due to present the 2012 budget on March 30, which is designed to cut the deficit.

Yesterday:
• Summary for Week ending March 23rd
• Schedule for Week of March 25th

by Calculated Risk on 3/25/2012 01:20:00 PM

Kathleen Pender has some details at the SF Chronicle: Harp 2 mortgage-refinance program

Harp 2 got into full swing last week after Fannie Mae and Freddie Mac updated their automated underwriting systems ... Fannie and Freddie updated their systems March 17 and 15, respectively. That means lenders can now refinance any loans, and do it more efficiently. ...

Banks are free to add their own requirements, and some have. Wells Fargo spokesman Jim Hines says, "We also employ minimum credit standards to ensure customers have capacity to repay the mortgage." Some banks, including Chase and Bank of America, are not refinancing loans under Harp 2 that they do not already service. ... originators - who often continue to service loans they sell to Fannie or Freddie - don't want all the headaches associated with servicing defaulted loans. That's why some lenders are still imposing loan-to-value limits and other requirements.

This means high LTV borrowers will probably have to stick with their current servicer to refinance - and the servicer can charge high fees for the refinance. Still - with the automated version - we should see an increase in HARP refinance activity.

Yesterday:
• Summary for Week ending March 23rd
• Schedule for Week of March 25th

by Calculated Risk on 3/25/2012 08:42:00 AM

From ProPublica: Fannie and Freddie: Slashing Mortgages Is Good Business

New analyses by mortgage giants Freddie Mac and Fannie Mae have added an explosive new dimension to one of the most politically charged debates about the housing crisis: Whether to reduce the amount of money beleaguered homeowners owe on their mortgages.

Their conclusion: Such loan forgiveness wouldn’t just help keep hundreds of thousands of families in their homes, it would also save Freddie and Fannie money. That, in turn, would help taxpayers, who bailed out the companies at a cost of more than $150 billion and are still on the hook for future losses.

The analyses, which have not been made public, were recently presented to the agency that controls the companies, the Federal Housing Finance Agency, according to two people familiar with the matter. Freddie Mac’s meeting with the FHFA took place last week.

ProPublica added an update:

[F]ollowing the publication of this story by ProPublica and NPR, lawmakers called on the Federal Housing Finance Administration to provide Congress with the new analyses on principal reductions by Fannie Mae and Freddie Mac.

Hopefully this will be made public, and this might lead to more principal reductions.

by Calculated Risk on 3/24/2012 04:11:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for March 23, 2012. (table is sortable by assets, state, etc.)

Changes and comments from surferdude808:

The FDIC got back to shuttering banks this week which contributed to the changes to the Unofficial Problem Bank List this week. In total, there were four removals and one addition, which leaves the list with 949 institutions with assets of $379.8 billion. A year ago, there were 985 institutions with assets of $431.1 billion on the list.

The removals from failure were Premier Bank, Wilmette, IL ($269 million) and Covenant Bank & Trust, Rock Spring, GA ($96 million), which is the 78th bank failure in Georgia since the inception of the crisis. The removals include two action terminations - by the Federal Reserve - against The Citizens Bank of Edmond, Edmond, OK ($262 million) and Mid America Bank & Trust Company, Dixon, MO ($129 million). Look for the Federal Reserve to ramp-up its termination of orders against community banks as it recently issued guidance to its examiners to upgrade ratings if progress has been made "when there is a demonstrated improvement in the organization's financial condition and risk management practices, and where improvement is likely to continue."

The addition this week is Orrstown Bank, Shippensburg, PA ($1.4 billion Ticker: ORRF). Next week, we anticipate for the FDIC to release its enforcement action activity during February 2012.

Earlier:
• Summary for Week ending March 23rd

by Calculated Risk on 3/24/2012 01:05:00 PM

Earlier:
• Summary for Week ending March 23rd

The key reports this week are the January Case-Shiller house price index, to be released on Tuesday, the February Durable Goods report on Wednesday, the February Personal Income and Outlays report on Friday, and the third estimate of Q4 GDP on Thursday.

There are several regional manufacturing surveys that will also be released this week. Fed Chairman Ben Bernanke will discuss the labor market on Monday and deliver two more college lectures on Tuesday and Thursday. The Thursday lecture will discuss current policy.

----- Monday, Mar 26th -----
8:00 AM ET: Speech by Fed Chairman Ben Bernanke, "Recent Developments in the Labor Market", At the National Association for Business Economics Annual Conference, Arlington, Virginia

8:30 AM: Chicago Fed National Activity Index (February). This is a composite index of other data.

10:00 AM ET: Pending Home Sales Index for February. The consensus is for a 1.0% increase in the index. Housing economist Tom Lawler (based on limited data) thinks there could be a "sizable increase" in this index.

10:30 AM: Dallas Fed Manufacturing Survey for March. The consensus is for 15.5 for the general business activity index, down from 17.8 in February.

----- Tuesday, Mar 27th -----
9:00 AM: S&P/Case-Shiller House Price Index for January. Although this is the January report, it is really a 3 month average of November, December and January.

This graph shows the nominal seasonally adjusted Composite 10 and Composite 20 indexes (the Composite 20 was started in January 2000).

The consensus is for a 3.8% decrease year-over-year in prices (NSA) in January. I expect these indexes to be at new post-bubble lows, not seasonally adjusted. The CoreLogic index declined 1.0% in January (NSA).

10:00 AM: Conference Board's consumer confidence index for March. The consensus is for a decrease to 70.4 from 70.8 last month.

10:00 AM: Richmond Fed Survey of Manufacturing Activity for March. The consensus is for a decrease to 18 for this survey from 20 in February (above zero is expansion).

12:45 PM: Fed Chairman Ben Bernanke's lecture series to college students, "The Federal Reserve and the Financial Crisis" Part 3 of 4

----- Wednesday, Mar 28th -----
7:00 AM: The Mortgage Bankers Association (MBA) will release the mortgage purchase applications index. This index has been weak this year, although this does not include all the cash buyers.

8:30 AM: Durable Goods Orders for February from the Census Bureau. The consensus is for a 2.9% increase in durable goods orders.

----- Thursday, Mar 29th -----
8:30 AM: The initial weekly unemployment claims report will be released. The consensus is for claims to increase to 350,000 from 348,000 last week.

8:30 AM: Q4 GDP (third estimate). This is the third estimate from the BEA. The consensus is that real GDP increased 3.0% annualized in Q4 (same as second estimate).

11:00 AM: Kansas City Fed regional Manufacturing Survey for March. The index was at 13 in February (above zero is expansion). This is the last of the regional Fed manufacturing surveys for March, and the surveys released earlier in the month indicated stronger expansion in March than February.

12:45 PM: Fed Chairman Ben Bernanke's lecture series to college students, "The Federal Reserve and the Financial Crisis" Part 4 of 4

----- Friday, Mar 30th -----
8:30 AM ET: Personal Income and Outlays for February.

This graph shows real Personal Consumption Expenditures (PCE) through January (2005 dollars). Real PCE increased less than 0.1% in January and has essentially been flat since October.

The consensus is for a 0.4% increase in personal income in February, and a 0.5% increase in personal spending, and for the Core PCE price index to increase 0.2%.

9:45 AM: Chicago Purchasing Managers Index for March. The consensus is for a decrease to 63.0, down from 64.0 in February.

9:55 AM: Reuter's/University of Michigan's Consumer sentiment index (final for March). The consensus is for a slight increase to 74.9 up from the preliminary reading of 74.3.

10:00 AM: Regional and State Employment and Unemployment (Monthly) for February 2012

by Calculated Risk on 3/24/2012 08:01:00 AM

Last week was mostly about housing, and all of the reports were a little disappointing. Housing starts were down slightly from January; new home sales were down 1.6% from January on a seasonally adjusted annual rate (SAAR) basis, and existing home sales declined 0.9% from the January rate.

However, if we take a little longer view, the picture improves. Housing starts are up almost 46% compared to the low in 2009 (mostly multi-family), and new home sales and existing home sales are up 13% and 39%, respectively, from the post-tax credit lows in 2010.

So the housing data was a little disappointing – especially given the nice weather in February – but the trend is still up. The spring selling season starts in March, and the next few months will be important for housing.

Other news was a little better. Initial weekly unemployment claims fell to 348,000, the lowest level in over 4 years. The architectural billings index remained positive for the fourth consecutive month, and the remodeling index was up sharply in January.

Overall a little disappointing, but still sluggish growth.

Here is a summary in graphs:

• New Home Sales declined in February to 313,000 Annual Rate

Click on graph for larger image in graph gallery.

The Census Bureau reported New Home Sales in February were at a seasonally adjusted annual rate (SAAR) of 313 thousand. This was down from a revised 318 thousand in January (revised down from 321 thousand). November and December of last year were revised up. This was below the consensus forecast of 325 thousand.

The first graph shows New Home Sales vs. recessions since 1963. The dashed line is the current sales rate.

Starting in 1973 the Census Bureau broke inventory down into three categories: Not Started, Under Construction, and Completed. This graph shows the three categories of inventory.

The inventory of completed homes for sale was at 54,000 units in February. The combined total of completed and under construction is at the lowest level since this series started.

The last graph shows sales NSA (monthly sales, not seasonally adjusted annual rate).

In February 2012 (red column), 25 thousand new homes were sold (NSA). Last year only 22 thousand homes were sold in February (although 2012 is a leap year). This was the second weakest February since this data has been tracked - the third weakest was February 2010 with 27 thousand homes sold. The high for February was 109 thousand in 2005.

New home sales have averaged only 303 thousand SAAR over the 22 months since the expiration of the tax credit ... mostly moving sideways, although sales have been increasing a little lately (averaging 322 thousand rate over the last four months).

All New Home Sales Graphs
• Housing Starts declined slightly in February

Total housing starts were at 698 thousand (SAAR) in February, down 1.1% from the revised January rate of 706 thousand (SAAR). Note that January was revised up from 699 thousand.

Single-family starts declined 9.9% to 457 thousand in February. Permits moved higher, so single family starts will probably increase in March.

The second graph shows total and single unit starts since 1968. Total starts are up 34.7% from a year ago.

This was slightly below expectations of 700 thousand starts in February.
All Housing Investment and Construction Graphs

• Existing Home Sales in February: 4.59 million SAAR, 6.4 months of supply

This graph shows existing home sales, on a Seasonally Adjusted Annual Rate (SAAR) basis since 1993.

Sales in February 2012 (4.59 million SAAR) were 0.9% lower than last month, and were 8.8% above the February 2011 rate.

The next graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory decreased 19.3% year-over-year in February from February 2011. This is the twelfth consecutive month with a YoY decrease in inventory.

Months of supply increased to 6.4 months in February, up from 6.0 months in January.

This was close to expectations of sales of 4.61 million.
All current Existing Home Sales graphs

• AIA: Architecture Billings Index indicated expansion in February

Note: This index is a leading indicator for new Commercial Real Estate (CRE) investment.

This graph shows the Architecture Billings Index since 1996. The index was at 51.0 in February (slight expansion). Anything above 50 indicates expansion in demand for architects' services.

Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So this suggests further declines in CRE investment in early 2012, but perhaps stabilizing mid-year.
All current Commercial Real Estate graphs
• Weekly Initial Unemployment Claims declined to 348,000

The DOL reports:

In the week ending March 17, the advance figure for seasonally adjusted initial claims was 348,000, a decrease of 5,000 from the previous week's revised figure of 353,000. The 4-week moving average was 355,000, a decrease of 1,250 from the previous week's revised average of 356,250.

The dashed line on the graph is the current 4-week average. The four-week average of weekly unemployment claims was declined to 355,000.

The 4-week moving average is near the lowest level since early 2008.
All current Employment Graphs
• Other Economic Stories ...
• NAHB Builder Confidence index unchanged in March
• Residential Remodeling Index increases 11% year-over-year in January
• LPS: Percent of delinquent mortgage loans declined in February
• DOT: Vehicle Miles Driven increased 1.6% in January

by Calculated Risk on 3/23/2012 06:26:00 PM

Premier Bank’s premier
“Cheap, as if made with fool’s gold”
Booed off stage right
by Soylent Green is People
From the FDIC: International Bank of Chicago, Chicago, Illinois, Assumes All of the Deposits of Premier Bank, Wilmette, Illinois

As of December 31, 2011, Premier Bank had approximately $268.7 million in total assets and $199.0 million in total deposits ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $64.1 million. Compared ... Premier Bank is the fifteenth FDIC-insured institution to fail in the nation this year, and the third in Illinois

On February New Home Sales:
• New Home Sales decline in February to 313,000 Annual Rate
• Home Sales: Distressing Gap
• New Home Sales graphs

Earlier this week on Existing Home sales:
• Existing Home Sales in February: 4.59 million SAAR, 6.4 months of supply
• Existing Home Sales: Inventory and NSA Sales Graph
• Existing Home Sales graphs

by Calculated Risk on 3/23/2012 05:38:00 PM

Another Friday
Another Georgia bank down
The Ouroboros
by Soylent Green is People
From the FDIC: Stearns Bank, National Association, St. Cloud, Minnesota, Assumes

All of the Deposits of Covenant Bank & Trust, Rock Spring, Georgia
As of December 31, 2011, Covenant Bank & Trust had approximately $95.7 million in total assets and $90.6 million in total deposits. ... The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $31.5 million. ... Covenant Bank & Trust is the fourteenth FDIC-insured institution to fail in the nation this year, and the fourth in Georgia.

Are there any banks left in Georgia?

by Calculated Risk on 3/23/2012 04:30:00 PM

The Department of Transportation (DOT) reported:

Travel on all roads and streets changed by +1.6% (3.5 billion vehicle miles) for January 2012 as compared with January 2011. Travel for the month is estimated to be 224.8 billion vehicle miles.

The following graph shows the rolling 12 month total vehicle miles driven.

Even with a small year-over-year increase in December, the rolling 12 month total is mostly moving sideways.

Click on graph for larger image.

In the early '80s, miles driven (rolling 12 months) stayed below the previous peak for 39 months.

Currently miles driven has been below the previous peak for 50 months - and still counting!

The second graph shows the year-over-year change from the same month in the previous year.

This is the second consecutive month with a year-over-year increase in miles driven - for the first time since 2010.

Looking back, gasoline prices (regular) were around $3.06 per gallon in January 2011, and averaged $3.33 per gallon this year. Even though prices are up sharply over the last couple of months, prices also increased quickly last year in March and April - so we might not see a year-over-year decline in miles driven in the coming months.

by Calculated Risk on 3/23/2012 02:35:00 PM

Zillow Forecast: January Case-Shiller Composite-20 Expected to Show 3.7% Decline from One Year Ago

On Tuesday, March 27th, the Case-Shiller Composite Home Price Indices for January will be released. Zillow predicts that both the 20-City and the 10-City Composite Home Price Indices (non-seasonally adjusted [NSA]) will decline by 3.7 percent on a year-over-year basis. The seasonally adjusted (SA) month-over-month change from December to January will be zero percent and -0.1 percent for the 20 and 10-City Composite Home Price Index (SA), respectively.

Zillow's forecasts for Case-Shiller have been pretty close, and I expect Case-Shiller will report house prices at a new post-bubble low in January for the Not Seasonally Adjusted (NSA) indexes.

The seasonally adjusted indexes will probably be close to the level reported in December.

One of the keys this year will be to watch the year-over-year change in the various house price indexes. The composite 10 and 20 indexes declined 3.9% and 4.0% respectively in December, after declining 3.8% in November. Zillow is forecasting a slightly smaller year-over-year decline in January.

		Case Shiller Composite 10		Case Shiller Composite 20
		NSA	SA	NSA	SA
Case Shiller (year ago)	January 2011	154.36	155.43	140.78	141.98
Case-Shiller (last month)	December 2011	149.89	149.76	136.71	136.63
Zillow January Forecast	YoY	-3.7%	-3.7%	-3.7%	-3.7%
	MoM	-0.8%	-0.1%	-0.8%	0.0%
Zillow Forecasts1		148.7	149.6	135.6	136.7
Post Bubble Lows		149.89	149.76	136.71	136.63
Date of Low		December 2011	December 2011	December 2011	December 2011
1Estimate based on Year-over-year and Month-over-month Zillow forecasts