Business Up Today

US housing crisis is continuing entailing new and new victims. IndyMac Bank that was a high-flying mortgage lender specializing in exotic and risky loans falls in housing crisis now.

“It worked great during the housing boom. They made hundreds of millions of dollars in profits for a couple of years,” Ydstie says. “But when home prices started falling and loans began to go sour, they fell very hard.”

Weekend Edition Saturday, July 12, 2008 · On a day in which fear and turmoil swept through the financial markets, the biggest victim was a bank that specialized in risky mortgages. IndyMac Bank was seized by federal regulators late Friday. The bank is the largest mortgage lender to fail during the housing crisis and is one of the biggest banks to collapse in U.S. history.

“IndyMac was a high-flying mortgage lender specializing in exotic and risky loans sometimes called Alt-A loans,” NPR’s John Ydstie tells Weekend Edition guest host Linda Wertheimer. For some of those loans, IndyMac didn’t require borrowers to provide documentation of income.

“It worked great during the housing boom. They made hundreds of millions of dollars in profits for a couple of years,” Ydstie says. “But when home prices started falling and loans began to go sour, they fell very hard.”

John Reich, director of the federal Office of Thrift Supervision, said Friday that IndyMac “failed due to a liquidity crisis,” that is, it ran out of money. The OTS said it transferred IndyMac’s operations to the Federal Deposit Insurance Corp. because it did not think IndyMac could meet its depositors’ demands.
Depositors who had $100,000 or less in the bank won’t suffer any loss, but those who had deposits totaling $1 billion that were not insured are going to take a big hit: They’ll get a payment equal to half the uninsured amount.

Reich suggested interference by a U.S. senator may have played a role in the collapse. Two weeks ago, New York Democrat Charles Schumer wrote a letter contending that lax lending standards and deposits purchased from third parties had left the bank on the brink of failure.

Within 11 business days of the letter, there was a run on the bank: Depositors withdrew more than $1.3 billion. Reich charged that Schumer “gave the bank a heart attack.”

According to the FDIC, depositors will have access to their money this weekend through ATMs, debit cards and checks.

“IndyMac will open on Monday as a new entity under government control,” Ydstie says.

Online marketing is growing and changing rapidly. From day to day more and more companies start to introduce their fruits of production using all aspects of internet marketing such as online advertising, online activity that promotes a company, including websites, blog sites, article and press releases, online market research, as appropriate for the promotion of their business.

Buying, selling, and trading online has become profitable business. One of the most popular online shopping site today is eBay of course. According to Internet Retailer eBay’s traffic only in Sept. 2007 was up 9 percent from a year earlier, and that was good enough to make the online auction site the most-visited of the top 10 online shopping sites for the month. eBay’s traffic was 57.6 million visits, up 9 percent from 52.9 million a year earlier.

The rest of the top 10 consisted of Amazon.com, which ranked second with 41.9 million visits, up 18 percent from 35.5 million; followed by Target Corp., 19.9 million, up 25 percent from 15.9 million; Wal-Mart Stores, 19 million, up 22 percent from 15.6 million; Shopping.com Network, 17.2 million, up 16 percent from 14.8 million; Shopzilla.com Network, 17.2 million, up 15 percent from 15 million; Dell Inc., 15.9 million, up 3 percent from 15.5 million; Expedia.com, 14.4 million, down 1 percent from 14.5 million; NexTag Network, 12.5 million, up 30 percent from 9.6 million; and Ticketmaster, 11.4 million, up 3 percent from 11.1 million.

Asian stocks sank on Monday to their lowest since August and the dollar tumbled as the fire sale of U.S. bank Bear Stearns and the Federal Reserve’s emergency cut of a key lending rate sparked concerns that the global credit crisis will claim more casualties, Reuters reports.

European stocks were set to drop as well, with the FTSE’s 100 seen down as much as 1.8 percent and Germany’s DAX seen down 2.2 percent, while U.S. stock futures also pointed to a sharply lower session.

A Filipino trader gestures in front of a downward graph at the Philippine Stock Exchange on Monday. (Aaron Favila/The Associated Press)

The dollar sank to a record low against the euro and a 13-year low against the yen, sending spot gold and crude futures hurling toward record highs.

Other safe-haven assets also rose. Both Japanese government bond futures and U.S. Treasury futures rose to five-year highs.

“I’m sure we’ll see one or two other victims,” said Angus Gluskie, portfolio manager at White Funds Management in Sydney.

The currency market was also volatile on Monday in Asia, with the U.S. dollar falling as low as 95.72 yen, the lowest in more than 12 years, before rebounding to above the 99.00 level in afternoon on talk of possible joint governmental intervention to stop the slide. Japan’s Prime Minister Yasuo Fukuda hinted that his government might intervene the currency market, saying, “it is undesirable to see rapid changes” in foreign exchange rates and stock prices, the Kyodo News agency reported Monday afternoon.

Banking stocks led the plunge on Monday. Australia’s largest bank, Macquarie Group, slid 6.3%, or 3.00 Australian dollars ($2.82), to 44.50 Australian dollars ($41.76), while the country’s No. 2, Babcock & Brown, plunged 10.1%, or 1.38 Australian dollars ($1.30), to 12.26 Australian dollars ($11.51). Japan’s Mitsubishi UFJ fell 4.8%, or 40 yen (40 cents), to 789 yen ($7.97).

Economic state today is not in a hopeless condition yet but really is very closed to it. This is a reality. The US Dollar, has been losing value for many years, but lately the results of this sad state of affairs have become increasingly more evident, writes Sheldon Liber in his columns Chasing Value and Serious Money. Concerns are mounting on a global basis not just in the United States. The euro, once pegged at a buck, is now trading at $1.55, while gold has passed $1,000 and oil has continued its charge, breaking through the $110 per barrel mark.

By Sheldon Liber opinion, the only way to reduce inflation is to have a balance between the amount of currency in circulation and the goods and services available to purchase with said currency. Every action by the Fed to create liquidity in the economy, generates a phantom value, and if not met with an increase in productivity, is devaluing the dollar and enslaving us to a future of working more for less benefit. That is why I so strongly believe we should fund roads & bridges NOT mad money stimulus. For more discussion you can also read Serious Money: Stimulate productivity not consumption, which I believe is an imperative. That is the gravity of the situation.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.