KeNo's Housing and Economic Portal: Friday October 29 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Government job cuts ravage California - (www.latimes.com) Weighed down by a struggling economy, government agencies in California shed 37,300 workers last month — more jobs than were lost in the private sector — as cities and counties made their biggest payroll cutbacks since at least 1990. What's more, analysts see more job cuts ahead as California faces an estimated $10-billion shortfall in the state budget that the next governor must address. Cities and counties, meanwhile, are still struggling with tepid sales and property tax revenue. "Local governments are adopting austerity measures," said Jerry Nickelsburg, an economist with the UCLA Anderson Forecast. "They don't have confidence that they're going to get money to do otherwise." Joe Galvez, 43, was hit with a double dose of government cuts. He lost his job with the Los Angeles County Public Works Department in 2007 and hasn't been able to find steady work since. And, he said his son's high school is so strapped for funding that it has asked parents to donate money for school supplies.

Brown Pledges College Admission for Illegal Immigrants - (Mish at globaleconomicanalysis.blogspot.com) Those of you considering voting for Brown in the California gubernatorial election need to consider this. “We have enough wealth to continue to have a great university and get every kid into this school that can qualify. Now when I say every young man and young woman, I mean everyone – whether they are documented or not. If they went to school, they ought to be here.” Brown is a fool. California has enough problems already. Hopefully this stupidity will cost him the election.

7 banks closed in Fla., Ga., Ill., Kan., Ariz. - (finance.yahoo.com) Regulators on Friday shut down a total of seven banks in Florida, Georgia, Illinois, Kansas and Arizona, lifting to 139 the number of U.S. banks that have fallen this year as soured loans have mounted and the economy has sputtered. The Federal Deposit Insurance Corp. took over the banks, the largest of which by far was Hillcrest Bank, based in Overland Park, Kan., with $1.6 billion in assets. A newly chartered bank subsidiary of Boston-based NBH Holdings Corp. was set up to take over Hillcrest's assets and deposits. The new subsidiary is called Hillcrest Bank N.A. The FDIC and Hillcrest Bank N.A. agreed to share losses on $1.1 billion of the failed bank's assets. Its failure is expected to cost the deposit insurance fund $329.7 million.

Big Problem for Banks: Due Process - (www.nytimes.com) Earlier this week, Bank of America, the nation’s largest consumer bank, reported its third-quarter earnings. It was a very good quarter; putting aside an accounting charge — a very large, $10.4 billion accounting charge, admittedly — the bank reported $3.1 billion in profits. It was the third consecutive quarter that Bank of America had earned more than $3 billion. During the ensuing conference call Tuesday morning, there was the requisite chest-thumping fromBrian Moynihan, the chief executive, and Chuck Noski, the chief financial officer. But there was also something else: tough talk about two big legal problems the bank faces as a result of the subprime bubble. Not surprising, it was the latter that caught my attention. Like everyone else, I’d been reading with amazement the stories about one of those legal problems: the robo-signing scandal that has ensnared all the banks with mortgage servicing subsidiaries, Bank of America included. That’s the scandal in which a tiny handful of employees had signed — or allowed others to forge their signatures — on thousands of affidavits confirming that the banks had the legal right to foreclose on properties they serviced. In truth, they had often never seen the documents proving the bank had that legal right. In some cases, the documents didn’t even exist. As a result of the mounting publicity, many big banks had halted all foreclosures while they reviewed the legality of their affidavits.

Chicago faces crisis over pension funding, how to pay for it - (www.chicagobreakingnews.com) Much has been made of retiring Mayor Richard Daley's plan to draw down reserve funds to balance next year's city budget and how it could burden his successor. But the chairman of the Finance Committee, Ald. Ed Burke, today talked about a far larger problem. One in four pension funds for city workers will go broke in the next decade, if current funding levels continue and markets don't improve, and all will be belly up by 2032 if nothing gives. "It's similar to watching the house burn down without turning on the fire hydrant," said Burke, 14th, during the first day of hearings on Daley's proposed $6.15 billion budget. "At the present time, the city pension funds are actually selling assets to meet obligations." Stabilizing employee pensions long-term would require greater employee contributions, higher taxes, major changes to the pension systems or a combination of those steps. Without relief, the city would have to about double its property taxes for the next 40 years to cover its pension obligations, said Gene Saffold, the city's chief financial officer. To cover the outstanding liabilities, each household in Chicago would have to pay $41,966, the report concluded. That's the highest per-home amount among U.S. cities.