MORNING BRIEFS

*still falling, albeit at a slower pace.
Home prices in 20 major cities fell by 18.1% from April 2008, Case-Shiller index shows.
June 30 (Bloomberg) -- Home prices in 20 major U.S. metropolitan areas fell in April at a slower pace than forecast, a sign the plunge in real-estate values is abating. The S&P/Case-Shiller home-price index decreased 18.1 percent from a year earlier following an 18.7 percent drop in March. The measure declined 19 percent in January, the most since the data began in 2001. Price declines are likely to keep moderating as demand steadies and distressed properties account for a smaller share of transactions. Still, the highest jobless rate in 25 years is contributing to record foreclosures, which are likely to keep depressing values for months to come even as home sales steady. bloomberg.com

*when does it end
AIG warns of material adverse effect should European swap values decline
AIG Discloses New Risk on Derivatives Sold to Banks
The risk of losses on the derivatives may last “longer than anticipated,” the New York-based insurer said late yesterday in a regulatory filing updating the “risk factors” in its 2008 annual report. The firm had $192.6 billion in swaps allowing lenders to reduce the funds they had to hold in reserve as of March 31, AIG said.
Gerry Pasciucco, hired from Morgan Stanley in November to clean up AIG’s Financial Products operation, is under pressure to unwind contracts at the unit, which brought the insurer to the brink of bankruptcy with separate bets tied to subprime home loans. Collateral payments tied to mortgage-linked swaps drained AIG’s cash last year, forcing the firm to seek a U.S. rescue. “Given the size of the credit exposure, a decline in the fair value of this portfolio could have a material adverse effect on AIG’s consolidated results,” the company said. Bloomberg.com

*Banks will have a hell of a 2Q, at all of our expense. Banks can borrow at .25%, not lend to even creditworthy borrowers, not foreclose on properties so they don't have to take the loss onto their balance sheets and use the money they are hoarding to drive up the stock market to unrealistic levels, AGAIN. They are also making money hand over fist trading bonds for the Fed.
Securities firms go back to basics for positive quarter
Wall Street securities firms returned to the basics to post their most profitable quarter since the beginning of the credit crisis. JPMorgan Chase, Morgan Stanley, Goldman Sachs, Bank of America and other companies are leaning on strong trading and underwriting performances rather than risk and leverage. "The banks are making money the old-fashioned way, by making markets," said Douglas Sipkin, an analyst at Pali Capital. The Wall Street Journal (6/30)