Economic Impact
The CIT Group, a century-old company that lends money to small businesses and midsize corporations, was forced to draw on $7.3 billion of emergency bank credit lines. Its shares and bonds plummeted. CIT makes student loans, an area from which others have retreated. HSBC Bank USA; M&T Bank Corp.; and TCF Financial Corp., won’t be making loans for the next school year. CIT has other interests as well. Analysts said the tightening credit squeeze could drive the entire company into the arms of a suitor.
What happens in hard-hit areas as people try anything to save their homes from foreclosure? Some will not admit the problem – an actual state of denial. Other are turning to short term loans as high fuel costs and home heating costs eat into what little is left. “We’re hearing from around the country that many folks are buried deep in pay day loan debts as well as struggling with their mortgage payments,” said Uriah King, a policy associate at the Center for Responsible Lending (CRL).
The IRS announced today that their website, irs.gov, will publish the dates and schedule for release of economic stimulus checks, also called bailout checks, or tax refunds. If you have direct deposit and file before April 15th you will have priority over paper filers. For those will adjustable rate mortgages, near foreclosure, or already in foreclosure the stimulus refund should be considered carefully. Be realistic. If paying the utilities will keep the lights on for one more month while denying the inevitable, perhaps you should consider a different approach.
JPMorgan Chief Executive Officer Jamie Dimon yesterday agreed to buy Bear Stearns, the second-biggest underwriter of U.S. mortgage securities, for $240 million, less than a 10th of its value last week. In order to strike a deal before the opening of Tokyo trading, the Fed agreed to help JPMorgan finance up to $30 billion of Bear Stearns’s “less liquid assets.”
Underlining the Fed’s desperate attempts to calm markets, for the first time it said that it would accept mortgage-backed assets as collateral from the banks for fresh loans.