Some housing bubble news from Wall Street and Washington. "Sales of new one-family houses in July 2007 were at a seasonally adjusted annual rate of 870,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.8 percent (±12.0%)* above the revised June rate of 846,000 and is 10.2 percent (±12.3%)* below the July 2006 estimate of 969,000."

"The seasonally adjusted estimate of new houses for sale at the end of July was 533,000."

From MarketWatch. "Home builders have piled on incentives, including offering free vacations and new cars, to sell homes and reduce inventories. Such incentives are not subtracted from the sales price reported to the government."

"Sales are reported when a contract is signed, not at the closing of the sale. Home builders have reported a large increase in cancellations in recent months. Cancellations are not reflected in the government data, so the reported sales are likely overstated."

From CNN Money. "Builders, worried about a big glut of unsold homes on the market, cut price. The average price of a new home sold in the period fell to $300,400, down 3.4 percent from a year ago."

"While the median price edged up 0.6 percent to $239,500 from a year earlier, it's still off 8.8 percent from the record high hit just last March. The July 2007 median is also below the full-year reading for 2005 and 2006."

"'I suspect builders were pulling out all the stops to get those homes sold,' said Stuart Hoffman, chief economist for PNC Financial Services Group. 'But given what's happened with the mortgage market since, it's clearly going to be materially worse in August than it was in June and July.'"

The Chicago Tribune. "Despite a $2 billion vote of confidence from Bank of America Corp. on Wednesday, Countrywide Financial Corp.'s debt ratings are under review by Moody's Investors Service for a possible downgrade."

"In a conference call, John McMurray, Countrywide's chief risk officer, said subprime tightening includes the elimination of the 2/28 program, the curtailment of 100 percent financing, added restrictions on first-time home buyers, and increased credit score requirements for interest-only loans."

"'In prime, guideline cutbacks include curtailment of 100 percent financing and adjustments to 95 percent financing,' McMurray said. And, 'as with subprime, more restrictions are under way.'"

"'If we went back a year or two and you were in the marketplace at that time, what would you have done differently?' Citigroup analyst Brad Ball asked Countrywide management. 'Would you have put in place the actions that you have under way today?'"

"Angelo Mozilo, Countrywide's CEO, struggled to answer and eventually borrowed a phrase from former U.S. Sen. Howard Baker, who said of scandal-plagued Richard Nixon, 'What did the president know and when did he know it?'"

"'Our volumes, our whole place in the industry, would have changed dramatically,' Mozilo said, 'because we would have arbitrarily made a decision that was contrary to what everything appeared to be: Values going up, and no delinquencies, no foreclosures, and we suddenly stop the music and say that we're not going to' offer certain products."

"'It would have been an insight that only a superior spirit could have had at the time.'"

"As CEO, Mozilo said he constantly asks himself: 'What should I have known and when should I have known it, and what should I have done about it? Would we do things a lot differently, knowing what we know now? Absolutely. We would have done a lot of things differently. But we didn't.'"

The Street.com. "By discrediting virtually every step taken thus far to help the housing market and the mortgage industry, Countrywide Financial CEO Angelo Mozilo killed Wall Street's buzz about the credit crunch being over."

"'I don't see the light here,' he added, noting that the current financial panic is among the worst he's seen in 55 years."

"The message from the banks Countrywide typically borrows from has been, 'We've got our own problems,' said Mozilo in the CNBC interview."

"The mortgage executive had no kind words for the Fed either, saying the central bank has done nothing to help Countrywide with its liquidity problems. The Fed's discount rate cut...is useless to Countrywide because it cannot borrow there for regulatory reasons."

"After Mozilo's gloomy comments, it was hard for the markets to perceive Bank of America's $2 billion stake in the company as anything but opportunistic for BofA, which like many banks and Wall Street firms faces some of its own liquidity and balance sheet issues amid the credit crunch."

"Indeed, Bank of America's little 'confidence boost' was quite a lucrative trade for the mega-bank, and maybe better considered in the context of distressed investing."

The Boston Globe. "Countrywide Financial Corp. tried to calm depositors and home buyers yesterday with assurances it would continue operating in Massachusetts and nationwide."

"Some real estate agents no longer refer their home buyers to Countrywide, the nation's largest mortgage lender, because they fear it would be unable to fund the mortgage at the closing table, loan brokers said."

"Keith Shaughnessy, president of Foundation Mortgage Corp. in Littleton, said he received two requests for mortgages from real estate agents who a few weeks ago would have sent their clients to Countrywide."

"'The realtors have a nagging fear, because of what's happened to them in the past two months, of loans dying at the closing table,' he said. Some agents now seek him out for mortgages, he said, because he can secure loans with commercial banks, in which realtors still have confidence."

"Bank of America's purchase of $2 billion worth of Countrywide preferred stock is effectively a loan with a 7.25 percent interest rate. The securities can be converted to shares of Countrywide stock for $18 a share."

"The investment occurred five days after Countrywide drew down a $11.5 billion line of credit from its banks to replace funds that Wall Street investors no longer can provide by purchasing mortgages."

"Bruce Marks, the CEO of a Boston group that provides...loans to potential homebuyers, brought about a dozen homeowners to Washington yesterday who said they were lured into risky and expensive loan agreements by Countrywide Financial Corp., which the homeowners said charged higher interest rates than promised, then imposed heavy fees when the buyers had trouble making payments."

"'They bullied us,' said Jamie Washington, a Boston woman who said Countrywide jacked up the interest rate on her and her husband's home loan to more than 11 percent just hours before closing."

"When the Washingtons failed to persuade the buyers of their previous home to use Countrywide as a mortgage lender, the company threatened to refuse to release the cash for their new house, she said."

"Cynthia Bryant, one of the panelists, said Countrywide refused to accept a late payment last year. The 42-year-old single mother of four, with a home in Pomona, Calif., has filed for bankruptcy to stop the rate from climbing on her interest-only loan."

"'We want [Office of Thrift Supervision] to go back to Countrywide, and we want them to say 'We are going to require you to restructure loans,' 'There's too much focus out there now on how investors are hurting, how lenders are hurting,' he said."

From Reuters. "Market turmoil set off by the U.S. subprime meltdown has taken a toll of bankers across Europe and analysts say many more could lose their jobs before the crisis runs its course."

"'The capital markets are a cruel master. One minute you are munificently paid and the next minute you are toast. It's part of the explicit conditions of employment,' said a partner at a financial consultancy based in London. 'I expect we will see a round of people let go for misdeeds and others will leave because they are no longer needed.'"

"The owners of stricken state lender SachsenLB aim to sell the German bank quickly after its near collapse under heavy losses from U.S. subprime mortgages and other risky debt, sources familiar with the matter said."

"Germany has taken the brunt of the European fallout so far from problems stemming from subprime home loans as two of the country's banks have almost collapsed."

"European Union market watchdogs are to meet with credit rating agencies to discuss their role in the U.S. subprime mortgage crisis that has roiled financial markets globally. The leading rating agencies include Standard & Poor's, Moody's and Fitch."

"EU Internal Market Commissioner Charlie McCreevy said last week he was reviewing a voluntary code used by credit rating agencies as they appeared too slow in warning about problems in the U.S. subprime mortgage sector."

"Germany's VDP association of banks supplying money to the property market said rating agencies offered the only on-going quality control for structured finance products."

"The more complicated the product, the fewer investors there were who could evaluate them on their own."

"'Hence, many investors rely heavily on external ratings (probably some of them exclusively). Therefore, some agencies might be tempted to push market developments in the direction of complex structures,' VDP said in its submission."

"Millions of Americans feel it when the market swoons, and the Federal Reserve no doubt had them in mind when it slashed a key short-term interest rate Friday."

"To some observers, the Fed's unusual action was a sop to the investment bankers, securities traders and hedge-fund managers who fanned the subprime mortgage boom and other excesses of the easy-money era."

"They, and to a certain extent the homeowners who tapped into the frenzy to spend beyond their means, are taking the blame for the market mess and, in the eyes of some, should take the hit."

"'They have to pay a price for the risks they have taken,' said Stanley Nabi, chief strategist at New York-based Silvercrest Asset Management. 'They're paying it now.'"

"There is a running debate about the wisdom of the central bank giving Wall Street the financial equivalent of a get-out-of-jail-free card, allowing the industry to curtail losses from its risky bets on subprime loans and leveraged corporate buyouts."

"Shouldn't a hedge fund holding too many subprime bonds be allowed to fail, and an investment bank stuck with unwanted bonds from a leveraged buyout take a hit to earnings? 'The Fed is protecting these guys on the theory that they're protecting the economy,' said Richard Bove, an analyst at Punk, Ziegel & Co."

"The Fed itself is caught in the blame game. Under former Chairman Alan Greenspan, the central bank created fertile ground for the housing frenzy by keeping interest rates at historic lows."

"'From the Federal Reserve to Wall Street, which developed new and sundry types of mortgage products, to people who stretched themselves further than they should have, everybody shares responsibility,' said Jim Paulsen, chief investment strategist of Wells Capital Management."

"'There is a whole list of accomplices in this crime, and it includes the rating agencies, the brokers that packaged the mortgages, the hedge funds and other investors that bought the securities, and the regulators who didn't watch the process carefully,' said Brian Hamilton, CEO of a financial research firm. 'As a result, there are a lot of somewhat innocent bystanders who are going to get burned."