Some housing bubble news from Wall Street and Washington. Reuters, "Sales of new single-family U.S. homes were off 23.3 percent from a year ago. Across the regions, sales were mostly down although the West did see a 37.7 increase. In the Midwest, sales were off 19.5 percent and down 6.6 percent in the Northeast. Sales were up 0.5 percent in the South. There were 523,000 new homes for sale at the end of the month. It would take 8.3 months to clear that inventory at the current sales pace."

From MarketWatch. "Sales of new homes rebounded in September from summer sales levels that were much weaker than previously reported, the Commerce Department reported Thursday. The three previous months were revised sharply lower, which means the housing market was much weaker in the middle of the year than previous believed, and no one believed it was strong."

"'The crash continues,' wrote Ian Shepherdson, chief economist for High Frequency Economics. Sales fell at a 35% annualized pace in the third quarter, he said."

"The sales figures do not account for canceled sales contracts, which have surged in recent months."

From CNN Money. "The battered markets for real estate and home building still have farther to fall, according to a range of economists who spoke Wednesday at a forecast conference sponsored by the National Association of Home Builders."

"Mark Zandi, chief economist of Moody's Economy.com, estimated that the excess inventory of homes on the market is close to one million, and he added that the glut could get worse if mortgage defaults and foreclosures increase, as it now appears they will."

"'We're awash in inventory,' he said. 'I don't think this [credit] crisis is over.'"

From Bloomberg. "Pulte Homes Inc., the third-largest U.S. homebuilder, reported a third-quarter loss after it reduced the value of its real estate and potential buyers of its homes had difficulty obtaining mortgages."

"Revenue fell 31 percent to $2.5 billion. The company wrote down the value of its assets by $1.18 billion in the quarter. Orders for new homes fell 37 percent to 4,582, and the company had a backlog of 12,042 homes, worth $4.1 billion, it reported.

"Ryland Group Inc, the No. 8 U.S. home builder, posted a quarterly loss on Wednesday. Ryland said revenue during the quarter fell 35.2 percent to $732.3 million as the number of homes the company sold fell 32.3 percent to 2,495. The average selling price slid to $284,000 from $291,000."

"New orders were off 20.9 percent to 1,876 units, and the value of the orders fell 27.0 percent. Ryland's results include charges for write-offs for inventory and property values of $128.1 million."

The Denver Business Journal. "Denver home builder M.D.C. Holdings Inc. battled a 'turbulent' housing market in the third quarter of 2007. The builder suffered a net loss for the period ended Sept. 30 of $155.4 million. M.D.C. reported $249 million in inventory impairments related to 7,000 lots in 132 subdivisions."

"Nearly half of M.D.C.'s markets saw decreases in selling prices."

"Home builder Tousa Inc said it would exercise the right to abandon a number of home-sight option contracts in response to deteriorating market conditions in the third quarter."

"'As a result, the company anticipates that it will incur significant deposit write-offs and abandonment charges in the third quarter of 2007,' Tousa said in a filing with the SEC."

The Dallas Morning News. "Centex Corp. officials said Wednesday that they have cut the Dallas-based homebuilder's nationwide workforce by 40 percent and plan to further reduce overhead. Centex's sales in the most recent quarter were down in every region of the country, including Texas, which has been one of the builder's strongest markets."

"Overall, Centex said that its average home prices were down 8 percent during the last quarter. In some markets, prices were cut as much as 20 percent."

"'Unlike in previous quarters, our Texas results were weak as areas like Houston in particular were especially hard hit by the disruptions in the mortgage market,' said Centex chief financial officer Cathy R. Smith."

"The Bank of England said the global financial system is at risk of further instability because of 'ongoing uncertainties' about credit-market losses. In a worst-case scenario, U.K. banks would have to raise as much as 170 billion pounds ($348 billion) if market conditions prevented them from selling the loans on their balance sheets to other investors, the central bank said."

"The report also said the market selloff may be welcome because investors were taking too-optimistic a view on the risks facing the global economy. 'A return to earlier conditions would be undesirable as that involved an underpricing of risk,' the Bank of England said."

"Nomura Holdings Inc., Japan's largest securities firm, reported its first loss in more than four years after U.S. mortgage investments plunged, forcing the company to close some operations, cut staff and shut its Chicago office."

"Nomura's U.S. arm posted a $620 million loss on subprime, prompting CEO Nobuyuki Koga to shut the unit's residential mortgage operation. The world's biggest financial companies have reported credit and market losses of more than $30 billion after defaults on subprime U.S. mortgages contaminated securities backed by home loans and other types of debt."

The Sydney Morning Herald. "ANZ Bank missed forecasts as provisions for bad loans increased. ANZ's provisions for credit impaired loans jumped 39 percent last fiscal year to $567 million."

"Investment banking firm Friedman, Billings, Ramsey Group Inc. said Thursday its third-quarter losses widened due to the weakening of the mortgage market. FBR reported losses of $214.7 million."

"Financial guarantor MBIA Inc. followed the trend set by its rivals in reporting a third-quarter loss due to its cutting the value of its credit derivatives portfolio."

"Though MBIA had a big mark-to-market loss, it did not follow the lead of some other financial guarantors in pre-announcing its results to give investors some warning of the effects of falling prices for securities backed by mortgage loans. MBIA's mark-to-market losses were 'well above the $175 million we had expected given the recent preannouncements by its peers,' said Morgan Stanley analyst Ken A. Zerbe"

The Associated Press. "Triad Guaranty Inc. lost money in the third quarter as soaring defaults on home loans forced the mortgage insurer to pay more claims, the company said Thursday."

"Triad paid $28.5 million on mortgage default claims and socked away an additional $78.3 million anticipating more defaults. The company's premiums jumped by more than a third to $72.1 million. But for each premium dollar Triad collected, it spent $1.70 administering claims."

"'We believe delinquency and claim trends will only deteriorate further,' said Bear Stearns analyst Michael Nannizzi."

"Merrill Lynch & Co., the largest brokerage firm, may have to write down another $4 billion in the fourth quarter as the value of subprime assets continues to drop, according to CIBC World Markets."

"'Thus far, Merrill has taken the largest writedown of its financial peers, but unfortunately, we believe in aggregate it will only get larger,' CIBC analyst Meredith Whitney said."

"When Stan O'Neal's rivals started backing away from subprime lending late last year, the Merrill Lynch & Co Inc CEO plunged in."

The Wall Street Journal. "In a conference call with investors yesterday, Merrill CEO Stan O'Neal acknowledged that the firm had fumbled the CDO business: 'The bottom line is, we got it wrong by being overexposed to subprime.' Mr. O'Neal added that Merrill had misjudged the risk of many CDOs. 'It turned out that both our assessment of the potential risk and mitigation strategies were inadequate,' he said."

"Credit ratings agency Moody's is poised for further subprime-related surprises from banks and expects financial markets to remain nervous about bank exposures for months to come, it said on Thursday."

"Moody's downgraded its ratings on Merrill Lynch on Wednesday and warned it could suffer further. The rating agency said surprise loss revelations, prompted by the difficulty banks are having in estimating losses on subprime-related assets on their books, may strike again."

"'Merrill Lynch was a victim of that, but we don't believe they were the only ones,' Moody's senior VP Lynn Exton told a financial conference. 'As news comes out, we will be taking ratings actions as necessary,' said Exton, who is responsible for large UK and Benelux banks at Moody's."

"The collapse of confidence in Merrill Lynch & Co. after the world's biggest brokerage lost six times more than it forecast earlier this month helps explain why Treasury Secretary Henry Paulson's attempt to rescue SIVs is troubled."

"Investors aren't willing to rely on estimates by Wall Street traders to value these bonds and there's no central trading system or exchange. Fitch Ratings says the value of SIVs, which own more than $320 billion of bonds, fell to 73 percent as of Sept. 28 from 100 percent in July."

"'Continuing to mask transparency by means of rearranging risk without actually offloading or recognizing the true value of that risk is not going to help anyone,' said Joseph Mason, an associate professor of business at Drexel University and a former financial economist at the Office of the Comptroller of the Currency."

"Many of the 30 SIVs worldwide can't find buyers for their commercial paper, debt that comes due in 270 days or less. The concern is that without the funding, the SIVs would have to sell their investments and might have to accept fire-sale prices."

"The largest SIV, the $52 billion Sigma Finance Corp., declined to let Fitch disclose its value. S&P reports show the value of pieces of top-rated CDOs owned by Rhinebridge slumped 15 percent or more in three days last week."

"One of the lessons that investors seem to have to learn over and over again, and they'll have to learn it over again in the future, is that not only can you not turn a toad into a prince by kissing it, but you also cannot turn a toad into a prince by repackaging it,' billionaire Warren Buffett said today."

"Real estate wealth is expected decline anywhere from $2 trillion to $4 trillion out of a previous valuation of roughly $21 trillion when the total costs of recent credit crunch are tallied, the New York Times reported on Thursday, citing economists."

"And financial firms could face aggregate losses of some $400 billion from expanding troubles related to the subprime mortgage market fallout, the paper said."

"That is higher than the roughly $240 billion in financial institution losses from the savings and loan crisis of the early 1990s, adjusted for inflation, the paper said."

"The losses in real estate wealth, while large, are substantially less than what investors suffered in the stock market collapse earlier this decade, which erased more than $7 trillion, or about 40 percent of market value, the paper said."

"Two million subprime-mortgage foreclosures are likely to occur by 2009 if home prices continue their downward spiral, a congressional report said Thursday."

"In the wake of the financial market turmoil that arose over the summer, there has been a remarkable lack of finger-pointing so far over the cause of the crisis. But one observer, Tom Schlesinger, the founder and executive director of a think tank that has followed the Federal Reserve closely for the past decade, believes the blame for the crisis falls squarely on the Fed and accuses the central bank of 'regulatory foot-dragging' that has harmed the public."

"Schlesinger maintains the Fed's prevailing regulatory philosophy has shifted from that of 20 or 25 years ago, which in essence was 'here is the line between right and wrong, don't cross it,' to a current underlying policy that 'anything and everything that might be called financial innovation ought to be embraced.'"

"'This is a very faulty premise that deserves debate and reflection and ultimately, in my opinion, a changed perspective,' Schlesinger said in an interview with MarketWatch."

"Upon joining the Fed, former Fed chief Alan Greenspan said he had a 'pleasant surprise' when he found the Fed staff was not so keen on regulation either. Together, they interpreted congressional legislation with a view to 'letting markets work,' he wrote."

"Schlesinger says this practice was actually 'regulatory foot-dragging' where the Fed had a clear obligation under law to police markets but went about it 'with such reluctance that in some cases the supervision is difficult to detect.'"

"In an interview on '60 Minutes,' Greenspan said the Fed couldn't stop subprime mortgage originators. Schlesinger disagrees. Although the abuses came from independent originators and not banks, Schlesinger said the Fed had 'all or most' of the authority it needed to police the market under two laws passed by Congress."

"'The Fed's unwillingness to flex the muscle that those statues granted is a real black mark on the central bank,' he said."