Thursday, October 15, 2009

“Update: GOP Senate Hopefuls Rely On Personal Loans (KTHV Little Rock)” plus 4 more

“Update: GOP Senate Hopefuls Rely On Personal Loans (KTHV Little Rock)” plus 4 more

Update: GOP Senate Hopefuls Rely On Personal Loans (KTHV Little Rock)

Posted: 15 Oct 2009 08:59 AM PDT

Tom Cox of Little Rock on Thursday reported raising $32,712 for his GOP Senate bid. Cox says he spent $34,637 during the past three months and had $5,332 in the bank.

Cox said his campaign has $13,176 in debts, including $7,250 he lent to the campaign.

Retired Army Col. Conrad Reynolds of Conway said he raised $13,265 and spent $104. Reynolds reported $36,593 in debts, including a $30,000 loan he made to his campaign. Reynolds has $43,161 in the bank.

Seven Republicans have said they're seeking the GOP nomination to challenge Lincoln. Republican state Sen. Gilbert Baker of Conway last week said he's raised more than $500,000 for his campaign.

Lincoln announced this week that she has more than $4.1 million in the bank for her re-election bid.

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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GOP Hopefuls Rely On Loans (Arkansas News Bureau)

Posted: 15 Oct 2009 02:31 PM PDT


Arkansas GOP Senate hopefuls rely on personal loans.
from Channel 7

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Citi results weighed down by failed loans (Washington Post)

Posted: 15 Oct 2009 12:47 PM PDT

The bank reported a $101 million profit before accounting for $288 million in preferred stock dividends and the debt exchange offer that gave the government a 34 percent stake in the bank. Including those items, the New York-based bank reported a $3.24 billion loss.

Citigroup, one of the hardest hit during the credit crisis and recession, said loan losses during the quarter came to $8 billion, down $386 million from nearly $8.4 billion in the second quarter, but a sign that many consumers continue to be overwhelmed.

Citigroup's results are a measure not only of its health after it lost nearly $19 billion in 2008 and needed a $45 billion government bailout, but also the economy's, since the bank caters to consumers.

Banks including Citigroup had warned when second-quarter earnings were released that loan losses would continue into next year. Investors nonetheless reacted negatively to the bank's report of continuing heavy loan losses, and sent Citigroup shares down 30 cents, or 6 percent, to $4.70 in late trading. Other financial company stocks fell sharply in what was overall a modestly lower stock market.

"The bank is not making money, they are losing money in credit cards and mortgages, and it's dragging down the entire bank," said Bart Narter, a senior vice president at consulting firm Celent.

John Gerspach, Citigroup's chief financial officer, said during a call with media that the outlook for loan losses in the company's North American operations is "somewhat mixed." Citigroup said it added $800 million to its loan loss reserves during the third quarter, down $3.1 billion from the addition it made during the second quarter. In a conference call with analysts, Gerspach said the company had $28.4 billion in its loan loss reserves for consumer loans, including mortgages and credit cards.

Nancy Atkinson, senior analyst at Boston-based research firm Aite Group, said because of credit trends and the struggling consumer, Citi "still has a number of quarters that are going to be challenging."

"They made very bad bets on mortgages and consumer lending. They were clearly a leader in the consumer card space, and as a result are suffering now," Atkinson said.

Citigroup, like other national banks, has seen more customers stop repaying loans as the economy falters and unemployment rises. Credit card defaults and mortgage losses are likely to continue to climb.

CEO Vikram Pandit told analysts on a conference call Citi's credit costs "remain elevated and clearly U.S. consumer credit remains the No. 1 issue affecting our near-term results."

"We are seeing further confirmation of signs of improvement in our international markets, but challenges remain in the U.S," he said.

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Rates on 30-year loans inch up, to 4.92 percent (Washington Post)

Posted: 15 Oct 2009 08:36 AM PDT

The average rate on a 30-year fixed mortgage was 4.92 percent this week, up from 4.87 percent a week earlier, mortgage company Freddie Mac said Thursday. Rates, while above the record low of 4.78 percent hit in the spring, are still attractive for people looking to buy a home or refinance.

To prop up the housing market and help the economy recover from the worst recession since the 1930s, the Federal Reserve has been engaged in an extraordinary level of support, spending $1.25 trillion on mortgage-backed securities, which has driven down rates on home loans.

Last month, Fed Chairman Ben Bernanke and his colleagues agreed to slow down the pace of the program to buy mortgage securities from Fannie Mae and Freddie Mac. Instead of wrapping up the purchases by the end of this year, the Fed now plans to do so by the end of March.

But minutes released this week of the Fed's closed-door deliberations on Sept. 22-23 revealed disagreement among Fed policymakers, though their vote to extend the program was unanimous. Some thought a boost to the mortgage securities buying program could help the economy recover more quickly, while another member believed a reduction was warranted because the recovery was showing signs of picking up.

Despite the government's effort to support the housing market, qualifying for a loan is still tough. Lenders have tightened their standards dramatically, so the best rates are available to those with solid credit and a 20 percent down payment.

Freddie Mac collects mortgage rates on Monday through Wednesday of each week from lenders around the country. Rates often fluctuate significantly, even within a given day, often in line with long-term Treasury bonds.

The average rate on a 15-year fixed-rate mortgage rose to 4.37 percent, from 4.33 percent last week, according to Freddie Mac.

Rates on five-year, adjustable-rate mortgages averaged 4.38 percent, up from 4.35 percent a week earlier. Rates on one-year, adjustable-rate mortgages inched up to 4.6 percent from 4.53 percent.

The rates do not include add-on fees known as points. The nationwide fee for loans in Freddie Mac's survey averaged 0.7 point for 30-year and 15-year loans. The fee averaged 0.6 point for five-year loans and 0.5 point for one-year loans.

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Citigroup Earns $101M After Dip in Losses on Toxic Loans (Washington Post)

Posted: 15 Oct 2009 09:31 AM PDT

The struggling New York company, which now counts the federal government as its largest shareholder, narrowly achieved its primary goal of remaining in the black for the third straight quarter.

As rivals including J.P. Morgan Chase and Goldman Sachs post massive profits, benefiting from the government's efforts to revive Wall Street, Citigroup continues to pursue smaller victories. The company is trying to shed its involvement in high-risk consumer lending, and its vast store of losing investments.

Citigroup's results amounted to a loss of 27 cents per share of common stock, in part because it was required to pay more than the amount of its profits as a dividend to preferred shareholders. The results compared with a loss of $2.8 billion, or 61 cents a share, during the same period last year.

"Sustainable profitability remains our primary goal in the near term," chief executive Vikram Pandit said in a statement.

Citigroup's shares at noon were down 5 percent to $4.74, as financial stocks generally struggled. The broader market was sagging slightly after Wednesday's elation; the Dow Jones Industrial Average remained slightly above 10,000.

Citigroup has taken more federal aid than any other bank. The company received a total of $45 billion in direct investments from the Treasury Department. It has borrowed billions more with help from the Federal Deposit Insurance Corp., and it has tapped the various emergency aid programs operated by the Federal Reserve.

This summer, the company sold a 34 percent stake to the federal government.

Citigroup was once the nation's largest bank, but it now hopes to return to health by selling vast chunks of its empire. The company's retail brokerage already is gone. It hopes to sell its consumer lending business, CitiFinancial, as well. The goal is to focus on the company's core business of offering banking services to international corporations, along with retail banking operations in nations including the United States and Mexico.

"We're the world's most global bank," Pandit told analysts on a conference call Thursday morning. "We offer services that our peers just can't offer."

But Citigroup first must escape its legacy as one of the world's largest subprime lenders and investors, which has saddled it with billions of dollars in mortgage, credit card and other loans that are no longer being repaid. The company recorded a loss of $8 billion in the third quarter for loans it no longer has any hope of collecting. It also increased its reserve against expected losses by $800 million to $36.4 billion, equal to 5.9 percent of its outstanding loans.

"U.S. consumer credit remains the number one issue affecting our results," Pandit said.

Both drains on revenues were slightly smaller than in the second quarter, but analysts said it was too early to conclude that the company's losses had bottomed out.

"These portfolios are continuing to bleed profits and we see no signs that the flow is slowing," Bart Narter, a banking analyst for Celent, wrote in a morning note on the earnings report.

The company overcame the massive losses in varied fashion. Its retail bank, which operates mostly outside the United States, posted a modest profit thanks to better economic conditions in other countries. As with other major American banks, Citigroup reported strong profits from its Wall Street activities, and from providing banking services to corporations.

The company also relied on a number of extraordinary measures that it cannot repeat, including the sale of profitable business units, investing revenues in countries with lower tax rates, and persuading preferred shareholders to accept common shares of stock in lieu of dividends and eventual repayment.

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Posted by Rakhma at 8:02 PM

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