Some housing bubble reports from Wall Street and Washington. Origination News, "Countrywide CEO Angelo Mozilo estimates that 40 to 50 subprime firms are going out of business each day, a trend that likely will continue all year. During a conference call discussing Countrywide's earnings, Mr. Mozilo, in response to a question, said analysts are seeing reports of two to three firms failing each day, but that the number is much larger."

"Addressing the carnage in the subprime sector, Mr. Mozilo said, 'I think we have a way to go on that.'"

The LA Times. "Bottom-fishing in especially turbulent waters, several Wall Street firms have purchased specialists in 'sub-prime' loans to risky borrowers — a business that Mozilo said Countrywide has backed away from as loan delinquencies have shot up."

"'In terms of the Wall Street houses, some will succeed and most will not,' Mozilo said, citing as an example of the latter Merrill Lynch & Co.'s loss of a $100-million investment in Agoura Hills-based sub-prime lender Ownit Mortgage Solutions Inc."

"When Merrill cut off funding in December, Ownit filed for bankruptcy protection. The filing showed that Merrill also held $93 million in soured loans it had purchased from Ownit."

"JPMorgan Chase & Co. is cutting its exposure to subprime mortgages amid deteriorating industry conditions that are proving troublesome to a growing group of lenders."

"JPMorgan CEO James Dimon said in an investor presentation Tuesday that the company has sold off most of the mortgage loans it made last year to people with weak credit histories. He said mortgages are the one area of subprime lending where 'we really see something taking place that looks like a recession.'"

"JPMorgan said in the presentation that 'loss severities' in subprime mortgages have started increasing, and that delinquencies of subprime loans originated last year are higher than the 2005 and 2004 vintages were at a comparable age. In the fourth quarter, JPMorgan saw net charge-off rates on subprime mortgage loans leap to 0.6 percent from 0.1 percent a year earlier."

"When it released its fourth-quarter earnings earlier this month, JPMorgan boosted its retail bank's provision for loan losses to $262 million from $158 million a year earlier, due in part to what the bank described as 'some deterioration in subprime mortgage.'"

From Reuters. "Tighter mortgage underwriting to the riskiest homebuyers has helped improve loan quality but has far to go before defaults are reduced to acceptable levels, according to some of the biggest subprime issuers."

"Lenders including New Century Financial Corp. and Accredited Home Lenders Holding Co are scrambling to reduce the number of early defaults on their loans that surged at rapid rates in 2006. Investors are increasingly forcing lenders to buy back the loans, hurting profits and prompting originators to improve quality at the expense of volume."

"'We haven't seen the turnaround yet,' Brad Morrice, CEO of Irvine, California-based New Century, told investors. New Century has a rate of 'first payment defaults' of about 2-1/4 percent, up about a percentage point from two years ago."

"At Accredited, bonds supported by loans to borrowers who stated, rather than proved, their incomes dropped to 23 percent from 37 percent over the course of 2006, Stuart Marvin, Accredited's executive vice president of finance, told investors. Sacrificing volume to tighter underwriting has become a necessary choice, he said."

"Other Wall Street analysts expect efforts by lenders will have only a small impact since too many loans are still being made to people who can't afford them. Lenders changing their underwriting criteria is 'like moving the deck chairs on the Titanic,' (said) Chris Flanagan, head of asset-backed securities research at JPMorgan."

"'It's incredible to me that there's a notion of a significant tightening' in underwriting, he said."

"Morrice at New Century said the company hasn't completed changes to underwriting standards to reverse the rapid rise in defaults from low rates in 2003-2005. 'We suspect things are going to get somewhat worse before they get better, and we are planning accordingly,' he said."

The Baltimore Sun. "Black & Decker Corp. reported yesterday that the housing slump continued to cut into sales and earnings and said more restructuring could be on the way."

"Nolan D. Archibald, Black and Decker's CEO, told analysts during a conference call that the housing slowdown resulted in fewer orders from key retailers, which forced the company to scale back production to keep inventories in check."

"'As we had announced in December, we faced a very difficult market environment in the quarter, resulting in a significant decrease in sales and earnings,' he said."

From MarketWatch. "3M Co. said Tuesday that downturns in the housing and automotive markets chilled fourth-quarter earnings growth, and shares of the blue-chip conglomerate lost more than 5% as its outlook disappointed investors."

"'The dramatic slowdown in the U.S. housing and automotive markets had a significant negative impact on sales and gross margins in a handful of our divisions,' CFO Patrick Campbell said."

"U.S. Treasury Secretary Henry Paulson said on Wednesday that he is working to create a strong regulator for mortgage finance companies Fannie Mae and Freddie Mac."

"'I was encouraged by some of the progress late last year we made,' Paulson said. 'We've got a lot further to go.'"