Archive for November, 2007

Zoe Cruz, co-president of Morgan Stanley, now unemployed

Written by Timothy Blake on November 30, 2007 under Archives, Job Losses

Zoe Cruz, the most senior woman on Wall Street, on Thursday became the latest high-profile casualty of the US subprime mortgage meltdown when she lost her job as co-president of Morgan Stanley. The ousting came three weeks after Morgan Stanley revealed it had lost more than $3.7 billion (USD). Morgan Stanley’s maximum potential losses from subprime- related assets stood at $6 billion at the end of October, down from $10.4 billion at the end of August, the company said. That “net exposure” figure assumes that all of the securities default and no money is recovered on any of them.

Northern Rock in Florida with a run on a fund

Written by Timothy Blake on November 29, 2007 under Archives, Economic Impact

Perceiving a problem with a Florida investment fund, investors withdrew about $10 billion in recent weeks before Florida halted any further withdrawals. Similar to run on U.K. bank Northern Rock, it shows how far this year’s subprime-fueled credit crisis has spread. Florida’s Local Government Investment Pool, which had more than $27 billion in assets at the end of September, is a money-market fund that’s supposed to invest in ultrasafe assets to provide participants with a secure place to stash spare cash.

One third of U.K. homeowners face big house payment increases

Written by Timothy Blake on November 28, 2007 under Archives, Foreclosure, International, Opinion, Outside the U.S., Root Causes

Some say the U.K. is a warning to the U.S. but the news sounds about the same. One third of all U.K. homeowners will face big increases in their house payments. A report released yesterday said approximately 5.5 million people in the U.K. would be effected. Many fell into the subprime trap because of divorce, employment issues, or other unforeseen financial issues. While the U.K. classifies adults as ‘non-standard’ the United States also faces many subprime and ALT-A problems as adjustable rate mortgages reset. The United States classifies the problem as ‘subprime’ but analysts say the analogy no longer holds up to examination. Here is why:

Option ARM lawsuit may seek class action status

Written by Timothy Blake on November 28, 2007 under Adjustables (ARMs), Archives, Lawsuits, Lenders

A suit files in South Carolina alleges the borrower was not properly informed of how an option ARM actually works. The suit was filed Nov. 16 in U.S. District Court in Charleston and names as defendants World Savings Bank FSB of Oakland, Calif., and Golden West Financial Corp. and Wachovia Corp., both of Charlotte. Option AMRs were invented in the 1980′s for wealthy borrowers, but mortgage enthusiasts sold the products to anybody and everybody by 2005.

Did Countrywide foreclosures abuse the bankruptcy system?

Written by Timothy Blake on November 28, 2007 under Archives, Lawsuits, Lenders, Mortgage Fraud

The federal agency monitoring the bankruptcy courts has subpoenaed Countrywide Financial, the nation’s largest mortgage lender and loan servicer, to determine whether the company’s conduct in two foreclosures in southern Florida represented abuses of the bankruptcy system. The subpoenas for Countrywide documents were issued in late October by the United States Trustee after the agency announced an effort to move against mortgage servicing companies that file false and inaccurate claims in foreclosure cases. The inquiries into Countrywide by the trustee’s office, a division of the Justice Department, come as foreclosures are increasing across the country.

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