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NEWS ABOUT: subprime crisis

No Hope for Detroit Until We End Rip-Off Financing

The indebted consumer can't afford cars

(Newser) - Congress' plan to bail out Detroit ignores one fundamental problem: Americans owe so much on their current cars—often more than the vehicles are worth—that they can't buy new ones, writes Stephanie Mencimer in Mother Jones. Detroit—along with the "great scourge of the American consumer market: the... More »

Feds Overhaul Credit Card Rules

New rules will tighten interest rates, could cost issuers $10B in revenue

(Newser) - Credit card companies will be forbidden from raising interest rates on existing debt after major changes to federal regulations OK'd today go into effect, USA Today reports. Starting in July 2010, the new rules will also restrict issuers' ability to cherry-pick higher-interest parts of balances to pay down first, and... More »

AIG Looks for $10B More to Pay Bad Bets

Struggling insurer gambled billions of its own money on risky derivative trades

(Newser) - Insurance giant AIG, already the recipient of a $150 billion government bailout to cover soured credit-default swaps, now admits it owes some $10 billion more for speculative trades it made with its own money, reports the Wall Street Journal. Those deals aren’t covered by the bailout, leaving the struggling... More »

Fannie, Freddie Brushed Off Subprime Warnings

Companies ignored risk experts for years

(Newser) - Fannie Mae and Freddie Mac can’t say they weren’t warned. Internal documents obtained by the Washington Post show that both companies had internal factions who stressed the dangers of subprime mortgages several years ago. At Freddie Mac, the former chief enterprise risk officer wrote that the loans could... More »

Bird Shelters Overrun as Foreclosures Take Toll

Exotic animals not always welcome, and require special care

(Newser) - The US foreclosure epidemic, hard on all kinds of pets, appears particularly devastating for exotic birds, Reuters reports. People forced to vacate their homes are finding that cockatiels, macaws, and the like won’t fly at their new digs. Shelters for cats and dogs aren’t equipped to handle the... More »

Treasury May Lower Mortgage Rates to 4.5%

Rates could go as low as 4.5% to curb falling home prices

(Newser) - The Treasury may try to bring new mortgage rates down to 4.5%—a full percentage point lower than current rates—to revitalize the housing market, the Wall Street Journal reports. Under the proposal, which is still in the early stages, the department would use Fannie Mae and Freddie Mac... More »

Wall Street's Doom Years in the Making

Liar's Poker writer saw this coming long ago, and so did some contrarian money men

(Newser) - When he wrote Liar’s Poker in 1989, Michael Lewis figured the end of Wall Street was near. After all, it had hired him, a 24-year-old with neither experience nor interest in finance. “Sooner rather than later,” he writes in Portfolio, “someone was going to identify me,... More »

Another Casualty of Financial Crisis: Divorce

Two households no longer affordable as couples struggle to pay for one

(Newser) - With unemployment rising, salaries stagnant, and housing prices cratering, many unhappy couples are opting not to divorce, reports MSNBC. “A lot of people are deciding, 'It’s not worth it to do it (at) this time. Let’s stay together. Let’s try to work through our problems and... More »

Home for the Holidays: Florida Mulls Foreclosure Ban

Governor wants holiday moratorium

(Newser) - Florida Gov. Charlie Crist is considering a Christmastime moratorium on home foreclosures similar to the 90-day halt urged by California Gov. Arnold Schwarzenegger, reports the Tallahassee Democrat. Crist is unsure whether he has the legal authority to impose a moratorium. He may have to negotiate a halt with the state's... More »

Fannie, Freddie Will Stop Foreclosures Over Holidays

Some 16K affected by pause

(Newser) - Homeowners facing foreclosure got a morsel of good news today: Fannie Mae and Freddie Mac won’t give them the boot over the holidays. The companies will suspend foreclosures of occupied houses from Nov. 26-Jan. 9 while they work out a loan-reform plan with lenders, MarketWatch reports. The six-week suspension... More »

To Save Economy, Go Shopping

Friedman suggests how Obama should lead America out of its economic mess

(Newser) - To stop the economic recession from slipping into a depression, Barack Obama shouldn’t mince words: Americans need to go shopping and support federal efforts to rescue banks and homeowners, Thomas Friedman writes in the New York Times. “No, it’s not fair. But fairness is not on the... More »

Obama: We've Got to Stop Foreclosures

President-elect also backs aid for auto industry, but not a 'blank check'

(Newser) - Saving people's homes from bank foreclosures will be a priority of his economic crisis plan, President-elect Obama said in an interview airing tonight on 60 Minutes. "We've got to set up a negotiation between banks and borrowers so that people can stay in their homes. That is going to... More »

FDIC Pushes Plan to Ease Mortgage Payments

Bush camp opposes using bailout funds

(Newser) - Officials at the FDIC are butting heads with the Bush administration over the bailout once again, yesterday outlining a plan to prevent 1.5 million foreclosures in the coming year by having banks sharply reduce monthly payments on mortgages, the Washington Post reports. The government would guarantee half the losses... More »

Freddie Posts Record $25.3B Loss; Taps $13B Infusion

(Newser) - Freddie Mac, the swamped mortgage giant seized by the government two months ago, asked for $13.8 billion from the Treasury today after a record quarterly loss plunged its net worth into the negative, Bloomberg reports. Sister company Fannie Mae, also under government control, said this week it might need... More »

Fannie, Freddie to Offer Mass Loan Modifications

Housing giants aim to reduce foreclosures

(Newser) - Fannie Mae and Freddie Mac will roll out a plan today to modify hundreds of thousands of loans in an effort to prevent foreclosures, the Wall Street Journal reports. The mortgage giants, under federal conservatorship, aim to reduce mortgage payments to no more than 38% of household income. Private banks... More »

Citi to Aid Homeowners by Modifying $20B in Mortgages

The bank will amend mortgages to assist 130,000 borrowers

(Newser) - Citigroup will modify up to $20 billion in mortgages for borrowers current on their payments but at risk of falling behind, the bank announced this morning, mirroring similar moves by Bank of America and JPMorgan Chase. Citi will reach out to half a million borrowers, ultimately reducing monthly payments for... More »

We Should Offer Banks a Choice on Exec Pay

Either let US set limits, or make firms set aside cash: economist

(Newser) - Regardless of who wins today’s election, one issue from this campaign will continue to burn hot with investors, Andrew Ross Sorkin writes in the New York Times. Both candidates have blamed executive pay for the financial collapse, as execs are rewarded for risk-taking while rarely penalized for failure. But... More »

Bankrupt AIG Might Have Been Better Than Bailout

Experts say letting insurer file bankruptcy would have been a better, cheaper, plan

(Newser) - The government’s $143 billion bailout of AIG is looking more and more like an expensive example of good money following bad, as financial experts are concluding that bankruptcy would have been better for both the insurance giant and taxpayers, reports the Washington Post. AIG has burned through more than... More »

FDIC Plan Tests Strategies for Keeping People in Homes

Systematic reworking faces typical hurdles

(Newser) - The first large-scale experiment in how to keep struggling borrowers in their homes is being run by the FDIC at seized mortgage lender IndyMac, the Wall Street Journal reports, and the results are mixed. Of some 65,000 borrowers with “seriously delinquent” mortgages, about 47,000 qualify for aid... More »

JPMorgan Plans Relief for $110B in Mortgages

WaMu customers included in measure to avoid foreclosures

(Newser) - JPMorgan Chase will help distressed homeowners by reducing interest rates or principal balances for $110 billion in mortgages, Bloomberg reports. The restructuring applies to clients of Washington Mutual, which JPMorgan agreed to buy last month. Foreclosures will be suspended on all loans for the next 90 days while the relief... More »

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