This Is Not A Good Sign:

From Bloomberg:  Banks Seek $10 Billion of Bids in Effort to Sell Bad Mortgages

As more banks explore selling soured housing debt, a smaller share of the loans that they are considering off-loading are actually being sold, Daurio and Goodwin said. Instead of one in five potential deals turning into DebtX auctions, “that ratio has gotten worse recently,” Goodwin said during the session. LINK

Despite the lipstick put on this pig by "experts" quoted in the article, the reality is that mortgage delinquencies and defaults continue to climb and banks are looking to unload as much of this crap-ass paper as they can before they have to start tapping into their excess reserves at the Fed in order to monetize the problem.  Let's not forget that a large part of bank profits since last year have been derived from marking up the holding value of assets like distressed mortgages.

Although the banking sector was slammed today - the BKX bank index was down 3.2% - Wells Fargo stock was hammered for 4.6%.  WFC is a large purveyor and holder of the nuclear explosion mortgages known as pay-option ARMs.  The stock performance today in the financial sector likely reflects the deteriorating financial condition of the United States.

On a related note, some idiot disguised as a financial expert on CNN Headline News, Clark Howard, was on today gleeflully explaining to viewers that the housing market was going lower now that the housing tax credit expired and it was great time to buy because prices were dropping by as much as 10% in some areas, as people who weren't able to sell to tax credit buyers now look just to sell before they default.  How would you like to be one of those poor slobs who was aggressively cajoled into buying some beater of a home by his broker in order to take advantage of the tax credit and "good prices," and and then turn on CNN to hear that now your purchase closed, the value of your home has probably already dropped by about 10% - which factors in 8.5% for the tax credit plus another 1.5% because of the inventory that is now flooding the market.  Many homes around my area in Denver are now sporting "price reduced" signs on top the realtor sign in front.

The housing market is on the edge of another cliff dive.  The policy makers have completely misjudged the effectiveness of the tax credit program as a means of "jump starting" the housing market.  Expect the Fed to roll out another massive money printing program, using Europe's woes as the cover excuse.  But we all know by now that the problems in Europe pale compared to the brewing financial/economic disaster in this country.