Weil on Finance: Fed-Bred House Flipping
Greetings, View fans. Here’s a look at my breakfast reading this morning.
The latest on house flipping
This comes from a story at Market Watch, and it helps to show who has benefitted most from the Federal Reserve’s easy-money policies: “For the market as a whole, flips of single family homes fell 13 percent in the third quarter, according to new research from RealtyTrac, with investors earning a gross profit of nearly $55,000 on each property. But at the higher end of the market, homes seem to flip as quickly as a griddle full of hamburgers.” Flipping increased 34 percent among homes worth $750,000 or more, 42 percent among $1 million to $2 million houses, and 350 percent for properties worth $2 million to $5 million. Five metro areas accounted for more than 75 percent of all high-end flips: New York, Los Angeles, San Francisco, San Jose and San Diego. A flip is defined as a sale that occurs within six months of a home being purchased.
The downside of a hedge-fund takeover of your neighborhood
Magnetar Capital is a hedge fund that gained fame for helping design the mortgage bonds that it shorted during the housing bubble. It has since gone long on Ohio neighborhoods and now owns one in 11 homes in Huber Heights, a suburb of Dayton. Heather Perlberg and John Gittelsohn of Bloomberg News report that its management company applied for the largest cut to property-tax assessments in the county’s history, which “could curb funding for public schools, the police and fire departments and services to the disabled.”
Here’s the guy in charge of taming Europe’s banks
Danny Hakim of the New York Times has an interesting profile of Ignazio Angeloni, the head of financial stability for the European Central Bank, who will have a lead role in examining the books of Europe’s largest banks when the ECB takes over as their supervisor. Tough job: “While he expressed doubts about the usefulness of splitting the investment and retail arms of banks, as many on both sides of the Atlantic have advocated, he still suggested that some banks had grown too complex for their own good, or for society’s. Perhaps ominously for the banks, the silver-colored cuff links on his monogrammed shirt were shaped like bears.”
Bank of America may be next for a big government settlement
The Federal Housing Finance Agency, which is the government conservator for Fannie Mae and Freddie Mac, has reached a tentative $4 billion settlement with JPMorgan Chase & Co. over soured mortgage bonds from the housing bubble. (News reports over the weekend were including that number as part of the Justice Department’s tentative $13 billion accord with JPMorgan.) Now the housing-finance agency is seeking $6 billion from Bank of America Corp., say Keri Geiger, Clea Benson and Hugh Son of Bloomberg News.
The sad story of Grambling State
Grambling State’s football team revolted last week, refusing to travel to Jackson State for a game as a protest of awful conditions for athletes at the university. (It’s a wonder that more U.S. college sports teams haven’t gone on strike before.) George Dohrmann of Sports Illustrated had a great inside story over the weekend about what has happened to the once-proud program that Eddie Robinson built. A lot of the problems can be traced to the Louisiana legislature’s decision to slash the university’s funding.
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)