If you listen to the mainstream media, (not advisable) no doubt you would have heard that the credit crisis is over or that at the very least, the worst is over. Well just in case you happened to believe such reports, below are a few reasons you might want to question such claims.
Fed: Senior Loan Officer Opinion Survey on Bank Lending Practices
In the April survey, domestic and foreign institutions reported having further tightened their lending standards and terms on a broad range of loan categories over the previous three months. The net fractions of domestic banks reporting tighter lending standards were close to, or above, historical highs for nearly all loan categories in the survey. Compared with the January survey, the net fractions of banks that tightened lending standards increased significantly for consumer and commercial and industrial (C&I) loans. Demand for bank loans from both businesses and households reportedly weakened further, on net, over the past three months, although by less than had been the case over the previous survey period. emphasis added
UBS to cut 5,500 jobs, sell assets to BlackRock fund
First-quarter loss of 11.5 bln Swiss francs matches earlier warning
Troubled Swiss banking group UBS said Tuesday that it plans to cut 5,500 jobs and sell a $15 billion chunk of its risky mortgage assets to BlackRock Inc. as it reported a first-quarter loss broadly in line with an earlier warning.
The group posted a loss of 11.54 billion Swiss francs ($10.99 billion), compared to a profit of 3.03 billion francs a year earlier, driven by write-downs of $19 billion. The bank had disclosed the write-downs at the start of April and said it would report a loss of around 12 billion francs.
UBS (UBS) said it's planning to cut 2,600 jobs in its investment banking unit by the end of the year and around 5,500 -- or 7% of its workforce -- across the group by the middle of 2009. click on the link for the full story
Fannie Mae reports $2.2 billion loss in first quarter
Mortgage-finance giant Fannie Mae (FNM) reported a much greater-than-expected loss in the first quarter, losing $2.2 billion as credit-related expenses took a bite out of its bottom line, and said it's planning to raise $6 billion in new capital. On a per-share basis, Fannie Mae lost $2.57 in the first quarter, much more than the 81-cent-a-share loss expected by Wall Street analysts surveyed by FactSet. In the same period a year ago, Fannie Mae earned 85 cents a share. Shares of Fannie Mae were recently down 13% in pre-market trading.
Countrywide Takes Away Home-Equity Credit Lines in Las Vegas
May 6 (Bloomberg) -- Countrywide Financial Corp. has suspended the home equity credit lines of almost all its Las Vegas customers, including the $60,000 Christopher Whipple says he needed to expand his cell-phone accessories business.
``I hope this doesn't break me,'' the 35-year-old retailer said. His credit score was 790 out of a possible 850, putting him in the top 40 percent of borrowers. ``It's going to hurt more than I thought.''
Since January, Countrywide, Bank of America Corp., Washington Mutual Inc. and IndyMac Bancorp Inc. have frozen about 600,000 equity credit lines nationwide, said Michael Kratzer, president of a Bankrate Inc.-owned Web site that's fielding consumer complaints. The lenders are targeting borrowers in cities where property values are falling, including Las Vegas, Chicago and Los Angeles, he said.
Frozen credit and real estate declines are putting a chill on spending and hurting the economy. In February, taxable sales in Clark County, Nevada, which includes Las Vegas, fell 3.1 percent from a year earlier, dropping 13 percent at furniture stores and 6 percent for durable-goods wholesalers. In the same month, as it became harder to borrow money across the U.S., consumer spending rose at the slowest pace in more than a year. click on the link for the full story