Friday June 27 Housing and Economic stories

Top Stories:

Fears grow of new stage in credit crisis - (www.ft.com) Progressive Moulded Products has become the latest motor parts company to file for Chapter 11 bankruptcy protection, inflicting losses on its owner, private equity firm Thomas H. Lee Partners and lenders led by Goldman Sachs. Thomas H. Lee is expected to see its $200m investment go to zero while Goldman, which provided a slug of junior, mezzanine debt is also likely to lose everything. The company has about $550m debt.
US commerce secretary upbeat on economy - (www.ft.com) - The US economy emerged from the first quarter in better shape than the initial data suggested and remains on a positive growth trajectory, Carlos Gutierrez, commerce secretary, has told the Financial Times. “The composition of growth looks healthier than what we showed the first time when inventories were doing most if not all of the growth,” said Mr Gutierrez, the former chief executive of Kellogg. “I find it very interesting and very impressive that the economy grew 1 per cent in spite of all the dire predictions we had at the time,” he said. Mr Gutierrez said consumer spending was on a more resilient trajectory than many analysts thought even before households received tax rebate cheques. Good news (Sarcasm intended). It is great to be the owner of the data, free for you to manipulate.
Tavakoli On Ignoring Ratings - (watch.bnn.ca) Must watch video. Stay Away From Bond Insurance & Please Ignore Ratings Agencies: BNN discusses with Janet Tavakoli, president, Tavakoli Structured Finance. Very good discussion on additional $125B in product that still needs to be written down.
Fed may ease rules on bank buy-outs - (www.ft.com) The Federal Reserve is considering making it easier for private equity firms to take large stakes in banks, without being subject to existing restrictions and commitments, as part of efforts to encourage capital-raising in the troubled US financial system.
Reverse: Condo Association foreclosing on Wells Fargo - (www.dailybusinessreview.com) Yes, the tables have been turned!!! The Residences at the Bath Club Condominium Association in Miami Beach is pressing a foreclosure action against Wells Fargo as trustee for an investment pool that owns the mortgage on a unit that isn’t paying its maintenance fees. The lender owes $32,252 in late maintenance fees on the unit it took back more than a year ago
Update: IndyMac slides below $1.00 -- 50/50 chance? - (www.ml-implode.com) - IndyMac shares are finally down to a mid-day low of $0.94 at one point. One of our sources states, "Pretty much we were told informally that if we did not get a capital infusion we would not make it and that we had a 50/50 chance of obtaining said infusion.
Chrysler woes spark bankruptcy rumour - (www.theaustralian.new.com.au) Speculation Chrysler might seek bankruptcy protection has served to further deflate investor confidence in the company's debt. Some loans are trading as low as US50 cents on the dollar. A Chrysler spokesman said the company has ample liquidity and that a bankruptcy filing is "not on the table."
Chrysler denies bankruptcy talk, welcomes Iacocca - (www.businessweek.com)
German shares close markedly lower on Chrysler bankruptcy talk UPDATE - (www.forbes.com)
Low-rated borrowers getting squeezed out of debt markets - (www.financialweek.com) – And this is a problem??? This was the same reasoning that allowed 70% home-ownership. There is a reason people and companies should not get loans. They have proven they have no ability to repay these loans.
Root cause of bubble disaster: Federal Reserve - (www.sfgate.com) – BINGO. Time to try and jail Alan Greenspan for hiding the truth from the American people and creating a large disaster. Federal Reserve policy lies at the heart of the crisis. In response to a high-tech bust, the Fed lowered interest rates to stimulate a housing sector that already enjoyed boom conditions. That mismatch of diagnosis and treatment built the foundation of all that followed, including the Fed's current difficulty in resuscitating residential real estate.
House of Cards - (www.lacitybeat.com) - While many eyes are focusing on the housing meltdown and its hugely negative effect on an economy clearly moving into recession, few are paying attention to the next bubble expected to burst: credit cards. Combined with the subprime losses, such a credit card nightmare has the potential, experts say, of bringing down the entire financial system and global economy. You and your credit card have become key players in the highly unstable financial crunch. Mortgage lender cupidity and bank credit card greed wedded to financial institution deregulation supported by both political parties, have been made manifestly worse by Bush administration support-the-rich policies. It has brought us to a brink not seen since just before the Great Depression
Vital Part of Housing Bill Is Brainchild of Banks - (www.washingtonpost.com) A key provision of the housing bill now awaiting action in the Senate -- and widely touted as offering a lifeline to distressed homeowners -- was initially suggested to Congress by lobbyists for major banks facing their own huge losses from the subprime mortgage crisis, according to congressional staff members and bank officials. Credit Suisse, a large investment bank heavily invested in mortgage-backed securities, proposed allowing hundreds of thousands of homeowners to refinance their mortgages with lower-cost government-insured loans, relieving financial institutions of the troubled debt.
After the bank proposed this to Congress in January, it became known as the "Credit Suisse plan" among congressional staffers and lobbyists. It later formed the basis of housing provisions in both the House and Senate.
Bank of America, which is acquiring Countrywide Financial, the country's largest mortgage lender, followed with a similar and more detailed proposal, principal negotiators on the legislation said. In approaching congressional aides, the lobbyists suggested that banks take less than full payment for the distressed loans on their books. But the measures would allow financial institutions to get cash out of foreclosed properties that would otherwise sit on their books as dead weight.


Other Stories:

U.S. Stocks Tumble, Sending Dow to Worst June Since Depression - (www.bloomberg.com)
Oil Surges Above $140 to Record as Libya Warns of Output Cut - (www.bloomberg.com)
Shares hit as fears grow over financial turmoil - (www.ft.com) - Investors’ fears of a prolonged period of financial uncertainty deepen as a raft of downgrades for blue-chip companies sends US and European shares into a tailspin and oil prices jump above $140 a barrel for the first time - 00:33
High Medicare Costs, Courtesy of Congress - (www.nytimes.com) On Wal-Mart’s Web site, you can buy a walker for $59.92. It is called the Carex Explorer, and it’s a typical walker: a few feet high, with four metal poles extending to the ground. The Explorer is one of the walkers covered by Medicare. But Medicare and its beneficiaries aren’t paying $59.92 for the Explorer or any similar walker. In fact, they’re not paying anything close to it. They are paying about $110. For years, Congress has set the price for walkers and various medical equipment, and it has consistently set them well above the market rate, effectively handing out a few hundred million dollars of corporate welfare every year to the equipment makers.
Fitch Cuts Issuer-Default Ratings Of GM, Chrysler - (online.wsj.com)
Citigroup May Write Down $8.9 Billion, Goldman Says - (www.bloomberg.com)
Delinquencies Rise at Fannie Mae, Freddie Mac - (www.washingtonpost.com)
Buffett Says He's Concerned About U.S. Stagflation - (www.bloomberg.com)
Emptying the attic to pay for Fed's deliberate inflation - (articles.moneycentral.msn.com)
House inflation good, but energy and food inflation bad? - (www.huffingtonpost.com)
Housing Bailout Bill Created By Banks To Profit Banks - (www.washingtonpost.com)
Approval Is Near for Law to Stick Taxpayers with Bill for Bad Mortgages - (www.nytimes.com)
Marshals Make Millions Serving Foreclosure Papers - (www.ml-implode.com) Last year, John T. Fiorillo earned almost twice as much as University of Connecticut women’s basketball coach Geno Auriemma and more than 10 times the salary of Gov. M. Jodi Rell. The Bristol resident grossed more than $2 million, but not by coaching a team to the Final Four or running state government. Fiorillo is a self-employed state marshal who serves legal papers to people about to lose their homes through foreclosure. Fiorillo’s bounty can be attributed to his relationship with two law firms — Hunt Leibert Jacobson and Reiner, Reiner and Bendett — that have a virtual monopoly on the burgeoning foreclosure market.

Indymac Teetering Above One Dollar a Share - (www.ml-implode.com) - Indymac Bancorp saw its shares fall nearly 20 percent over the last week, and the company now faces the strong possibility of trading below $1"
BofA to cut 7,500 jobs after Countrywide deal - (www.ml-implode.com) - "Bank of America said Thursday it will cut about 7,500 jobs after it closes its acquisition of mortgage lender Countrywide Finan...
As Freddie Pushes Pedal to the Metal, Fannie Taps the Brakes on Mortgage Investments - (www.ml-implode.com) - In the midst of a historic housing crisis and the green light from regulators to ramp up their mortgage portfolios, long-standing second fiddle Freddie Mac has been seen regularly blowing by its historically larger GSE cousin as of late, at least in terms of its mortgage investment activity
Foreclosure Resales Boost Existing Home Sales - (www.ml-implode.com)
Mortgage Rates, Home Sales Rise Mildly - (www.ml-implode.com)
American Express Says Late Card Payments Increasing - (www.bloomberg.com)
Small Banks: How Fragile Are They? - (www.businessweek.com)
The Rental Non-Bubble - (www.cbsnews.com)
Beat the crunch: Why it can pay to rent - (www.independent.co.uk)
Investors wise to ignore real estate industry shills - (www.seekingalpha.com)
House-price declines eat baby boomer nest eggs - (www.marketwatch.com)
U.S. housing going, going... - (www.theglobeandmail.com)
Lennar Reports Net Loss as Sales of New Homes Slump - (www.ml-implode.com)
Exisiting Home Sales Fall 15.9% - (www.ml-implode.com)
Condos and Lenders and Foreclosures- Oh What A Tangled Web - (www.ml-implode.com)
Download Washington's Countrywide Indictment - (www.ml-implode.com)
Peak Credit - (www.ml-implode.com)
At Countrywide's End, an Emotional CEO - (www.ml-implode.com)
California Median Home Price Falls at Record Pace - (www.ml-implode.com)

Senators Are Becoming More Affordable - (thelastgoodidea.blogspot.com)
Bank of America's Countrywide Purchase to be Paid for by Taxpayers - (www.bloomberg.com)
Illinois to Sue Countrywide - (www.nytimes.com)
CA attorney general sues Countrywide - (www.sfgate.com)

Gold Surges Most in Two Years as Fed Fuels Inflation Concerns - (www.bloomberg.com)
Yen, Swiss Franc Rise as Stock Slump Reduces High-Yield Demand - (www.bloomberg.com)
Treasuries Gain as Stocks Tumble, Credit Losses Seen Worsening - (www.bloomberg.com)
Economists worry about consumer spending for holiday season - (www.chicagotribune.com)
U.S. Initial Jobless Claims Unchanged at 384,000 Last Week - (www.bloomberg.com)
Fed Shifts Its Concern to Inflation - (www.nytimes.com)
Buffett says inflation exploding - (money.cnn.com)
More Americans Delay Health Care - (online.wsj.com)
Fed Sounds Inflation Alarm, Moves Toward Rate Rise - (www.bloomberg.com)
Worst to Come as Credit Crisis Chokes Growth, Nucor CEO Says - (www.bloomberg.com)
American Express Slump Signals Economic Strain - (www.washingtonpost.com)
75% blame Bush's policies for deteriorating economy - (www.latimes.com)
Fed Holds Rate Steady As Inflation Worries Rise - (online.wsj.com)
New faces join ranks of nation's homeless - (www.usatoday.com)

Fed comments put dollar under strain - (www.ft.com)
Wall Street Sold Auction-Rate to Investors as It Warned Issuers - (www.bloomberg.com)
Fears grow of new stage in credit crisis - (www.ft.com)
Value of M&A tumbles as buy-out boom ends - (www.ft.com)

Bank of America to Cut 7,500 Jobs on Countrywide Deal - (www.bloomberg.com)
American Express sees worsening credit conditions - (www.chicagotribune.com)
Investors crush Georgia Gulf - (www.ajc.com)
More write-downs for Citi, Merrill, says analyst - (www.financialweek.com)
California Atty. Gen. Jerry Brown sues Countrywide - (www.latimes.com)
Oil costs force P&G to rethink its supply network - (www.ft.com)

Battle of the central bankers - (www.nypost.com)
Trichet reinforces expectation of ECB rate rise - (www.iht.com)
India's Property Boom Coming to an End, Lenders Say - (www.bloomberg.com)
Taiwan Raises Key Rate; Lifts Banks' Reserve Ratios - (www.bloomberg.com)
European Stocks, U.S. Futures Drop; Fortis, Oracle, BSkyB Fall - (www.bloomberg.com)