Solvency Rumors Spark Bank Run In China

What A Bank Run In China Looks Like: Hundreds Rush To Banks Following Solvency Rumors

 

 

 

” Curious what the real, and not pre-spun for public consumption, sentiment on the ground is in a China (where the housing bubble has already popped and the severe contraction in credit is forcing the ultra wealthy to luxury real estate in places like Hong Kong) from the perspective of the common man? The photo below, which shows hundreds of people rushing today to withdraw money from branches of two small Chinese banks after rumors spread about solvency at one of them, are sufficiently informative about just how jittery ordinary Chinese have become in recent days, and reflect the growing anxiety among investors as regulators signal greater tolerance for credit defaults.

 

Reuters explains:

 

  Domestic media reported, and a local official confirmed, that ordinary depositors swarmed a branch of Jiangsu Sheyang Rural Commercial Bank in Yancheng in economically troubled Jiangsu province on Monday. The semi-official China News Service quoted the bank’s chairman, Zang Zhengzhi, as saying it would ensure payments to all the depositors. The report did not say how the rumour originated.

 

  Chen Dequn, a resident in Yandong, just outside Yancheng, said she saw a crowd of about 70 to 80 people gathering in a branch of Sheyang Rural Commercial Bank in her town on Tuesday.”

 

ZeroHedge has more

 

 

 

 

 

 

 

 

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Thomas Sowell On The Housing Bubble Myth Of No Warning And Knee-Jerk Governance

 

Bouncing Ball Politics

 

 

 

 

 

” For years, home ownership was a big “good thing” among both liberal Democrats like Congressman Barney Frank and Senator Christopher Dodd, on the one hand, and moderate Republicans like President George W. Bush on the other hand.

Raising the rate of home ownership was the big red bouncing ball that they pursued out into the street, in utter disregard of the dangers.

A political myth has been created that no one warned of those dangers. But among the many who did warn were yours truly in 2005, Fortune and Barron’s magazines in 2004 and Britain’s The Economist magazine in 2003. Warnings specifically about the dangerous roles of Fannie Mae and Freddie Mac were made by Federal Reserve Chairman Alan Greenspan in 2005 and by Secretary of the Treasury John W. Snow in 2003.

In pursuit of those higher home ownership rates, especially among low-income people and minorities, the many vast powers of the federal government — from the Federal Reserve to bank regulatory agencies and even the Department of Justice, which issued threats of anti-discrimination lawsuits — were used to force banks and other lenders to lower their standards for making mortgage loans.

What makes all this painfully ironic is that the latest data show that the rate of home ownership today is lower than it has been in 18 years. There was a rise of a few percentage points during the housing boom, but that was completely erased during the housing bust. Housing has been just one area where the bouncing ball approach to political decision-making has led the country into one disaster after another.”

 

 

 

 

 

 

 

 

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More ” Oh Look What We Forgot To Mention “

 

FHA Red Ink May Be $32.8 Bil, Double Official Audit

 

 

 ” The Federal Housing Administration is in the red, according to an official audit released Friday, making a taxpayer bailout “all but certain.” But the reality may be even worse.

The FHA’s capital reserve was -1.44% of loan guarantees, or -$16.3 billion, according to a new independent audit. Last year reserves were still positive at 0.24% and $2.6 billion.

By law, the FHA — which insurers mortgages, mostly for low-income borrowers — is supposed to have a capital reserve of 2%.

The report prompted the chairman of a House Financial Services subpanel, Rep. Scott Garrett, R-N.J., to say that “a taxpayer bailout of the Federal Housing Administration is all but certain.”

And Ed Pinto, a resident fellow at the conservative American Enterprise Institute, says the truth is even worse. “

Illustration By Nate Beeler

Related articles

• For a Job Well Done (seeingthesword.com)
• FHA needs a bailout; Gee, who could have seen that coming? (aleksandreia.com)
• WSJ: FHA Close to Exhausting Reserves (calculatedriskblog.com)
• FHA Sets Stage for Taxpayer Subsidy With 2012 Deficit… (bloomberg.com)
• U.S. says to take steps to fill FHA capital hole, avoid bailout (reuters.com)
• FHA providing buying opportunities to those who defaulted on homes (denverpost.com)
• FHA capital reserves exhausted, audit says: WSJ (marketwatch.com)
• Now that the Election Is Over… (blogs.the-american-interest.com)
• Lousy week for America (bostonherald.com)

Brace Yourselves… 2nd Wave of Foreclosures on the Way …. Hope & Change

The housing market , for those of you unaware , has yet to hit bottom .