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http://www.guardian.co.uk/business/feedarticle/7649271<br />

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Many more US bank failures likely<br />

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* Reuters, Sunday July 13 2008, By Jonathan Stempel<br />

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NEW YORK, July 13 (Reuters) - U.S. banks may fail in far greater numbers following the collapse of the big mortgage lender IndyMac Bancorp Inc, straining a financial system seeking stability after years of lending excesses.<br /><br />

More than 300 banks could fail in the next three years, said RBC Capital Markets analyst Gerard C#!!idy, who had in February estimated no more than 150.<br /><br />

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Banks face pressure as credit losses once concentrated in subprime mortgages spread to other home loans and debt once-thought safe. This has also led to investor worries about the stability of mortgage finance companies Fannie Mae and Freddie Mac; IndyMac is not related to either.<br /><br />

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While analysts declined to say which banks will fail next, several smaller lenders and one large one, Washington Mutual Inc, appear already to have elevated levels of soured loans, relative to their sizes.<br /><br />

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"You have to look at companies with the greatest exposure to the highest-risk assets, which include construction loans and exotic mortgages," C!$%!idy said. "The final nail in the coffin for any depository institution would be a funding crisis where it is unable to gather deposits at reasonable cost, or wholesale funding markets are cut off."<br /><br />

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The Federal Deposit Insurance Corp seized IndyMac on Friday after a bank run in which panicked customers withdrew more than $1.3 billion of deposits in 11 business days.<br /><br />

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This followed comments on June 26 by U.S. Sen. Charles Schumer questioning the Pasadena, California-based thrift's survival. Some withdrawals also followed IndyMac's July 7 decision to fire half its work force and halt most mortgage lending.<br /><br />

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IndyMac once specialized in Alt-A mortgages, which didn't require borrowers to document income or assets. It was founded in 1985 by Angelo Mozilo and David Loeb, who also founded Countrywide Financial Corp, once the largest mortgage lender. Bank of America Corp bought Countrywide on July 1.<br /><br />

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As of March 31, the FDIC had put 90 banking institutions with $26.3 billion of assets on its "problem list." This excluded IndyMac, which alone had about $32 billion of assets, and close to $19 billion of deposits.<br /><br />

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Well over 2,000 banking companies failed in the 1980s and early 1990s. C@$#!idy said the government may need to set up a liquidator similar to Resolution Trust Corp, created for the earlier savings and loan crisis.<br /><br />

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The largest U.S. bank failure is the May 1984 collapse of Chicago's Continental Illinois National Bank & Trust Co. IndyMac was roughly the same size as American Savings & Loan Association of Stockton, California, a September 1988 failure.<br /><br />

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DANGER ZONE<br /><br />

C%!!$idy called the probability of failure "very high" in which a bank's nonperforming assets exceed the sum of tangible equity plus reserves for loan losses.<br /><br />

Richard Bove, a Ladenburg Thalmann & Co analyst, in a July 13 report titled "Who Is Next?" said a "danger zone" is where nonperforming assets, including loans at least 90 days past due, exceeded 40 percent of common equity plus reserves.<br /><br />

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Citing FDIC data as of March 31, Bove said that IndyMac had been at the greatest risk among more than 100 of the largest U.S. lenders, with a 146.2 percent ratio.<br /><br />

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Among the other banks high on the list include Newport Beach, California's Downey Financial Corp, with a 95.4 percent ratio; Fort Lauderdale, Florida's BFC Financial Corp, which invests in BankAtlantic Bancorp Inc; Coral Gables, Florida's BankUnited Financial Corp; Chicago's Corus Bankshares Inc; Los Angeles' FirstFed Financial Corp; Troy, Michigan's Flagstar Bancorp Inc, and Washington Mutual, at 40.6 percent.<br /><br />

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The list also includes Puerto Rico's Doral Financial Corp, First BanCorp and Santander BanCorp.<br /><br />

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"We're surprised to be near the top of that list," said Bert Lopez, BankUnited's chief financial officer, in an interview. "Our underwriting standards have been very conservative, we have insured a substantial portion of our loan portfolio, and our losses remain low on an overall basis."<br /><br />

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He declined further comment, citing a pending $400 million stock offering. BankUnited shares closed Friday at 77 cents. Other banks did not immediately return requests for comment.<br /><br />

Bove wrote: "The system is not anywhere near the danger that existed in the late 1980s and early 1990s despite all of the whining by public officials. Perhaps, the second quarter numbers will prove them right."<br /><br />

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BUYING THE REMNANTS<br /><br />

The FDIC will reopen IndyMac on Monday as IndyMac Federal Bank, and then try to sell the company as a whole or in pieces. Regulators expect the takeover to cost the FDIC $4 billion to $8 billion. The agency insurance fund has about $52.8 billion.<br /><br />

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Among IndyMac's assets are its deposits, 33 southern California branches, its Financial Freedom reverse mortgage unit, and a fast-deteriorating loan book.<br /><br />

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C!@%idy said thrift deposits tend to be less valuable than deposits at commercial banks because they yield more, and customers might be quick to leave once those rates disappear.<br /><br />

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"For the right price, those branches and deposits are valuable, probably to someone with a footprint in southern California," he said. "Would a Wells Fargo or a U.S. Bancorp, which are strong and healthy and would want to expand their franchise, look at it? I think so."<br /><br />

Neither bank immediately returned requests for comment.<br /><br />

Most IndyMac depositors will get their money back; the FDIC typically insures deposits up to $100,000, and up to $250,000 on some retirement accounts. The seizure came without warning.<br /><br />

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"There are many regional banks that are under a great deal of pain," said Daniel Alpert, an investment banker at Westwood Capital in New York. "Some of them will probably have guys with yellow tape showing up soon." (Additional reporting by Dan Wilchins; Editing by Martin Golan)

RBS issues global stock and credit crash alert



http://www.telegraph.co.uk/core/Content/displayPrintable.jhtml;jsessionid=TCMKJ5122ZGXBQFIQMGSFFOAVCBQWIV0?xml=/money/2008/06/18/cnrbs118.xml&site=1&page=0



By Ambrose Evans-Pritchard, International Business Editor

Last Updated: 12:19am BST 19/06/2008



The Royal Bank of Scotland has advised clients to brace for a full-fledged crash in global stock and credit markets over the next three months as inflation paralyses the major central banks.



"A very nasty period is soon to be upon us - be prepared," said Bob Janjuah, the bank's credit strategist.



A report by the bank's research team warns that the S&P 500 index of Wall Street equities is likely to fall by more than 300 points to around 1050 by September as "all the chickens come home to roost" from the excesses of the global boom, with contagion spreading across Europe and emerging markets.



RBS issues global stock and credit crash alert

RBS warning: Be prepared for a 'nasty' period



Such a slide on world bourses would amount to one of the worst bear markets over the last century.



RBS said the iTraxx index of high-grade corporate bonds could soar to 130/150 while the "Crossover" index of lower grade corporate bonds could reach 650/700 in a renewed bout of panic on the debt markets.



"I do not think I can be much blunter. If you have to be in credit, focus on quality, short durations, non-cyclical defensive names.

adverti#%#%!t



"Cash is the key safe haven. This is about not losing your money, and not losing your job," said Mr Janjuah, who became a City star after his grim warnings last year about the credit crisis proved all too accurate.



RBS expects Wall Street to rally a little further into early July before short-lived momentum from America's fiscal boost begins to fizzle out, and the delayed effects of the oil spike inflict their damage.



"Globalisation was always going to risk putting G7 bankers into a dangerous corner at some point. We have got to that point," he said.



US Federal Reserve and the European Central Bank both face a Hobson's choice as workers start to lose their jobs in earnest and lenders cut off credit.



The authorities cannot respond with easy money because oil and food costs continue to push headline inflation to levels that are unsettling the markets. "The ugly spoiler is that we may need to see much lower global growth in order to get lower inflation," he said.



"The Fed is in panic mode. The massive credibility chasms down which the Fed and maybe even the ECB will plummet when they fail to hike rates in the face of higher inflation will combine to give us a big sell-off in risky assets," he said.



Kit Jukes, RBS's head of debt markets, said Europe would not be immune. "Economic weakness is spreading and the latest data on consumer demand and confidence are dire. The ECB is hell-bent on raising rates.



"The political fall-out could be substantial as finance ministers from the weaker economies rail at the ECB. Wider spreads between the German Bunds and peripheral markets seem assured," he said.



Ultimately, the bank expects the oil price spike to subside as the more powerful force of debt deflation takes hold next year.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/27/cnbarclays127.xml



US central bank accused of unleashing an inflation shock that will rock financial markets, reports Ambrose Evans-Pritchard...



Barclays Capital has advised clients to batten down the hatches for a worldwide financial storm, warning that the US Federal Reserve has allowed the inflation genie out of the bottle and let its credibility fall "below zero".



"We're in a nasty environment," said Tim Bond, the bank's chief equity strategist. "There is an inflation shock underway. This is going to be very negative for financial assets. We are going into tortoise mood and are retreating into our shell. Investors will do well if they can preserve their wealth."



Barclays Capital said in its closely-watched Global Outlook that US headline inflation would hit 5.5pc by August and the Fed will have to raise interest rates six times by the end of next year to prevent a wage-spiral. If it hesitates, the bond markets will take matters into their own hands. "This is the first test for central banks in 30 years and they have fluffed it. They have zero credibility, and the Fed is negative if that's possible. It has lost all credibility," said Mr Bond.



Federal Reserve chairman Ben Bernanke has made a huge policy mistake, according to Barclays



Strategists at Barclays accuse Ben Bernanke of a policy blunder



The grim verdict on Ben Bernanke's Fed was underscored by the markets yesterday as the dollar fell against the euro following the bank's dovish policy statement on Wednesday.



Traders said the Fed seemed to be rowing back from rate rises. The effect was to propel oil to $138 a barrel, confirming its role as a sort of "anti-dollar" and as a market reproach to Washington's easy-money policies.



The Fed's stimulus is being transmitted to the 45-odd countries linked to the dollar around world. The result is surging commodity prices. Global inflation has jumped from 3.2pc to 5pc over the last year.



Mr Bond said the emerging world is now on the cusp of a serious crisis. "Inflation is out of control in Asia. Vietnam has already blown up. The policy response is to shoot the messenger, like the developed central banks in the late 1960s and 1970s," he said.



"They will have to slam on the brakes. There is going to be a deep global recession over the next three years as policy-makers try to get inflation back in the box."



Barclays Capital recommends outright "short" positions on Asian bonds, warning that yields could jump 200 to 300 basis points. The currencies of trade-deficit states like India should be sold. The US yield curve is likely to "steepen" with a vengeance, causing a bloodbath for bond holders.



David Woo, the bank's currency chief, said the Fed's policy of benign neglect towards the dollar had been stymied by oil, which is now eating deep into the country's standard of living. "The world has changed all of a sudden. The market is going to push the Fed into a tightening stance," he said.



The bank said the full damage from the global banking crisis would take another year to unfold.



Rob McAdie, Barclays' credit strategist, said: "The core issues have not been addressed. We're still in a very large deleveraging cycle and we're seeing losses continue to mount. We think smaller banks will struggle to raise capital. We're very bearish - in the long-term - on high-yield debt. The default rate will reach 8pc to 9pc next year."



He said investors had taken their eye off the slow-motion disaster engulfing the US bond insurers or "monolines". Together these firms guarantee $170bn of structured credit and $1,000bn of US municipal bonds.



The two leaders - MBIA and Ambac - have already been downgraded as the rating agencies belatedly turn stringent. The risk is further downgrades could set off a fresh wave of bank troubles. "The creditworthiness of many US financial institutions will decline in coming months," he said.



The bank warned that engineering and auto firms we're likely to face a crunch as steel and oil costs surge. "Their business models will have to be substantially altered if they are going to survive," said Mr McAdie.



A small chorus of City bankers dissent from the view that inflation is the chief danger in the US and other rich OECD countries. The teams at Société Générale, Dresdner Kleinwort, and Banque AIG all warn that deflation may loom as housing markets crumble under record levels of household debt.



Bernard Connolly, global startegist at Banque AIG, said inflation targeting by central banks had become a "totemism that threatens to crush the world economy".



He said it would be madness to throw millions out of work by deflating part of the economy to offset a rise in imported fuel and food prices. Real wages are being squeezed by oil, come what may. It may be healthier for society to let it happen gently.

HE PRAYED EARNESTLY ...
From Streams in the Desert Devotional


"Elijah was a man just like us. He prayed earnestly." James 5:17


"Thank God Elijah was just like us! He sat under a tree, complained to God, and express his unbelief - just as we have often done. Yet this was not the case at all when was truly in touch with God. 'Elijah was a man just like us,' YET 'he prayed earnestly.' The literal meaning of this in the Greek is magnificent: instead of saying, 'earnestly,' it says, 'He prayed in prayer.' In other words, 'HE KEPT ON PRAYING.' The lesson here is that we must KEEP PRAYING.

Climb to the top of Mount Carmel and see the great story of FAITH AND SIGHT. After Elijah had called down fire from heaven to defeat the prophets of Baal, rain was needed for God's prophecy to be fulfilled. And the man who could command fire from heaven could bring rain using the same methods. We are told, 'Elijah ... bent down to the ground and put his face between his knees' (1 Kings 18:42), shutting out all sights and sounds. He put himself in a position, beneath his robe to neither see nor hear what was happening.

Elijah then said to his servant, 'Go and look toward the sea.' (1 Kings 18:43) Upon returning, the servant replied, 'There is nothing there.' How brief his response must have seemed! NOTHING! Can you imagine what you would do under the same circumstances? We would say, 'Just what I expected!' and then we would stop praying. BUT ELIJAH DID NOT GIVE UP!

No. In fact, SIX TIMES he told his servant, 'Go back.' Each time the servant returned saying, 'NOTHING!'

Yet 'the seventh time the servant reported, 'A cloud AS SMALL AS A MAN's HAND is rising from the sea' (1 Kings 18:44). What a fitting description, for a man's hand had been raised in prayer to God BEFORE the rains came. And the rains came so fast and furiously that Elijah warned Ahab to ' go down before the rain stops you.'

This is a story of FAITH AND SIGHT - faith cutting itself off from everything EXCEPT GOD, with sight that looks and yet receives nothing. Yes, in spite of utterly HOPELESS REPORTS received from SIGHT, this is a story of faith that continues 'PRAYING IN PRAYER!'

Do you know how to pray that way - how to prevail in prayer? Let your sight bring you reports as DISCOURAGING as possible, BUT PAY NO ATTENTION TO THEM. Our heavenly Father lives, and even the delay of His answers to our prayers are part of His goodness.


J.Illian

Pope Ground Zero prayer seeks terrorists' redemption
Thu Apr 10, 2008 8:50am EDT

http://www.reuters.com/article/newsOne/idUSL1079181020080410

By Philip Pullella

VATICAN CITY (Reuters) - Pope Benedict will pray for the conversion to love "of those whose hearts and minds are consumed with hatred" when he visits New York's Ground Zero, the site of the World Trade towers destroyed on September 11, 2001.

A prayer he will read also commemorates those who died or were injured in the other September 11 attack at the Pentagon and on United Flight 93, which crashed in Pennsylvania after passengers fought off hijackers.

Nearly 3,000 people died in the September 11 attacks, including the 19 hijackers.

The pope will visit Ground Zero in lower Manhattan on April 20, the last day of his six-day visit to Washington and New York.

Last month, al Qaeda leader Osama bin Laden accused Benedict of being part of a "new crusade" against Islam. The Vatican rejected the accusation.

The visit to Ground Zero, now a gaping crater where new buildings and a memorial will be built, is expected to be the emotional high point of the trip.

The prayer, as released by the Vatican on Thursday, reads in full:

"O God of love, compassion, and healing, look on us, people of many different faiths and traditions, who gather today at this site, the scene of incredible violence and pain.

"We ask you in your goodness to give eternal light and peace to all who died here -- the heroic first-responders: our fire fighters, police officers, emergency service workers, and Port Authority personnel, along with all the innocent men and women who were victims of this tragedy simply because their work or service brought them here on September 11, 2001.

"We ask you, in your compassion to bring healing to those who, because of their presence here that day, suffer from injuries and illness.

"Heal, too, the pain of still-grieving families and all who lost loved ones in this tragedy. Give them strength to continue their lives with courage and hope. We are mindful as well of those who suffered death, injury, and loss on the same day at the Pentagon and in Shanksville, Pennsylvania.

"Our hearts are one with theirs as our prayer embraces their pain and suffering. God of peace, bring your peace to our violent world: peace in the hearts of all men and women and peace among the nations of the earth.

"Turn to your way of love those whose hearts and minds are consumed with hatred. God of understanding, overwhelmed by the magnitude of this tragedy, we seek your light and guidance as we confront such terrible events.

"Grant that those whose lives were spared may live so that the lives lost here may not have been lost in vain. Comfort and console us, strengthen us in hope, and give us the wisdom and courage to work tirelessly for a world where true peace and love reign among nations and in the hearts of all."

(Reporting by Philip Pullella, editing by Mary Gabriel)

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