Monday's Financial Winners & Losers
Financial stocks were mostly stuck in reverse on Monday as a plethora of bad news countered mounting calls for the government to bail out troubled subprime borrowers.
Treasury Secretary Hank Paulson essentially confirmed a Friday report that the government is formulating a plan to help stymie what he called "preventable foreclosures." The plan's intent is to give the economy some traction as it slides seemingly ever downward due to the sinking housing market. And Sen. Hillary Clinton (D., N.Y.), in a letter to Paulson, called for a 90-day moratorium on foreclosures and at least a five-year freeze on adjustable mortgage rates.
Still, individual financial stocks were losing ground. Countrywide (CFC), Citigroup (C) and Wells Fargo (WFC) -- all of which surged Friday on news their executives are meeting with regulators to formulate the rescue plan -- each were down 0.7% or more. Washington Mutual (WM) traded in and out of the red, though it was recently up 0.7%.
Also on Monday, Boston Federal Reserve President Eric Rosengren said evidence points to the foreclosure crisis getting "worse before it gets better." But he also said that one-fifth of subprime borrowers could actually be well-qualified enough to upgrade to prime loans and/or participate in loan guarantee programs.He also cited the 1.2 million subprime borrowers -- a full 55% of those with non-jumbo adjustable-rate mortgages (ARMs) occupying mortgaged houses -- who haven't missed a payment in the past year and could also qualify for a loan guarantee program.
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