NightBlogger

Debra Watson and Anne Moore
According to a report in the August 13 Detroit News, there are now several properties listed for one dollar in Detroit, including a single family home and a duplex. In some cases subprime lenders, “find themselves the owners of whole neighborhoods of vacant, deteriorating homes.”

Dire conditions in a once prosperous East Side Detroit neighborhood underscore the impact the wave of home foreclosures is having on working people across the United States. While the effect of the mortgage crisis on the Wall Street banks is headline news, the media rarely inquires into the social consequences of the foreclosure epidemic. Some three-quarters of a million people have lost their homes across the US so far this year and foreclosure filings are up 82.6 percent from a year ago, according to the web site ForeclosureS.com. The same report notes that 107,500 homes were lost in September alone.

The city of Detroit has the highest repossession rate for a major city in the US, with real-estate owned (REO) homes—that is, homes repossessed by banks or mortgage holders—at 3.7 percent in 2007. Cleveland, Ohio came in a close second with a 3 percent REO rate. The social reality behind these figures is illustrated by a recent sale of a foreclosed home in Detroit. In September, a modest two-story single-family home on Detroit’s east side near the Detroit City Airport sold for one dollar. Less than two years ago, in November 2006, the same home sold for $65,000. More

Source: Option Armageddon
The NYT will report in tomorrow’s paper that Merrill is seeking a buyer for its 20% stake in Bloomberg LP, the maker of the ubiquitous financial terminals. According to the Times: …Merrill, which has already raised $15 billion since John A. Thain took over as chief executive last fall, is finding it difficult to raise additional capital through previously used means, like selling preferred stock to sovereign wealth funds and other institutional investors, and it would prefer to avoid diluting the holdings of existing investors.

You can imagine SWFs are gun-shy since they’ve already lost billions on the first wave of Wall Street capital infusions made last year. I wonder if flush private equity players have been invited to invest recently. Merrill hopes to get $5-$6 billion for their stake, which would imply a $25-$30 billion valuation for all of Bloomberg. Hizzoner owns a 72% stake, so that valuation would put his net worth between $18 and $22 billion. If the $5 billion raised from a Bloomberg sale isn’t enough, Merrill may raise another $10 billion selling its BlackRock stake. Citigroup is also planning a fire sale in order to raise capital.

The more assets sold, the more capital will go back onto Wall Street balance sheets, which is good news…..theoretically, anyway. The banks may finance some of these asset sales with their own balance sheets, which the Times article notes Merrill may do to sell the Bloomberg stake back to Bloomberg.