FBI: 2008 Could Be Record Year for Suspicious Activity Reports

Financial institutions filed a record 15,000 suspicious activity reports (including instances of mortgage fraud) with the Federal Bureau of Investigation in the first fiscal quarter of this year. If the pace keeps up, more than 60,000 SARs will be filed, outstripping 2007, when 46,717 reports hit the system.

In a briefing on January 29, FBI officials said the agency has 14 major “corporate fraud” investigations under way involving mortgage or related companies. The focus, officials said, was on subprime mortgage firms, their accounting and lending practices, and insider trading. The agency did not specify any cases, but it is well known that the collapse of New Century Financial, is the subject of a major probe.

As previously reported, the Securities and Exchange Commission is investigating the failure of several subprime firms, focusing on, among other things, their investment bankers, including Bear Stearns, Merrill Lynch, and Morgan Stanley.

MBIA posted its biggest ever quarterly loss and said it is considering new ways to raise capital.

Watching the Mortgage Bond Insurer’s Downgrades has been like watching a steam roller run you over.

We have seen $90 billion of writedowns to date. Standard and Poor’s is saying that you can super size that order. Writedowns total losses are expected to be $265 billion or more.

So far, Wall Street has been shouldering the brunt of the losses. S&P says the next losses will affect smaller financial institutions including regional banks in the U.S., credit unions, and lenders in Europe and Asia.

Just yesterday, UBS, the biggest Swiss bank, wrote down $14 billion of assets.

The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 3 percent.

Financial markets remain under considerable stress, and credit has tightened further for some businesses and households.  Moreover, recent information indicates a deepening of the housing contraction as well as some softening in labor markets.

The Committee expects inflation to moderate in coming quarters, but it will be necessary to continue to monitor inflation developments carefully.

Today’s policy action, combined with those taken earlier, should help to promote moderate growth over time and to mitigate the risks to economic activity.  However, downside risks to growth remain.  The Committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risks.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.  Voting against was Richard W. Fisher, who preferred no change in the target for the federal funds rate at this meeting.

In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 3-1/2 percent.  In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and San Francisco.

2008 Monetary Policy Releases

Congress was rumored last week to increase conforming loan limits, what is the chance that we will see an increased somewhat?

The president and Secretary Paulson have made it very clear that really want that to happen with various Government Sponsored Enterprise reform in place.

Would that be good for the credit market? Some people think it would be good on the margin. The critical thing about Fannie Mae and Freddie Mac has been that over the last six months, they have kept the conforming loan market going. The mortgagor has grown dramatically, as the rest of the providers have withdrawn.

If you look at their market share now, it is probably approaching 70% of all mortgages made in this country. This is the main reason everyone believes there should be much stronger regulation in the future.

With Recession Fears, Feds Cut Interest Rate

The Federal Reserve cuts a key interest rate by three quarters of a percentage point, hoping to stem fears of a recession in the United States. This is the biggest one day move by the central bank in recent memory.

Federal Reserve chairman Ben Bernanke heads to capitol hill today. He may encourage lawmakers to stimulate the economy.

Bernanke will appear before the house budget committee today. Legislators are set to question the fed chairman on steps to avoid the first recession since 2001. Bernanke may also try to avoid backing away particularly from tax or spending policies. analysts say doing so could earn him criticism from legislators who oppose them, in turn putting the fed’s reputation of independence at risk.

Bernanke may side step moves taken by former fed chairman Alan Greenspan, who said he misjudged the environment when he endorsed tax cuts in 2001.

$18.1 Billion in writedowns and 4,200 layoffs. US Banks are a good buy for foreigners?

How bad of an idea is this?

American Companies Sold Out to Foreign Buyers at Faster Pace in 4Q; India’s ICICI May Increase Foreign Borrowing by 40% to Fund Takeovers and Investments

If this is OK, then why are we not able to buy stakes within some of these governments as well as their corporations?

What happens if they decide to pull out their billions? What effect will that have?

Sounds like both McCain is correct with his position on Sovereign Wealth Funds.

Don’t support these corporations because your job and our security can seriously be effected!