Research Zeitgeist: Are We There Yet?
Only time will tell whether Friday October 3 marked a turning point in the credit crisis. Final passage of the bank rescue bill, however flawed it may be, provides some hope that confidence can begin to be restored soon. But perhaps more significant is the spectacle of Wells Fargo (NYSE: WFC)and Citigroup (NYSE: C) fighting over Wachovia (NYSE: WB) If they both want such an impaired asset, maybe it’s a sign of light.
Still, our most popular post of the week, Recent Vintage Alt-A US RMBS Delinquencies up Sharply, suggests there is much more pain to come. Based on a report from Standard & Poor’s, this post pointed out that supposedly -almost-prime” Alt-A loans are going bad at a faster pace even than subprime loans. Also discouraging was Fitch Ratings US Prime Auto Loan ABS Losses Reach Record High, though the post did note that these securities are holding up relatively well.
Our summaries of ratings actions on financial institutions in the news continued to be well read, led by Ratings Roundup: B&B, Fortis, Citi/Wachovia, Dexia, Hypo.
It’s also nice to see a strong response to an audio post, based on the excellent work of Alex Blumberg and Adam Davidson featured on NPR. Their latest report explaining How the Commercial Paper Market Seized Up helped make it clear why the bailout plan was needed.
Finally, for a slight change of pace,the CreditSights report No Systemic Risk to Utilities Despite Constellation Merger was also well read.
Research Recap Quote of The Week:
After 24 months of seasoning, total delinquencies for 2006 represent approximately 18.54% of the current aggregate pool balance, a 208% increase over the 2005 vintage, which had 6.03% in total delinquencies after the same amount of seasoning. -Standard & Poor’s, commenting on mortgage securities backed by Alt-A loans.
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