Thursday, March 29, 2012

Friday March 30 Housing and Economic stories


Pension Benefit Costs Cut by Record 43 States, Study Says - ( Pension benefits for U.S. public workers were reduced by a record 43 states over three years to cut costs following the longest recession since the 1930s, according to the National Conference of State Legislatures. Two recessions since 1999 have made it difficult for states to keep up with funding 126 pensions, reducing estimated assets held by the plans to 77 percent of projected liabilities in 2010 from 103 percent, the report said, citing data from the Boston College Center for Retirement Research in Newton, Massachusetts. “By the end of the first decade of this century, state retirement plans had suffered an enormous reversal from their financial status in 1999,” said the report by Ron Snell, a director with the group in Denver.

Foreclosures fall, but there's a 'rising tide' ahead - ( The number of homes entering foreclosure dropped in February, but a new up-turn may soon be on its way. The reason? The $26 billion settlement between 5 major banks and state attorneys general over past foreclosure practices. The agreement clarifies how foreclosures must be handled, and that is expected to enable banks to speed up their processing, putting many new delinquent homeowners into the foreclosure process. Cases could go forward after sitting in limbo for months -- even years -- with their delinquent owners squatting on the properties. The banks involved are Bank of America, JPMorgan Chase, Citibank, Wells Fargo and Ally Financial. "The pig is starting to move through the python," said Daren Blomquist, director of marketing for RealtyTrac, which released its foreclosure report for February on Thursday.

Banks foreclosing on churches in record numbers - ( Banks are foreclosing on America's churches in record numbers as lenders increasingly lose patience with religious facilities that have defaulted on their mortgages, according to new data. The surge in church foreclosures represents a new wave of distressed property seizures triggered by the 2008 financial crash, analysts say, with many banks no longer willing to grant struggling religious organizations forbearance. Since 2010, 270 churches have been sold after defaulting on their loans, with 90 percent of those sales coming after a lender-triggered foreclosure, according to the real estate information company CoStar Group. In 2011, 138 churches were sold by banks, an annual record, with no sign that these religious foreclosures are abating, according to CoStar. That compares to just 24 sales in 2008 and only a handful in the decade before.

Constitution Halts Sheriff - YouTube - ( Interesting video from Ireland… Where things may be heading in the US…

Twitter lost nearly $100 million in 2010 and early 2011, leaked finances show - ( Twitter lost nearly $100 million from the beginning of 2010 through early 2011 according to leaked financial information, the website Gawker reported Friday. A "source with close knowledge of Twitter's financials" provided Gawker with information from 2010 and the first four months of 2011, the website said Friday. The popular San Francisco microblogging platform lost $67.8 million in the 2010 calendar year and $25.8 million from January through the end of April in 2011, according to figures provided to Gawker. Twitter is a private company and thus does not have to publicly report financial information. A company spokesman said in an email Friday morning that there would be no comment on the report from Twitter.


India Holds Rate for Third Meeting as Inflation Accelerates - (

Bo Xilai Axed as Chongqing Party Chief After Wen’s Criticism - (

China’s Foreign Direct Investment Falls for Fourth Month - (

European Car Sales Decline Most Since October 2010 - (

Greek Restructuring Delay Helps Banks as Risks Shift - (

Wholesale Prices in U.S. Increase by Most in Five Months - (

Jobless Claims in U.S. Decrease, Matching Four-Year Low - (

Tarullo’s Revolution Reprograms Fed’s Regulation of U.S. Banks - (

South African Goldman banker always stuck to principles - (

Wednesday, March 28, 2012

Thursday March 29 Housing and Economic stories


Goldman Sachs Employee Criticizes Firm for Ripping Off Clients - ( A departing Goldman Sachs Group Inc. (GS) employee mounted an unprecedented public attack on its “toxic and destructive” culture in a New York Times opinion piece, becoming the first serving insider to openly criticize the firm. Greg Smith, identified by the newspaper as an executive director and head of the firm’s U.S. equity derivatives business in Europe, will leave the firm after 12 years, blaming Chief Executive Officer Lloyd Blankfein and President Gary Cohn for losing hold over the firm’s culture. Executive directors are junior to managing directors and partners, the most senior rank. “I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients,” Smith, a Stanford University graduate, wrote in the New York Times. “It’s purely about how we can make the most possible money off of them.”

JPMorgan’s $28 Billion Leads Bank Trading Losses in Tests - ( JPMorgan Chase & Co. (JPM), which produced the most trading revenue among Wall Street firms last year, had the highest trading and counterparty losses of the biggest U.S. banks under the Federal Reserve’s stress scenario. JPMorgan had an estimated $27.7 billion in projected losses from mark-to-market changes, credit valuation adjustments and counterparty default losses, according to the Fed results released yesterday. Goldman Sachs Group Inc. (GS) had an estimated $27.1 billion of such losses in the testing. The Fed is requiring the nation’s largest lenders to show they have credible plans for maintaining capital and continuing lending in an economic downturn. The six largest U.S. banks had a projected $116 billion in trading and counterparty losses, larger than the 19 banks subjected to Fed’s stress tests had in any lending area.

Citigroup, SunTrust Banks Capital Plans Fail Fed Stress Tests - ( Citigroup Inc. (C), the lender that took the most government aid during the financial crisis, will seek approval for a “meaningful” payout to shareholders after failing to meet minimum standards in U.S. stress tests. “We still believe that our company has the capacity to return more capital to shareholders,” Chief Executive Officer Vikram Pandit said in an internal memorandum obtained by Bloomberg News. “We will work with the Federal Reserve to formulate a plan that returns meaningful capital while satisfying our regulators.” The Fed objected yesterday to Citigroup’s capital plan, which may have included a request for a higher dividend. SunTrust Banks Inc. (STI), Ally Financial Inc. and MetLife Inc. (MET) also fell short in the Fed’s test of how 19 of the nation’s biggest lenders would fare in a severe economic slump.

William Cohan: Greg Smith Is In The Witness Protection Program Right Now - ( Bloomberg columnist William Cohan knows something about Wall Street. He's the author of 'Money and Power: How Goldman Sachs Came to Rule the World', so naturally he got to comment about Greg Smith's Goldman Sachs resignation op-ed. And Cohan didn't mince words: “He's toast. He is completely toast in terms of Wall Street, no question about that. He is in the witness protection program right now." Not that Cohan doesn't agree with Smith. In fact, he said that "Goldman's culture has gotten off the tracks. They espouse this idea of the client comes first but in fact, we know time and again, whether it's the Abacus transaction or a number of other things that they did in the financial crisis beginning in 2006 when they put the big short on and they continued to sell mortgage-backed securities to their clients at par, that Goldman has been putting itself first."

Some Banks Got over $2 Trillion in Loans and Other Bailouts - ( The following list is from page Page 131 of the GAO Fed Investigation Report. The amounts are simply stunning, and far beyond the amounts most people believed were doled out between 2007-2009. Citigroup alone got $2.5 trillion. The entire GDP of the United States is around $14.5 trillion.

The below numbers reflect a number of Fed sponsored loan programs from very short term, to medium term.

· Citigroup – $2.513 trillion

· Morgan Stanley – $2.041 trillion

· Merrill Lynch – $1.949 trillion

· Bank of America – $1.344 trillion

· Barclays PLC – $868 billion

· Bear Sterns – $853 billion

· Goldman Sachs – $814 billion

· Royal Bank of Scotland – $541 billion

· JP Morgan Chase – $391 billion

· Deutsche Bank – $354 billion

· UBS – $287 billion

· Credit Suisse – $262 billion

· Lehman Brothers – $183 billion

· Bank of Scotland – $181 billion

· BNP Paribas – $175 billion

· Wells Fargo – $159 billion

· Dexia – $159 billion

· Wachovia – $142 billion

· Dresdner Bank – $135 billion

· Societe Generale – $124 billion

· “All Other Borrowers” – $2.639 trillion


Current-Account Deficit in U.S. Widens to $124.1 Billion - (

Import Prices in U.S. Rise Less Than Forecast, Food Costs Drop - (

Mortgage purchase demand rose last week: MBA - (

Payroll tax extension adds to deficit, analysis finds - (

Bernanke Keeps Easing Option While Signaling Economy Improving - (

Why I Am Leaving Goldman Sachs - (

Tuesday, March 27, 2012

Wednesday March 28 Housing and Economic stories


MBIA and an Industry’s Failure to Trust, but Verify - ( As the financial crisis intensified in mid-2008, the largest of the monoline insurance companies that had guaranteed payments on complicated securities retained an investment bank to evaluate the risks it had taken on in a small part of its portfolio — a group of 15 collateralized debt obligations. The report commissioned by MBIA came back days before that investment bank, Lehman Brothers, itself failed in September 2008. Lehman concluded that MBIA stood to lose more than $7.7 billion on those 15 securities. That was about three times the loss reserves the company had established for all of its policies. If accurate, it raised serious questions about the company’s solvency. About 10 weeks later, on Dec. 5, MBIA asked the New York Insurance Department, now part of New York’s Department of Financial Services, for permission to split into two units. One would have just the dubious business — known as structured finance — including securities backed by home mortgages and the even riskier C.D.O.’s that are backed by securities that in turn are backed by mortgages. The other unit would be responsible for MBIA’s traditional business of insuring municipal bonds. It presented to the department financial projections showing both companies would be well capitalized.

Tainted Libor Rate Guessing Games Face Replacement by Verified Bank Trades - ( The London interbank offered rate, the benchmark for $360 trillion of securities, may not survive allegations of being corrupted unless it’s based on transactions among banks rather than guesswork about the cost of money. “The methodology used to formulate Libor is totally unsuitable for the modern world,” said Daniel Sheard, chief investment officer of asset manager GAM U.K. Ltd., which manages about $60 billion. “The British Bankers’ Association needs to come out on the front foot and say ‘this is a system that was appropriate 20 years ago but is no longer appropriate and we are going to change it.’” The BBA, the lobby group that has overseen Libor for 26 years, is under pressure to find an alternative way to calculate the benchmark, or cede control of it. Regulators from Canada toJapan are probing whether banks lied to hide their true cost of borrowing and traders colluded to rig the benchmark, the basis for interest rates on securities from mortgages to derivatives.

Bank of Japan Rejects Lawmakers’ Calls to Expand Asset Buys - ( Japan’s central bank chief sought to distance monetary policy from political pressure after stimulus implemented last month stoked speculation the government’s sway is increasing. Governor Masaaki Shirakawa and his board yesterday rejected one member’s suggestion to build on the 10 trillion yen ($121 billion) of additional government-bond purchases announced Feb. 14. Officials instead expanded loans designed to boost long-term growth. Shirakawa told reporters after the meeting that bending to politicians would be “suicide.” The unprecedented size of last month’s move proved a success in diminishing risks for Japan’s exporters, by sending the yen tumbling further from the postwar high against the dollar reached in October. At the same time, boosting government-debt purchases risks fueling concern that the BOJ is moving closer to financing the nation’s deficit spending, according to JPMorgan Chase & Co. (JPM)

Hackers Discover US Government Employees Using Work Emails On Porn Websites – ( A group of hackers calling themselves Th3 Consortium and claiming to be affiliated with Anonymous and LulzSec broke into yet, the third porn site it's hacked in as many weeks, stealing 72,000 passwords and 40,000 credit card numbers. All three porn sites Th3 Consortium has targeted are owned by Luxembourg-based Manwin: Brazzers got hit in mid-February -- 350,000 usernames and passwords were stolen -- and then came a major hack at YouPorn -- a million usernames and passwords were compromised. But the porn network does not seem to be the real target of the attack: the hackers seem most interested in embarrassing government employees who used their official email addresses (for some reason?) to register for a porn site. Foolish government employees beware.

Student loans seen as potential ‘next debt bomb'for U.S. economy - ( Bankruptcy lawyers have a frightening message for America: They’re seeing the telltale signs of a student loan debt bubble that is placing increased financial pressure on families struggling with their children’s mounting debt. According to a recent survey by the National Association of Consumer Bankruptcy Attorneys, more than 80 percent of bankruptcy lawyers have seen a substantial increase in the number of clients seeking relief from student loans in recent years. In most cases, those clients could not meet the federal hardship standards that are necessary to discharge a student loan through bankruptcy proceedings. Instead, many of these parents or guardians who co-signed the student loans face the prospect of losing their life savings, cars or homes to collection agencies for aggressive private lenders.


Soaring Target2 Imbalances Stoke German Risk Angst: Euro Credit - (

Weidmann Says ECB Looking at Ways to Exit From Emergency Tools - (

Bundesbank builds buffer against euro bank loan risk - (

Brazil Winning Currency Fight Against Monetary Tsunami, Mantega Aide Says - (

Bundesbank head cautions on ECB crisis measures - (

Spain Faces EU Call for Deeper Deficit Cuts as Leaders Seek to End Crisis - (

China Talks of More Lending but Less Currency Growth - (

Monday, March 26, 2012

Tuesday March 27 Housing and Economic stories


California's Greek Tragedy - ( Long a harbinger of national trends and an incubator of innovation, cash-strapped California eagerly awaits a temporary revenue surge from Facebook IPO stock options and capital gains. Meanwhile, Stockton may soon become the state's largest city to go bust. Call it the agony and ecstasy of contemporary California. California's rising standards of living and outstanding public schools and universities once attracted millions seeking upward economic mobility. But then something went radically wrong as California legislatures and governors built a welfare state on high tax rates, liberal entitlement benefits, and excessive regulation. The results, though predictable, are nonetheless striking. From the mid-1980s to 2005, California's population grew by 10 million, while Medicaid recipients soared by seven million; tax filers paying income taxes rose by just 150,000; and the prison population swelled by 115,000.

Solyndra Is Blamed as Clean-Energy Loan Program Stalls - ( More than $16 billion in loans authorized five years ago by Congress to develop fuel-efficient vehicles has yet to be disbursed, with applicants for the money complaining that the Energy Department is crippling plans for greener cars and trucks at a time of rising gas prices. Some companies contend that the loans, administered by energy officials, have dried up because of a political firestorm that followed the bankruptcy last year of the solar panel company Solyndra, which had received a federal loan from a related program. The bankruptcy fed Republican criticism of the Obama administration’s handling of clean energy loans because one of the investors in Solyndra was a major fund-raiser for the president.

Carlyle Owners Took $398.5 Million Payout Before IPO - ( Carlyle Group LP (CG), in a transaction nine months before it filed to go public, saddled itself with debt to pay owners including William Conway, Daniel D’Aniello and David Rubenstein a $398.5 million tax-deferred dividend. The private equity firm borrowed $500 million from Abu Dhabi’s Mubadala Development Co. in December 2010, saying it would use part of that to expand investment products. Instead, it paid out almost 80 percent of the money to existing owners, according to regulatory filings. Separately, the Washington- based firm negotiated bank credit giving it the option to distribute an additional $400 million prior to its initial public offering, lending agreements filed last month show. The deals, which echo the dividend recapitalization private equity managers use to extract cash from the companies they acquire, leave Carlyle’s future shareholders with the cost of servicing the debt.

States Keep Axes Sharpened - ( States are moving to cut jobs and other spending to close budget deficits, even though their protracted fiscal crisis is easing a bit in an improving economy. State governments are confronting a combined $47 billion gap between projected revenue and costs for the fiscal year that starts in July, according to the Center on Budget and Policy Priorities, a left-leaning think tank. While that figure is high historically, it is less than half the budget shortfall that states confronted a year ago and down from $191 billion three years ago. For the coming year 29 states have projected deficits; that is down from 42 a year ago and 46 the year before. Tax receipts in many states have risen in recent months as companies post higher profits and more people find jobs. And several states lowered their costs with earlier rounds of budget cuts. But for many, revenue gains haven't kept up with surging costs for health care and pensions. Meanwhile, federal stimulus funding is drying up.

California's State Treasurer Is Getting Pummeled By His Wife's Sex Tape Scandal – ( It has been a rough year for California State Treasurer Bill Lockyer. After struggling through state budget and pension crises, the 70-year-old Democrat is now embroiled in a convoluted soap-opera scandal involving his young wife and what the San Francisco Chronicle reports as a sex tape she made with a guy she met in rehab. Revelations of the sex tape came to light after Lockyer's 40-year old wife, Nadia, an Alameda County Supervisor, called police on Feb. 3 after she was allegedly assaulted in a motel by an "ex-boyfriend."


Retail Sales in U.S. Rose in February by Most in Five Months - (

U.S. to File WTO Complaint Over China Rare-Earth Export Caps- (

Fed action unlikely amid mixed economic signals - (

Fed seen biding time, assessing jobs gains - (

Fed Bond-Buying Seen Less Likely After Best Six-Month Job Gains Since 2006 - (

Trade Fight Flares on China Minerals - (

Trade Issues With China Heating Up - (

Yahoo sues Facebook for infringing 10 patents - (

Sunday, March 25, 2012

Monday March 26 Housing and Economic stories


Greece Deal Triggers $3B in Default Swaps: ISDA - ( A committee of credit-default swaps traders will expedite an auction to settle about $3 billion of contracts tied to Greece after the nation took steps to force investors to participate in the biggest sovereign-debt restructuring in history. Traders will hold the auction March 19 to “maximize” the number of bonds that can be used to set payout amounts, the New York-based International Swaps and Derivatives Association said on the committee’s website yesterday. Auctions, which set a recovery value on the underlying bonds, typically are held about a month after credit events are triggered. The viability of credit swaps as a hedge for about $257 billion of government debt was questioned after ISDA rejected a request on March 1 to declare whether the swaps were triggered because the restructuring effectively subordinated private investors to the European Central Bank. Banks, hedge fundsand institutional investors use swaps to protect against losses or to speculate on creditworthiness.

Legal skull-duggery in Greece may doom Portugal - ( The Greek parliament's retroactive law last month to insert collective action clauses (CACs) into its bonds to coerce creditor hold-outs has added a fresh twist. These CAC's are likely to be activated over coming days. Use of retroactive laws to change contracts is anathema in credit markets. This might not matter too much if Greece were really a "one-off" case but markets are afraid that Portugal will tip into the same downward spiral as austerity starts to bite. Citigroup expects the economy to contract by 5.7pc this year, warning that bondholders may face a 50pc haircut by the end of the year. Portugal's €78bn loan package from the EU-IMF Troika is already large enough to crowd out private creditors, reducing them to ever more junior status.

Freddie Mac Faulted With FHFA for Oversight of Loan Servicers - ( Freddie Mac and its regulator, the Federal Housing Finance Agency, need to do a better job supervising financial institutions servicing the company’s loans, according to the FHFA Office of Inspector General. FHFA hasn’t implemented regulations governing servicer oversight or paid enough attention to abuses uncovered by other federal regulators, Deputy Inspector General Russell A. Rau wrote today in a report. Five servicers, including Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM), last month settled a lawsuit with state and federal authorities after investigations revealed the banks didn’t have the proper documents to seize homes. FHFA, which learned about the practices of Freddie Mac’s mortgage servicers in 2008, didn’t begin paying attention to them until August 2010, according to the report.

Foreclosure starts jump 28 percent in January - ( Starts on U.S. home foreclosures shot up 28 percent in January, data provider Lender Processing Services (LPS.N) said on Tuesday in a report that suggested paper backlogs that had clogged the system were rapidly clearing. U.S. lenders had cut back on foreclosure after accusations of faulty foreclosure practices had surfaced in late 2010. Last month, five big U.S. banks reached a $25 billion settlement with the federal government to end a national investigation into claims of flaws in their foreclosure process, including allegations of so-called "robo-signing" of documents.

Fitch sees home prices as overvalued with potential for another 9.1% drop - ( Fitch Ratings said U.S. home prices are still overvalued and could fall another 9.1%, despite inching toward a point of sustainability. After evaluating data from the third quarter, Fitch said prices still have more room to fall with unemployment and gross domestic product numbers showing only marginal growth. In addition, tightened lending standards remain a hurdle for new buyers, and the $25 billion government settlement with the nation's largest mortgage servicers is expected to prolong the liquidation of distressed inventory over the short term. New lending standards continue to hinder housing activity with only borrowers who have equity in their property or sizeable down payments getting loans, the report said.


227,000 jobs added in January, Unemployment Rate 8.3% - (

More jobs, same unemployment rate - (

Jobless Claims in U.S. Rose 8,000 Last Week to 362,000 - (

Triple trouble in Europe, US and China brings out the bears - (

Foreclosures Jump 29% in January - (

3 Charts Worth Watching As Warning Signs – (

A Return to Normalcy? - (