Banks Face Simpler, Tougher Times

One year in, credit crunch has upset all expectations about modern markets

(NEWSER) - Last summer, central banks injected hundreds of billions of dollars into the financial system, desperate to restore liquidity to battered markets. But by then the credit crunch was on—and after 12 months, it shows no signs of abating. The Financial Times looks at how risky US mortgages set off the worst economic crisis in 70 years. More»

A year into crisis, analysts redefine once-shocking news as not so bad

(NEWSER) - Yesterday's announcements of multibillion-dollar losses at Wachovia and Washington Mutual were only the latest poundings since the credit crisis took hold a year ago. Yet Wall Street, its expectations at rock bottom, cheered the reports because they could have been worse. Shares in WaMu, which posted a $3.3 billion quarterly fall, soared 6.2%. "We are redefining bad," one risk analyst told the New York Times. More»

Complex implosion could take far longer to untangle, experts say

(NEWSER) - How does the current mortgage debacle measure up to the savings-and-loan meltdown of the 1980s and the tech crash of 2000? Losses look manageable, the Wall Street Journal reports in a detailed analysis of how this crisis differs from other crashes, and how likely it is to spin the economy into a recession. But it could be exacerbated and prolonged by complex differences. More»

(NEWSER) - Until the day Lehman Brothers declared bankruptcy, all three of the major credit-ratings agencies swore its debt was safe, rating it A or better. They rated AIG at AA. And they gave 75% of the $3.2 trillion of subprime mortgage securities iron-clad AAA ratings. Moody’s, S&P and Fitch were, in short, at the center of the credit crisis. Yet all are still profitable—and regulators aren’t touching them, Bloomberg reports. More»

Regulators move to stabilize credit union industry as condition reaches critical

(NEWSER) - Federal regulators have taken control of two major wholesale credit unions, which provide services to thousands of credit unions nationwide, to stabilize the industry, Bloomberg reports. The institutions, which have combined assets of $57 billion, failed the so-called stress test, showing an unacceptably high level of risk from mortgage-backed securities. Service at the US Central Corporate Federal Credit Union and the Western Corporate Federal Credit Union will continue uninterrupted. More»