“The financial industry blew it, did not exercise any restraint, and now the financial system is at risk”

While Wall Street faces the biggest overhaul of its regulatory structure since the Great Depression, analysts are already wondering if the plan to be announced by Treasury Secretary Henry Paulson on Monday would help prevent the kind of risky investments that led to the near-collapse of Bear Stearns Cos.

The plan maps out a course for broader oversight of the nation’s financial markets by consolidating power into the Federal Reserve. It will eliminate overlapping state and federal regulators and give the central bank an expanded role in looking at the books of investment banks and brokerages. Read more

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‘“2007 was the worst year in history for Massachusetts homeowners, and our forecast for 2008 is even gloomier,” said Jeremy Shapiro, president and co-founder of ForeclosuresMass.com. “2007 ended with two consecutive record quarters, and the surge is continuing this year, making it nearly impossible for regulators to act in time.’

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“A key factor behind all this mess can be traced back to the mid-1970s, when Wall Street valuation methods became more sophisticated. Since then, the increased availability of data, Modern Portfolio Theory and the application of advanced mathematical techniques have combined to make “quant geeks” Wall Street’s newest heroes. Their impact spread in the 1980s as Value at Risk Models, led by J.P. Morgan, gave investment firms a false sense of security. In reality, such probability-based models are derived from past norms. However, to those that once in a while take the time to look up from their computer screens, world events have actually become increasingly uncertain, less predictable, and, as a consequence, ever more “event” driven.”

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“But I would be very cautious heading into the weekend. This rally is suspect.”

Stocks rose on Friday, as optimism about benign inflation data and gains in financial stocks overshadowed concerns about consumer sentiment. via WTNZ-TV Knoxville

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‘The McCune Foundation, one of the largest in western Pennsylvania, blames the subprime mortgage crisis for a $130 million loss in assets that has forced the foundation to suspend grant giving until at least June.’

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‘Authorities in Philadelphia will suspend foreclosure sales of homes whose owners have fallen behind on adjustable-rate subprime loan payments — potential relief for tens of thousands of struggling debtors.’

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‘..,economist Robert Parks predicted early last week that there was more than a 60 percent probability the current financial meltdown in the United States would lead to the “Bush depression,”‘

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“Obviously fear is outweighing supply. People would rather have a Treasury on their book than a mortgage”

Treasurys were mostly higher Wednesday after an unexpected drop in orders for big-ticket manufactured goods stirred concerns about the health of the economy. via CNN Money

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‘Hillary Rodham Clinton’s campaign manager, Maggie Williams, earned about $200,000 on the board of a Long Island subprime lender that charged prepayment penalties — a practice that Clinton, a critic of the subprime industry, now seeks to eliminate.’

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NEW YORK: Bear Stearns Cos kicked off the week’s list of hot stocks, after JPMorgan Chase & Co hiked its offer for the struggling investment back to $10 per share, from a $2 per share bargain price. via Daily Times

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