Bank of America CEO steps down…

Okay, a couple of thoughts about this one…..

• The head of the biggest bank in the country doesn’t leave with a 90 day notice unless someone was putting some serious pressure on him to get out.
• How big of a golden parachute do you think he gets?
• How many times do you think that the CEO of a major financial firm has stepped down without a successor being named in the last 10 years?

Yeah, sure the banking world is just fine……

NOT

Tom Vanderwell

BofA’s Ken Lewis Plans to Step Down By End of the Year – CEOs * US * News * Story – CNBC.com

Bank of America’s CEO Ken Lewis, the embattled head of the nation’s biggest bank, told the board he plans to step down by the end of the year.

Lewis wasn’t asked to step down and the decision was not the result of any regulatory action, sources told CNBC. No successor has been named yet.

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Driveby Economics – a new feature on Straight Talk

Driveby Economics

Mortgage Rates and the Jobs Report

Mortgage Market and the Jobs Report
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There’s something weird going on with mortgage rates

There’s something weird going on in the Mortgage World…..Technorati Tags: Mortgage Rates

40% price reduction?

I know that it’s anecdotal, and I know that it’s not a sold price, but when the minimum bid for a house is 40% below what it was originally listed at in May, that tells me one of a couple of potential things:

• Either the high end home market is really getting hammered and is significantly worse than it was in May.
• or This particular builder is in major trouble and is doing anything he can to get out of debt on the property…..

Tom Vanderwell

Bids open on Coto villa at $4.5 million discount – Lansner on Real Estate – OCRegister.com

House auctions have become commonplace in Orange County in this day of foreclosure sales and desperate sellers. Luxury homeowners got into the act at least two years ago, seeking to liquidate their assets in a day.

But such things are less common behind the gates of Coto de Caza, says luxury homebuilder Larry Igarashi. Until now.

Igarashi’s 16,505-square-foot spec home on Palma Valley goes on the block at 1 p.m. Saturday, with the minimum bid set at $5.99 million. That’s nearly $4.5 million below the home’s original list price when it went on the market in May.

Technorati Tags: Driveby Economics

Quote of the Day

Two thoughts about this quote:

• One of the reasons that I like Barry Ritholtz is because he writes what he wants to write and what he feels is important to write about, not what the readership (and he gets a LOT more traffic than I do).  
• It’s a model for what I’m attempting to do at Straight Talk.  There has never been a time where it’s more crucial to understand what’s going on in the world of mortgage lending and finance than now.   I don’t always talk about the nice, the optimistic and the upbeat things.   Why?  Because I can live with myself better if I’m telling the truth…..

Tom Vanderwell

William Safire: How to Read a Column | The Big Picture

“He also showed that sometimes you have to write what (you) want, regardless of what the readership (thought it) wanted,”  Barry Ritholtz, September 28, 2009 talking about William Safire

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Jobs, Jobs, Jobs….

A disturbing chart from the New York Times shows just how much we’ve lost in terms of jobs…..

Tom

Technorati Tags: Jobs, Unemployment

Food for Thought….

An interesting analysis of what’s happened, what’s happening and what it means going forward…..

Tom

Financial Services: Prospects for Your Future | MIT World

In a lively discussion with Simon Johnson, Lawrence Fish deconstructs the near collapse of the banking system and points out the multiple factors that have contributed to the financial crisis.

Topics in the discussion include the banks that did not fail, how Canadian and other countries’ banking systems also did not fail, the political landscape of banking regulation, ethics, bonuses in the banking industry and the ethics oath signed by 50% of the students at the Harvard Business School.

Technorati Tags: Banking, Financial Crisis

Personal Savings Rate – and the Fed Funds Rate

Two important things to note from this article:

• As credit continues to become less available than it was two years ago and the personal savings rate continues to climb, both of which are long term healthy financial indicators, we’re going to see slower consumer spending and therefore lower and slower growth of the overall economy.
• It talks about the plans, or the anticipated plans, of the Fed for raising rates.   Both Richard Clarida and CR think rates will remain low until the later part of next year.

I disagree with them, but only slightly.   Here’s my take on it:

• We will probably see one or two small (.25%) rate increases in the next 6 to 9 months.
• It will most likely be next summer to next fall before we start seeing any substantial rate increases.
• But once they start, rates will be on a pretty steep upward climb.   How far up?   How far up depends on how well the Federal government does at unwinding the stimulus/bailout plans and borrowings that they have spent in the last 12 to 18 months.

That’s why my recommendation remain as follows:

• If it’s debt that you aren’t going to be able to pay off within the next 2 to 3 years, do a fixed rate loan.  The likelihood of the overall cost of an adjustable rate being cheaper after the first 3 years is pretty slim.
• If you are quite confident that you can pay it off within 24 to 36 months, you’ll probably save money over the next couple of years.

I’ll keep in touch, if you’d like to talk about it (or anything else relating to finance – call me at (616) 292-7559 or e-mail me at tvanderwell@straighttalkaboutmortgages.com.

Tom Vanderwell

Calculated Risk: PIMCO: Personal Saving Rate to Exceed 8 Percent

From Bloomberg: Pimco’s Clarida Says U.S. Savings Rate May Exceed 8%

Pacific Investment Management Co. strategic adviser Richard Clarida said the U.S. savings rate may exceed 8 percent, hurting consumer spending and weighing on the economic recovery.

“At some point as unemployment declines, the Fed will need to renormalize rates,” Clarida said. “It’s too soon to tell the pace at which they will renormalize. I don’t think there will be a Fed hike until late 2010 or 2011.”

The article mentions that future data suggests traders believe there is a 72 percent change that the Fed will raise the Fed Funds rate by April. I agree with Clarida that the Fed will not hike rates until late 2010 – at the earliest.

More on the Fannie Mae Delinquencies….

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