New Phase of Crisis: Securities Sink Banks (WSJ)

"The U.S. banking crisis is entering a new stage, as lenders succumb to large amounts of toxic loans and securities they bought from other banks."

Souring Prime Loans Compound Mortgage Woes (WSJ)

Frightening foreclosure figures. One in eight households nationwide are in foreclosure or behind on mortgage payments. "Loans extended to borrowers with good credit are deteriorating at a faster clip" than loans to subprime borrowers. Doesn't feel like "recovery." Calculated Risk's detailed breakdown/analysis points out that Alt-A loans are included in the "prime" category, which may make the high numbers a little misleading. More on that (plus this explanation) from Reuters: "That could be skewing things since Alt-A loans by definition are less than prime and extremely loose lending standards during the boom have made them look more like subprime loans. For example, borrowers taking out an Alt-A loan could state their income rather than prove it."

Rise of the Super-Rich Hits a Sobering Wall (NYT)

John McAfee's net worth has fallen from $100 million to $4 million. Send him a sympathy card.

Burress Will Receive 2-Year Prison Sentence (NYT)

A New York millionaire, football player Plaxico Burress, who wounded no one but himself and threatened no one, gets two years in jail for his gunplay. Other New York millionaires who didn't need to pack heat to cripple millions of Americans are still on the loose on Wall Street.

Insider Selling Highlights Growing Downside Risk (TradingHelpDesk.com)

"... Company insiders are now selling stock at the highest rate in two years. This action does not guarantee a market decline but it does imply the easy money in the current bullish run has been made and downside risks, whether temporary or cyclical, have increased. ..."

MORE HEADLINES FOLLOW

THE LUCKY $TIFFED (NY Post)

AIG has shelled out hundreds of millions of dollars to Bernie Madoff's victims "under a rare homeowners' policy clause." Those who weren't covered can click on the above video (or here) for Bernie Madoff: The Musical, a strange and self-humorous mocking of the macher by Magevet, Yale's coed Jewish a cappella group. One student in the group says, "My dad thought it was too soon." But it's not too soon to put in a bid for Madoff's yacht, the 90-footer Leopard Bull. Also offshore are two hedge funds, Primeo and Alpha Prime, that are ignoring Madoff case trustee Irving Picard's clawback suits seeking $230.7 million.

Pension Plans' Private-Equity Cash Depleted as Profits Shrink (Bloomberg)

Intriguing peek at losses in some major public pension plans. California, Washington, and Oregon have lost their asses in the past eight years.

Has Obama's Mortgage Modification Plan Failed? (Baseline Scenario, Mike Konczal)

Looks like it, based on this smart, detailed analysis.

What rebound? Foreclosures rise as jobs and income drop (McClatchy, Kevin G. Hall)

California has 13.3 percent of all U.S. mortgages, but 20 percent of all new foreclosure starts.

'Clunkers' to Close After Fueling Sales, Dealer Anger (Bloomberg)

So far, 457,000 transactions worth $1.9 billion in rebates. Deadline for applications: 8 p.m. EDT on August 24.

NYC's jobless rate higher than the nation's (Crain's NY)

For the first time since November 2007, the city's jobless rate tops the national average. State labor department fights back by offering help to the unemployed via Twitter and Facebook.

Philadelphia Paper's Publisher Files Plan (WSJ)

Another big daily lands itself in bankruptcy court. The Inquirer, once a highly respected paper, carries $300 million in debt, which the court action will wipe out. Unsecured creditors will recover an estimated 1 percent of the $350 million they're owed. Adding insult to injury, they may wind up with 3 percent of the paper. What a deal. In Chicago, Sam Zell is on the verge of losing control of the Tribune Co. to lenders. Possibly gaining control of BusinessWeek is Lazard's Bruce Wasserstein.

The swamp of credit card arbitration (Fierce Finance)

Hidden ties between arbitration outfits and collection agencies and card companies. See earlier story here.

Benmosche Accepts AIG Job as Friend Says U.S. Turning Socialist (Bloomberg)

Making the world safe for capitalism. Sacrificing an easy life growing grapes in Croatia so he can "restore credibility in our industry, as well as for our country." You can't make up this shit.

A Lehman Brothers movie to air (Fierce Finance)

BBC's The Last Days of Lehman Brothers, focusing on CEO Dick Fuld.

What now for the world's central bankers at Jackson Hole? (Times U.K.)

"The mood should be a bit better than last year's meeting."

Ripples Widen In UBS Tax Case (WSJ)

IRS mum, but "far-flung" banks and their tax-dodging customers, are in extreme danger. Meanwhile, the Swiss government pocketed a $1.3 billion profit by selling its stake in UBS. Will the U.S. government ever rake in that kind of dough when it extricates itself from semi-ownership of banks?

SEARS' RESULTS STIR TALK OF MORE PAIN TO COME (NY Post)

Hedge-fund tycoon Eddie Lampert slashes costs at Sears and Kmart, but sales plummet. Ominous sign of how broke shoppers are.

Judge rips 'dark side' of attorney Simels in murder plot conviction to protect drug lord client (NY Daily News)

This can happen if you represent a businessman.