National City Corp (NCC), a large Midwestern bank which during the real estate boom boasted a healthy income from their wholesale mortgage division, got in trouble with the bank regulators back in June and are now being sued by their stockholders.
The mortgage meltdown is spilling over to other financial companies like Discover Financial Services the issuer of Discover Card. Discover stock price dropped yesterday 6.8 percent closing at $14.34 per share.
Early in the week JPMorgan Chase and Co. reported to regulators it’s mortgage related losses topped $1.5 Billion for the quarter slightly higher than last quarter’s loss of $1.1 Billion according to Forbes.
Meredith Whitney, Oppenheimer & Co. analyst, who saw the subprime mortgage meltdown coming years in advance, believes the banks are not moving fast enough to mitigate the credit crisis.
In a Fortune article, Meredith Whitney, shows concern for an extended credit crisis because the banks won’t swallow the “bad mortgage” pill.
I agree…
It seems the smarminess of Countrywide Financial’s CEO, Angelo Mozilo, is now so far reaching as to smear the reputation of Democratic nominee, Barack Obama. According to the Wall Street Journal, many politicos got special treatment with loan approvals done by Mozilo himself. This group came to be known inside the company as “Friends of Mozilo”.
Today Ben Bernanke, the Federal Reserve Chairman, spoke addressing many issues the foreclosure and mortgage crisis are causing. Mr. Bernanke seems worried, at least ostensibly, the current or a possible future crisis could cause entire “financial markets” to grind to a halt.
Finally I am getting some support for my long standing prediction the GSE’s, Fannie Mae and Freddie Mac, are on the verge of collapse. Tuesday the New York Time publish an article which I believe is the first from a major news outlet to even raise the question of the GSE’s long term viability.
The article stated the worries by saying,
Wells Fargo Mortgage is a subsidiary of a Federally chartered depositor bank which merged with Norwest Bank in 1998 an has become the second largest mortgage originator.
Wells Fargo Mortgage is part of the $40 Billion Wells Fargo Bank mega-company that once again has been a darling of stock brokers and mutual fund managers for over two decades. It is no accident Wells Fargo has had incredible stock price appreciation mainly due to their mortgage operation.
Yesterday Merrill Lynch announced it’s first quarterly loss in 6 years with the excuse their subprime mortgage exposure cost them $7.9 Billion, $3 Billion more than expected - marking Merrill’s gut-punch as the “Worst Hit” taken by a financial company from the subprime mortgage meltdown.
With the Fed jumping in on Friday to calm the markets it would be easy to be fooled into thinking the worst of this financial irresponsibility is over…it’s only just begun!
Merrill Lynch yesterday downgraded the stock of Countrywide Home Loans (CFC ticker symbol) and speculated on the analyst call just how they could go bankrupt. First this was irresponsible and reckless on the part of Merrill…or was it?
Since the call yesterday a lot has happened:
1. The stock has fallen about 10 points.
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