Daily Commentary

Given low liquidity and secondary volumes, month/quarter end buying has pushed spreads much tighter despite equity weakness. Witness the FranceTel new issue yesterday which was ~5x oversubscribed.

Oracle, Cytec and MetLife are all in the market with new issues today; their timing is likely inspired by the demand for FRTEL.

Bloomberg has an interesting article about correlations amongst different sectors being at all time highs. This is largely echoed in our most watched pair of the S&P vs CDX which over the last 3 months have moved largely in lock step. The only slight outlier seems to be the NASDAQ 100 which credit spreads 'predict' should be lower at ~1440. We've learned that correlation can spike during a crisis....but how should we react when they climb during a rally?

Remember, in a true OTC market like the credit market, if desks are lightly staffed like they are during this holiday week, volumes will remain very subdued (down ~20-30%)...credit trading is neither automated nor scalable. The large bulk of trading this week is month end index rebalancing (i.e. not driven by rational economic price taking). In the old days of 2 years ago, this period was typically dominated by the street lightening up their balance sheets....but now balance sheets are down 60-70% so the impact is obviously less.

Given all the recent chatter about rising commodities, I was a bit surprised by the headline that Euro-zone inflation may have a negative rate.

This may not surprise the mortgage folks, but I was stunned to learn that 28% of all mortgage defaults (65% of all subprime mortgage defaults) started out as prime mortgages.

Daily Commentary

With few other cues to guide spreads they are following global equity markets better this morning. On one hand you have a holiday shortened week that typically sees little supply and falling volatility (Vix, MOVE). On the other hand, you have a month and quarter end which can lead to quite odd technicals in the market. We may see some headlines on Wednesday from the State of California as they threaten to start using IOUs as payments.

AMG mutual fund flows showed a small weekly outflow from high yield breaking the streak of 14 consecutive inflows.

In light of pending bank/broker earnings, the FT has an article about how strong performance from sales/trading/capital markets will outweigh struggling legacy assets on the balance sheet.

Altman is predicting that default rates will rise from their current ~7% to a high of 14%, recovery rates will settle in the low ~$20s and high yield spreads will rise to ~1200bps over treasuries.

You've likely noticed my bemusement over the rating agencies and their new fangled 'enhanced' approach to rating securities that they completely missed in the downturn. Here S&P tells us how they will now require ~20% credit enhancement for CMBS securities to be rated AAA. This is up from ~12%. Perhaps they've noted that commercial real estate looks a bit squishy? Do not underestimate the impact this change will have on the securitized markets.

Apparently Michael Jackson's financial dealings were not as simple as ABC.

Daily Commentary

Lower volatility and firmer swap spreads are trumping weaker global equities, for now, and spreads are slightly better on the morning.

Reaction in the credit markets to yesterday's FOMC decision was largely muted as their asset purchase programs remained unchanged.

So far, I only see a smaller new deal from Jeffries (as an issuer) coming to market today.

Given the U.S. victory over Spain yesterday, I thought I'd revisit one of my favorite pair trades. Yes, we can beat the #1 football team in the world....but can we trade better than Campbell's Soup? The answer is no.....CPB is still trading through (i.e. viewed as lower risk) than the United States government.

Frankly, I'm surprised that AIG is trading better today. Yes, they did 'pay back' ~$25B to the Fed. However, I would have hoped they could do it the old fashioned way by selling a division.....and not by monkeying around with their capital structure (paying off debt with preferred shares).

If you cannot recall the exact date that the OTS took over WaMu....or when the TALF details were first announced...the NY Fed has put together this comprehensive timeline of all the crisis events. It's hard to read it without wincing at each event as you recall them.

This is a great piece, and commentary, on how Goldman views it's own risk and the foibles of using VaR.

Daily Commentary

Lower volatility, tighter swap spreads, minimal supply and almost universally higher equity prices have credit spreads firmer this morning.

That being said, this June has seen the least amount of sun since 1903 and equity returns are positively correlated to the amount of sunshine (according to this paper). If equities weaken, spreads will certainly widen.

While I usually don't delve into outright equity predictions more than once a posting, I thought this story about insider buying drying up was interesting.

Yesterday, everyone was worried about the World Bank's economic prediction of further weakness. Well, today's response to that is the OECD which is predicting the worst is over.

LIBOR rates yesterday hit all time lows.

The negative basis continues it's narrowing rally largely unabated (despite my predictions of a pause). However, I was a bit disappointed to see that credit curves actually inverted another 4bps over the last week which is in contrast to the trend of the last 6 weeks.

Thankfully, new issue supply is light; down about 30% from the '09 monthly average. Historically, June is above average for new issue volume as issuers try to get deals done before the July 4th holiday and then earnings season blackout period.

Secondary volumes remain healthy however the dealer sell vs dealer buy ratio has crept down towards 2x from it's usual 3x. Backing this data up anecdotally, I'm hearing a few folks saying that dealer inventories feel a bit heavy as customer buying has slowed a bit.

Daily Commentary

Spreads are modestly tighter today in sympathy with higher equities. Yesterday's pop in the Vix will likely keep any spread rally capped.

Credit investors remain focused on treasuries and the Fed this week. We have 2yr, 5yr and 7yr treasury auctions for ~$100B this week in addition to the FOMC announcement tomorrow at 2:15ish.

Yesterday, I noted that European investors switched to fixed coupon CDS yesterday mirroring the US market. However, I neglected to note that the European market will have 4 different coupons while US investors will suffice with just 2. This is yet another example of how homogeneity seems to be difficult to achieve in this sector.

Continuing a positive theme, to credit investors at least, Royal Ahold announced a debt buyback this morning.

Life insurance spreads are getting crushed this morning without any real fundamental news to speak of. I've noted their recent rally in spreads over the last few months; look at Allstate which has rallied from ~400bps in March to it's tights earlier this month of ~95bps. It's currently trading ~120bps.

I'm encouraged by the Merck new issue which is ~10-15bps tighter than where it was issued yesterday. They were able to cover all their takeover financing needs (for SGP) in one fell swoop.

CMBS spreads have had quite a volatile year; from early March until early April they had rallied from ~800bps to ~400bps on news that the Fed's purchase program would be expanded. However, fundamental concerns about the sector have been around for quite some time. Those concerns received more press today here.

Here's another story to add to the pile of my posts on "appetite for risk is back".....Byron Trott was able to raise $2B for his new private equity firm.

If you simply regress the credit markets (using CDX) and the S&P 500 for the last 3 months, there is little diversion (Z score of 0 with R^2 of ~91). However, if you regress those same 2 data series for 1 year, credit spreads are predicting an S&P of ~1100. So, if you think this environment is the new paradigm, then everything is 'fairly' priced. However, if you think this market is just temporary, then either credit spreads need to go wider or the S&P needs to higher (or some combination therein).

Today's anecdotal sign of the economy remaining weak....I called a few contractors yesterday afternoon looking for some minor drywall work to be done. All 3 called back within 1 hour and the guy I chose arrived this morning at 7:30am.

Daily Commentary

A higher Vix, lower equities and continued lousy weather on the US east coast have combined to push spreads wider this morning.

Volumes should be somewhat subdued today as they were Friday due to today's quarterly CDS roll and today's European conversion to fixed coupon CDS. Yes, this may force more operational and/or clean-up CDS trades but will likely distract many from making tactical or strategic trades.

Merck seems to be the only new issue in the market today. Remember, the new issue premium has shrunk back to almost zero reducing the relative attractiveness of new issues.

Despite continued unrest in Iran and the US Navy's tailing of a North Korean ship, the headline gathering the most attention is the possible overhaul of the repo markets. Like the CDS market, this function in the market has long been controlled by the tight duopoly of JPM and Bank of NY. Credit spreads in those 2 names are wider in line with the rest of the market. This function was one of the many bogeymen that were cited as contributing to the liquidity problems during the credit crisis.

In JPMorgan's weekly credit piece, they point out the relative attractiveness of negative basis trades despite the recent narrowing. They cite steep short term interest rate curves and increased available leverage as some of the primary drivers of increased ROI. How does this impact you? Expect the negative basis to continue to narrow as cash bonds will (theoretically) outperform credit default swaps.

William Poole, formerly a Federal Reserve governor, made an interesting comment:

“Goldman is to be congratulated for seeing the problem ahead of others and protecting itself from the impending failure of AIG....It’s not the responsibility of any private firm to determine what the public interest is -- that’s why we have a government.”

I agree with him. From the perspective of an investment management firm or broker, prudent risk management often entails insisting on margin or closing positions where margin may be insufficient. These always translate into cash calls for the targetted bank/broker. Can prudent risk managment = a run on a bank?

Many bloggers have taken up the thesis that LIBOR is no longer relevant. Here is a fairly good summary of the arguments.

Daily Commentary

I'm travelling today so this will be very brief.

Spreads are tighter on the back of stronger global equities and continued demand for credit bonds. This weeks mutual fund flow data once again showed huge outflows out of money market funds into the riskier asset classes.

Given all the scrutiny over true over-the-counter securities (think credit default swaps), I can't say I'm too surprised that the SEC is coming after 'dark pools.'

Beware of strangers bearing gifts on triple witching day.....especially if they are worth $134B.

Daily Commentary

Spreads are opening up wider this morning. While I could cite mixed global equity markets, I suspect it has more to do with rising 10 year yields and the rating agency S&P.

On the same day that 10 banks paid back their TARP funds, S&P downgraded 18 banks with 5 of them going to junk. Not surprisingly, bank spreads are wider this morning (but off their wides). Yes, I acknowledge that the TARP payers are mega-banks while the S&P targets were much much smaller.

Somewhat thankfully, S&P announced it's AAA rating for the United States is safe for some time.

On the matter of the 10 year and it's yield, a few pundits are predicting continued higher yields.....Dan Fuss of Loomis Sayles is predicting a 6.25% yield in the next 4-5 years.

The new issue market remains subdued with LO and LNC the only notables with 'live' deals pending.

For you equity folks watching the rally in HMO stocks, please note that their spreads

are not following suit tighter.

While I should have noticed this yesterday, I am very surprised to hear that the rating agencies were largely left untouched in this proposed financial regulation overhaul.

This is a thoughtful, and wordy, perspective on how AAA rated 'risk' became a proxy for systematic risk and when participants realized that there was only a 1 way trade in that 'risk', the panic set in.

The New Yorker's James Surowiecki has an interesting article about the impact, or lack thereof, of oil prices on the broader economy. One excerpt:

"historically, sharp spikes in oil prices have sent consumer confidence plummeting, and have led to outsized cutbacks in general consumer spending. This makes sense: gasoline prices are the most publicly visible prices in the economy as a whole—no other prices are displayed on the street in bold, two-foot-tall numbers—so it’s not surprising that they have a disproportionate impact on the way people feel."

Daily Commentary

Once again, a combination of wider swap spreads and weaker global equities are pushing our spreads wider. Fortunately supply remains light and technical demand remains strong so the damage should be limited. Financials are the underperformers as they are the most relatively liquid sector and therefore are first bonds folks try to sell (because they can).

The ratings agency continue to play catch-up or look backwards. Today's mid-game rule change involves bank hybrids which may lead to the downgrade of ~75% of that sub-sector by Moody's. Insurance hybrids are down on the day in the fear that they may be next.

Morgan Stanley will be re-structuring it's market leading prime brokerage group to assuage the fears of those that watched some of Lehman's PB assets get claimed in bankruptcy.

Secondary volume was heavy yesterday with the dealer sell vs. buy ratio heading back towards it's usual 3x. Recent new issues from DT and CMCSA are wider from where they priced while the TITIM issue remains firm.

Bloomberg news has a story about the recent insurance spread rally that I've mentioned before.

Once again, George Soros feels the need to get himself in the news....this time is 'how to reform'.

Daily Commentary

Wider swap spreads and a higher Vix are pushing credit spreads wider this morning. Quite obviously, the Vix is higher thanks to yesterday's weakness in the equity markets. However, one will note that the gap between the Vix and the MOVE (US Treasury volatility), noted earlier, is indeed narrowing. One investor has made an enormous bet that the Vix will continue to spike.

Proposed regulation for the ABS market is likely to be sending shivers down many spines. One of the proposals is to start reporting ABS trades on the TRACE reporting engine. As I've noted many times, TRACE killed the dealers profit margins for corporates driving their exodus from that market (at least as far as dedicated capital). Regulators think that transparency brings liquidity to some sectors, I think the exact opposite is true. Here you can read Geithner and Summers 'case for reform.'

Given the rally of the last month in spreads and the more recent shorter rally in US Treasury rates, it's helpful to note that all-in yields have fallen almost 50 basis points in the last month. This will obviously diminish the overall attractiveness of the market especially to insurance accounts.

While secondary volumes were light yesterday, new issues have about a 2 week window before the 4th of July and earnings season. So, yesterday we saw ~$5.2B in supply and so far I'm hearing of TITIM, DT, and CMCSA all coming to market.

Hopefully, you will recall that I've noted that the appetite for risk is back. As a result, or coincidence, hedge funds not only had their best month (May) in years but also saw inflows for the first time in 10 months (source - here).

In March, the UK government had a failed gilt auction. Today, they've decided to syndicate their debt (a la corporates) for only the second time ever. The result? Oversubscribed.

Daily Commentary

Weaker European equities and a treasury rally have credit spreads slightly wider this morning.

A lack of new issue supply early in the week should keep a cap on further widening in the United States. Europe is seeing supply in the bank space this morning.

That being said, the geopolitical scene (Iranian elections, Netanyahu, and North Korea come to mind) could cause further agita for the markets.

The technical demand picture still looks strong as inflows continue into high grade bond funds largely at the expense of money market funds. However, the dealer sell vs buy ratio has crept down a bit....a trend to be watched.

JPMorgan notes that in this downturn, corporate profits have 'only' fallen 13.4% versus the drop of 28.9% in the 2001 recession. This is thanks to heavy cost and job cutting. In addition, the pace of stock buybacks is down ~60% versus last year.

I'm heartened by the interest in securities down in the capital structure which further fortifies the view that risk appetite is back.

Call him irrelevant, hypocritical or pandering to populism....George Soros is calling for credit default swaps to be outlawed.

Daily Commentary

Today should be another quiet day of slightly tighter spreads with little economic news and a subdued new issue calendar. This subdued mood is apropos for a rainy week on the east coast and the Yankees losing their 8th straight to the Red Sox.

This week, the credit curve continued it's healthy steepening by 4 basis points....it's still inverted by 7bps (CDX 5yr vs 10yr).

So far, we've had ~$11.4B in issuance this week with little scheduled for today.

Major treasury auctions are few and far between in the next 2 weeks which is driving treasury volatility lower for 3 of the past 4 days. It's still quite elevated from earlier this year. The WSJ is reporting today that the Fed is unlikely to be making any more major bond purchases.

In one stark sign of demand for credit, the PIMCO high yield closed end fund is now trading at ~50% above it's NAV. You can enter PHK Equity NAV on Bloomberg to see this.

I've heard more people on trading desks talking about this story than any other. It's the story of a little Texas brokerage firm stuffing a few major CDS dealers at their own game.

The S&P and the major credit index, CDX, are showing quite a bit of divergence....up to a 2.5 Z score (for 1 year trailing). CDX is predicting an S&P of ~1250 or the S&P is predicting a CDX of ~190 (vs last close of 126).

Daily Commentary

Despite continued resiliency in spreads, including this morning, there are more signs of a pending pullback.

JPMorgan notes that the pickup from risk free rates into credit one month ago was ~150%. This now stands at only ~85%.

Dresdner has put out data showing that when all-in yields rise as they are now, inflows into credit funds slow dramatically. This is likely attributable to the fact that total returns fall in that scenario and retail investors often react to short term returns. This technical demand factor has been a major driver of spread tightening.

As many have spoken of, it's 'all about treasury rates'. If you look at the volatility of treasury rates (called the MOVE index) versus equtiy volatility (using the Vix), the correlation since Lehman has been R^2 of ~70-80. In the last month, however, it's fallen apart with MOVE headed much higher. If the Vix moves higher with it....look for credit spreads to widen.

Yesterday we saw ~$3B in fixed rate issuance and heavy secondary volume. Today I've seen CVS and SEE in the market shopping new issues.

Lloyd Blankfein of Goldman made some unusual (for a bank chief) supporting statements yesterday about mark-to-market accounting rules.

With oil rising, I would have thought the archetypal "middle eastern investor" would be still be liquid....apparently not.

Daily Commentary

Credit spreads continue their march tighter with other more moribund summer markets. While it's only 1 day of widening, I have noted that I fear the negative basis has run too far too fast and may give some of that narrowing back.

Secondary volumes remain above average with a smattering of new issues, lead by Dell, in the queue this morning. I suspect 'queue' is quite a popular verb this morning in London given the Tube strike.

JPMorgan research notes the mortgage spreads have rallied ~60% (from their wide spreads) with almost 1/3 of the entire market now held by the US government. This makes credit spreads look quite attractive as they've 'only' rallied ~50% but have zero direct government holders.

This blog has a hearty defense of the mortgage (and other) securitization machine from an insider.

Here's an interesting indicator for the health of the economy...and apparently it's one that former FOMC Chairman Greenspan watches as well.....underwear sales. Apparently, we've bottomed (pun intended).

Looking at market wide credit default swap data (from the DTCC), I noted some surprising facts.....BRK amd PMI have ~7x in net CDS outstanding compared to their public debt outstanding. MBI, RDN, MTG and ABK are all in the 3-4x range. Outside of those insurance names, RSH was the next highest (notable) at ~3x.

Daily Commentary

The focus in the fixed income markets remains on rising US Treasury rates.  Credit markets continue to perform well as spreads are tighter yet again this morning.  

Secondary volumes were slightly below normal and the dealer sell vs buy ratio dipped below it's usual 3x ratio.  The new issue market has been relatively quiet this week; so far today, I'm hearing only of potential deals from FO and ETR.

At the risk of repeating myself, the negative basis continues to narrow.  JPMorgan is making the case that this could even roll to a positive basis.  They also make the case that bank credit ratios should improve in this current environment of a steep yield curve and active markets.  

Bloomberg news has an interesting story about the difference in expectations between the dealer poll and the futures markets about the path of short term interest rates.

Given how far the credit markets have rallied, I feel like we could be setting up for a pullback or fall.  Often exogenous geopolitical events can be the cause or perhaps just a cue.  However, checking on the prediction markets on the InTrade website,  I'm somewhat assuaged as their markets show few, if any, pending problems.  Apparently, most folks are not worried about the pending "merciless offensive" from North Korea.     

      

Daily Commentary

Spreads are modestly wider this morning as credit investors wonder 1.) have we rallied too far too fast and 2.) why have risk-free rates risen so much.

In positive news, the negative basis continues it's torrid narrowing inside -100bps.  This basis has slightly outperformed the rally in spreads due to the slightly shorter nature of the basket of cash bonds (versus the overall index).

This week we'll likely to see some healthy corporate and treasury supply.  Realistically, we'll probably see more attention and press this week about the new iPhone. 

One common reason behind a treasury rate back-up is convexity hedging.  DeutscheBank maintains that this is not the reason behind this recent rise in yields but rather the old fashioned 'more sellers than buyers'.  If convexity hedging is not a familiar term for you, learn about it here.    

It was oddly comforting to see a rational and traditional handover of Tribune to senior debtholders without government intervention, union pressure and shenanigans or a new change of the rules.

Given the current populist administration, one should not be surprised that there is now some chatter about compensation reform for the entire financial services industry not just the TARP takers.

If it's any solace, Geithner is cannot sell his home either.      

Daily Commentary

Credit spreads shrugged off earlier equity weakness and are rallying once again today.  This week's rally of ~35bps was a slight reversal of last week's in that single A rated bonds outperformed lower quality BBB's.  The negative basis continues it's dramatic narrowing to it's current 111bps; remember that the FOMC watches this number as one of the indicators of the health of the credit markets.  

The market saw ~$32B in supply this week which was ~18% above the weekly average.  So far, this summer Friday has no new issues in the queue largely due to the unemployment figure (which has the potential to create a volatile rates environment).  

Secondary volumes remain slightly above average with the dealer sell vs buy ratio reverting back to it's sticky longer term average of ~3x.

Inflows into high grade bond fund were 3x their weekly average this week.  Thankfully, money market funds have returned to their 'normal' outflows after last week's aberration.

Bloomberg news has noted that some of the banks recent positive income reports are buoyed by FASB loosening it's rules; I had noted this potential previously.

What major index is up a whopping 27% YTD?  High yield.

Mortgage investors were not surprised that NY Fed Governor Dudley noted yesterday that AAA RMBS securities may not be supported (i.e. purchased by) the Fed's TALF program.

I was surprised to see in the DTCC data that gross credit derivatives index outstanding has shrunk ~40% since last fall.  I suspect most of this is due to collapsing of dealer vs dealer positions (as the number of dealers shrinks).

What government product has a consistent negative gross margin of 40%?  The penny.  It costs 1.7 cents to produce each one (story here).        

      

  

Daily Commentary

Spreads are meandering a bit wider with weaker equity and changing TARP rules.  

While the banks have raised $85B in capital to re-pay their TARP funds, including $7B yesterday, the Fed seems to be taking a 'not so fast' approach to repayment; witness this article that they pay back more than originally asked in the stress tests of a month ago.

While there is still a macro imbalance between the natural ongoing demand for corporate bonds and the supply, the last few days has seen more selling pressure.  I've heard of several traditional and non-traditional (i.e. equity funds) selling in the market.  The TRACE data somewhat bears that out as the recent trend in the ratio of dealer sells vs dealer buys has shrunk from the 3x range to closer to 2x.

Now, that being said, the negative basis continues to shrink which is a positive sign of demand.  This data can be occasionally backwards looking as bond prices, and pricing services, can sometimes lag CDS pricing.  

Several news sources and blog have noted that spreads in both investment grade and high yield are approaching their pre-Lehman blow up levels.  I suspect that the very mention of this (historically wide) level may cause some pause in our spread rally.

The new issue market was tepid yesterday with ~$3B in issuance.  I'm hearing that ACE and VOD are in the market today with deals. 

There is quite a squeeze in the US Treasury 10yr market.  Be aware that that yield may be artificially rich/low until this matter passes.

Today's economic curmudgeon is Bill Gross who points out that the 'boom times are over.'  

A Bloomberg news columnist notes here that bondholders may not be as safe as traditionally thought during this administration.

Perhaps we can replenish the government's coffers by taxing fat people.     

Daily Commentary

Credit investors are buoyed by the continued equity raises (from JPM, AXP, and MS) and spreads are reacting positively.  In addition, all-in credit yields are double the treasury/risk-free rate which makes credit very attractive (from a historic perspective).

Today's data point to illustrate the strong technicals - $384B in bonds leaving the index (maturity or downgrade to high yield) versus only $326B in new issuance.       

In the wake of GM's filing on June 1st, it's helpful to note that there were only 7 defaults during May (versus the monthly average of 15).  Including GM, that brings the YTD total amount of debt defaults to $124B (versus the previous high of $64B for all of 2001).

As you've learned, I oft cite the market's negative basis as a sign of it's health and depth of demand.  Bloomberg recently noted that it's also become a rejuvenated source of profit for 'fast money'.

In the new issue market today, I'm hearing of CVX, ESRX, and PRU.  Of note, PRU recently declined TARP money.  In the hurry to pay back or ignore TARP money, the Fed has decided to issue criteria for paying it back.

Apparently, the UK will not follow the lead of it's former penal colony, Australia, in rescinding the short-selling ban....it remains on indefinitely.       

 

Daily Commentary

There's lots of green print on the Bloomberg WEI page this morning reflective of almost universal strength in the equity markets.  Credit spreads have rallied, or held firm, for 12 straight weeks and today is no exception.

Volumes are currently pretty light.  Secondary volume was only moderate on Friday which is somewhat surprising for a month end.  I've heard a few times this morning that new issue volume will be relatively light this coming week.

While the headline lead the news, GM bonds were not market moving this morning with long bonds up ~$1.  

Economists can and will argue ad naseum whether or not commodities actually drive inflation. Hopefully, both sides of this argument noted that commodities had their strongest month since 1974 during May.  Given that backdrop, you'll note that a fund advised by Nassim Taleb is allegedly positioning itself for hyperinflation.  

The insurance sector continues to rally.  The reasons I can cite are fairly weak, unconvincing and largely technical; so I'll leave you to ruminate and speculate.  Prudential's equity offering has insurance sector credit spreads much tighter this morning.  As I've mentioned before, Allstate remains one of the largest outliers of the gap between it's equity and credit spreads.  Credit spreads are 'predicting' an ALL equity price of ~$37 (vs current $26).

I thought Bill Gross had a succinct observation on the coming impact of government support on the markets:

 "redistribution and reregulation lead to slower economic growth, but the financial flows from it will be haircutted and “burden shared” by stakeholders. In turn, the present value of those flows should reflect an increasing risk premium and a diminishing multiple of annual receipts."

There do seem to be increasing populist anti-debt currents growing in our culture.  Margaret Atwood's new book Payback notes that in ancient Aramic, debt and sin were the same word.  Also, the new blockbuster hit Drag Me to Hell's main character is a mortgage lender and servicer who forecloses on homes (here is info if you didn't see the movie).

Forgive me for straying too far into the mortgage sector, but I believe this blog has an interesting 'discovery' of an aspect of the Treasury's "Making Home Affordable"program.  Investors in mortgages will have their payments covered even if the homeowner re-defaults on his already modified mortgage.