Iceland melting Icelandic expansion

A large current account deficit coupled with high inflation at a time when the housing bubble and consumer credit boom is about to come to a very abrupt standstill are all ingredients which we should be well aware of at this point. As can be expected this has also taken its toll on the financial sector which has played a seminal role in the recent Icelandic expansion. In this way, Iceland's three largest banks (Kaupting, Glitnir, and Landsbanki) have all seen their credit rating being scythed by the rating agencies recently. In one of their recent much appreciated daily digests Eurointelligence reports how credit default swaps have risen to alarming levels even if we should note that the three big Icelandic banks have branches in mainland Europe allowing them to potentially knock down the...

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Posted in: Iceland

US banks are likely to fail as a result of the housing crisis

US banks are likely to fail as a result of the housing crisis, Ben -Bernanke said yesterday, warning that his country faced a more difficult situation than in the aftermath of the dotcom bust in 2001."There will probably be some bank failures," the Fed chairman told the Senate banking committee in his second day of biannual testimony to Congress.He said the banks at risk were "small and in many cases de novo [new] banks that are heavily invested in real estate in localities where prices have fallen".But he said: "I do not anticipate any serious problems" at any of the big banks, which played the most important role in the US financial system.The Standard & Poor's financials index declined 3 per cent yesterday.Mr Bernanke, meanwhile, dodged efforts by senators to enlist his support for...

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Posted in: Standard and Poor's financials index

Bear Stearns goes belly up

Battered Wall Street brokerage Bear Stearns said Friday that it is receiving short-term emergency funding to prevent its collapse. JPMorgan Chase & Co. and the Federal Reserve Bank of New York said they would provide Bear Stearns funding for up to 28 days, with the Fed providing the money to JPMorgan through its discount window. With the credit crisis worsening, the government took action to prevent the investment bank from going under and igniting widespread panic through the financial markets.Bear Stearns (BSC, Fortune 500) shares plunged as much as 53% before moving off their lows to trade 39% lower in the early afternoon.The announcement did not indicate how much funding Bear Stearns would receive, but executives said in a conference call Friday afternoon that with the money, the firm...

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Posted in: Bear Stearns

Second bank has Bankrupt this year

A second bank has failed this year, the Federal Deposit Insurance Corp. said Friday. The FDIC and the Commissioner of Missouri's Division of Finance closed Hume Bank in Hume, Mo., on Friday, the federal banking regulator announced. It was the second bank to fail this year, the FDIC said. The first was Douglass National Bank in Kansas City, Mo., on Jan. 25. The FDIC didn't give a reason for the failure. Security Bank of Rich Hill, Mo., will assume Hume Bank's insured deposits. The failed bank's sole office will open Monday as a branch of Security Bank. As of Dec. 31, Hume Bank had assets of $18.7 million and total deposits of $13.6 million. Security Bank agreed to assume $12.5 million of the failed bank's insured deposits for a premium of 4.26%, the FDIC sa...

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Posted in: Federal Deposit Insurance Corp

Morgan Crucible Co. Chief Executive Officer Ian Norris extradition NO

Former Morgan Crucible Co. Chief Executive Officer Ian Norris, who is accused by U.S. prosecutors of price-fixing, won a ruling from the U.K.'s highest court that hinders attempts to extradite him for a trial in Pennsylvania. Norris, 65, has been charged in the U.S. with conspiring with other executives to rig the price of carbon products, including brushes, in the 1990s and trying to obstruct an ensuing investigation. The House of Lords today ruled he couldn't be extradited on the antitrust claims because price-fixing wasn't a crime in the U.K. at the time of the alleged misconduct. ``Mere price fixing was not at any time'' a criminal offense in the U.K. when the cartel operated, the House of Lords said in a ruling today. While Norris doesn't have to face U.S. antitrust charges, the Lords...

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Posted in: U.K.'s Serious Fraud Office

Cost of borrowing euros for three months rose to the highest level in seven weeks

The cost of borrowing euros for three months rose to the highest level in seven weeks, adding to evidence central bank attempts to ease a shortage of cash in the money markets are misfiring. The euro interbank offered rate, or Euribor, for the loans climbed 7 basis points to 4.50 percent today, the European Banking Federation said. It was the biggest gain since Jan. 25. The one-week rate was little changed at 4.11 percent. The Federal Reserve said today it plans to increase loans to banks this month to offset ``heightened liquidity pressures'' and a deepening credit crisis. Money-market rates are rising as banks hoard cash after at least $188 billion in credit losses and writedowns linked to the U.S. subprime-mortgage collapse since the beginning of 2007. Credit-default swaps showed bank debt...

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Posted in: European Central Bank's

Europe's biggest bank unloaded $24 billion (U.S.) of opaque mortgage securities in a fire

Faltering credit markets have tipped over into a new and more dangerous phase – and everyone from municipalities trying to get sewers fixed to people shopping for a car loan will pay the price.Yesterday, Alabama's most populous county teetered on the verge what could become the United States' largest municipal bankruptcy. A pair of financial companies said they received default notices from banks nervously looking for loan payments. Reports swirled that Europe's biggest bank unloaded $24 billion (U.S.) of opaque mortgage securities in a fire sale.Those on the front lines – from bond traders to investment managers – say the latest batch of bad news indicates a harrowing new time in the credit crisis. And that could send a shock wave through the U.S. economy as consumers feel their own version...

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Posted in: Bankrupt Alabama

U.K., homeowners are using their credit cards to pay morgages

The U.K, usually 18 months ahead of the U.S. in its credit cycle, is perhaps a harbinger of things to come in the U.S. credit picture.Fears are now rising that U.S. consumer credit cardproblems could ripple out into the global credit market, starting in Europe.Think the estimated subprime debt load carried by the big international banks is big, at $1 trillion?How about this: Americans now owe nearly as much record $915 billion – on their credit cards alone.And defaults and delinquencies in the credit card sector are piling up – which means big banks are on the hook, again. More sand in the gears for the globaleconomy.Credit card companies wrote off 4.58 percent in payments between January and May, almost a third morethan in the same period in 2006, according to Moody's Investors Service. As...

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Posted in: Morgage crunch