WWW: Washington Mutual; Wachovia & Wells Fargo
Something we've Nattered about before many a time... The WWW.
MSN's Michael Brush joins in on why Wachovia and WaMu are in deep trouble.
Home foreclosures still haven't peaked, and Wachovia and Washington Mutual haven't faced the extent of the damage, at least judging by their financials, say the accounting sleuths.
Foreclosures hit a record high in the first quarter, when homeowners walked away from about 448,000 mortgage loans.
Matters are only going to get much worse, predicts Mark Zandi, the chief economist at Moody's Economy.com.
Zandi thinks defaults on first mortgages will jump 60% this year to 2.3 million, compared with 1.4 million last year.
Then, in 2009, he expects defaults to hit 1.7 million, still 18% above last year's level. And defaults will remain at high levels "well into next decade."
Meanwhile, the unrelenting decline in home values won't let up. Zandi predicts home prices will fall 12% this year and nearly 8% in 2009.
Currently, about 9 million homeowners have no equity or their homes are worth less than they owe.
Given the expected fall in home prices, that number will rise more than 30% over the next year, to 12.2 million homeowners.
Wachovia hasn't set aside enough cash to cover those nonperforming loans. The bank will have to set aside much more, which will hit earnings hard again at some point.
WaMu started off behind, and as a result of their inadequate funding...
"The allowance for loan loss is unlikely to be sufficient to absorb the charge-offs experienced over the next 12 months."
Setting aside less money means WaMu was able to report higher earnings in 2006 and 2007. "There is no question that that led to higher executive pay."
The Nattering One muses... and we have some tasty followup on the 3rd member of the WWW...
Wells Fargo... and why they are also in big trouble, coming this weekend.
MSN's Michael Brush joins in on why Wachovia and WaMu are in deep trouble.
Home foreclosures still haven't peaked, and Wachovia and Washington Mutual haven't faced the extent of the damage, at least judging by their financials, say the accounting sleuths.
Foreclosures hit a record high in the first quarter, when homeowners walked away from about 448,000 mortgage loans.
Matters are only going to get much worse, predicts Mark Zandi, the chief economist at Moody's Economy.com.
Zandi thinks defaults on first mortgages will jump 60% this year to 2.3 million, compared with 1.4 million last year.
Then, in 2009, he expects defaults to hit 1.7 million, still 18% above last year's level. And defaults will remain at high levels "well into next decade."
Meanwhile, the unrelenting decline in home values won't let up. Zandi predicts home prices will fall 12% this year and nearly 8% in 2009.
Currently, about 9 million homeowners have no equity or their homes are worth less than they owe.
Given the expected fall in home prices, that number will rise more than 30% over the next year, to 12.2 million homeowners.
Wachovia hasn't set aside enough cash to cover those nonperforming loans. The bank will have to set aside much more, which will hit earnings hard again at some point.
WaMu started off behind, and as a result of their inadequate funding...
"The allowance for loan loss is unlikely to be sufficient to absorb the charge-offs experienced over the next 12 months."
Setting aside less money means WaMu was able to report higher earnings in 2006 and 2007. "There is no question that that led to higher executive pay."
The Nattering One muses... and we have some tasty followup on the 3rd member of the WWW...
Wells Fargo... and why they are also in big trouble, coming this weekend.
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