Washington Mutual Inc., the biggest U.S. savings and loan, said subprime mortgages it originated this year were performing better than those issued last year due to tighter lending restrictions, Bloomberg News reports.

“What I’ve seen so far in the way of first payment defaults, early payment defaults and early delinquencies suggests materially improved performance over what we saw out of the ’06 book of business,” Chief Executive Officer Kerry Killinger said today at a Sanford C. Bernstein & Co. conference in New York.

“That would confirm the belief that we’ve had that underwriting standards have been improved and pricing has improved in the subprime products in ’07 versus ’06.”

Late payments on subprime home loans, which are made to borrowers with poor credit ratings or high debt burdens, led to 437,500 U.S. foreclosure filings in the first quarter, a 35 percent increase from a year ago, according to Irvine, Calif.-based RealtyTrac Inc.

During the period, Seattle-based Washington Mutual’s home loan division posted a $113 million loss as the company took steps to reduce terms that make subprime borrowers more likely to default.
Washington Mutual said in April it expects the home loan unit to return to profitability by yearend.

Households in the Seattle metropolitan area spent an annual average of $54,027 in 2004 and 2005 – fully 20.3 percent more than the $44,928 spent by the typical American household. So says a report out this week from the Bureau of Labor Statistics.

While Puget Sounders spent their money as did typical Americans for things such as food, housing, transportation and healthcare, we did spend a smaller share on clothing.

Housing accounted for 32.4 percent of our expenditures hereabouts, similar to the national average of 32.5 percent. In Miami, Floridians paid 39.3 percent, the nation’s highest.

In this area, we spent 61.4 percent of our money on shelter (which includes rent or mortgage, property taxes, repairs and such). Utilities, fuels and public services came cheap, at 15.8 percent of the total, compared to 21 percent spent nationwide.

Transportation took a 17.6 percent bite of our budget around here, with 41.6 percent of that going to the purchase of our vehicles. To use public transportation, we spent 9.1 percent of our transportation budget, well ahead of the 5.5 percent national rate.

We ate with 12.8 percent of our total budget ($6,904), of which 56.6 percent went to groceries and 43.3 percent to restaurants, take-out and catering.

As to clothes, we spent $1,833, or 3.4 percent of the total budget – down from the 4.1 percent national average.

Noting an operating environment that is “more challenging than it has been in recent years,” Federal Deposit Insurance Corp. Chairman Sheila Bair warned Thursday that regulators and bankers “need to ensure that new global capital standards do not threaten the safety net.”
That net stretched during the first quarter as bank income fell.
The income fell, the FDIC said, because of “the housing slump, unfavorable interest rate conditions, slower growth in the U.S. economy and higher levels of problem loans.”
Net income among FDIC-insured banks fell from $36.9 billion in the first three months of 2006 to $36 billion in 2007.
“Higher expenses for credit losses at large banks and narrower net interest margins at smaller institutions posed the biggest challenges,” Bair said.
Meanwhile, banks in Washington continued to report better results than banks nationwide.
According to the report:
• Just over 60 percent of commercial banks in the state reported earnings gains, where 85 percent reported higher earnings a year before.
• Nearly 11 percent of commercial banks were unprofitable, up from 5 percent.
• The return on assets, a widely recognized yardstick of earnings performance, fell to 1.31 percent from 1.33 percent. Nationwide, ROA fell from 1.38 percent to 1.25 percent.
• Nationwide, only 38 percent of insured institutions reported an increased ROA.
• Total deposits among state commercial banks rose from $30.4 billion to $36.7 billion.
• Loan quality at commercial banks improved in the state, with 0.26 percent of assets not performing, down from 0.33 percent. Nationally, loan quality fell as troubled loans increased from 0.47 percent to 0.54 percent.
• Net charge-offs of loans and leases at all insured institutions nationwide totaled $8.1 billion for the quarter, a 48.4 percent increase over the same quarter in 2006.
• As the number of commercial banks in the state rose from 76 to 83, so did the number of people employed rise from 10,600 to 11,469. Nationwide, the number of commercial banks fell over the year by 111, to a total 7,380 at the end of March.

In its latest alert to taxpayers, the Internal Revenue Service this week warned of an e-mail scam intended to fool people into believing they are under investigation by the agency’s Criminal Investigation division.

The e-mail purporting to be from IRS Criminal Investigation falsely states that the person is under a criminal probe for submitting a false tax return to the California Franchise Board. The e-mail seeks to entice people to click on a link or open an attachment to learn more information about the complaint against them. The IRS warned people that the e-mail link and attachment is a “Trojan Horse” that can take over the person’s computer hard drive and allow someone to have remote access to the computer.

The IRS urged people not to click the link in the e-mail or open the attachment.

Similar e-mail variations suggest a customer has filed a complaint against a company and the IRS can act as an arbitrator. The latest versions appear aimed at business taxpayers as well as individual taxpayers.

The IRS emphasized that it does not send unsolicited e-mails or ask for detailed personal and financial information online. Additionally, the IRS never asks people for the PIN numbers, passwords or similar secret access information for their credit card, bank or other financial accounts.

Recipients may forward questionable e-mails to phishing@irs.gov. Since the establishment of the mail box last year, the IRS has received more than 17,700 e-mails from taxpayers reporting more than 240 separate phishing incidents. To date, investigations by TIGTA have identified host sites in at least 27 different countries, as well as in the United States.