The News Review:
- Fed auctions another $50 billion to cash-strapped banks in battle…
- ADC sees up to $22 mln charge on auction rate securities
- Fed’s TAF auctions 50 bln usd 28-day loans at 2.82 pct
- BoE to offer 15 billion pounds in 3-month money auction on April 15…
- ECB allots $15 billion at dollar-term auction facility
Fed auctions another $50 billion to cash-strapped banks in battle…
International Herald Tribune – Apr 8, 2008
86 billion) to cash-strapped banks. Meanwhile, the International Monetary Fund warned that further actions are needed globally to prevent more wrenching problems.
ADC sees up to $22 mln charge on auction rate securities
MarketWatch – Apr 8, 2008
expects an impairment charge of $12 million to $22 million in the second quarter related to auction-rate securities, the company said in an Securities and Exchange filing Tuesday. The latest estimate is significantly more than $7 million it had estimated previously. Our auction-rate securities holdings have a par value of approximately $169. At the end of our first quarter of fiscal 2008 our auction-rate securities holdings had a fair-value of $90.
Fed’s TAF auctions 50 bln usd 28-day loans at 2.82 pct
Forbes – Apr 8, 2008
The stop-out rate came in above the 2. 25 pct Fed funds target rate and the 2. 50 pct discount window rate.
BoE to offer 15 billion pounds in 3-month money auction on April 15…
Forbes – Apr 8, 2008
In a statement, the central bank said that, together with the other routine short-term maturities being offered on April 15, the total amount being offered is 16. The BoE said there will be a minimum rate at the 3-month maturity that will be determined by the Bank based on the 3-month overnight index swap rate. It added that it will not be widening the range of collateral accepted.
Related: Dell to Offer Ubuntu Linux on PCs, Laptops
ECB allots $15 billion at dollar-term auction facility
Forbes – Apr 8, 2008
It said bids totaled $30. 76 billion and the total number of bidders was 32. The facility expires May 8.
Related: UN: Refund $28 Billion to Nigeria for Peace Keeping.
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[...] Fed’s Krosner sees benefits, practical problems with mortgage…Forbes – Apr 9, 2008The main incentive for lenders to consider writedowns now, after avoiding them in the past, Kroszner contended, is that they lost an average 50 percent of the loan value when they foreclosed on homes in the fourth quarter of 2007. The committee’s chairman, Democrat Barney Frank of Massachusetts, is proposing mass writedowns of loan values to give borrowers some equity so they can refinance into loans guaranteed by the Federal Housing Administration. Loan value writedowns should be considered far more frequently than in the past, he said, because so many borrowers have negative equity or are more colloquially ‘underwater’. Their home value has sunk below the mortgage balance. The problem is spreading fast among subprime and even better-quality borrowers. ‘A distressed borrower with a negative equity position may have neither the means nor the incentive to remain in the home,’ Krozner said in his prepared testimony… He suggested that the industry develops a series of templates for guiding homeowners in trouble to different solutions based on their differing situations. Moral hazard risk is among the problems with a major writedown program, Kroszner warned. ‘Homeowners who can afford to pay their current mortgage should not be encouraged to default in order to qualify for a writedown. ‘ Nor should they be able to quickly cash out the new equity provided in the loan value writedown. Some exit fees and profit-sharing with the lender and the government are in order, he said. The government also needs to be wary of another problem, adverse selection, in which lenders would dump only their worst-case loans into the government program. And Kroszner said it would be difficult to work out writedowns when homeowners had a second lien on the house, as many subprime borrowers do.Related: Fed’s TAF auctions 50 bln usd 28-day loans at 2.82 pct [...]