Stories related to: subprime crisis

Stagnant pools bursting with mosquitoes have become a byproduct of the housing crisis, turning into breeding grounds for diseases like West Nile virus. But, the Wall Street Journal reports, there is a solution: Gambusia affinis , a natural predator, also known as the mosquito fish, that's hardy enough to police abandoned watering holes from Florida to California. More »

Economist, writer, actor, and lawyer Ben Stein follows up his December excoriation of Goldman Sachs' contribution to the subprime crisis with a look in today's New York Times into how Wall Street executives can get away with reckless behavior at the expense of the public. This time he targets the SEC, which has been so weakened in the Bush administration it quietly loosened the capital requirements for investment banks and "told Wall Street to police itself to save on regulatory costs."   More »

The slumping economy will pummel state budgets in the next fiscal year, leaving them at least $26 billion short, according to a survey from the National Conference of State Legislatures. Payrolls fell drastically in March and consumer confidence is low, a double whammy for state tax revenue. "With a few exceptions, state finances are deteriorating, in some cases considerably,” the survey said. More »

Consumer confidence fell to a 26-year low in April, as the public fretted over inflation and housing, Reuters reports. The index fell to 62.6, surpassing the 63.2 analysts had predicted. Nearly 90% said the economy is in recession. Respondents also said they were unlikely to spend their stimulus or tax-rebate checks, planning instead to save them or pay down debt. More »

The Federal Reserve may be ready to cool its torrid rate-cutting after a likely .25% percentage point cut at its meeting next week, the Wall Street Journal reports. Futures markets are betting Chairman Ben Bernanke is unlikely to rest just yet, with little change in the month-to-month economic picture, but will pause after that to assess the cuts' effect and avoid stoking inflation. More »

Lawmakers have backed a $15 billion aid package for municipalities so they can buy and fix up foreclosed homes, the Wall Street Journal reports. A House panel voted 38-26 for the measure, which would be split evenly between loans and grants. States could use the money to get vacated homes in shape and filled quickly. It's part of a larger relief measure making its way through the House. More »

In a sign of just how bad the credit crisis has become, Deutsche Bank has forbidden its employees from using expense accounts to pay for brothel visits and hotel porn, the Independent reports. It's unclear if execs have been seeking relief from subprime woes—the German giant has written down $4 billion—in fleshier pleasures, the paper adds. More »

US homeowners are literally burning down their homes instead of paying their subprime mortgages. Last year saw a dramatic nationwide jump in apparently debt-motivated arson, the Los Angeles Times reports. “I'm busier now than a one-armed paper hanger,” said one investigator. “What is happening is terrifically economically driven.” So far, the numbers are small, but they have insurers on edge. More »

Battered National City—which has seen shares plummet 78% as it's been overwhelmed by the subprime fiasco—is close to a $6 billion bailout funded by some of its largest shareholders and private equity firm Corsair Capital, reports the Wall Street Journal . The infusion for the Cleveland-based bank would be the third rescue package this month for a struggling bank that offers discounted shares to raise capital. More »

Should all Americans own their dream home? Not really, writes Joshua Riner in the New Republic —only those who can afford one. But Washington made homebuying easy, sparked the subprime crisis, and is now making things worse by buying up risky mortgages. Officials "need to replace the dream of homeownership with policies that actually increase wealth—not just the illusion of it," writes Riner. More »

With the housing market in turmoil, President Bush is turning to an investment banker-turned-bureaucrat to head HUD, the Washington Post reports. Steven Preston, 47, has run the Small Business Administration since 2006 after a stint at Lehman Brothers; he succeeds Alphonso Jackson, who announced his resignation 2 weeks ago amid allegations of uethical misconduct. More »

Merrill Lynch today posted nearly $2 billion in losses in the first quarter, after taking another $9 billion in writeoffs, the Wall Street Journal reports. In its third straight quarterly loss, Merrill was in the red $1.96 billion, or $2.19 a share, compared to earning $2.16 billion, or $2.26 a share a year ago. The company said it will cut about 3,000 jobs. More »

Washington Mutual shareholders got some of the blood they were out for yesterday, the Wall Street Journal reports, as the company backtracked on a pay scheme that would have shielded company executives from the subprime fallout. Board finance-committee head Mary Pugh also resigned, appeasing investors who blamed her for failing to prevent WaMu’s mortgage-related losses. More »

Merrill Lynch is likely to report another $6 billion to $8 billion in writedowns related to the subprime collapse tomorrow, leading to a third consecutive quarterly loss, the Wall Street Journal reports. Merrill’s chronic mortgage losses—$30 billion and counting—show just how deep the world's largest brokerage is mired in the mess, and have it slashing costs and jobs. More »

The bill was rushed through the Senate to come to the aid of homeowners facing foreclosure, but it turns out that some of its biggest beneficiaries are automakers, airlines and energy producers. The Senate’s housing bill is packed with billions in corporate tax cuts, the New York Times reports. With populist fervor behind the bill, lobbyists from a host of industries hit the Hill. And while the bill would help homebuilders and homebuyers, there’s little to actually prevent foreclosures. More »

Foreclosures and a glut of unsold homes flooding the market were blamed for an 11.9% drop in new housing starts last month, more than twice the slide economists had predicted, reports Bloomberg. Starts are at the lowest level since March 1991, according to the Commerce Department, casting a pall over hope for a rapid economic recovery. "Home construction is probably going to continue to fall right through this year,'' says one economist. More »

JPMorgan Chase, battling $5.1 billion in subprime writeoffs and deteriorating consumer credit, reported first quarter profits fell 50%, reports the Wall Street Journal. CEO Jamie Dimon warned the outlook for the remainder of 2008 was likely as grim. Morgan—the 3rd-largest US bank—said profits dropped to $2.37 billion, or 68 cents a share, down from $4.79 billion, or $1.34 a year earlier. More »

American communities once reliant on the manufacturing industry are increasingly being supported by the growing healthcare sector, the Wall Street Journal reports. Over the past 10 years, the former paper-mill town of Bangor, Maine, lost 3,700 factory jobs—but gained 3,500 healthcare jobs, a hopeful sign for an economy teetering on the brink of recession. More »

Bank repossessions skyrocketed 129% over the 12-month period ending in March, and foreclosure filings rose 57% over the previous year, RealtyTrac announced today. March foreclosure notices rose 5%, after a 4% decline in February. All this “is ongoing fallout from people overextending themselves and using highly toxic loan products,” said a RealtyTrac VP. And it hasn't peaked yet. More »

The Senate approved a $15 billion measure to address the housing slump today, including $6 billion in total tax breaks to homebuilding firms and a $7,000 tax credit for buyers of foreclosed homes. Though it passed by an 84-12 margin, opposition from President Bush and the House could yet sink the measure, Reuters reports. More »