Investors Scrutinizing JPMorgan’s Mortgages

Bank of America, the firm perhaps hardest hit by mortgage-related lawsuit woes, might have some company in the courthouse soon.

Lawyers representing investors that settled billions of dollars of mortgage bond claims with Bank of America last summer announced on Friday that they had opened investigations into $95 billion worth of mortgages held in JPMorgan Chase securities.

The investors are concerned that there were mortgages put inside those securities before the housing bubble burst that were subpar from the beginning, and they are investigating whether JPMorgan should repurchase those loans.

JPMorgan is among the banks with the most mortgage-related litigation and claims, having inherited much of its exposure from its acquisitions of Bear Stearns and Washington Mutual, which both ran into trouble partly because of troubled mortgages. Of the 243 mortgage bonds at JPMorgan that the investors are targeting, at least half were created by Bear Stearns or Washington Mutual.

For the banking sector in general, mortgage bond investigations have left a looming question mark over the industry’s prospects. Banks face investigations and potential litigation from private investors as well as state attorneys general and also from the Federal Housing Finance Agency, which oversees the mortgage financing giants Fannie Mae and Freddie Mac.

The potential dollar cost of the mortgage mess has kept growing this year; many analysts estimate it may be more than $100 billion for the industry. But as a team of bank analysts at FBR, a firm in Arlington, Va., put it in a report that estimated the liabilities: “Does anyone really know?”

For banks, the continuing doubts about their old mortgage businesses also makes it difficult to move on with new mortgage origination, because the companies may be concerned about the way they describe new mortgages in filings, analysts say. The lack of lending, in turn, is seen as a drag on the economy.

“It is inhibiting people from lending,” said Tom Cronin, a managing director of the Collingwood Group, a housing consulting firm in Washington. “You’re only going to make the very best loans, if you don’t know how enforcement is going to be handled.”

Joseph M. Evangelisti, a spokesman for JPMorgan, declined to discuss the bank’s mortgage liability exposure in depth, saying only: “We stand by our obligations under the agreements in question and we will honor our obligation to repurchase any loan that should be repurchased under the terms of those agreements.”

Banks like JPMorgan have benefited in recent years from the slowness of investors to investigate the bonds they bought before the financial crisis.

Under the terms of those bonds, investors who own small slivers of mortgage bonds — as most investors do — have been stymied from obtaining much data on the mortgages within the deals. The rules vary for each bond, but typically banks have to turn over detailed information only to investors who own more than a quarter of a bond. That has meant that large investors like Pimco, BlackRock and even the Federal Reserve Bank of New York have had to combine their interests to cross that threshold.

Many of the investors are coordinating their efforts through Gibbs & Bruns, a law firm in Houston. That firm announced its plans to investigate the 243 JPMorgan deals on Friday.

It was also that firm that struck an $8.5 billion settlement with Bank of America to settle similar issues with $424 billion of mortgage bonds in July, though that settlement has yet to be approved by a court.

Gibbs & Bruns did not return requests for comment.

It will most likely take months for the investors to determine how much money they think they are owed, but when they do, they may try to reach a settlement with JPMorgan or they may take the bank to court.

JPMorgan is currently in litigation with the Federal Deposit Insurance Corporation over the terms of its deal to acquire Washington Mutual, and it is unclear if it would be the F.D.I.C. or JPMorgan that would pay out on claims related to the failed bank’s mortgage bonds.

JPMorgan has set aside billions in reserves to cover mortgage-related litigation, according to a recent company presentation.

If the bank settled with the investors using the same loss ratio that was applied in the Bank of America settlement, it would cost JPMorgan about $1.9 billion. Still the bank would have other exposure outstanding. JPMorgan faces about $31 billion in class-action cases, according to McCarthy Lawyer Links, a legal consulting firm.

Elizabeth Nowicki, a professor of securities law at Tulane University and a former lawyer at the Securities and Exchange Commission, said that the efforts by investors might turn out to be the costliest and most important way that banks are held accountable for their mortgage security creations, because the push for accountability is coming from bank clients. For instance, in the one mortgage security case the S.E.C. has brought against JPMorgan, the bank settled the allegations in June for $153.6 million.

“I think this is going to have much more of an impact in terms of fear and Wall Street sort of shaking in its boots than anything the S.E.C. or Congress can do,” Ms. Nowicki said.

“Without a confident client base, the banks can’t make any money, and now that the client base is really trying to probe into these packages to see what really went on, they are going to have to give some answers.”

S.E.C. Accuses Fannie and Freddie Ex-Chiefs of Deception

Robert Khuzami of the S.E.C. announcing the lawsuits against six former top executives of Fannie Mae and Freddie Mac.

Regulators have accused the former chief executives of the mortgage giants Fannie Mae and Freddie Mac of misleading investors about their firms’ exposure to risky mortgages, one of the most significant federal actions taken against those at the center of the housing bust.

The lawsuits filed Friday against the two chief executives and four other top executives are an aggressive move by the Securities and Exchange Commission, and come after a three-year investigation.

The agency has come under fire for not pursuing top Wall Street and mortgage industry executives who contributed to the financial crisis. In cases contending the deceptive marketing of securities tied to mortgages, the S.E.C. has been criticized for citing only midlevel bankers while settling with the Wall Street firms themselves. Recently, the agency drew criticism from a federal judge after allowing Citigroup to settle a fraud case without conceding wrongdoing.

On Friday, S.E.C. officials trumpeted their actions in the Fannie and Freddie case as part of a renewed effort to crack down on wrongdoing at the highest levels of Wall Street and corporate America.

“All individuals, regardless of their rank or position, will be held accountable for perpetuating half-truths or misrepresentations about matters materially important to the interest of our country’s investors,” said Robert S. Khuzami, the agency’s enforcement chief. “Investors were robbed of the opportunity to make informed investment decisions.”

He noted that the agency had now filed 38 separate actions stemming from the 2008 financial crisis.

The former Fannie Mae and Freddie Mac executives have vowed to challenge the government, saying that the companies repeatedly disclosed the breakdowns of their loan portfolios.

As companies that fed both the housing bubble and Wall Street’s appetite for risk, Fannie Mae and Freddie Mac came under investigation quickly by federal agencies amid the financial crisis in 2008. But Freddie Mac disclosed this summer that the Justice Department’s inquiry into the company had ended without any charges. And the S.E.C stopped short of bringing actions against the two companies.

Instead, agreements with Fannie and Freddie will allow the now government-controlled companies to evade prosecution and fines so long as they cooperate with authorities. The deal does not require approval from a federal court, unlike the proposed settlement with Citigroup.

The case against the former executives, including Daniel H. Mudd, the former chief executive of Fannie Mae, and Richard F. Syron, the former chief of Freddie Mac, centers on a series of disclosures the firms made to investors at the height of the mortgage boom. The government contends that the firms played down the extent of their exposure to subprime mortgages, loans doled out to the riskiest of borrowers.

One S.E.C. complaint contends that Freddie Mac executives falsely proclaimed that the company had virtually no exposure to ultra-risky loans, despite internal warnings admonishing against such claims.

A separate complaint contends that Fannie Mae executives described subprime loans as those made to individuals “with weaker credit histories” while only reporting one-tenth of the loans that met that criteria in 2007. Both complaints were filed in the United States District Court in Manhattan.

Mr. Mudd, who was chief executive of Fannie Mae from 2005 until the government took control of the company in 2008, said that there had been no deception.

“The government reviewed and approved the company’s disclosures during my tenure, and through the present,” he said in a statement. “Now it appears that the government has negotiated a deal to hold the government, and government-appointed executives who have signed the same disclosures since my departure, blameless — so that it can sue individuals it fired years ago.”

The S.E.C.’s commitment to the long-running investigation — more than 100 depositions were produced over its course — highlights the major roles that Fannie Mae and Freddie Mac played in the financial crisis and subsequent government bailout. The Bush administration took over the teetering mortgage giants in September 2008, and taxpayers have since pumped more than $150 billion into the two companies. The Obama administration has vowed to wind them down, although the timeline remains unclear.

The case against the former mortgage executives resembles an earlier action against one of the nation’s biggest lenders to risky, or subprime, borrowers. Angelo Mozilo, the former chief executive and founder of Countrywide Financial, agreed to pay $22.5 million to settle federal charges along the same lines. The settlement was the largest ever levied against a senior executive of a public company, though Mr. Mozilo, who also agreed to forfeit $45 million in gains, neither admitted to nor denied wrongdoing.

Success for the S.E.C. in the Fannie and Freddie case will largely hinge on the meaning of the word subprime, which the government itself has never fully defined. While the term often refers to borrowers with low credit scores, Fannie and Freddie decided to classify loans as prime or subprime based on the lender type, not the borrower’s credit score. A Wall Street bank, for instance, was usually considered a prime lender, despite extending subprime loans.

But the government’s complaint contends that this kind of disclosure masked risk. Loans not considered subprime often defaulted at higher rates than those classified as subprime.

The government contends that the executives were less than forthcoming about that extra layer of risk. Mr. Syron told an investor conference in May 2007 that the company had “basically no subprime business.”

But a lower-level executive at the firm, who reviewed Mr. Syron’s speech in advance, warned that such a statement could be misleading.

“We need to be careful how we word this. Certainly our portfolio includes loans that under some definitions would be considered subprime,” the employee said, according to the complaint. “We should reconsider making as sweeping a statement.”

Mr. Mudd, meanwhile, testifying before Congress in April 2007, broadly defined subprime as “the description of a borrower who doesn’t have perfect credit.” But at the same hearing, he told lawmakers that “less than 2.5 percent of our book of business can be defined as subprime,” which the complaint says greatly understated the firm’s exposure based on his definition that day. Mr. Mudd’s estimate omitted some $50 billion in subprimelike loans, according to the complaint.

Lawyers for the executives, however, plan to argue that the firms did in fact disclose minute details of their loan portfolios, suggesting a potential weakness in the case. During the period under scrutiny, the companies produced “monster charts” breaking down their loan portfolios by borrowers’ credit scores and how much equity they had in their homes, among other information.

Lawyers for Mr. Syron called the S.E.C.’s case “fatally flawed” and “without merit.”

“Simply stated, there was no shortage of meaningful disclosures, all of which permitted the reader to assess the degree of risk in Freddie Mac’s guaranteed portfolio,” Thomas C. Green and Mark D. Hopson, partners at Sidley Austin, said in the statement.

The lawyers note that even the federal government never settled on a definitive meaning for subprime. Indeed, in a 2007 document, multiple federal agencies declined to define it.

Lawyers for two of the other executives named in the suit have also promised to fight the allegations.

The complaints also name Fannie’s former risk officer, Enrico Dallavecchia; an executive vice president for Fannie, Thomas A. Lund; Patricia L. Cook, Freddie’s former chief business officer; and its executive vice president, Donald J. Bisenius.

Still, Mr. Mudd and Mr. Syron are the two most prominent subjects of the complaint.

Since August 2009, Mr. Mudd has been chief executive of the Fortress Investment Group, the large publicly traded private equity and hedge fund company.

Mr. Syron is a former president of the American Stock Exchange and currently an adjunct professor and trustee at Boston College.

Your Life on Facebook, in Total Recall

Facebook's new format is likely to bring back a lot of old memories. But it could also make it harder to shed past identities.

Remember those karaoke videos from three years ago that somehow wound up on Facebook? They were embarrassing for the few hours they spent at the top of your Facebook profile, and then they were buried under a cascade of new updates.

But on Thursday, Facebook started rolling out a revamped profile feature called Timeline that makes a user’s entire history of photos, links and other things shared on Facebook accessible with a single click. This may be the first moment that many of Facebook’s 800 million members realize just how many digital bread crumbs they have been leaving on the site — and on the Web in general.

For better or worse, the new format is likely to bring back a lot of old memories. But it could also make it harder to shed past identities — something people growing up with Facebook might struggle with as they move from high school to college and from there to the working world.

“There’s no act too small to record on your permanent record,” said Jonathan Zittrain, a law professor at Harvard who studies how the Internet affects society. “All of the mouse droppings that appear as we migrate around the Web will be saved.”

The old Facebook profile page shows the most recent items users have posted, along with things like photos of them posted by others. But Timeline creates a scrapbooklike montage, assembling photos, links and updates for each month and year since they signed up for Facebook.

When Mark Zuckerberg, the founder and chief executive of Facebook, introduced Timeline in September at a developer conference, he described it as a way to get a more comprehensive portrait of someone than by simply reading updates or looking at a profile picture: “We think it’s an important next step to help tell the story of your life.”

Facebook said in a blog post that users could either wait to receive a notification about Timeline on their pages or go to facebook.com/about/timeline to activate it immediately. Eventually all profiles will be switched to the new look, though the company is not saying when. And there will be no switching back.

Some adept users have been able to reach Timeline for weeks using a workaround meant for developers. They said that while the design might be attractive, it was unnerving to realize just how much information they had been feeding into Facebook.

“We’ve all been dropping status updates and photos into a void,” said Ben Werdmuller, the chief technology officer at Latakoo, a video service. “We knew we were sharing this much, of course, but it’s weird to realize they’ve been keeping this information and can serve it up for anyone to see.”

Mr. Werdmuller, who lives in Berkeley, Calif., said the experience of browsing through his social history on Facebook, complete with pictures of old flames, was emotionally evocative — not unlike unearthing an old yearbook or a shoebox filled with photographs and letters.

But while those items would probably live only on a dusty shelf in a closet, these boxes of memories are freely available online for anyone with access to your Facebook page to view.

“It’s unsettling to see the past presented as clearly as the present,” Mr. Werdmuller said. “It’s your life in context, all in one place.”

Several hundred Facebook users shared their initial reactions to Timeline on the company’s blog post. While many appeared to be the kind of denouncements that are generated by any tweak to Facebook’s site, a large percentage welcomed the changes.

“A treat for profile stalkers,” wrote a Facebook user named Mudit Goyal. Another, Joshua Bamberg, said, “If Facebook didn’t change stuff every couple months, we would still be using MySpace.”

And Tatsat Banerjee wrote: “Now our Facebook profile is almost equivalent to a personal Web site. Make no mistake, this is the best update Facebook has ever done till now.”

Analysts say Timeline is a significant evolutionary shift for Facebook. For starters, linking Facebook more closely to memories could make it harder for people to abandon the service for rivals.

To Facebook’s credit, the site lets people edit their life stories and decide which items on their Timelines to hide. And once a switch is made, a user has seven days to review what will be displayed on the page before making it public.

But Nicole B. Ellison, a professor of information studies at Michigan State University who researches how people interact online, said the average Facebook users may not understand how to edit their pages or want to be bothered with it.

“I think for someone who has been on the site for all five of its years,” she said — Facebook opened to the general public in 2006 — “that’s a big undertaking.”

Professor Ellison said the new design could make people’s relationship with Facebook more complex.

“What does it mean to not be able to reinvent yourself after high school, after college?” she said. “Or will people completely go back and edit their histories? And how will that shape the way we view ourselves and our friends?”

Analysts say this is more than just Facebook rethinking a feature or two. The site is trying to help itself to entice advertisers more easily — and to better compete with rivals like Google, said Susan Etlinger, an analyst with the Altimeter Group, a consulting firm that advises companies on how to use technology.

“There is an arms race between technology companies to know as much as possible about the people using their services,” she said.

Timeline is also set up to highlight things like which news articles people are reading, songs they are listening to and recipes they are cooking. Users can choose to have Facebook partners like The Washington Post and the music service Spotify send that information to their Facebook pages. If Facebook could advertise items like concert tickets based on that activity, those ads could be very lucrative.

One of the Facebook designers behind Timeline is Nicholas Felton, who achieved some online fame by publishing detailed annual reports examining and graphing his personal data, such as what he ate and how many miles he traveled. The reports helped him land a job at Facebook. Mr. Felton said there were benefits to seeing one’s behavior compiled in a comprehensive way.

“One year I noticed that I wasn’t going to as many concerts as I could have liked or reading that many books,” he said. “So I was able to modify my behavior around that.”

Mr. Felton said that over time, many Facebook users would come to appreciate Timeline. “Everyone is producing crazy data exhaust these days,” he said. “Showing the value of that data helps move everything forward. It’s pretty exciting and important.”

Paying a ‘Sports Tax,’ Even if You Don’t Watch

Are you ready for some football?

You are paying for it regardless.

Although “sports” never shows up as a line item on a cable or satellite bill, American television subscribers pay, on average, about $100 a year for sports programming — no matter how many games they watch. A sizable portion goes to the National Football League, which dominates sports on television and which struck an extraordinary deal this week with the major networks — $27 billion over nine years — that most likely means the average cable bill will rise again soon.

Those spiraling costs are fraying the formerly tight bonds between the creators and distributors of television. Cable channels like ESPN that carry games are charging cable and satellite operators more money, and broadcast networks are now doing the same, demanding cash for their broadcast signals and using sports as leverage.

And higher fees are raising concerns across the industry that cable bills may be reaching the breaking point for some consumers who are short of money.

The N.F.L. contracts announced this week “will surely enrich N.F.L. owners and players just as much as it will impoverish all pay TV subscribers, particularly those who will never watch an N.F.L. game,” said Matthew M. Polka, the president of the American Cable Association, which represents small cable operators. His group wants government officials to step in and make it harder for channel owners to demand higher fees for carriage and drop the channels when operators disagree.

Publicly expressing the private sentiments of others, Greg Maffei, the chief executive of Liberty Media, recently called the monthly cost of the media empire ESPN a “tax on every American household.”

Patrick Flynn personifies the consumer challenge. He and his wife, who pay Comcast $170 a month for television, Internet and a home phone in Beaverton, Ore., are keenly aware that part of their bill benefits the sports leagues that charge networks ever-increasing amounts for the TV rights to games. Save for one regional sports channel, he said, none of them are worth it.

“For the two or three games a year that our Washington Huskies are on ESPN, we can arrange for someone else to host the party,” he said.

But there are also millions of viewers like Russell Tibbits, of Dallas, who says, “If you eliminate sports channels from cable packages, I literally would not own a TV.”

Television and league executives argue that the vast majority of viewers not only want sports, but are, like Mr. Tibbits, willing to pay to watch a favorite team. On Sunday night, about 25 million people watched the New York Giants play the Dallas Cowboys on NBC — by far the highest-rated show on television for the night, more than tripling NBC’s average audience. ESPN, which broadcasts “Monday Night Football” and floods its week with football programming, is typically found by surveys to be the most valuable cable channel among subscribers.

But ESPN is also far costlier than any other channel, earning about $4.69 a month for each cable and satellite household in the United States, according to the research firm SNL Kagan. Next year the firm expects ESPN to cross the $5 a month threshold for the first time (the next highest is TNT, at $1.16 this year). On Thursday, ESPN announced its latest rights deal, one that extends through 2024 with the N.C.A.A.

“Sports is hugely popular in America,” said Edwin M. Durso, an executive vice president for ESPN, “and I think the prices that we and others pay for programming clearly reflect that.” Mr. Durso noted, accurately, that ESPN does not set retail prices for its content. But together with siblings like ESPN2 and ESPN Classic, the ESPN networks take in about $6.50 per subscriber each month, according to SNL Kagan. Other sports channels like Fox Sports Net, N.F.L. Network and Versus, soon to be renamed the NBC Sports Network, account for at least an additional $1.50 or so.

In the last few years broadcasters like CBS and NBC have started to posture for monthly fees from cable and satellite providers, and indirectly, those fees pay for sports programming, too.

Eventually, subscribers feel the pinch; “if you look at the whole media food chain, the last guy on it is the consumer,” said David Bank, an equity research analyst at RBC Capital Markets.

To date the cable industry’s slight concessions toward the rising costs of sports have not amounted to much. Time Warner Cable offers a cheaper, smaller bundle of channels that lacks ESPN, but few have signed up. Both Time Warner and Cablevision have refused to carry the N.F.L.’s own network, citing the high cost — 81 cents a month, according to SNL Kagan — but they have been harshly criticized by sports fans for it.

Soon, though, there may be an Internet alternative — something that was heresy until recently. Distributors like Dish Network are talking to channel owners about creating virtual cable providers that would stream channels over the Internet instead of traditional cables. That would break up the bundle of channels that subscribers have grudgingly accepted for years and allow subscribers who don’t like sports to avoid paying for them.

“They’re aggressively looking for ways to offer a lower-cost package of channels without sports,” said the chief executive of one such channel owner, who insisted on anonymity because the talks were confidential. “There may be a market in America, whether it’s 10 or 20 million people, that would be very happy to have 50 or 60 channels but not ESPN.”

By streaming the channels online, old distributors like Dish or new ones like Google could do an end run around the contractual commitments and market dynamics that effectively force them to carry sports channels now. ESPN declined to comment directly on the possibility, but Mr. Durso said Thursday, “We’re happy to sell service to as many distributors as we can.”

Even if such online providers materialize, the leagues and the entrenched TV networks are now locked into lucrative contracts for the long term. Wednesday’s N.F.L. agreement doesn’t expire until the end of the 2022 season, which Brian Rolapp, N.F.L. Media’s chief operating officer, said was a “recognition that the world will change and we don’t know what it will look like.” But the networks are betting that, no matter what television becomes, it will include a lot of football.

The Facebook Resisters

Tyson Balcomb, a college student in Oregon, stopped using Facebook, saying its effects were maybe “a little unhealthy.”

Tyson Balcomb quit Facebook after a chance encounter on an elevator. He found himself standing next to a woman he had never met — yet through Facebook he knew what her older brother looked like, that she was from a tiny island off the coast of Washington and that she had recently visited the Space Needle in Seattle.

“I knew all these things about her, but I’d never even talked to her,” said Mr. Balcomb, a pre-med student in Oregon who had some real-life friends in common with the woman. “At that point I thought, maybe this is a little unhealthy.”

As Facebook prepares for a much-anticipated public offering, the company is eager to show off its momentum by building on its huge membership: more than 800 million active users around the world, Facebook says, and roughly 200 million in the United States, or two-thirds of the population.

But the company is running into a roadblock in this country. Some people, even on the younger end of the age spectrum, just refuse to participate, including people who have given it a try.

One of Facebook’s main selling points is that it builds closer ties among friends and colleagues. But some who steer clear of the site say it can have the opposite effect of making them feel more, not less, alienated.

“I wasn’t calling my friends anymore,” said Ashleigh Elser, 24, who is in graduate school in Charlottesville, Va. “I was just seeing their pictures and updates and felt like that was really connecting to them.”

To be sure, the Facebook-free life has its disadvantages in an era when people announce all kinds of major life milestones on the Web. Ms. Elser has missed engagements and pictures of newborn babies. But none of that hurt as much as the gap she said her Facebook account had created between her and her closest friends. So she shut it down.

Many of the holdouts mention concerns about privacy. Those who study social networking say this issue boils down to trust. Amanda Lenhart, who directs research on teenagers, children and families at the Pew Internet and American Life Project, said that people who use Facebook tend to have “a general sense of trust in others and trust in institutions.” She added: “Some people make the decision not to use it because they are afraid of what might happen.”

Ms. Lenhart noted that about 16 percent of Americans don’t have cellphones. “There will always be holdouts,” she said.

Facebook executives say they don’t expect everyone in the country to sign up. Instead they are working on ways to keep current users on the site longer, which gives the company more chances to show them ads. And the company’s biggest growth is now in places like Asia and Latin America, where there might actually be people who have not yet heard of Facebook.

“Our goal is to offer people a meaningful, fun and free way to connect with their friends, and we hope that’s appealing to a broad audience,” said Jonathan Thaw, a Facebook spokesman.

But the figures on growth in this country are stark. The number of Americans who visited Facebook grew 10 percent in the year that ended in October — down from 56 percent growth over the previous year, according to comScore, which tracks Internet traffic.

Ray Valdes, an analyst at Gartner, said this slowdown was not a make-or-break issue ahead of the company’s public offering, which could come in the spring. What does matter, he said, is Facebook’s ability to keep its millions of current users entertained and coming back.

“They’re likely more worried about the novelty factor wearing off,” Mr. Valdes said. “That’s a continual problem that they’re solving, and there are no permanent solutions.”

Erika Gable, 29, who lives in Brooklyn and does public relations for restaurants, never understood the appeal of Facebook in the first place. She says the daily chatter that flows through the site — updates about bad hair days and pictures from dinner — is virtual clutter she doesn’t need in her life.

“If I want to see my fifth cousin’s second baby, I’ll call them,” she said with a laugh.

Ms. Gable is not a Luddite. She has an iPhone and sometimes uses Twitter. But when it comes to creating a profile on the world’s biggest social network, her tolerance reaches its limits.

“I remember having MySpace for a bit and always feeling so weird about seeing other people’s stuff all the time,” she said. “I’m not into it.”

Will Brennan, a 26-year-old Brooklyn resident, said he had “heard too many horror stories” about the privacy pitfalls of Facebook. But he said friends are not always sympathetic to his anti-social-media stance.

“I get asked to sign up at least twice a month,” Mr. Brennan said. “I get harangued for ruining their plans by not being on Facebook.”

And whether there is haranguing involved or not, the rebels say their no-Facebook status tends to be a hot topic of conversation — much as a decision not to own a television might have been in an earlier media era.

“People always raise an eyebrow,” said Chris Munns, 29, who works as a systems administrator in New York. “But my life has gone on just fine without it. I’m not a shut-in. I have friends and quite an enjoyable life in Manhattan, so I can’t say it makes me feel like I’m missing out on life at all.”

But the peer pressure is only going to increase. Susan Etlinger, an analyst at the Altimeter Group, said society was adopting new behaviors and expectations in response to the near-ubiquity of Facebook and other social networks.

“People may start to ask the question that, if you aren’t on social channels, why not? Are you hiding something?” she said. “The norms are shifting.”

This kind of thinking cuts both ways for the Facebook holdouts. Mr. Munns said his dating life had benefited from his lack of an online dossier: “They haven’t had a chance to dig up your entire life on Facebook before you meet.”

But Ms. Gable said such background checks were the one thing she needed Facebook for.

“If I have a crush on a guy, I’ll make my friends look him up for me,” Ms. Gable said. “But that’s as far as it goes.”

Rating Agency Warnings Bring Down the Markets

PARIS — The market euphoria over last week’s deal by European leaders to shore up the euro currency union succumbed to a darker mood Monday.

In European trading and on Wall Street, stocks fell sharply after Moody’s Investors Service and the Fitch Ratings agency warned that political efforts to protect the euro had not resolved the immediate dangers of a significant economic downturn in the region and troubles in the banking system.

And the yield, or interest rate, on the 10-year Italian government bond — perhaps the most crucial barometer of the euro crisis — rose to 6.5 percent, heading back into a range that could make it hard for Italy to pay off its staggering debts.

Also pulling down stocks, the chip maker Intel said before trading began in New York that its fourth-quarter revenue would be lower than expected because of supply shortages of hard disk drives, as a result of flood damage to factories in Thailand. Intel now expects fourth-quarter revenue of $13.4 billion to $14 billion, down from a previous forecast of $14.2 billion to $15.2 billion.

Shares of Intel, a component of the Dow, lost 4 percent, to close at $24.

Hank Smith, the chief investment officer for Haverford Trust, said the combination of the Intel announcement and downbeat reassessments of the European summit meeting were too much for investors to digest.

“All of that just breeds uncertainty and I think you are just seeing that reflected in the market,” he said.

Fitch warned Monday that European politicians were taking a “gradualist” approach to creating a true fiscal union among the 17 euro zone member nations — a protracted effort that Fitch said would impose additional economic and financial burdens on the region. “It means the crisis will continue at varying levels of intensity throughout 2012 and probably beyond,” the agency said.

Moody’s said it was putting the sovereign ratings of European Union countries on review for a possible downgrade in the coming months. Standard & Poor’s issued a similar warning last week, saying it could lower the sterling credit ratings of Germany and France and cut other countries’ credit scores as Europe headed into a probable recession next year.

Cuts in credit ratings for crucial euro zone countries could play havoc with financing European bailout plans.

In United States, the Standard & Poor’s 500-stock index was down 1.49 percent, or 18.72 points, to 1,236.47. The Dow Jones industrial average fell 1.34 percent, or 162.87 points, to 12,021.39. The Nasdaq composite index lost 1.31 percent, or 34.59 points, to 2,612.26.

American financial stocks as a group were off more than 3 percent, dragged down by Morgan Stanley’s 6 percent plunge, to $15.38, and Citigroup’s 5 percent drop, to $27.22.

The Treasury’s benchmark 10-year note rose 13/32, to 99 27/32, and the yield fell to 2.02 percent from 2.06 percent late Friday.

In Europe, the Euro Stoxx 50, a barometer of euro zone blue chips, closed down 3.1 percent, while the FTSE 100 in London fell 1.8 percent. The DAX in Frankfurt lost 3.4 percent and the CAC in Paris fell 2.6 percent.

President Nicolas Sarkozy of France acknowledged Monday that a loss of the nation’s triple-A rating could come soon, but said it would not pose an “insurmountable” difficulty. Mr. Sarkozy has made it a priority of his coming presidential campaign to keep the country’s top credit rating, and repeated a pledge to reduce the nation’s debt and deficit without cutting wages and pensions.

Mr. Sarkozy’s rival, the Socialist candidate François Hollande, said Monday that he would try to renegotiate the terms of the European deal struck Friday if he were elected president in May, saying the pact would stifle growth.

With markets and rating agencies expressing disappointment with last week’s Brussels deal, the spotlight returned to the European Central Bank, the only institution with overall responsibility for maintaining the health and integrity of the euro.

Amid last week’s political theater, the central bank took a crucial step to help the biggest European commercial banks by agreeing to provide them with unlimited funds for up to three years.

While that may ease the pressure on the financial system, any further downgrade in the credit rating of European governments could escalate the crisis by making it more expensive for the weakest countries to service their debts. It could also make it more difficult for banks in Italy, Spain and even France to get credit from other banks, causing a potential pullback in lending to consumers and businesses at a time when economic growth is already being squeezed.

“No one has talked about what the euro zone’s growth strategy is, but economic growth is what does most of the eroding of debt,” said Richard Batty, an investment strategist at Standard Life Investments in Edinburgh.

Carl B. Weinberg, the chief economist at High Frequency Economics, said some European banks, which had already been selling assets to keep enough money on hand, were now also cutting back on lending. “A contraction of credit has already begun and will get worse,” he said.

Many governments and investors still cling to hope that the central bank will ride to the rescue by buying the bonds of troubled governments in Italy and Spain, in an effort to keep their borrowing costs from rising to levels that forced Greece, Ireland and Portugal to take international bailouts.

But Germany has opposed the move as being outside the bank’s mandate. Mario Draghi, the central bank president, made clear last week that the central bank was loath to take such steps.

Keeping the heat on Italy, Spain and Portugal to limit their borrowing, the central bank last week reduced its bond purchases of government debt, according to data disclosed Monday. The bank spent 635 million euros ($850 million) buying bonds on the open market, down from 3.7 billion euros the previous week.

Bond trading is typically thin in December, so the central bank probably saw less need to intervene.

Still, the total since the European Central Bank began buying government bonds last year stands at 207.5 billion euros — only about a tenth of what the United States Federal Reserve has spent as part of its effort to bolster American growth by adding to the money supply.

Moody’s warned Monday that the longer policy makers took an incremental approach to the crisis, “the greater the likelihood of more severe scenarios, including those involving multiple defaults by euro area countries and those additionally involving exits from the euro area.”

In Brussels, one potential legal snag arose Monday with the fiscal compact that most European Union members agreed to last week. The agreement calls for tightening the enforcement rules against countries that exceed budget deficit limits of 3 percent of gross domestic product.

Fully initiating that plan, however, might require changes to the European Union’s governing treaty, which would require parliamentary approvals beyond the scope of the deal reached in Brussels last week, according to European officials who were not authorized to speak publicly.

But Olli Rehn, European commissioner for economic and monetary affairs, said that most of the changes could be enforced.

“The results of this summit are better than first meets the eye,” he said, adding that people “should not underestimate its potential to fundamentally change the landscape of fiscal and economic policy making in Europe.”