Some housing bubble reports from Wall Street and Washington. "Zacks Equity Research, Chicago, has made H&R Block its 'Bear of the Day,' a stock expected to underperform the markets over the next three to six months. Block is the parent of Option One Mortgage Corp., and recently reported earnings of $490.4 million ($1.49 per share) for its fiscal year, down from $623.9 million ($1.88 per share) for the prior year."

"Zacks said, 'as expected, earnings in fiscal year 2006 were at the low end of previous guidance. Competition remains intense in the tax business, while fundamentals in the mortgage business continue to deteriorate.'"

"A top lawmaker on Wednesday said he asked the U.S. Justice Department to investigate whether former Fannie Mae executives perjured themselves in testimony before his subcommittee in 2004. 'The accounting fraud at Fannie was despicable and demands punishment, but these men also had an opportunity to come clean, swearing an oath to tell the truth, which I believe the evidence shows they clearly and arrogantly flouted,' said Richard Baker of Louisiana."

"Under U.S. code, the punishment for making false statements before Congress is up to five years in prison."

"Legislative action has been stalled in the Senate over the issue of limiting Fannie and Freddie Mac's massive holdings of mortgage-backed securities. The White House supports such limits, arguing that a crisis at either company could ripple through financial markets and the U.S. housing market."

"But there are signs the administration may not be willing to wait for congressional legislation to reform the giant housing lender. Tuesday, Treasury Undersecretary Randal Quarles said his agency will review the process it uses to approve requests by the mortgage companies to issue debt."

"Secretary Alphonso Jackson said separately on Tuesday that the Department of Housing and Urban Development would probe whether Fannie and Freddie Mac are improperly holding billions of dollars in assets and liabilities."

"Federal Reserve Board Governor Susan Schmidt Bies said consumers so far appear to be handling the gradual re-setting of adjustable rate mortgages, which raise their payments. She said some industry evidence indicates that delinquencies for these types of loans 'may be on the uptick,' adding that delinquency rates for loans issued in 2005 in most cases are higher than those for comparable loans issued in prior years."

"'Some industry observers believe that the increase in delinquencies for loans issued in 2005 is directly related to the continued easing of underwriting standards and the increased use of risk layering practices,' such as accepting less documentation for loan applications and failing to assess a borrower's ability to cope with a higher interest rate, she said."

"Bies reiterated her concerns that real estate loan concentrations are high relative to capital, especially for smaller banks with assets of $100 million to $1 billion. The concentration level for these banks is about 400 percent of total capital, or twice the level of the late 1980s and early 1990s, a period of considerable loan loss problems in the banking industry."