New foreclosures almost quadrupled in Los Angeles and doubled in Miami in the second quarter, with as much as $5 billion worth of loans going bad in L.A. alone, the on- line real estate data company PropertyShark.com reported.
The number of homes scheduled for auction in Los Angeles rose 14,505 compared with 3,797 in the same period a year earlier, PropertyShark said in a report distributed by e-mail. In Miami- Dade County, the number climbed to 2,677 from 1,282.
U.S. stocks tumbled, sending the Dow Jones Industrial Average into a bear market, after oil rose to a record and steelmakers and coal producers retreated on concern the economic slump will worsen.
The Standard & Poor's 500 Index slid to its lowest since July 2006 as crude climbed above $143 a barrel, dimming the outlook for corporate profits. General Motors Corp., the biggest U.S. automaker, plunged to a 54-year low on Merrill Lynch & Co.'s warning that ``bankruptcy is not impossible.'' Nucor Corp. led the biggest decline in steel shares since 2002 as concern grew that the auto slump will cut demand and the government said metals orders declined. Peabody Energy Co., the biggest U.S. coal producer, dropped as European prices fell the most since 2005.
``Investor sentiment is clearly miserable right now,'' said Wayne Wilbanks, who oversees about $1.2 billion as chief investment officer of Wilbanks Smith & Thomas Asset Management in Norfolk, Virginia.
The fallout from the subprime-mortgage collapse is spreading from global lenders such as Citigroup Inc. and UBS AG to local ones, including Lansing, Michigan-based Capitol Bancorp, FirsTier Corp. of Northglenn, Colo. and Mountain 1st, which tempts customers at log cabin-style branches with cookies and coffee. Less capital for such hometown banks may stymie Federal Reserve Chairman Ben Bernanke's effort to prevent a credit crunch.
``There is no question there is a problem,'' said Chris Cole, senior regulatory counsel for the Independent Community Bankers of America, a Washington-based trade group for about 5,000 lenders. ``Banks need the capital to lend. So that problem of raising capital causes a further slowdown. This inability to raise capital points to a damping of the whole economy.''