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NEWS ABOUT: subprime mortgages

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Merrill: $9.8B Loss on $11.5B Writedown

Brokerage's first-ever full-year loss blamed on subprime woes

(Newser) - Merrill Lynch reported a fourth-quarter loss of  $9.8 billion, or $12.01 a share, nearly triple the per-share loss most analysts predicted, reports Bloomberg. It was the second straight losing quarter for the nation’s largest broker, and capped the company’s first full-year loss since 1989. Merrill said... More »

For Hurting US Companies, World Supplies Band-Aid

In economic sea change, 'we need the money,' one US Rep. says

(Newser) - The subprime collapse has US financial institutions in uncharted waters—asking for help from foreign investors and governments, the Wall Street Journal reports. Citigroup, Merrill Lynch, and Morgan Stanley all have recently sought bailouts, a dramatic switch from a tradition that saw US banks coming to the “rescue of... More »

JP Morgan Profit Drops 34% in Q4

$1.3B in subprime writedowns hit earnings at third-largest bank

(Newser) - Subprime mortgage writedowns of $1.3 billion cut deeply into better-than-expected revenue gains at JP Morgan Chase in the fourth quarter, leaving the nation’s third-largest bank with net income of $2.97 billion, or 86 cents per share, a 34% drop from a year ago, reports Bloomberg. The writedown... More »

Merrill Hauls in $6.6B Lifeline

Recapitalization plans move forward as firm struggles to shake subprime debacle

(Newser) - Merrill Lynch has reached into the deep pockets of foreign investors once again, pulling in a $6.6-billion lifeline today from a consortium of investors that include Japan’s Mizuho Financial Group and the Kuwait Investment Authority, the Wall Street Journal reports. In December, Merrill received a $5-billion cash infusion... More »

Citi Takes $9.83B Loss, $18B in Writedowns

Record Q4 loss offset by $14.5B cash infusion from Singapore, Kuwait

(Newser) - Citigroup announced $18 billion in writedowns and a $9.83-billion fourth-quarter loss today as a relentless torrent of mortgage defaults has brought the banking giant to its knees. The $1.99-per-share loss is the largest in Citi’s 196-year history, Bloomberg reports. Citi, struggling to recapitalize, also reported US and... More »

China May Scuttle $2B Citigroup Bailout

Sources say China's government is standing in the way of the deal

(Newser) - On the eve of Citigroup’s fourth-quarter earnings announcement, the Chinese government appears to have raised objections to China Development Bank's purchase of a $2 billion stake in the struggling financial giant, reports the Wall Street Journal. The proposed deal, reported by the Journal over the weekend, is part of... More »

Investigators Ask: Did Banks Withhold Info?

Banks hid risk of bundled 'exception' loans, insiders say

(Newser) - Prosecutors are probing Wall Street banks to see if they ever revealed the risky nature of certain subprime mortgage investments, the New York Times reports. Industry experts are accusing the banks of turning high-risk loans, called exceptions, into investments without divulging details to investors and credit-rating agencies. One probe, led... More »

BofA May Buy Ailing Countrywide

Talks between bank and troubled mortgage giant well advanced

(Newser) - Bank of America is in advanced talks to buy troubled Countrywide, the Wall Street Journal reports. The Charlotte-based bank could be on the brink of acquiring the US' largest mortgage lender, whose market value has plummeted to $3 billion—about 2 months' profit for BofA—as foreclosures continue to dent... More »

Citi, Merrill Look Overseas for More Cash

Big Banks could announce $25 billion in additional losses next week

(Newser) - Merrill Lynch and Citigroup, which have already tapped foreign investors for billions of dollars to help bail them out of the subprime debacle, are headed back to the well, reports the Wall Street Journal. Merrill is seeking some $4 billion more, Citi up to $10 billion—all expected to come... More »

More Trouble Has Countrywide Teetering

Mortgage lender sees stock dive again as foreclosures rise

(Newser) - After its stock plunged yesterday on rumors it might declare bankruptcy, mortgage giant Countrywide Financial was its shares fall to a 12-year low today on news that foreclosures and late payments were up last month, Bloomberg reports. The subprime collapse has forced the company to lay off thousands, and it's... More »

Bear Stearns CEO Will Step Down

Add Cayne to roster of victims of subprime collapse

(Newser) - Add Bear Sterns CEO Jimmy Cayne's to the list of rolling heads in the subprime mortgage market collapse, reports the Wall Street Journal. Cayne, 73, has been the target of board and shareholder angst over the 53% drop in the bank’s stock last year—the largest of any of... More »

Paulson Calls for More Housing Relief

Treasury secretary suggests aid for prime-rate borrowers

(Newser) - Treasury Secretary Henry Paulson advised the mortgage industry today to give help to millions of financially stressed homeowners whose mortgages are set to rise. His comments signal that the Bush administration is starting to push lenders to expand relief beyond subprime borrowers to homeowners with other adjustable-rate loans, reports the... More »

UK To Introduce Sweeping Bank Reforms

Darling announces regulatory shift after Northern Rock fiasco

(Newser) - Britain's chancellor will offer sweeping new powers to that country's equivalent of the SEC to intervene in the event of a banking crisis. In an interview with the Financial Times, Alistair Darling presented a set of triggers that would allow the Financial Services Authority to step in and protect assets... More »

In Turnabout, '07 Mess Hurt Brokers More

Complex securities backfired on insiders, not Joe Investor

(Newser) - Ordinary investors did fairly well in 2007, but their brokers and other big financial players lost their shirts in the subprime collapse. How did that happen? The New York Times observes that “parallel markets” have developed in recent years, with stocks and bonds available to most, and specialized, acronym-heavy... More »

Subprime Lender Lobbying Foiled Safeguards

Ameriquest's budget to woo local, national officials: $20M+

(Newser) - Subprime giant Ameriquest spent more than $20 million on political donations from 2002 to 2006 to successfully lobby against lending restrictions meant to protect borrowers, reports the Wall Street Journal. Though the company spent millions at the national level, its focus was local, where regulators were cracking down on predatory... More »

New Home Sales Hit 12-Year Low

Decline tops even worst estimate

(Newser) - New home sales fell much farther than expected in November, hitting their lowest point since 1995, Bloomberg reports, and the slide only likely to get worse. Sales fell to an annual pace of 647,000, a 9% drop from October’s revised-down 711,000 rate. Prices are falling, but buyers... More »

In Need of Cash, Banks Looking to Sell

It's a buyers market as banks unload 'everything from branches to entire units'

(Newser) - Still in need of cash, as subprime writedowns continue to maul bottom lines, US and European banks are selling off or shuttering non-critical assets. They've already sold stakes to foreign investors and borrowed from central banks; now it's time for the yard sale, as the Wall Street Journal puts it.... More »

Contemporary Art Scores for Auction Houses

Sales swelled 36% in 2007; some fear houses too invested in the new

(Newser) - Contemporary art has been very good to Sotheby’s, fueling a 46% boost in sales for the world’s second-largest auctioneer this year over last, Bloomberg says. A crop of new collectors from the US, Russia and Asia brought new records for artists like Francis Bacon and Jeff Koons, for... More »

Student Lender Sallie Mae Plans $2.5B Stock Sale

Embattled stock drops 6.5% as investors fret

(Newser) - With a credit rating bordering on junk-bond status, embattled student loan provider Sallie Mae plans a public stock offering to raise $2.5 billion, reports the Wall Street Journal. The company will use $2 billion to buy back its own stock futures, which have lost value recently following a failed... More »

Banks Face Simpler, Tougher Times

Effect of subprime crisis on bottom line shows no signs of abating

(Newser) - Investors waiting for the big banks to turn it around after 2007’s subprime debacle might be waiting a long time, the Wall Street Journal warns. The credit crunch has unraveled a complicated modern banking model that gave big firms nearly total balance sheet flexibility. “It was a different... More »

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