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Kevin Mao

Canadian banks not immune to housing bubble: OSFI official | Mortgages | Personal Finan... - 0 views

business.financialpost.com/...o-housing-bubble-osfi-official

canadian banks housing bubble mortgages finance canada

shared by Kevin Mao on 17 May 12 - No Cached
  • Canada’s banks, ranked the soundest on the planet by the World Economic Forum, aren’t immune to collapses triggered by falling housing prices
  • Previous failures of Canadian financial institutions were due to bad real estate lending and sharp falls in housing prices, and these can happen again
  • “Just because nothing happened in Canada in 2008 (a U.S.-centered crisis), does not mean that Canada is not vulnerable to a housing correction now.”
  • ...19 more annotations...
  • Finance Minister Jim Flaherty has tightened mortgage rules three times and put the federal housing agency’s books under regulator oversight
  • Bank of Canada Governor Mark Carney has repeatedly warned household debt is the economy’s biggest domestic risk.
  • Canadian housing starts rose to the highest since September 2007 last month
  • “How many new lending ‘guidelines’ can the market bear before it breaks?”
  • “The market may break because the fundamentals are not sound (i.e. overvaluation of homes), not because of OSFI guidance,” Melessanakis wrote in response.
  • Canadian existing home sales rose 0.8% in April from the previous month and 11.5% from a year earlier
  • The average home price rose 0.9% from April 2011,
  • Four Canadian banks were among the world’s six strongest in Bloomberg’s second annual rankings.
  • Lenders have been increasingly skeptical of the need for new rules to cool the housing market
  • Flaherty reduced the amortization period on mortgages backed by the government to 30 years from 35, the third time since 2008 he has tightened rules for home loans
  • Flaherty introduced legislation April 26 that includes measures to strengthen oversight of Canada Mortgage & Housing Corp.
  • The law allows OSFI to review CMHC’s books at least once a year, and prohibits banks from using insured mortgages to back covered bonds,
  • Canadian banks should not be “lulled into a false sense of security” by steps policy makers are taking to prevent another financial crisis
  • “Are the banks equipped to handle a 40% drop (what occurred in Toronto market in early 1990’s)?
  • in some places like Vancouver, maybe Toronto, obviously you’re going to have greater risk there of price volatility,”
  • OSFI’s guidelines suggest lenders limit home-equity lines of credit to 65% of the property’s value.
  • last financial institution failure in Canada occurred in 1996, when Security Home Mortgage Corp. collapsed
  • Security Home Mortgage had assets of $65-million the year before it failed.
  • Eighteen financial institutions failed in the 1990s, including Confederation Life Insurance Co., which had $19.2-billion in assets at the end of 1993. There were 23 failures in the 1980s, including Northland Bank, which had $1-billion in assets
  • Kevin Mao on 17 May 12
     
    An article about how Canadian banks are not impervious to a housing bubble.
Kevin Mao

Definitions - 12 views

Interest - "1. The charge for the privilege of borrowing money, typically expressed as an annual percentage rate. 2. The amount of ownership a stockholder has in a company, usually expressed as a...

started by Kevin Mao on 18 Apr 12 12 follow-ups, last by Kevin Mao on 18 May 12
kevinan108

Key Facts - 10 views

Ina Drew- Chief Investment Officer of JP Morgan. She was one of the few women in leadership roles on Wall Street. She was fired after her actions cost JP Morgan $3 billion dollars. She may receive ...

started by Kevin Mao on 18 Apr 12 12 follow-ups, last by kevinan108 on 18 May 12
kevinan108

China's easing aimed at housing market - MarketWatch - 0 views

www.marketwatch.com/...d-at-housing-market-2012-05-14

China housing bubble cooling slowgrowth banks

shared by kevinan108 on 18 May 12 - No Cached
  • The People’s Bank of China announced on Saturday it plans to lower then the ratio of reserves bank must set aside as deposits at the central bank by a half percentage point, effective Friday.
  • Investment in real estate was up 18.7% in the first four months of the year, cooling significantly from a 23.5% gain in the first three months of the year, according to official figures released Friday. The data weren’t broken down on a monthly basis.
  • The numbers indicated property developers were cutting back on land purchases, with outlays on sites of 182 billion yuan ($28.81 billion) in the January-to-April period, a drop of nearly 14% from a year earlier.
  • ...1 more annotation...
  • Standard Chartered said developers’ concerns over the property market were reflected in data showing residential investment hitting the wall in April, growing just 4% during the month, compared to a 15.1% year-on-year rise in March.
Kevin Mao

BofA to try converting foreclosures into rentals - Los Angeles Times - 1 views

articles.latimes.com/...la-fi-home-rental-20120324

foreclosures rentals Bank of America banking pilot project

shared by Kevin Mao on 17 May 12 - No Cached
  • Bank of America Corp. has tentatively joined a nascent housing industry movement in which homes in or near foreclosure are sold to investors as rental properties.
  • often would be better for homeowners, communities and the banks themselves to keep troubled borrowers on as renters rather than kick them out
  • Bank of America doesn't plan to become a longtime landlord for borrowers turned tenants
  • ...6 more annotations...
  • no more than three months before selling them
  • The bank wants to find out
  • whether getting a loan off its books with a quick sale at a deep discount is a better deal financially than the foreclosure process,
  • nd sign contracts agreeing to rent the home for up to three years at or below market rates
  • designed to test the market for homes ranging in current value from $75,000 to $1 million
  • TwinRock Partners, a private Newport Beach firm, recently told potential investors that more than 100 homes it has acquired and rented out over the last two years have produced annualized returns of 8.7%, with the potential for big resale profits if housing prices recover
  • Kevin Mao on 17 May 12
     
    Article about Bank of America's pilot project to convert foreclosures into investment opportunities for investors.
kevinan108

Why We Regulate - NYTimes.com - 0 views

www.nytimes.com/...krugman-why-we-regulate.html

banking America JP Morgan derivatives PaulKrugman

shared by kevinan108 on 18 May 12 - No Cached
  • He has, however, been fond of giving Gatewood-like speeches about how he and his colleagues know what they’re doing, and don’t need the government looking over their shoulders.
  • So there’s a large heap of poetic justice — and a major policy lesson — in JPMorgan’s shock announcement that it somehow managed to lose $2 billion in a failed bit of financial wheeling-dealing.
  • In the 1930s, after the mother of all banking panics, we arrived at a workable solution, involving both guarantees and oversight.
  • ...4 more annotations...
  • It probably won’t last; I expect Wall Street to be back to its usual arrogance within weeks if not days.
  • As far as we can tell, it used the market for derivatives — complex financial instruments — to make a huge bet on the safety of corporate debt, something like the bets that the insurer A.I.G. made on housing debt a few years ago.
  • This system gave us half a century of relative financial stability. Eventually, however, the lessons of history were forgotten.
  • No loopholes, no exemptions, no exceptions, no compromise, no ambiguous language. Until Congress reinstates it, moral hazard governs and the losers will be the Americans taxpayers. History will keep repeating itself unless politics and money are taken out of the equation.
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