by Laura Conaway

Foreclosures spiked by 30 percent last month. All told, 290,631 homeowners got either the news or the boot, depending on how far along in the process they were. The Mortgage Bankers Association calculates that 11.18 percent of all loans was either in foreclosure or at least one payment behind.

The fear now is that the new foreclosures are driven by rising unemployment, and not fallout from the subprime mortgage crisis. New weekly claims rose by 9,000, to 654,000.

 

The other day at church coffee hour, of all places, I met a guy who does risk management for a major bank. He says they're solid through 10 or 11 percent unemployment. That's in the neighborhood of the Federal Reserve's "adverse scenario" for stress testing banks, at 10.3 percent unemployment next year.

But by any measure, the rising unemployment is bad news for banks.