Monday, June 11, 2012

Tuesday June 12 Housing and Economic stories



TOP STORIES:

Bankia Shares Suspended Ahead of Rescue Details - (www.reuters.com) Spain's Bankia is set to ask the state for a more than 15 billion euros ($19 billion) bailout on Friday, marking another rise in the cost of a drawn-out rescue of the country's fourth-biggest bank. The capital shortfall at Bankia is key to a wider funding gap in Spain's banking system, which some investors believe could drive the euro zone's fourth-largest economy to seek international aid — a move that would create fresh uncertainty around the whole currency union. Spain is nationalizing Bankia, which holds some 10 percent of the country's bank deposits, after it was unable to handle heavy losses from a 2008 property crash. The government insists the bank is a one-off case.

JPMorgan Gave Risk Oversight to Museum Head Who Sat on AIG Board - (www.bloomberg.com) The three directors who oversee risk at JPMorgan Chase & Co. (JPM) include a museum head who sat on American International Group Inc.’s governance committee in 2008, the grandson of a billionaire and the chief executive officer of a company that makes flight controls and work boots. What the risk committee of the biggest U.S. lender lacks, and what the five next largest competitors have, are directors who worked at a bank or as financial risk managers. The only member with any Wall Street experience, James Crown, hasn’t been employed in the industry for more than 25 years. “It seems hard to believe that this is good enough,” said Anat Admati, a professor of finance at Stanford University who studies corporate governance. “It’s a massive task to watch the risk of JPMorgan.”

Spain's Catalonia seeks government help to pay debt - (www.reuters.com) Spain's wealthiest autonomous region, Catalonia, needs financing help from the central government because it is running out of options for refinancing debt this year, Catalan President Artur Mas said on Friday. "We don't care how they do it, but we need to make payments at the end of the month. Your economy can't recover if you can't pay your bills," Mas told a group of reporters from foreign media. A spokesman for the Catalan government later emphasised that Mas was referring to payments that must be met routinely each month and not a specific deadline this month. The debt burden of Spain's 17 highly devolved regions, and rising bad loans at the country's banks, are both at the heart of the euro zone debt crisis because investors are concerned they could strain finances so much that Spain, the currency bloc's fourth biggest economy, will need an international bailout.

Red Flag in Bank Lending? - (online.wsj.com) Lending stumbled in the first quarter after nearly a year of growth, deepening questions about the recovery and confidence of borrowers and bankers. Loan balances fell by more than $56 billion, or 0.8%, in the quarter ended March 31, according to the Federal Deposit Insurance Corp. The quarter-over-quarter decline marks a reversal from three consecutive quarters in which lending expanded. While lending to larger commercial and industrial customers rose as it has for nearly two years, declines came in nearly all other types of loans, including those to small businesses. "We're afraid to expand right now," said Dan Thystrup, who owns Adventureglass, a four-person company in North Webster, Ind., that builds fiberglass paddleboats in the shape of swans, ducks and dragons. Mr. Thystrup said his reasons for caution include sluggish demand and new environmental regulations.

In Spain, Bank Transfers Reflect Broader Fears - (www.nytimes.com) Ángel de la Peña, a Spanish government worker, is seriously considering the once unthinkable: converting some of his savings from euros to British pounds. Alvaro Saavedra Lopez, a senior executive for I.B.M. in Spain, says many of his corporate counterparts across the country are similarly looking for safer havens by transferring their spare cash to stronger euro zone countries like Germany “on a daily basis.” It is only a trickle so far, and not nearly enough to constitute a classic bank run. But these growing transfers of deposits out of troubled Spanish banks reflect a broader fear that the country’s problems could make it hard for Spaniards to get to their money if banks fail and cannot be supported by the government. In a worst case, some even worry their money will be worth substantially less if Spain is forced to leave the euro currency zone and re-adopt its old currency, the peseta.





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