Jan. 16 (Bloomberg) -- President-elect Barack Obama is likely to back a bank-rescue effort that combines fresh capital injections with steps to deal with toxic assets clogging lenders’ balance sheets, according to people familiar with the matter.

Obama’s economic team will use another portion of the $350 billion remaining from the Troubled Asset Relief Program to help homeowners avoid foreclosure. It may also assist cash-strapped cities and states that are having trouble selling bonds, the people said.

This week’s sell-off in financial stocks and the continuing decline of the U.S. economy put pressure on Treasury Secretary- designate Timothy Geithner and Obama’s economics chief Lawrence Summers to unveil a comprehensive program. Without a radical new effort, soaring credit losses could prolong and deepen a recession that is now more than a year old.

Read the rest of the story......

JPMorgan Chase posts surprise profit

Analysts expected the bank to break even. But earnings fell sharply from a year ago, while CEO Jamie Dimon warns of "very difficult business climate."

NEW YORK (CNNMoney.com) -- JPMorgan Chase reported a surprise quarterly profit Thursday, even as the company suffered a hit in its investment banking business and was forced to set aside a chunk of cash for looming loan losses.
The New York City-based bank said net income fell 76% to $702 million, or 7 cents a share during the fourth quarter, from $2.97 billion, or 86 cents a share, during the same period a year ago.
The results beat expectations, however, as analysts were forecasting that the company would break even for the quarter, according to Thomson Reuters.

 Read the rest of the story......

 Banking giant gives nod to legislation that would allow judges to alter mortgages for homeowners who have filed for bankruptcy.

NEW YORK (CNNMoney.com) -- Citigroup reached an agreement with Democratic lawmakers Thursday on legislation that would allow judges to reduce mortgage debt for individuals who have filed for bankruptcy.

Sen. Dick Durbin of Illinois, the bill's architect, said he hoped the participation of Citigroup would entice other mortgage lenders to sign onto the program.

"I hope other institutions will follow suit," he said. Durbin appeared at a press conference along with fellow sponsors of the bill, Sen. Christopher Dodd of Connecticut and Sen. Charles Schumer of New York.

Until recently, members of the banking industry, including Citigroup (C (C, Fortune 500), Fortune 500), as well as other housing-related groups like the National Association of Realtors, have criticized the notion of allowing the courts to have a say over their mortgage portfolios.


Read the rest of the story.......

Dec. 24 (Bloomberg) -- Jumbo mortgage shoppers in the most expensive U.S. housing markets such as New York and San Francisco aren’t getting much relief from lower borrowing costs.

The average 30-year fixed rate for home loans of more than $729,750 remains almost 2 percentage points above conforming rates and the spread between them may set a record this month, according to financial data firm BanxQuote.

Banks remain reluctant to lend after recording $678 billion in mortgage-related losses and writedowns in the past year and as house prices plunge. The collapse of the private mortgage securities market means lenders find there’s little demand for jumbo loans they want to sell. If low conventional rates entice enough homeowners to refinance, jumbo home loans may become more affordable as loan payoffs add liquidity to the banking system, said Keith Gumbinger, vice president of mortgage-research firm HSH Associates Inc. in Pompton Plains, New Jersey.

Read the rest of the story.....

Spike in refinancing following Fed moves leads to nearly 50% jump in Mortgage Bankers' index; home purchases also up.

NEW YORK (CNNMoney.com) -- Near record low mortgage rates sent mortgage applications shooting higher last week, especially for refinances, according to an industry report.
The Mortgage Bankers Association reported that its overall Market Composite Index, a measure of mortgage loan application volume, shot up 48% on a seasonally adjusted basis for the week ending Dec. 19.

That was driven by a 62.6% leap in the group's Refinance Index. But the Conventional Purchase Index also increased 17.7%. The only component of the overall index to fall was the Government Purchase Index, which largely tracks FHA loans. It slipped 3.4%

Read the rest of the story......

Ben Bernanke & Co. cite the weakness in the economy and the reduced inflation threat as justification to cut rates to a record low range of 0% to 0.25%.

NEW YORK (CNNMoney.com) -- In its latest effort to try and stimulate the U.S. economy, the Federal Reserve cut its key interest rate to a range of between zero percent and 0.25%, and said it expects to keep rates near that unprecedented low level for some time to come.

The central bank typically sets a specific target for its federal funds rate instead of a range. The rate had previously been at 1% and this marks the first time the Fed has cut rates below 1%. Most investors were expecting the Fed to cut rates to either 0.25% or 0.5%.

The federal funds rate is an overnight lending rate used as a benchmark to set rates for a variety of loans, including adjustable rate mortgages, credit cards, home equity lines of credit and business loans. This marks the tenth time it has cut rates in the last 15 months.

Read the rest of the story.....

US shares echoed gains in stock markets worldwide on hopes that new stimulus plans in the US and other countries will revive global economic growth.

The Dow Jones index ended Monday up 299 points or 3.5% to 8,932, shrugging off Friday's grim unemployment data. The Nasdaq and S&P's 500 also gained.

In the UK, the FTSE 100 ended up 6.2%, while Germany's Dax added 7.6%, and France's Cac finished up 8.7%.Earlier in the day, stock markets around Asia also raced ahead.

"Despite bad US jobs data [announced on Friday], markets are gaining on a sense that they've hit the bottom and expectations for economic stimulus measures being put out by many governments," said Hiroake Osakabe at Chibagin Asset Management.

Read the rest of this story......

The Federal Reserve's attempt to stabilize the housing market set off a chain reaction across the U.S. on Tuesday, dropping interest rates and quickly spurring a burst of refinancing activity by borrowers eager to lower their mortgage costs.
Some brokers said it was the most activity they've seen in at least one year, although there was no way to determine the volume of refinancing.

At Bank of America Corp., call volume was roughly twice what was expected at call centers and via the Internet, said Matt Vernon, national sales executive.

"It's the folks who have been sitting on the sideline. They're jumping in with this news."

Rates on 30-year fixed-rate mortgages dropped by roughly half a percentage point to about 5.5%, for borrowers with good credit scores and substantial equity in their homes, say mortgage brokers and lenders.

While the initial flurry of calls came from people seeking to refinance, economists predicted lower rates also will spur some home buying among bargain-seekers. The surge in refinancing will help the overall economy by putting more cash in consumers' pockets and reducing the pressure on some borrowers struggling to make payments.

Read the rest of the story......

Agency to guarantee up to $1.4 trillion in banks' debt for more than 3 years, to add up to $500 billion to FDIC-backed deposits.WASHINGTON (AP) -- The FDIC will guarantee up to $1.4 trillion in U.S. bank s' debt for more than three years as part of the government's financial rescue plan.

The directors of the Federal Deposit Insurance Corp. voted Friday to approve the plan, which is meant to break the crippling logjam in

bank-to-bank lending.

The FDIC will provide temporary insurance for loans between banks - except for those for 30 days or less - guaranteeing the new debt in the event of payment default by the issuing bank.

The FDIC also will guarantee deposits in non-interest-bearing "transaction" accounts by removing the current $250,000 insurance limit on them through the end of next year. That could add as much as $500 billion to FDIC-backed deposits.

By Jim Christie
SAN FRANCISCO (Reuters) - California Democrats who control the state Assembly said on Tuesday they would push for a 120-day moratorium on foreclosures after mortgage default notices have been filed, compared with a 90-day stay proposed by Gov. Arnold Schwarzenegger.
The rival plans will be debated during special session of the state legislature that Schwarzenegger called last week to tackle a state budget shortfall that has widened to more than $11 billion because revenues have plunged amid recent financial market turmoil and the state's housing slump.
Some areas of California, the most populous U.S. state, are among the hardest hit in the nation by foreclosures stemming from risky mortgages such as subprime loans taken on during the state's booming homes market earlier this decade.

Read the rest of the story.....

Paulson says Treasury will broaden reach to include non-bank financial firms and seek out private capital to match U.S. funds.

NEW YORK(CNNMoney.com) -- Treasury Secretary Henry Paulson said Wednesday the government would broaden the reach of the $700 billion bailout plan to support non-bank financial institutions that provide consumer credit, such as credit cards and auto loans.

In this second stage of the bailout, officials also hope to attract private capital, possibly through matching investments, to give the government's injections more heft.

Paulson also said the government is no longer planning to buy troubled mortgage assets, the original goal of the plan. And officials are continuing to examine ways to help homeowners and slow the tide of foreclosures.

Read the rest of the story.....

A new program aimed at homeowners who haven't defaulted yet could help 130,000 mortgage borrowers stay in their homes.

NEW YORK (CNNMoney.com) -- Citigroup says it will expand its foreclosure prevention efforts and try to keep 130,000 troubled borrowers with $20 billion in mortgages in their homes.

The news follows similar initiatives announced earlier this year by IndyMac Bank, which was seized by the Federal Deposit Insurance Corp. last summer, as well as Bank of America (BAC, Fortune 500) and JPMorgan Chase (JPM, Fortune 500) each of which heralded enhanced housing rescue efforts.

Banks are undoubtedly feeling pressured to be more aggressive in aiding home owners, given how many billions of taxpayer dollars have poured into the industry to stem the credit crisis.

More......

There are surely a lot of ways to answer “yes” to the question posed in the headline. The people who hate the financial industry, for instance, must be happy to see the bloodletting on Wall Street, as must those who simply enjoy a dose of schadenfreude now and again.
But I am thinking of a different kind of silver lining, one that may reach far and wide and have lasting positive effects.
First, let’s step back for a minute and look at a different kind of labor shakeup that happened more than 50 years ago. At the time, about 55 percent of all white female college graduates worked as schoolteachers. Why? Because teaching was one of the few professions that educated women had good access to.

Read the rest of the story....

NEW YORK (Reuters) - Naysayers who predicted the U.S. dollar's demise as the world reserve currency of choice have been silent of late given the greenback's meteoric recovery in recent months.

Slammed over the last several years as U.S. government budget and trade deficits mounted, the greenback was seen ceding its status as the predominant currency to the euro.

Talk of nations reducing their dollar reserves in favor of the euro prompted talk the dollar would also lose favor as the medium of exchange for commodities.

Read more about the dollar......

By JENNIFER LOVEN, AP White House Correspondent Jennifer Loven, Ap White House Correspondent

WASHINGTON – An impatient White House prodded banks and other financial companies Tuesday to quit hoarding billions of dollars flowing into their vaults from Washington and start making more loans. Wall Street soared nearly 900 points on bargain-hunting and hopes of a hefty interest rate cut by the Federal Reserve.

Read the rest of the story.....

First Financial Bankshares Inc. reported earnings for the third quarter of 2008 of $13.36 million, up 9.1 percent from $12.25 million in the same quarter last year, according to a news release today.

Basic earnings were 64 cents per share for the third quarter, up 8.5 percent from 59 cents for the same quarter last year.

The provision for loan losses increased to $1.77 million in the third quarter of 2008, up from $475,000 in the same quarter last year and $1.44 million in the second quarter of 2008. This increase is reflective of the company's growth in loans and concern for a slowing economy.

To read the rest of the story