Some housing bubble news from Wall Street and Washington. Bloomberg, "The Federal Reserve added $24 billion in temporary reserves to the banking system amid an increase in demand for cash from banks roiled by U.S. subprime loan losses. BNP Paribas SA halted withdrawals from three investment funds today and Dutch investment bank NIBC Holding NV said it had lost at least 137 million euros on subprime investments."

"'Demand from European banks is driving Fed funds higher,' said John Murphy, senior VP at Tullett Prebon Plc, the world's second-largest inter-dealer broker. 'European banks have lack of liquidity in the euro- dollar market which spilled over to the Fed fund market.'"

"The European Central Bank today loaned 94.8 billion euros ($130.2 billion) to meet banks' cash needs. The ECB said it will provide unlimited funds today at 4 percent, its current benchmark rate, after demand for cash in the European money markets drove interest rates higher."

"The Bank of Canada today said it will provide liquidity to 'support stability.'"

The Associated Press. "'This is a mini-panic,' said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co., calling the banks' injection of money into the system an unprecedented move, and evidence that the problems in subprime lending are, in fact, spilling into the general economy."

"'All the things that had been denied up until this point are unraveling,' Battipaglia said. 'On top of this, retail sales were mediocre, which shows that indeed, the housing collapse is affecting the consumer.'"

"BNP Paribas Investment Partners, said it was suspending three funds together worth about $3.79 billion and wouldn't make investor redemptions until it could determine a net asset value for the fund. 'The complete evaporation of liquidity in certain market segments of the U.S. securitization market has made it impossible to value certain assets fairly regardless of their quality or credit rating,' BNP Paribas said in a statement."

From Reuters. "The BNP problems sent judders through European markets already rife with rumors of worsening troubles in Germany. The Bundesbank hosted a meeting with banks involved in the rescue of Europe's highest profile subprime victim yet, lender IKB (IKBG.DE), to arrange details of its 3.5 billion euro bailout."

"'Nobody wants to lend any money. It's safety first.' said Karen Birzler, a money market trader at HVB in Munich."

"The cash markets were seizing up, several dealers said. 'There appears to be a dash for cash both in dollars and in euros,' said Nick Parsons, head of market strategy at nabCapital in London."

"The cost for banks to borrow money overnight in the world's second largest economic region shot up to 4.62 percent, the highest level since October 2001 and way above the ECB's 4 percent target. Only when the ECB offered banks extra cash to assure orderly conditions did rates return to normal levels."

"A Zurich-based money market trader called market conditions 'crazy' since Fed Chairman Ben Bernanke has given no signal of concern that credit markets could unpick the real economy. 'The market is acting like a yo-yo. It's all very psychological. The possibility of a credit crunch returning is starting to spook everyone,' he said."

"A separate European fund valued at 750 million euros was frozen too, and a Dutch bank pulled its planned new listing after suffering subprime losses."

"U.S. Treasury Secretary Henry Paulson has said repeatedly that he consider U.S. economic conditions to be fundamentally strong and that market volatility reflects disruptions in the subprime mortgage lending sector where defaults are rising."

"'Risk is being re-priced,' Paulson said on Wednesday, implying it was a normal reaction to the difficulties that companies involved with subprime mortgages were experiencing."

"Residential mortgage delinquencies and defaults are becoming more common among borrowers in the category just above subprime, American International Group said Thursday."

"AIG, the world's largest insurer and one of the biggest mortgage lenders, said total delinquencies in its $25.9 billion mortgage insurance portfolio were 2.5 percent."

"It said 10.8 percent of subprime mortgages were 60 days overdue, compared with 4.6 percent in the category with credit scores just above subprime, indicating that the threat to the mortgage market may be spreading."

"AIG acknowledged that 'the continuing weakness of the U.S. housing market resulted in a significant increase in losses.'"

"'Everyone's looking at their subprime exposure, and they didn't do very well,' said Matt Nellans, an analyst with Morningstar. 'Their domestic second lien business had a loss ratio of 318 percent for the quarter.'"

"AIG said its mortgage guaranty operation reported a pretax operating loss of $78 million in the quarter. Delinquencies and defaults in second lien mortgages were the major contributors to the decline at its mortgage guaranty business, and losses on first liens, or primary mortgages, also increased and were more severe, AIG said."

"ABX subprime mortgage indexes tied to risky loans made in last year's second half are trading weaker on Thursday, according to an analyst."

"The index is 'weaker on the day, particularly on the single-A's,' the analyst said. However, the gap between prices offered by buyers and sellers is fairly large, he said."

"H&R Block Inc. said Thursday it will cut more jobs at its struggling subprime mortgage unit and that the planned sale of the business could be delayed until later in the year."

"H&R Block didn't give a reason for the possible delay. H&R Block's earnings have been hurt since last year by the struggles of the mortgage unit."

"The housing market slump has Toll Brothers' chief executive perplexed."

"'This downturn is very different. It is the first one in my 41 years in the business that's occurred when you have an up stock market, low unemployment, decent job growth and a very decent economy,' said Robert Toll."