Secondary Market

The Government National Mortgage Association (Ginnie Mae) announced Tuesday that it guaranteed $22.7 billion in mortgage-backed securities (MBS) in March. Total single-family issuance for March was more than $22 billion. Ginnie Mae II single-family pools lead the way with nearly $14 billion in issuance, while Ginnie Mae I single-family pools totaled nearly $8 billion. In addition, Ginnie Mae's multifamily MBS issuance was nearly $828 million.

Private equity investment funds, in collaboration with the U.S. Treasury, have relieved the market of $10 billion in souring real estate assets, purchased through the federal government's Legacy Securities Public-Private Investment Program (PPIP). About 88 percent of the portfolio holdings, or $8.8 billion, are non-agency residential mortgage-backed securities (RMBS). Twelve percent, or $1.2 billion, are commercial mortgage-backed securities (CMBS). Of the RMBS assets, nearly half fall into the Alt-A loan category.

In the first quarter of 2010, Wells Fargo earned $2.5 billion, or $0.45 per common share, according to the San Francisco-based bank's earnings report released Wednesday. Wells Fargo said all business segments contributed to the strong earnings results. The bank specifically pointed to improvements in home retention efforts and credit quality, which it described as having ""turned the corner.""

Fraud allegations brought against Goldman Sachs Friday are still reverberating down Wall Street. Capital market analysts at Bernstein Research estimate that the suit could put Goldman Sachs on the hook for up to $700 million. The implications of the charges, though, stretch far beyond the walls of Sachs. With the federal government already gunning for big Wall Street firms as it pieces together financial reform legislation, the news has given Congress and the White House ammunition for tighter regulations.

The Securities Industry and Financial Markets Association (SIFMA) announced Monday that Richard Dorfman has been appointed managing director and head of the SIFMA Securitization Group (SSG), a unit formed in early 2010 to take up the broad range of regulatory and legislative issues facing the secondary market in the wake of the nation's financial crisis. Dorfman joins SIFMA from the Federal Home Loan Bank of Atlanta, where he was president and CEO.

The hits keep coming for small and mid-sized banks. Over the weekend, regulators shut down eight - three in Florida, two in California, and one each in Massachusetts, Michigan, and Washington. Altogether, this latest round of closures will cost the FDIC $985 million, and brings the total number of failed banks for the year to 50.

The earnings season for big banks is starting off in positive territory, and well above analysts' expectations. JPMorgan Chase & Co. reported last week that it brought in net income of $3.3 billion during the first quarter of 2010, or $0.74 per share. The market was expecting earnings of $0.65 a share. The numbers represent a 55 percent improvement over a year ago, largely due to big gains in its investment banking business. JPMorgan's consumer credit portfolios didn't fare as well, but the bank's chief did indicate that loan quality is improving and delinquencies are beginning to stabilize.

A federal investigation into Wall Street and the economic crisis has honed in on Washington Mutual, making the bank that was absorbed by JPMorgan Chase in 2008 the poster child for what went wrong with the nation's financial system. After two days of hearings, the Senate Permanent Subcommittee on Investigations has concluded that federal banking regulators failed to step in and curtail shoddy lending practices and ignored excessive risk-taking at what was once the sixth largest U.S. bank.

Encore Equities, a subsidiary of Dallas-based Encore Enterprises, Inc., recently appointed Mark Cypert as SVP of institutional equities. In his new role, Cypert will focus on raising institutional investor equity and managing Encore's research and underwriting program to help identify projects meeting Encore's commercial real estate investment criteria in the retail, multifamily, and hospitality sectors.

The performance of subprime loans made during the real estate boom continues to worsen, putting investors on an even bigger hook. This week, Moody's Investors Service downgraded its ratings on a total of $42.2 billion of residential mortgage-backed securities (RMBS) made up of subprime home loans. The agency said the downgrades are a result of ""continued performance deterioration in subprime pools,"" which is likely to worsen further as still-falling home prices and high unemployment trigger more defaults.