Credit crunch - coming soon to a market near you!

The liquidity binge of past few years is catching with players with all sorts of exposure in all corners of the world.

Macquarie Bank MBL announced last night that two of its funds faced losses related to the US subprime mortgage crisis of up to 25%. MBL finished the day more than 10% lower on the news.

Moving right along, Bear Stearns's (BSC)now has a 3rd fund in trouble. Actually that's a bit of an understatement the other two funds have been wiped out. The company's Asset-Backed Securities Fund, with about $900 million invested in asset-backed securities, including mortgage bonds, suspended redemptions after investors demanded their money back.


American Home Mortgage woes continue

You may have heard in the last few days about the trials and tribulations of American Home Mortgage (AHM).

If not here is a great time line of events at AHM courtesy of MGETA.

Although that time line is a little out of date now. Yesterday the stock fell 90% as the company revealed it has missed margin calls from its lenders and has hired advisers to consider strategic options including the liquidation of its assets.

Forget advice this thing is going under.

Of interest is AHM's list of creditors:

• UBS (UBS) $2.0 billion.
• Bear Stearns (BSC) $2.0 billion - these guys just can't catch a break can they?
• Banc of America (BAC) $1.3 billion.
• Barclays (BCS) $1 billion.
• Caylon Securities $1.5 billion.
• J.P. Morgan Chase & Co (JPM) $124 million.

Michael Shedlock of MGETA has penned a fitting analysis of the demise of AHM:

On 2007-07-31 American Home Mortgage went under. After receiving multiple margin calls, it simply ran out of cash. Bear in mind that just a couple weeks ago it "reaffirmed" its $.70 dividend. Today it was lights out. The stock was halted on Monday and sank 90% when trading resumed today. See Liquidity Crunch at American Home and Unable to Borrow for a recap.

Dave Donhoff at No Bull Mortgage sent me the following earlier today.

AHM/ABC Kapputt
From our clearing firm's office this AM;
Subject: Notice: American Brokers Conduit closes it's doors

Our office received a phone call this morning from the Operations Manager of American Brokers Conduit in Las Vegas, Nevada. They have ceased doing business as of this morning. They have no money for wires on loans that have already signed loan docs. Please contact our Rep, Sanja and she will see that your files are returned to you so you can place your loans with other lenders. Dave posted this comment on The Market Traders: "This is significant as the first MAJOR A-paper mortgage bank, with significant volume and a huge brokerage base, to go belly up."

AHM is out of money and out of business. It's the end of the line for American Home Mortgage. Judging from insider sales, it seems only one insider, John A. Johnston (president Western Division) saw this coming and bailed. A few of the losses are staggering.