Comments on: Wells Fargo: Do record profits herald disaster?

By: Business Explained by Stever » Blog Archive » Who’s surprised by compact car sales? Spotting trends. In advance.

Fri, 02 May 2008 14:11:44 +0000

[...] The sub-prime banking crisis was also predictable. All these analysts saying no one could have predicted it should be out of a job. The trends were obvious in a single news article last year. I—a non-finance guy—even blogged about it. [...]

By: Stever

Stever — Thu, 15 Nov 2007 22:05:50 +0000

It took 16 months, but, well, jeepers. Wells Fargo had to re-increase their credit loss provisions and deal with mortgage credit risk. And the CEO still gets his 2006 bonus, despite the fact the writing was on the wall over a year ago.

From Forbes article on Wells Fargo:

“Wells Fargo took a $490 million hit in mortgage writedowns. “Almost half of the increase in net credit losses from second quarter 2007 was concentrated in the home equity portfolio,” said Chief Credit Officer Mike Loughlin

In addition, the bank’s credit loss provisions surged 46% to $892 million in the period.”

By: Stever

Stever — Sat, 17 Mar 2007 16:24:41 +0000

Today in the New York Times, ar article starts to detail rising homeowner crisis due to the irresponsibility of lenders. Predictable far in advance. Sad, really…

By: Stever

Stever — Fri, 12 May 2006 16:26:02 +0000

Interesting. A couple of days ago (10? May 2006) I saw a USA Today headline that said: “Mortgage defaults up 30% in 2006.” I wasn’t able to get a copy of the paper, but am wondering if it’s a harbinger of things to come…

By: Wyn

Wyn — Wed, 03 May 2006 15:42:33 +0000

Somehow, I don’t think the banks will be allowed to be hurt much. Somehow, I’m guessing the individual borrowers will be the hurtees.

I was looking at an article by Edward Wolff a couple of days ago entitled Retirement Income: The Crucial Role of Social Security, (http://www.epinet.org/books/retirement_income/retirement_income-full.pdf)

What struck me was how dependent the Baby Boom generation, and those a bit older than they are, are on Social Security and home equity, and the extent to which their borrowing against their home equity appears likely to compromise their hopes for retirement.

Not only will they not be able to afford to stay in the house where are living now, but they will have little equity left to live off of when they get to a town where land prices are low and therefore the cost of living is lower.

On the wealthandwant website, I’ve got a couple of other articles by Michael Hudson which point to some related problems.