by Calculated Risk on 11/02/2009 06:33:00 PM

Update: from Bloomberg: Locke Was ‘Imprecise’ in Comments on Second Stimulus

Kevin Griffis, a Commerce Department spokesman, said in a telephone interview after Locke spoke that the secretary was referring to “all the different job-creating measures being considered” by lawmakers rather than a single stimulus measure.

Earlier post: From Bloomberg: Obama’s Advisers Are Considering Second Stimulus, Locke Says

President Barack Obama’s advisers are “seriously” considering proposing a second stimulus measure to boost the economy, Commerce Secretary Gary Locke said in an interview.

Locke said another stimulus would be “very targeted and specific and we need to be mindful of the deficit as well.”

Atrios notes: "Had a pet theory that they'd wait until unemployment rounded that magic 10% mark."

We could see 10% on Friday. The unemployment rate was 9.83% in September (before rounding); an increase of 0.17% from August.

Although there probably were fewer job losses in October than in September (BLS reported 263,000 jobs lost), if a few more people were participating in the work force - perhaps looking for one of the scarce holiday retail jobs - the unemployment rate could easily hit 10% for October. If not in October, then probably in November.

by Calculated Risk on 11/02/2009 04:09:00 PM

Here is a graph of office, mall and lodging investment through Q3 2009 based on the underlying detail data released by the BEA ...

Click on graph for larger image in new window.

This graph shows investment in offices, lodging and malls as a percent of GDP.

The recent boom in lodging investment has been stunning. Lodging investment peaked at 0.32% of GDP in Q2 2008 and has started to decline (0.21% in Q3 2009).

I expect lodging investment to continue to decline through at least 2010, to perhaps one-third of the peak (investment as percent of GDP).

Investment in multimerchandise shopping structures (malls) peaked in 2007 and has fallen by 40% (note that investment includes remodels, so this will not fall to zero). As projects are completed, mall investment will decline through most of next year. REIS recently reported the "third-quarter vacancy rate at U.S. strip malls, which include local shopping and big-box centers, rose 0.3 percentage points from the second quarter to 10.3 percent, the highest since 1992".

Office investment as a percent of GDP peaked at 0.46% in Q3 2008 and has declined sharply. Reis is reporting the vacancy rate rose to 16.5% in Q3 from 15.9% in Q2. The peak following the previous recession was 17%. With the office vacancy rate rising, office investment will also probably decline through 2010.

Notice that investment in all three categories typically falls for a year or two after the end of a recession, and then usually slowly recovers. Also office investment is usually the most overbuilt in a boom, but this time the office market struggled for a few years after the stock market bubble burst and there was comparatively more investment in malls and hotels.

As projects are completed there will be little new investment in these categories probably at least through 2010. This will be a steady drag on GDP (nothing like the decline in residential investment though), and a steady drag on construction employment.

by Calculated Risk on 11/02/2009 02:12:00 PM

Testimony of Jon D. Greenlee, Associate Director, Division of Banking Supervision and Regulation on Residential and commercial real estate

[T]he condition of the banking system is far from robust. Two years into a substantial economic downturn, loan quality is poor across many asset classes and, as noted earlier, continues to deteriorate as weakness in housing markets affects the performance of residential mortgages and construction loans. Higher loan losses are depleting loan loss reserves at many banking organizations, necessitating large new provisions that are producing net losses or low earnings. In addition, although capital ratios are considerably higher than they were at the start of the crisis for many banking organizations, poor loan quality, subpar earnings, and uncertainty about future conditions raise questions about capital adequacy for some institutions. Diminished loan demand, more-conservative underwriting standards in the wake of the crisis, recessionary economic conditions, and a focus on working out problem loans have also limited the degree to which banks have added high-quality loans to their portfolios, an essential step to expanding profitable assets and thus restoring earnings performance.
emphasis added

On Commercial Real Estate (CRE):

Prices of existing commercial properties have already declined substantially from the peak in 2007 and will likely decline further. As job losses have accelerated, demand for commercial property has declined and vacancy rates have increased. The higher vacancy levels and significant decline in the value of existing properties have placed particularly heavy pressure on construction and development projects that do not generate income until after completion. ...

As a result, Federal Reserve examiners are reporting a sharp deterioration in the credit performance of loans in banks’ portfolios and loans in commercial mortgage-backed securities (CMBS). At the end of the second quarter of 2009, approximately $3.5 trillion of outstanding debt was associated with CRE, including loans for multifamily housing developments. Of this, $1.7 trillion was held on the books of banks and thrifts, and an additional $900 billion represented collateral for CMBS, with other investors holding the remaining balance of $900 billion. Also at the end of the second quarter, about 9 percent of CRE loans in bank portfolios were considered delinquent, almost double the level of a year earlier. Loan performance problems were the most striking for construction and development loans, especially for those that financed residential development. More than 16 percent of all construction and development loans were considered delinquent at the end of the second quarter.

Of particular concern, almost $500 billion of CRE loans will mature during each of the next few years. In addition to losses caused by declining property cash flows and deteriorating conditions for construction loans, losses will also be boosted by the depreciating collateral value underlying those maturing loans. The losses will place continued pressure on banks' earnings, especially those of smaller regional and community banks that have high concentrations of CRE loans.

The current fundamental weakness in CRE markets is exacerbated by the fact that the CMBS market, which previously had financed about 30 percent of originations and completed construction projects, has remained closed since the start of the crisis. Delinquencies of mortgages backing CMBS have increased markedly in recent months. Market participants anticipate these rates will climb higher by the end of this year, driven not only by negative fundamentals but also by borrowers’ difficulty in rolling over maturing debt. In addition, the decline in CMBS prices has generated significant stresses on the balance sheets of financial institutions that must mark these securities to market, further limiting their appetite for taking on new CRE exposure.

Higher vacancy rates, sharply lower rents, reduced leverage and much higher cap rates - back in July, Brian called this the "neutron bomb for RE equity"; destroys CRE investors and banks, but leaves the buildings still standing.

by Calculated Risk on 11/02/2009 12:32:00 PM

There was some good news on employment in the ISM Manufacturing survey report this morning:

ISM's Employment Index registered 53.1 percent in October, which is 6.9 percentage points higher than the 46.2 percent reported in September. This is the first month of growth in manufacturing employment following 14 consecutive months of decline. An Employment Index above 49.7 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

That calls out for a graph!

The following graph shows the ISM Manufacturing Employment Index vs. the BLS reported monthly change in manufacturing employment (as a percent of manufacturing employment).

The graph includes data from 1948 through 2009. The earlier period (1948 - 1988) is in red, and the last 20 years is in green.

Click on graph for larger image in new window.

Sure enough the ISM employment index is related to changes in BLS employment.

According to the BLS, manufacturing employment has declined by about 50 thousand per month for the last 3 months. The ISM survey suggests that manufacturing employment might have increased in October. The equation suggests an increase of about 4,000 manufacturing jobs in October (with significant variation) - not much, but that is far better than losing 50,000 jobs per month.

by Calculated Risk on 11/02/2009 10:26:00 AM

We started the year looking for two key construction spending stories: a likely bottom for residential construction spending, and the collapse in private non-residential construction.

It appears residential construction spending may have bottomed, although any growth in spending will probably be sluggish until the large overhang of existing inventory is reduced.

And the collapse in non-residential construction spending has started, and there will be further declines to come as projects are completed.

Click on graph for larger image in new window.

The first graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential construction spending increased in September, and nonresidential spending continued to decline.

Private residential construction spending is now 62.2% below the peak of early 2006.

Private non-residential construction spending is still only 16.0% below the peak of last September.

The second graph shows the year-over-year change for private residential and nonresidential construction spending.

Nonresidential spending is off 15.4% on a year-over-year basis.

Residential construction spending is still off significantly from a year ago, although the negative YoY change will get smaller going forward.

Here is the report from the Census Bureau: September 2009 Construction at $940.3 Billion Annual Rate

by Calculated Risk on 11/02/2009 10:00:00 AM

PMI at 55.7% in October up from 52.6% September.

From the Institute for Supply Management: October 2009 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in October for the third consecutive month, and the overall economy grew for the sixth consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The manufacturing sector grew for the third consecutive month in October, and the rate of growth is the highest since April 2006 when the PMI registered 56 percent. The jump in the index was driven by production and employment, with both registering significant gains. Production appears to be benefiting from the continuing strength in new orders, while the improvement in employment is due to some callbacks and opportunities for temporary workers. Overall, it appears that inventories are balanced and that manufacturing is in a sustainable recovery mode."
...
The recovery in manufacturing strengthened in October as the PMI registered 55.7 percent, which is 3.1 percentage points higher than the 52.6 percent reported in September, and the highest reading for the index since April 2006 (56 percent). A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
emphasis added

As noted, any reading above 50 shows expansion.

Also, from the NAR: Pending Home Sales Rise for Record Eight Straight Months

The Pending Home Sales Index,* a forward-looking indicator based on contracts signed in September, rose 6.1 percent to 110.1 from a reading of 103.8 in August, and is 21.2 percent higher than September 2008 when it stood at 90.9.

by Calculated Risk on 11/02/2009 08:56:00 AM

From the Independent: Darling prepares to unveil bank shake-up

Chancellor Alistair Darling will this week unveil his proposed overhaul of the UK banking system which includes breaking up Lloyds and Royal Bank of Scotland and bringing "at least" three new banks to the high street.
...
The two banks "will be divesting some of the holdings they have at the moment. What you really want to do is have substantial divestment of branches, or particular institutions they own, made available to other people," Mr Darling said. This follows pressure from the European competition commissioner, Neelie Kroes, who has demanded that RBS and Lloyds sell operations under the EU's state aid rules.
...
Banking giants Barclays, HSBC and possibly Spain's Banco Santander, which owns Abbey, Alliance & Leicester and branches of Bradford & Bingley, are likely to be blocked from bidding as the Government is "determined" to see more competition in the wake of its £1.2 trillion bailout of the sector.

Breaking up the big banks to lower the risk and increase competition. It makes me think of BofA and Citi ...

by Calculated Risk on 11/01/2009 11:15:00 PM

From Crain's New York: Not much life left in the party

The severity of the recession may have caught some companies by surprise in 2008, but this year reality has sunk in ... The lavish celebrations of years past are not making a comeback this year in the city—or anywhere else in the country.

Just 62% of companies nationwide are planning holiday parties this year, down from 77% last year and 90% in 2007, according to a survey by outplacement firm Challenger Gray & Christmas.
...
Restaurants and hotels that count on this lucrative business say their private party business is off by about 20% this year, compared with a dismal season in 2008.

Just more bad news for restaurants and hotels ...

by Calculated Risk on 11/01/2009 07:08:00 PM

The WSJ has an article on landlords cutting effective rents: Landlords Offer Incentives to Stay Put

... Equity Residential said new tenants in the third quarter paid 9% to 10% less rent than the previous residents. ... Denver-based UDR is offering renewing tenants a flat-screen TV, new carpet, kitchen upgrade or, $300 in cash. ... Some landlords have also become more open-minded about tenants with credit issues involving home foreclosures.

Rents are falling because vacancies are at record levels. Reis recently reported that the apartment vacancy rate in cities hit a 23 year high of 7.8 percent in the third quarter, and Reis expects the vacancy rate to reach a record 8 percent soon.

Click on graph for larger image in new window.

Last week the Census Bureau reported the overall rental vacancy rate hit a record 11.1 percent in Q3 2009.

The higher vacancy rate is pushing down rents and the value of rental units. This is good news for renters, but this will also lead to more apartment defaults, higher default rates for apartment CMBS, and more losses for small and regional banks.

And falling rents are already pushing down owners' equivalent rent (OER). OER just turned negative for the first time 1992. From the BLS:

The increase [in CPI] occurred despite declines in the indexes for rent and owners' equivalent rent, the first decreases in those indexes since 1992.

Since OER is the largest component of CPI, this will apply downward pressure on CPI for some time. And lower rents will also put pressure on house prices, since renting is a competing product.

Note: REIT BRE reports tomorrow and their CEO always some interesting comments.

"I think it is shaping up there is another leg down in terms of market rents and effective rents and that will be somewhere late this year or early [next] year where I think all the operators will move their rents down to basically handle the late stage of this recession."
BRE CEO, Aug 5, 2009

by Calculated Risk on 11/01/2009 03:53:00 PM

Press Release: CIT Board of Directors Approves Proceeding with Prepackaged Plan of Reorganization with Overwhelming Support of Debtholders

And from the NY Times Dealbook: CIT Files for Bankruptcy

On Sunday afternoon, the company filed for Chapter 11 — but under a so-called prepackaged bankruptcy plan that will enable it to emerge from court protection by the end of the year.

Sunday’s filing, made in a Manhattan federal court, caps months of efforts by CIT to stay alive.

And from the WSJ:

One loser from a bankruptcy would be the U.S. Treasury. Late last year it injected $2.3 billion of funds from the Troubled Asset Relief Program ... The government investment is likely to be wiped out ...

Even if CIT emerges intact, its lending capacity could drop to less than 20% of what it was two years ago, according to an estimate by Brian Charles, a debt analyst at R.W. Pressprich & Co.

CIT provides financing for about one million small businesses, so the key question is how will this impact the ability of many small businesses to obtain financing.

by Calculated Risk on 11/01/2009 12:41:00 PM

Another busy week ahead starting with construction spending, the ISM reports, vehicle sales, the Fed meeting (little change in wording expected), and ending with the employment report. Did the unemployment rate hit 10% in October?

Here is a summary of data released in October and the updated Unofficial Problem Bank List.

October Economic Summary in Graphs

Unofficial Problem Bank List Grows to 500

A guest post from albert:

On a New York bankruptcy case in the news: In re Olga: of Bankruptcy and Foreclosure

****************************
On the GDP report:

From Rex Nutting at MarketWatch: U.S. GDP rises 3.5% as stimulus kicks in

From Paul Krugman: What recovery should look like

From Jim Hamilton at Econbrowser: A welcome GDP report

And from me: Random Thoughts on the Q3 GDP Report

Click on cartoon for larger image in new window. Cartoon from Eric G. Lewis www.EricGLewis.com (site coming soon)

****************************
A few stories on the collapse of WaMu:

From Kirsten Grind at the Puget Sound Business Journal: The downfall of Washington Mutual

From Drew DeSilver at the Seattle Times: Part one | Reckless strategies doomed WaMu

From David Heath at the Seattle Times: Part two | WaMu: Hometown bank turned predatory

****************************
And on the Home buyer tax credit:

From Bloomberg: Senate Said to Revise Plan to Extend, Expand Homebuyer Credit

The details:
- Income eligibility for home buyers increases to $125,000 for individuals and $225,000 for couples.
- The tax credit for first-time home buyers (anyone who has not owned in the last 3 years) will be the lesser of $8,000 or 10% of the purchase price.
- For move-up buyers - "who have lived in their current home for at least five years" - the credit would be limited to $6,500.
- The credit runs from Dec. 1, 2009 to April 30, 2010, with an additional 60 day period to close escrow. (So end of April to sign contract, end of June to close escrow)

Cartoon from Eric G. Lewis www.EricGLewis.com (site coming soon)

by Calculated Risk on 11/01/2009 09:03:00 AM

From Greg Gordon at McClatchy Newspapers: How Goldman secretly bet on the U.S. housing crash

In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.
...
A Goldman spokesman, Michael DuVally, said that the firm decided in December 2006 to reduce its mortgage risks and did so by selling off subprime-related securities and making myriad insurance-like bets, called credit-default swaps, to "hedge" against a housing downturn.

DuVally told McClatchy that Goldman "had no obligation to disclose how it was managing its risk, nor would investors have expected us to do so ... other market participants had access to the same information we did."

The last section of the article "I've got a secret" discusses the selling of Goldman's MBS and the disclosure rules.

by Calculated Risk on 10/31/2009 10:35:00 PM

The whole video is here: Banking with Bird & Fortune at the Financial Times. An excerpt ...

by Calculated Risk on 10/31/2009 06:31:00 PM

Here is a collection of real estate and economic graphs for data released in October ...

Note: Click on graphs for larger image in new window. For more info, click on link below graph to original post.

********************
New Home Sales in September (NSA)

The first graph shows monthly new home sales (NSA - Not Seasonally Adjusted).

Note the Red columns for 2009. Sales in September 2009 (31 thousand) were below September 2008 (35 thousand). This is the 3rd lowest sales for September since the Census Bureau started tracking sales in 1963.

In September 2009, 31 thousand new homes were sold (NSA); the record low was 28 thousand in September 1981; the record high for September was 99 thousand in 2005.

From: New Home Sales Decrease in September

********************
New Home Sales in September

This graph shows shows New Home Sales vs. recessions for the last 45 years.

New Home sales fell off a cliff, but are now 22% above the low in January.

"Sales of new one-family houses in September 2009 were at a seasonally adjusted annual rate of 402,000 ...

This is 3.6 percent (±10.2%)* below the revised August rate of 417,000 and is 7.8 percent (±12.0%)* below the September 2008 estimate of 436,000."

From: New Home Sales Decrease in September

********************
New Home Months of Supply in September

There were 7.5 months of supply in September - significantly below the all time record of 12.4 months of supply set in January.

"The seasonally adjusted estimate of new houses for sale at the end of September was 251,000. This represents a supply of 7.5 months at the current sales rate."

From: New Home Sales Decrease in September

********************
Existing Home Sales in September

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

Sales in Sept 2009 (5.57 million SAAR) were 9.4% higher than last month, and were 9.2% higher than Sept 2008 (5.1 million SAAR).

From: Existing Home Sales Increase in September

********************
Existing Home Inventory September

According to the NAR, inventory decreased to 3.63 million in September (August inventory was revised upwards significantly). The all time record was 4.57 million homes for sale in July 2008. This is not seasonally adjusted.

Typically inventory peaks in July or August, so some of this decline is seasonal.

From: Existing Home Sales Increase in September

********************
Case Shiller House Prices for August

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

The Composite 10 index is off 32.5% from the peak, and up about 1.0% in August.

The Composite 20 index is off 31.3% from the peak, and up 1.0% in August.

From: Case-Shiller Home Price Index Increases in August

********************
NAHB Builder Confidence Index in October

This graph shows the builder confidence index from the National Association of Home Builders (NAHB).

The housing market index (HMI) decreased to 18 in October from 19 in September. The record low was 8 set in January. Note that Traffic of Prospective Buyers declined sharply.

This is still very low - and this is what I've expected - a long period of builder depression.

From: NAHB: Builder Confidence Decreases Slightly in October

********************
Architecture Billings Index for September

"The Architecture Billings Index was up 1.4 points at 43.1, matching July's level, according to the American Institute of Architects.

The index has remained below 50, indicating contraction in demand for design services, since January 2008."

From: AIA: Architectural Billings Index Shows Contraction

********************
Housing Starts in September

Total housing starts were at 590 thousand (SAAR) in September, up 0.5% from the revised August rate, and up sharply from the all time record low in April of 479 thousand (the lowest level since the Census Bureau began tracking housing starts in 1959). Starts had rebounded to 590 thousand in June, and have move sideways for four months.

Single-family starts were at 501 thousand (SAAR) in September, up 3.9% from the revised August rate, and 40 percent above the record low in January and February (357 thousand). Just like for total starts, single-family starts have been at this level for four months.

From: Housing Starts in September: Moving Sideways

********************
Construction Spending increases in August

The first graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential construction spending increased in August, and nonresidential spending continued to decline.

Private residential construction spending is now 63.1% below the peak of early 2006.

Private non-residential construction spending is still only 12.6% below the peak of last September.

From: Construction Spending increases in August

********************
September Employment Report

This graph shows the unemployment rate and the year over year change in employment vs. recessions.

Nonfarm payrolls decreased by 263,000 in September. The economy has lost almost 5.8 million jobs over the last year, and 7.2 million jobs during the 21 consecutive months of job losses.

The unemployment rate increased to 9.8 percent. This is the highest unemployment rate in 26 years.

Year over year employment is strongly negative.

From: Employment Report: 263K Jobs Lost, 9.8% Unemployment Rate

********************
September Employment Comparing Recessions

This graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost).

For the current recession, employment peaked in December 2007, and this recession was a slow starter (in terms of job losses and declines in GDP).

However job losses really picked up earlier this year, and the current recession is now the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession was worse).

The economy is still losing jobs at about a 3.2 million annual rate, and the unemployment rate will probably be above 10% soon.

From: Employment Report: 263K Jobs Lost, 9.8% Unemployment Rate

********************
September Retail Sales

This graph shows the year-over-year change in nominal and real retail sales since 1993.

On a monthly basis, retail sales decreased 1.5% from August to September (seasonally adjusted), and sales are off 5.7% from September 2008 (retail ex food services decreased 6.4%).

Excluding motor vehicles, retail sales were up 0.5%.

From: Retail Sales Decrease in September

********************
LA Port Traffic in September

This graph shows the loaded inbound and outbound traffic at the port of Los Angeles in TEUs (TEUs: 20-foot equivalent units or 20-foot-long cargo container). Although containers tell us nothing about value, container traffic does give us an idea of the volume of goods being exported and imported.

Loaded inbound traffic was 17.4% below September 2008.

Loaded outbound traffic was 8.6% below September 2008.

From: LA Area Port Traffic in September

********************
U.S. Imports and Exports Through August

This graph shows the monthly U.S. exports and imports in dollars through August 2009.

Imports were down in August, and exports increased slightly. On a year-over-year basis, exports are off 21% and imports are off 29%.

From: Trade Deficit Decreases Slightly in August

********************
Capacity Utilization in September

This graph shows Capacity Utilization. This series has increased for three straight months, and is up from the record low set in June (the series starts in 1967). Capacity Utilization had decreased in 17 of the previous 18 months.

Note: y-axis doesn't start at zero to better show the change.

An increase in capacity utilization is usually an indicator that the official recession is over.

From: Industrial Production, Capacity Utilization Increase in September

********************
Philly Fed State Conincident Indicators for September

Here is a map of the three month change in the Philly Fed state coincident indicators. Forty one states are showing declining three month activity. The index increased in 7 states, and was unchanged in 2.

A large percentage of states still showed declining activity in September.

From: Philly Fed State Coincident Indicators Show Widespread Weakness in September

********************
Light vehicle sales in September

This graph shows the historical light vehicle sales (seasonally adjusted annual rate) from the BEA (blue) and an estimate for September (red, light vehicle sales of 9.22 million SAAR from AutoData Corp).

This is the third lowest monthly vehicle sales this year (SAAR).

From: Light Vehicle Sales 9.2 Million (SAAR) in September

********************
Q3: Rental Vacancy Rate

The rental vacancy rate increased to a record 11.1% in Q3 2009.

The homeowner vacancy rate was 2.6% in Q3 2009.

The homeownership rate increased slightly to 67.6% and is now at the levels of Q2 2000.

These excess units will keep pressure on rents and house prices for some time.

From: Q3: Record Rental Vacancy Rate, Homeownership Rate Increases Slightly

********************
NMHC Quarterly Apartment Survey

This graph shows the quarterly Apartment Tightness Index.

“[T]he economic headwinds remain strong,” [NMHC Chief Economist Mark Obrinsky said], “as the employment market continues to sag, demand for apartment residences continues to slip. Though this quarter’s Market Tightness Index is improved compared to last quarter, it still indicates higher vacancies and lower rents.”

A reading below 50 suggests vacancies are rising. Based on limited historical data, I think this index will lead reported apartment rents by 6 months to 1 year. Or stated another way, rents will probably fall for 6 months to 1 year after this index reaches 50. Right now I expect rents to continue to decline through most of 2010.

From: NMHC Quarterly Apartment Survey: Occupancy Continues to Decline, but Pace Slows

********************
U.S. Consumer Bankruptcy Filings in September

This graph shows the non-business bankruptcy filings by quarter.

Note: Quarterly data from Administrative Office of the U.S. Courts, Q3 2009 based on monthly data from the American Bankruptcy Institute.

The quarterly rate is close to the levels prior to when the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) took effect. There were over 2 million bankruptcies filed in Calendar 2005 ahead of the law change.

There have been 1.05 million personal bankruptcy filings through Sept 2009, and the American Bankruptcy Institute is predicting over 1.4 million new bankruptcies by year end

From: ABI: Personal Bankruptcy Filings up 41 Percent Compared to Sept 2008

********************
Truck Tonnage Index in September

"The American Trucking Associations’ advance seasonally adjusted (SA) For-Hire Truck Tonnage Index decreased 0.3 percent in September, after increasing 2.1 percent in both July and August. The latest decline lowered the SA index to 103.9 (2000=100). ...

Compared with September 2008, SA tonnage fell 7.3 percent, which was the best year-over-year showing since November 2008."

From ATA Truck Tonnage Index Declines in September
********************
Restaurant Index Shows Contraction

The restaurant business is still contracting ...

Note: Any reading below 100 shows contraction for this index. The index is a year-over-year index, so the headline index might be slow to recognize a pickup in business, but the underlying details suggests ongoing weakness.

From: Restaurant Index Shows Contraction, Less Capital Spending
********************
Fannie Mae Serious Delinquencies

Fannie Mae reported that the rate of serious delinquencies - at least 90 days behind - for conventional loans in its single-family guarantee business increased to 4.45% in August, up from 4.17% in July - and up from 1.57% in August 2008.

From Fannie Mae: Delinquencies Increase Sharply in August

********************

by Calculated Risk on 10/31/2009 03:51:00 PM

From three DataQuick reports on Las Vegas, Miami and Phoenix ...

Las Vegas:

In September, a popular form of financing used by first-time home buyers – government-insured FHA loans – accounted for 53.8 percent of all home purchases, up from 52 percent in August. Absentee buyers bought 40.4 percent of all Las Vegas–area homes last month – the highest figure for any month this decade. Absentee buyers are often investors, but could include second-home buyers and others who, for various reasons, indicate at the time of sale that the property tax bill will be sent to a different address.
emphasis added

Miami:

A popular form of financing used by first-time home buyers - government-insured FHA loans - accounted for 45.0 percent of all September purchases, while absentee buyers bought 29.7 percent of all homes last month, according to an analysis of public property records.

Phoenix:

First-time buyers and investors remained the market’s lifeblood. Last month 46.7 percent of all Phoenix-area buyers used government-insured FHA loans, a popular choice among first-time buyers, according to an analysis of public property records. Absentee buyers made up 38.5 percent of all purchases ...

We are far from a healthy market ...

by Calculated Risk on 10/31/2009 11:59:00 AM

Click on cartoon for larger image in new window. Cartoon from Eric G. Lewis www.EricGLewis.com (site coming soon)

by Calculated Risk on 10/31/2009 08:31:00 AM

The media, and apparently FDIC employees, gather outside San Diego National Bank just minutes before the bank was seized last night. Photo credit: Lee. The mural is by Wyland.

This is one of the nine banks seized yesterday by the FDIC; a record for one week during this cycle. The second photo apparently shows the FDIC employees gathering beneath the whales ... Photo credit: Lee.

The FDIC closed nine more banks on Friday, and that brings the total FDIC bank failures to 115 in 2009. The following graph shows bank failures by week in 2009.

Click on graph for larger image in new window.

Note: Week 1 on graph ends Jan 9th.

After a busy summer, the FDIC slowed down in late September and early October with only five bank failures in four weeks. Now it appears the pace has picked up again. With 9 weeks to go, it seems 150 or so bank failures is likely this year.

The 2nd graph covers the entire FDIC period (annually since 1934).

This is the most failures per year since 1992 (181 failures).

As far as failures per week - there were 28 weeks during the S&L crisis when regulators closed 10 or more banks, and the peak was April 20, 1989 with 60 bank closures (there were 7 separate weeks with more than 30 closures in the late '80s and early '90s).

For a graph that includes the 1920s and early '30s (before the FDIC was enacted) see the 3rd graph here.

Of course the number of banks isn't the only measure. Many banks today have more branches, and far more assets and deposits. Also the cumulative estimated losses for the DIF, since early 2007, is now about $47.5 billion.

The FDIC era source data is here - including by assets (in most cases) - under Failures and Assistance Transactions

The pre-FDIC data is here.

by Calculated Risk on 10/30/2009 11:59:00 PM

Note: This was before the FDIC seized banks related to FBOP today.

This is an unofficial list of Problem Banks.

Changes and comments from surferdude808:

The Unofficial Problem Bank List crossed a major threshold this week as 500 institutions are now listed.

The list grew by a net 18 institutions this week and nearly $44 billion in assets were added. Most of the increase comes is a result of the FDIC finally releasing its actions for September 2009. It will take another month to get their actions for October 2009.

The FDIC released 25 cease & desist order and 2 Prompt Corrective Actions. The list already included 8 of these 25 as they were identified through 8-K filings, media reports, or the State Banking Department of Illinois’ website.

From last week’s list, we dropped the 6 failures last Friday and another one that had failed back in July. Also, the FDIC issued a Cease & Desist Order on September 28, 2009 against Hillcrest Bank Florida that failed last Friday; hence, it never had time to appear on the list.

Most notable among the new additions are R-G Premier Bank of Puerto Rico ($6.5 billion); Central Pacific Bank, Honolulu, HI ($5.5 billion); and West Coast Bank, Lake Oswego, OR ($2.6 billion). The other 22 institutions added had an average asset size of $262 million.

Looking at the additions from a geographic perspective, there were four institutions headquartered in Washington, and two each in Florida, Georgia, Minnesota, and Wisconsin. There is a new addition from the FDIC issuing a Prompt Corrective Action Order on September 18th against Washita State Bank, Burns Flat, OK. Although not new to the list as they have been operating under a formal action, there were two other Prompt Corrective actions added. First, the OTS issued a PCA order on October 22nd against Century Bank, a Federal Savings Bank, Sarasota, FL; and the Federal Reserve issued a PCA order on October 27th against SolutionsBank, Overland Park, KS.

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay, and the Fed and OTC data is more timely. The OCC data is a little lagged. Credit: surferdude808.

See description below table for Class and Cert (and a link to FDIC ID system).

For a full screen version of the table click here.

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)





Class: from FDIC

The FDIC assigns classification codes indicating an institution's charter type (commercial bank, savings bank, or savings association), its chartering agent (state or federal government), its Federal Reserve membership status (member or nonmember), and its primary federal regulator (state-chartered institutions are subject to both federal and state supervision). These codes are:

N National chartered commercial bank supervised by the Office of the Comptroller of the Currency

SM State charter Fed member commercial bank supervised by the Federal Reserve

NM State charter Fed nonmember commercial bank supervised by the FDIC

SA State or federal charter savings association supervised by the Office of Thrift Supervision

SB State charter savings bank supervised by the FDIC

Cert: This is the certificate number assigned by the FDIC used to identify institutions and for the issuance of insurance certificates. Click on the number and the Institution Directory (ID) system "will provide the last demographic and financial data filed by the selected institution".

by Calculated Risk on 10/30/2009 10:13:00 PM

Eight is not enough
Nine set the bar much higher
Ten won't be the peak.
by Soylent Green is People
From the FDIC: U.S. Bank, NA, of Minneapolis, Minnesota, Assumes All of the Deposits of Nine Failed Banks in Arizona, California, Illinois and Texas

The Federal Deposit Insurance Corporation (FDIC) entered into a purchase and assumption agreement with U.S. Bank, NA, of Minneapolis, Minnesota, a wholly-owned subsidiary of U.S. Bancorp, to assume all of the deposits and essentially all of the assets of nine failed banks. ...

The nine banks involved in today's transaction are: Bank USA, National Association, Phoenix, Arizona; California National Bank, Los Angeles, California; San Diego National Bank, San Diego, California; Pacific National Bank, San Francisco, California; Park National Bank, Chicago, Illinois; Community Bank of Lemont, Lemont, Illinois; North Houston Bank, Houston, Texas; Madisonville State Bank, Madisonville, Texas; and Citizens National Bank, Teague, Texas. As of September 30, 2009, the banks had combined assets of $19.4 billion and deposits of $15.4 billion.

The nine banks had 153 offices...

The FDIC estimates that the cost of the nine banks to the DIF will be a combined $2.5 billion. U.S. Bank's acquisition of all the deposits was the "least costly" resolution for the FDIC's DIF compared to alternatives. The failure of the nine banks brings the nation's total number this year to 115.

Nine in one shot ...

by Calculated Risk on 10/30/2009 07:54:00 PM

While we wait for the FDIC ... it could get real busy ...

From the Chicago Tribune: U.S. set to seize FBOP, congressmen say (ht Josh)

Federal regulators are expected to seize Friday night the banks owned by Oak Park-based FBOP Corp., the troubled owner of Park National Bank of Chicago and eight other U.S. banks, people familiar with the situation say.

A takeover would occur even after several U.S. Congressman from the Illinois area, including Reps. Bobby Rush and Danny Davis and Sen. Roland Burris, called the FDIC asking it to hold off on closing the bank for at least a week, said Marilyn Katz, a spokeswoman for the bank.

And another report in California: Pacific National Bank Going to FDIC (ht Vladimir)

San Francisco-based Pacific National Bank is being eyeballed for takeover by federal authorities, according to several sources in the Silicon Valley and San Francisco commercial real estate industry. ... The Federal Deposit Insurance Corp. was expected to take control as early as this afternoon. ... The bank ... reported assets of $2.1 billion