Finance

I recently completed the book Reckless Endangerment, a widely discussed and heavily promoted perspective on the mortgage and financial crisis. While the book is quite interesting and illuminating at times, it is a poorly written, incomplete and flawed analysis of recent events.

Most market participants believed that Congress was going to raise the debt ceiling before the Aug. 2 deadline. However, it was largely expected that the U.S. long-term debt rating was going to be downgraded from its 'AAA' status by at least one of the two big rating agencies.

Bank regulators expressed frustration July 27 over a little-noticed and initially uncontroversial provision of Dodd-Frank that forces them to eliminate references to credit ratings in most bank regulations.

CMBS 2.0 has taken off and is getting normalized, with even a $685 million deal backed entirely by hotel properties passing muster.

Standard & Poor's has announced, in connection with its advanced notice of proposed criteria change, that it will not be assigning ratings to CMBS transactions that are using its U.S. conduit/fusion criteria.

The bust of Spain's construction boom has left some deep scars on the country's economy. To be sure, the crash has been a prime ingredient of the stubbornly high unemployment rate - currently at 21% - as well as of the mountain of troubled assets held by the country's savings banks, known as cajas.

Last month, Turkey's Sekerbank debuted the country's first covered bond, backed by SME loans as collateral. The TL230 million ($135 million), 8-year final deal was purchased by Dutch Development Bank the FMO, which took a €25-million equivalent tranche; the International Finance Corp. ($25 million) and sole arranger Unicredit (€50 million).

Some investors are wary about the $8.5 billion Bank of America agreed to pay in the MBS-related settlement it worked out with 22 large money managers, but if approved the bank will be giving up more than a one-time cash payout. The settlement imposes requirements on the servicer that appear likely to portend long-term and much broader benefits for investors.

The markets continued to grapple with the impasse in Washington regarding raising the debt ceiling as the clock steadily ticks down to the Aug. 2 deadline, and the prospects of a ratings downgrade increase.

Manager Activity: Autos Book Runner Amount (US$ Mil) Rank Mkt.

The recent uproar over regulators' "qualified residential mortgage" (QRM) proposal has obscured the importance of another underwriting standard in the Dodd-Frank Act, the similarly titled "qualified mortgage" (QM).

Chief executives from the country's largest banks sent a letter to the White House and Congress Thursday urging them to reach an agreement the week of July 25 to raise the debt ceiling.

The U.S. homeownership rate fell by less than half-a-point in the second quarter to 65.9% as foreclosures accelerated and consumers put off buying homes because of fears about prices and the economy.

Private equity firm Apollo Global Management is planning to raise a second publicly traded fund to invest in leveraged loans.

Bank of America over the past 10 days tried – and failed – to sell roughly $50 billion of 'legacy' mortgage servicing rights, according to servicing advisors familiar with the auction.

The U.S. CMBS default rate jumped to 12.9% at the end of the second quarter of 2011, marking a 228 basis point increase since the end of 2010, according to Fitch Ratings.

A new report by Amherst Securities Group (ASG) examines how the recent Bank of America settlement has the potential to significantly impact Countrywide securities that comprise the Covered Trusts. Although the market seems to treat these securities in the same way, ASG said that the impact will vary from security to security.

Let's skip ahead to Aug. 3. The debt ceiling hasn't moved an inch and the United States no longer enjoys a coveted triple-A credit rating. Now what?

The slowly reviving CLO market is getting a boost from an unexpected source: one of the biggest financial blowups in history.

The Senate Banking Committee will hold a hearing next Thursday on the nomination of Richard Cordray to head the Consumer Financial Protection Bureau (CFPB).