Monday, April 30, 2012

Tuesday May 1 Housing and Economic stories

Greek Crisis Leaves Cyprus Mired in Debt - ( Michalis Sarris is not the only European banker working seven days a week, trying to scrape together enough capital to satisfy regulators and keep his institution afloat. But he may be the only one with the financial fate of his nation potentially hanging in the balance. Mr. Sarris, a 65-year-old onetime World Bank economist and former Cypriot finance minister, was drafted by bank regulators in January to take over as chairman of Cyprus’s largest financial institution, Cyprus Popular Bank, formerly known as Marfin Popular Bank. It is now his job to find investors willing to help put €1.8 billion, or $2.4 billion, in new money into the bank, which was devastated by its exposure to bad Greek debt. Given the perilous state of the Cypriot economy, it is no easy assignment. And there is not much time left: Banks in Europe must demonstrate to the European Banking Authority by the end of June that they have enough capital to be viable.
Fed May Extend Support Past 2014, Official Says - ( Janet L. Yellen (the most liberal member of the FED), the vice chairwoman of the Federal Reserve, said Wednesday that the lackluster trajectory of the economic recovery might require the Fed to continue its efforts to bolster growth even beyond the end of 2014. In a speech in Manhattan, Ms. Yellen offered a rejoinder to recent remarks by other Fed officials and investors warning that the Fed would need to raise interest rates well before the end of 2014 to prevent an increase in the rate of inflation. She indicated that the Fed’s leadership, including the chairman, Ben S. Bernanke, remained firmly committed to the central bank’s efforts to suppress interest rates and reduce the cost of borrowing for businesses and consumers. “I anticipate that the U.S. economy will continue to recover only gradually and that labor market slack will remain substantial for a number of years to come,” Ms. Yellen said, according to an advance copy of her prepared remarks.
Italy 3-yr debt costs rise sharply at auction - ( Italian three-year borrowing costs rose more than a full percentage point at an auction on Thursday, boosted by fresh concerns about weaker euro zone states, and Italy slightly missed its maximum planned amount of 3 billion euros for this bond. Italy paid 3.89 percent to sell its three-year March 2015 bond, up from 2.76 percent at an auction a month ago. The 2.88 billion euro sale was covered 1.44 times, down from a bid-to-cover of 1.56 at last month's bigger sale. This was the highest three-year yield since mid-January.
US Housing Secretary Pushes Mortgage Write-Downs For Fannie, Freddie - ( The Obama administration wants Fannie Mae and Freddie Mac, which finance the bulk of U.S. mortgages, to start reducing loan balances for troubled borrowers, but with safeguards to prevent them from purposely defaulting to obtain relief. Housing and Urban Development Secretary Shaun Donovan laid out the case for a program with such checks and balances to convince the Federal Housing Finance Agency, which regulates the companies, to provide more mortgage aid. "This isn't about force; this is about making the right decision for homeowners and for the taxpayers," Donovan said in an interview taped for C-SPAN's public affairs television that was set to air on Sunday.
Kid who sold kidney for iPad helps police arrest five in organ trading scam - ( In June 2011 we wrote about a strange case of a 17-year-old Chinese boy who sold one of his kidneysfor $3,500 so he could afford a then-new iPad 2 tablet. At the time, police had been attempting to track down the parties responsible for both the surgery and the seedy organ trading ring behind it all. Now, nearly a year later, the young man is in the hospital and a total of five people have been arrested. The mother of the boy was first tipped off to her son's unorthodox dealings when she noticed him playing with the brand new Apple tablet. Knowing he couldn't have afforded it on his own, she grilled him until he confessed that he was now without one of his kidneys thanks to the shady operation.

Sunday, April 29, 2012

Monday April 30 Housing and Economic stories

JPMorgan Restricts New Student Lending to Bank Customers - ( JPMorgan Chase & Co. (JPM), the largest U.S. bank, will stop providing private student loans to people who aren’t customers of the company beginning July 1. “The private student-loan market has continued to decline and government programs have expanded to help more students and their families,” Steve O’Halloran, a spokesman for the New York-based bank, said today in an e-mail. Customers must have a Chase deposit, loan or credit-card relationship to apply, he said. The company will continue to service existing education loans and work with financial aid offices at schools to certify loans for students, he said. The American Banker reported the bank’s decision on March 30. JPMorgan has been paring back student loans, which comprise a small part of the estimated $1 trillion market and the company’s $2.27 trillion balance sheet. The student-lending portfolio shrank 15 percent since 2009 to $13.4 billion as of Dec. 31 as bad debts almost doubled. Uncollectible loans climbed 72 percent since 2009 to $434 million last year, according to the bank.
T. BOONE PICKENS: 'I've Lost My A** In The Wind Business' - ( Alternative energy sure is risky. Energy tycoon T. Boone Pickens, the chairman of BP Capital Management and author of his namesake plan for U.S. energy independence "The Pickens Plan", said on MSNBC's "Morning Joe" that he "lost his ass in the [wind] business." [via Newsbusters] Watch the video (in the attached link - around the 7:40 mark of the video.)
Analysis: Investors run scared of Spain's battered banks - ( Spain's banks are fast joining the ranks of the most unloved in Europe just as many need to raise capital urgently, deserted by investors who believe the country is on the brink of a recession that many lenders will not survive. The government has ruled out more state aid for a sector that comprises a motley mix of international lenders and heavily indebted local savings banks. That leaves two options: raising private capital or turning to the EU for bailout funds. Prospects for a private sector solution are poor. Nothing on the horizon looks likely to persuade foreign fund managers to invest, such is the fear of the banks' growing bad loans, their holdings of shaky sovereign debt and the worsening economy.
Rajoy Says Spain Future at Stake as Debt Crisis Persists - ( Prime Minister Mariano Rajoy said Spain’s future is on the line in its battle to tame surging bond yields, as the head of the nation’s second-largest region proposed handing back powers to the government to cut costs. With Spanish bonds trading closer to levels that prompted Greece, Ireland and Portugal to seek European bailouts, Rajoy will address lawmakers of his People’s Party today to explain the deepest budget cuts in three decades. The prime minister will speak at 1 p.m. in Madrid. “Without a doubt, a good part of Spain’s future is at stake,” Rajoy told senators yesterday, as he urged regional governments to contribute to spending cuts. “The problem is that the markets can lend or decide not to lend.”
Coeure Suggests ECB Could Restart Bond Purchases for Spain - ( European Central Bank Executive Board member Benoit Coeure triggered speculation that the bank will revive its bond-purchase program to lower Spain’s borrowing costs as the region’s debt crisis threatens to boil over again. Spanish “market conditions are not justified,” Coeure, who heads the ECB’s market operations division, said at an event in Paris today. “Will the ECB intervene? We have an instrument, the securities markets program, which hasn’t been used recently but it still exists.” The euro rose and Spanish bond yields declined as Coeure’s comments reassured investors that the ECB will act again if needed to stem the crisis. With Spain’s three-month-old government struggling to reduce the budget deficit and crack down on overspending by regional administrations, borrowing costs have surged, nearing the levels that precipitated bailouts for Greece, Portugal and Ireland.

Thursday, April 26, 2012

Friday April 27 Housing and Economic stories

US states face legal action over pensions - ( US states are increasingly being blocked from changing public employees’ retirement benefits as the fight over shoring up chronically underfunded public pension systems moves from state legislatures to the courts. While some states have successfully altered terms for future employees, plans to force all current public workers to contribute more to state pensions have been ruled unconstitutional in Florida, Arizona and New Hampshire in recent weeks, a significant victory for public sector employee unions. Other states are expected to face similar legal battles as they plan to close large holes in their public pension funds by redrawing benefits. US state and local pensions could face a shortfall of as much as $4.4tn, up from $3.1tn in 2009, according to some estimates. Changes enacted in Rhode Island, the state that has made the most aggressive push to revamp its ailing pension system, are expected to face a legal challenge soon. Bobby Jindal, governor of Louisiana, wants to replace the state’s existing system – which allows workers to retire as young as 55 – with a retirement age of 67 for many public sector workers but the state’s legislative auditor has warned that could be ruled unconstitutional.
Timeshare Prices Plummet to $1 - ( Unable to sell his parents’ ocean-front timeshare for the past year, David Suder became so fed up he offered to give it away. They paid $8,000 for the Orange County, Calif. unit a decade ago, but since there are no willing buyers, and his 81-year-old mother, now a widow, can no longer afford the monthly maintenance fees, Suder says he doesn’t have a choice. The San Diego-based real estate investor is offering the unit for free in the hopes that someone will take it before his mother dies. “I don’t want to inherit it,” he says. “I want it to go away.” While real estate – and even vacation real estate – is starting to show signs of recovery, timeshares remain in freefall. During the first quarter, the number of for-sale-by-owner postings doubled compared to the same period a year ago on, a popular resale site. Another site,, says owner sales are up 20% during that period.
The Internet Is About To Burst The Most Hated Bubble In America - ( It looks like one of the most nefarious bubbles in the country could soon collapse. Writing on his Carpe Diem blog, Professor Mark Perry posts pretty convincing evidence that skyrocketing textbook costs are about to come to an end. Poor college students (or their parents) can thank the Internet. He uses the example of Rittenberg and Tregarthen's Principles of Economics, a textbook used at 2,000 colleges, as an example. Currently a hardback version costs $200. But "the online version [is] totally free, the other options are $35 for a printed black and white version, $90 for full color version, a print-it-yourself version for $25, and the e-book version for $25. Students can also purchase individual chapters at a reduced cost." Here's a look at book textbooks versus home prices and CPI. Appalling.

Handouts Die Hard for Greek Politicians Facing Voters - (
With the country perched on the edge of a financial abyss and international creditors anxiously awaiting more belt-tightening measures, Greek lawmakers have been working extra hard lately. But not always in the ways one might expect. Some members of Parliament have lobbied for fishing licenses for the owners of pleasure boats in the Aegean islands. Others have asked for government jobs for award-winning athletes or members of dismantled state agencies. One sought to exempt theaters and cinemas from a controversial property tax. Another to reduce fines for the owners of illegally built homes in parts of northern Greece. The list goes on. In all, more than 90 such budget-busting proposals have been floated as lawmakers scramble to push through last-minute amendments to bills otherwise intended to meet the demands of creditors who want Greece to liberalize its job market, cut red tape, and shrink state payrolls.
Wells Fargo failing to maintain foreclosed homes in minority neighborhoods, complaint says - ( A group of U.S. nonprofit housing advocates has filed a discrimination complaint against Wells Fargo, accusing the nation's largest mortgage lender of failing to maintain and market foreclosed properties in black and Hispanic neighborhoods. The National Fair Housing Alliance on Tuesday filed the complaint against San Francisco-based Wells Fargo and Co. and Wells Fargo Bank with the U.S. Department of Housing and Urban Development. Wells Fargo declined to comment, saying officials at the bank have yet to see the complaint. The bank services one out of every six home loans in the United States, The federal Fair Housing Act requires banks, investors, servicers and other parties to maintain and market homes without regard to race or ethnicity.

Wednesday, April 25, 2012

Thursday April 26 Housing and Economic stories

Illinois Is Pension Basket Case You Forgot About - ( Rod Blagojevich is in prison. But the worst things the former governor did to Illinois (BEESIL)weren’t even illegal. This month, the Teachers’ Retirement System of the State of Illinois made a dire announcementto its members. TRS, which covers most public-school teachers in Illinois outside Chicago and has more than 360,000 members, said the following: “If the General Assembly does not continue to provide all of the funding called for in state law, calculations done by TRS actuaries show that the System could become insolvent as soon as 2030. Preventing insolvency may include significant changes for TRS -- new revenues must be generated and if they are not benefits may have to be reduced.” The teachers’ fund is one of the country’s worst-financed statewide pension systems, reportingthat it is only 47 percent funded. And that’s if you buy the system’s rosy accounting assumptions, including that it will achieve 8.5 percent annual returns on its assets. This level is tied for the most aggressive investment assumption among state pension funds in the country, and the fund has had to get creative in an effort to meet it. Pensions & Investments magazine says it has the fourth-riskiest pension investment portfolio in the U.S., with less than 17 percent of its investments in fixed income and cash.
Matt Taibbi Shreds Obama Over JOBS Act That Will 'Nearly Legalize Fraud' - ( Matt Taibbi thinks the JOBS Act signed by President Obama last week is just about the worst thing ever. To backup, the JOBS act has been called the "crowdfunding act" because it lifts various regulations on startups raising money, and how many shareholders it can have. The JOBS Act has been hailed as a bipartisan triumph. Here's the left's response, per Rolling Stone's Taibbi: The JOBS Act "couldn't suck worse." It will nearly legalize and encourage fraud on Wall Street. And it completely goes against the populist anger against Wall Street that sparked Occupy Wall Street. The worst aspect of the bill, Taibbi argues, is one that exempts firms from independent tests of internal controls. It's a "comedy routine," he writes, because the rationale is that it is costly for a firm to hire independent auditors and fill out legal forms. Here's a good analogy: This is like formally eliminating steroid testing for the first five years of a baseball player's career. Yes, you can pretty much bet that you'll see a lot of home runs in the first few years after you institute a rule like that. But you'd better be ready to stick a lot of asterisks in the record books ten or fifteen years down the line.
Companies use popular provision to avoid income taxes - ( More than two dozen Fortune 500 companies paid no U.S. federal income taxes in recent years partly because of a corporate tax break that is broadly supported by Republicans and Democrats alike, a consumer group said on Monday. In at least half of the cases cited by the group, companies made use of accelerated depreciation, a tax provision that allows increased deductions in the early years of the life of an asset. Citizens for Tax Justice, which advocates steeper corporate taxes, said it surveyed major U.S. companies and found that 26 on average paid no net federal income taxes between 2008 and 2011, among them General Electric and Duke Energy. "This isn't fair to the rest of us," said Bob McIntyre, director of the left-leaning tax research group.
Spain Confronts Crisis Threat as Rajoy Seeks Deficit Cuts - ( Spain’s efforts to calm investors with 10 billion euros ($13 billion) of budget cuts in education and health failed to stem concerns the nation may be the fourth euro member to need a bailout. The yield on Spain’s 10-year benchmark bond surged 20 basis points to 5.95 percent today as Economy Minister Luis de Guindos declined to rule out a rescue for Spain and Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need additional capital if the economy weakens more than expected. Prime Minister Mariano Rajoy yesterday unexpectedly announced the 10 billion-euro package, less than two weeks after unveiling the most austere budget in more than three decades. Rajoy is targeting basic public services for the first time since his election in December in a bid to convince investors he can bring order to the nation’s finances. “There are growing fears that the Spanish economy is caught in a pernicious circle,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e- mailed response to questions. “The weakness of government finances, the fragility of banks and worries about the scale of the recession all feed on each other.”
Italian Stocks Sink Most in Five Months Amid Debt Concern - ( Italian stocks retreated the most in five months as UniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP) led a decline in financial shares amid speculation the European sovereign-debt crisis is worsening. The benchmark FTSE MIB Index (FTSEMIB) sank 5 percent to 14,458.88 at the close in Milan, the largest drop since Nov. 1. The gauge climbed 14 percent in 2012 through March 19 as investors bet the European Central Bank’s $1.3 trillion longer term refinancing operation, or LTRO, would stop credit markets from freezing and help lenders. Since March 19, the measure has lost 16 percent. “The bears are in charge again,” said Filippo Garbarino, who oversees $50 million at Frontwave Capital Ltd. in Chiasso, Switzerland. “Bank balance sheets should have been de-risked, but exactly the opposite happened. The LTRO was used to buy even more government bonds of insolvent countries, so systemic risk is even higher.”

Sunday, April 22, 2012

Wednesday April 25 Housing and Economic stories

A Tale of Two Employment Surveys - ( The economy added 120,000 jobs in March, half of February's gain of 240,000 and the fewest in five months. Yet the unemployment rate fell for the first time since January. How did the rate fall despite such a small job gain? Because the government does one survey to learn how many jobs were created and another survey to determine the unemployment rate. Those surveys can produce results that sometimes seem to conflict. One is called the payroll survey. It asks mostly large companies and government agencies how many people they employed during the month. This survey produces the number of jobs gained or lost. In March, the payroll survey showed that companies added 121,000 jobs, and federal, state and local governments cut 1,000. The other is the household survey. Government workers ask whether the adults in a household have a job. Those who don't are asked whether they're looking for one. If they are, they're considered unemployed. If they aren't, they're not considered in the work force and aren't counted as unemployed. The household survey produces each month's unemployment rate. In March, the household survey showed that the number of people who say they have a job fell by 31,000, but the number of people looking for a job fell by even more — 164,000. That lowered the unemployment rate slightly, from 8.3 percent to 8.2 percent.
Governments have made the recovery worse - ( Bad and uncoordinated policies have "made the recovery worse than it otherwise would have been", Mr Dimon wrote in his annual letter to shareholders. "You cannot prove this in real time, but when economists 20 years from now write a book on the recovery, it may well be entitled 'It could have been much better'." New regulations, he said, have slowed bank lending at "precisely the wrong time". JPMorgan weathered the financial crisis better than most of its rivals and Mr Dimon, known for his combativeness, has become something of a spokesman for Wall Street since. Although the 56 year-old insisted that he agreed with the intention of much of the regulation, the letter added that the "result of the financial reform has not been intelligent design". JPMorgan will spend about $3bn (£1.9bn) over the next few years to ensure that it is compliant with new regulations.
China doomsayer sees crash coming - ( China’s consumption boom is drawing to a close, according to one economist’s contrarian view, which calls for no growth — or even a contraction — in the Chinese economy and the advent of an era of deflation and weaker spending. Investments leveraged to the rise of the Chinese consumer, ranging from Australian miners to luxury-handbag makers and even iPhones are due for a reality check, according to Jim Walker, founder and managing director of the Hong Kong-based economic research company Asianomics. While much of the analyst community has touted China’s growing domestic demand in recent years, Walker sees the Chinese consumer as unlikely to show much resilience, now that the economy is on a weakening trend and easy credit has run its course. “The contrarian call we have is to short or underweight consumer plays until we get through this,” said Walker.
Fifth TARP Bank Fails, Likely Wiping Out Taxpayer Stake - ( Sonoma Valley Bank in northern California failed on Friday, the fifth financial institution that failed despite having received federal bailout funds. The failure likely wipes out the $8.7 million taxpayer investment that was made in the bank in early 2009 as part of the controversial Troubled Asset Relief Program. Several hundred banks that received funding under TARP, a program approved by Congress in 2008 to help financial institutions and other companies in the wake of the global financial crisis, have either paid back the money or are expected to within several years. But there is a growing group of banks that continued to struggle after getting bailouts, or have already been seized by regulators. Officials who designed the program had said the money was intended to go to companies that weren’t at risk of toppling, and regulators have sought to downplay the failures of TARP-connected banks.
Where Housing Once Boomed, Recovery Lags - ( Half a decade has passed since crowds of lunchtime workers regularly packed the Fish Market restaurant, a popular fixture of this southern Maryland crossroads known by the lighthouse on its roof. Sales representatives for drug companies no longer buy hundreds of dollars in food for workers in the medical offices across the street. The private dining room, once a popular spot for business meetings and family parties, was closed in the fall. The official statistics say that the national economy has been growing for almost three years, and that Maryland is growing faster than most states. But in Prince George’s County, where housing prices have fallen more than anywhere else in the state, there is scant evidence of renewed prosperity.
Multi-generation households are on the rise - ( As the economy continues to take a toll on consumers' finances, a growing number of people are discovering that becoming roommates with mom and dad, or a 20- or 30-something son or daughter, helps to ease some of the financial pain in tough times. As of 2010, 4.4 million U.S. homes held three generations or more under one roof, a 15% increase from 3.8 million households two years earlier, according to the latest data available from the Census Bureau. When Alicia Moura's father-in-law, Aecio D'Silva, retired from teaching at the University of Arizona in 2010 to pursue private-sector projects in aqua-culture and bio-fuel, he didn't expect to wait long before his efforts paid off. But then the economy tanked, development funds dried up and his ventures languished. Soon afterward, Alicia started experiencing some medical issues with her pregnancy and the family decided it would be best to move in together. Now everyone -- Alicia, her husband, their two young daughters and the in-laws -- live under one roof.

Saturday, April 21, 2012

Tuesday April 24 Housing and Economic stories

Federal Funds to Train the Jobless Are Drying Up - ( With the economy slowly reviving, an executive from Atlas Van Lines recently visited Louisville, Ky., with good news: the company wanted to hire more than 100 truck drivers ahead of the summer moving season. But a usually reliable source of workers, the local government-financed job center, could offer little help, because the federal money that local officials had designated to help train drivers was already exhausted. Without the government assistance, many of the people who would be interested in applying for the driving jobs could not afford the $4,000 classes to obtain commercial driver’s licenses. Now Atlas is struggling to find eligible drivers. Across the country, work force centers that assist the unemployed are being asked to do more with less as federal funds dwindle for job training and related services.
US union pensions hole deepens to $369bn - ( The hole in the pension plans of US labour unions now stands at $369bn Credit Suisse has calculated with the aid of new reporting standards. This raises the prospect of higher pension contributions for employers and deteriorating industrial relations. Multi-employer pension schemes, managed by trade unions on behalf of members working for many different employers, are now just 52 per cent funded, the bank calculates with most of the burden to close this gap likely to fall on small and midsize companies. S&P 500 companies' share of this obligation is estimated at just $43bn. However Credit Suisse identifies seven large companies in the S&P, including Safeway and UPS, where the pension liability is a significant proportion of their market capitalisation. There is also a "last man standing" risk for companies if other contributors to a fund fail. In 2007 it cost UPS $6.1bn to withdraw entirely from the Central States Pension Fund, capping its liability. More than 10m people are covered by such multi-employer schemes with contribution rates typically set by the collective bargaining agreements that cover pay, benefits and working conditions. Membership of these funds, and the businesses contributing to them, tend to be concentrated in industries with highly unionised workforces, such as construction, transport, retail and hospitality.
Shaken Spain seeks to restore confidence - ( Spain’s centre-right government, shaken by last week’s fall in Spanish sovereign bond prices and the stock market after its first budget, has signalled an immediate drive to restore confidence among investors and European leaders with further economic reforms. Luis de Guindos, the economy minister and Spain’s de facto international spokesman on the eurozone sovereign debt crisis, has said in interviews with local and foreign media that Spain does not need a bailout of the kind provided to Greece, Ireland and Portugal by the European Union and the International Monetary Fund.
Report: Sony to cut 10,000 jobs worldwide - ( Sony Corp. will cut about 10,000 jobs worldwide over the next year as it tries to return to profit, Japanese news reports said Monday. The Nikkei business daily and other media said Sony's decision to slash 6 percent of its work force comes as it struggles with weak TV sales and swelling losses. Sony spokeswoman Yoko Yasukouchi wouldn't confirm the reports. New CEO Kazuo Hirai is holding a press conference Thursday. Sony has announced restructuring plans by selling its chemical unit. Sony is also merging its LCD panel operation with Toshiba and Hitachi. Yasukouchi said those changes could affect up to 5,000 employees who are subject to transfers.
Obama attacks banks while raking in Wall Street dough - ( Despite his rhetorical attacks on Wall Street, a study by theSunlight Foundation’s Influence Project shows that President Barack Obama has received more money from Wall Street than any other politician over the past 20 years, including former President George W. Bush. In 2008, Wall Street’s largesse accounted for 20 percent of Obama’s total take, according to Reuters. When asked by The Daily Caller to comment about President Obama’s credibility when it comes to criticizing Wall Street, the White House declined to reply. Former White House Press Secretary Ari Fleischer says the distance between the president’s rhetoric and actions makes him look hypocritical. “It’s almost as if President Obama won’t cross across a Wall Street picket line except to get inside with [his] hand out, so he can raise money,” Fleischer told TheDC, referring to the Occupy Wall Street demonstrators who the president has been encouraging over the past week. “That sort of support causes him to look hypocritical.”

Friday, April 20, 2012

Monday April 23 Housing and Economic stories

Portugal Says Some Town Halls May Need to Restructure Their Debt - ( Some of Portugal’s municipalities may need to restructure their debt once the government determines the exact amount they owe, a spokesman for Parliamentary Affairs Minister Miguel Relvas said. “We are waiting to find out the overall debt figure,” Antonio Vale said in a phone interview from Lisbon today. “It may be possible that some town halls restructure their debt.” Portugal is cutting back on money transfers to town halls, while encouraging local administrations to merge as part of a plan to save money and comply with the terms of a 78 billion- euro ($102 billion) bailout from the European Union and the International Monetary Fund. “Most town halls are healthy,” said Vale. He said the government will first determine the total debt held by the country’s 308 town halls before it comes up with a plan to deal with each municipality on a case-by-case basis.
Exclusive: Falcone mulls voluntary bankruptcy for LightSquared - ( Hedge fund manager Philip Falcone said in an interview on Wednesday he is "seriously considering" filing a voluntary bankruptcy for LightSquared, the struggling telecom startup in which his Harbinger Capital Partners is the majority owner. Falcone said a bankruptcy is one of several options he is considering as he tries to find a way to salvage the company, which reported a $427 million net loss during the first nine months of 2011, and keep its creditors at bay. He said a bankruptcy would allow the company time to find a way to deal with communications interference issues that have arisen with the planned buildout of a nationwide wireless broadband network.
Spain Not Greece Is the Real Test for the European Union - ( The decisive test of the euro area’s plans for economic recovery was never Greece but Spain, and the European Union shows every sign of failing it. The Spanish government’s new austerity plan hasn’t won investors’ confidence, and this creates a threat not just to Spain but to the whole EU. Europe’s governments need to change course before it’s too late. An auction of Spanish bonds on Wednesday was the first verdict on Spain’s new budget. It didn’t go well. Demand was poor and prices fell. The country’s borrowing costs rose with 10 year bond yields in the secondary market hitting 5.7 percent, the highest since the beginning of the year. The premium over German government bonds increased to nearly four percentage points, the highest since November. The problem is not that Spain’s new austerity plan is too timid. Just the opposite: Under EU orders, Spain is promising what might be the tightest fiscal squeeze that it or any other European economy has ever faced.
Bank-Supported Muni Market Faces ‘Headwinds,’ Moody’s Says - ( The market for bank-supported municipal debt, including variable-rate demand bonds, may face “headwinds” this year because of possible cuts in bank ratings, Moody’s Investors Service said. Top short-term ratings for both Bank of America Corp. and Citigroup Inc. (C) are under review for a downgrade, according to the credit-rating company. Losing the top grade may cause interest rates on $34.7 billion of municipal bonds to spike as money-market funds redeem the debt and dealers can’t resell it, Moody’s said in an e-mailed statement. “Issuers whose remarketings fail or who are unable to arrange extensions or replacements for expiring support facilities may face severe cash-flow pressure as they confront higher interest cost and accelerated amortization,” Moody’s said in the report.
Student Debt Collectors Are Incentivized to Violate Federal-Aid Laws, Reports - ( People who have defaulted on their student loans are sometimes forced into paying back more per month than they can afford — and more than the federal government requires — because private debt collectors are given incentives to violate federal-aid laws, Bloomberg reported this week. With $67 billion of student loans in default, the Education Department is turning to an army of private debt-collection companies to put the squeeze on borrowers. Working on commissions that totaled about $1 billion last year, these government contractors face growing complaints that they are violating federal laws by insisting on stiff payments, even when borrowers’ incomes make them eligible for leniency. ‘Boiler Room’: Education Department contracts — featuring commissions of as much as 20 percent of recoveries — encourage collectors to insist on high payments. Former debt collectors said they worked in a “boiler-room” environment, where they could earn bonuses of thousands of dollars a month, restaurant gift cards and even trips to foreign resorts if they collected enough from borrowers.

Tuesday, April 17, 2012

Friday April 20 Housing and Economic stories

Fed Buying 61 Percent of US Debt - ( The Federal Reserve is propping up the entire U.S. economy by buying 61 percent of the government debt issued by the Treasury Department, a trend that cannot last, Lawrence Goodman, a former Treasury official and current president of the Center for Financial Stability, writes in a Wall Street Journal opinion article published Wednesday. "Last year the Fed purchased a stunning 61 percent of the total net Treasury issuance, up from negligible amounts prior to the 2008 financial crisis," Goodman writes. Goodman also warns that U.S. economy and markets are “at risk for a sharp correction” if conditions aren’t “normalized.” "This not only creates the false appearance of limitless demand for U.S. debt but also blunts any sense of urgency to reduce supersized budget deficits."
Spain Record House Price Drop Seen With Bank Pressure - ( Spanish home prices are poised to fall the most on record this year, leaving one in four homeowners owing more than their properties are worth, as the government forces banks to sell real-estate holdings. Home prices will decline 12 percent to 14 percent, according to research and advisory company R.R. de Acuna & Asociados, after Economy Minister Luis de Guindos in February gave lenders two years to make 50 billion euros ($67 billion) of additional provisions and capital charges for losses linked to real estate. That’s the most since the National Statistics Institute started tracking values in 2007. Standard & Poor’s forecasts borrowers with negative equity may rise to 25 percent this year from 8 percent in 2010, based on an analysis of 800,000 mortgages.
The bizarre calculus of emergency room charges - ( Readers share their experiences about the bewildering fees charged by hospitals. Even medical professionals can be baffled by the way costs are determined. Debbie Cassettari had outpatient foot surgery to remove a bone spur. She arrived at the surgery center at 8 a.m., left at 12:30 p.m., and the bill came to $37,000, not counting doctor fees. In recovery now from sticker shock, she's waiting for her insurance company to do the tango with the clinic and figure out who owes what to whom. Gary Larson has a $5,000 deductible insurance plan, but has found that his medical bills are cheaper if he claims he's uninsured and pays cash. Using that strategy, an MRI scan of his shoulder cost him $350. His brother-in-law went to a nearby clinic for an MRI scan of his shoulder, was billed $13,000, and had to come up with $2,500. Kaiser member Robert Merrilees had a colonoscopy at an affiliated surgery center, which charged $7,500. His co-pay was $15, Kaiser picked up $470, the rest of the bill "just went away." Merrillees was left scratching his head over the crazy math in medical billing.
Senior citizens continue to bear burden of student loans - ( The burden of paying for college is wreaking havoc on the finances of an unexpected demographic: senior citizens. New research from the Federal Reserve Bank of New York shows that Americans 60 and older still owe about $36 billion in student loans, providing a rare window into the dynamics of student debt. More than 10 percent of those loans are delinquent. As a result, consumer advocates say, it is not uncommon for Social Security checks to be garnished or for debt collectors to harass borrowers in their 80s over student loans that are decades old. That even seniors remain saddled with student loans highlights what a growing chorus of lawmakers, economists and financial experts say has become a central conflict in the nation’s higher education system: The long-touted benefits of a college degree are being diluted by rising tuition rates and the longevity of debt. Some of these older Americans are still grappling with their first wave of student loans, while others took on new debt when they returned to school later in life in hopes of becoming more competitive in the labor force. Many have co-signed for loans with their children or grandchildren to help them afford ballooning tuition.
Ireland faces popular revolt over new property tax - ( Debt-mired Ireland is facing a revolt over its new property tax. The government said less than half of the country's 1.6 million households paid the charge by Saturday's deadline to avoid penalties. And about 5,000 marched in protest against the annual conference of Prime Minister Enda Kenny's Fine Gael party. Emotions ran raw as police backed by officers on horseback stopped demonstrators from entering the Dublin Convention Centre. Many protesters booed and heckled passers-by who were wearing Fine Gael conference passes, some screaming vulgar insults in their faces.

Monday, April 16, 2012

Thursday April 19 Housing and Economic stories

Regulators Expected to Penalize JPMorgan Over Lehman Collapse - ( When Lehman Brothers collapsed at the height of the financial crisis, JPMorgan Chase was at the center of the storm. The bank was a major lender to the firm, which filed the biggest bankruptcy in United States history…. The Commodity Futures Trading Commission filed a civil case against JPMorgan on Wednesday, the first federal enforcement case to stem from Lehman’s downfall. The bank settled the Lehman matter and agreed to pay a fine of approximately $20 million. The Lehman action stems from the questionable treatment of customer money — an issue that has been at the forefront of the recent outcry over MF Global. JPMorgan was also intimately involved in the final days of that brokerage firm. The trading commission accused JPMorgan of overextending credit to Lehman for roughly two years leading up to its bankruptcy in 2008. JPMorgan extended the credit using an inaccurate evaluation of Lehman’s worth, improperly counting Lehman’s customer money as belonging to the firm. Under federal law, firms are not allowed to use customer money to secure or extend credit.
Rajoy Says Spain in ‘Extreme Difficulty’ as Bond Demand Drops - ( Prime Minister Mariano Rajoy said Spain’s situation is one of “extreme difficulty” and signaled that his budget cuts are less painful than a bailout would be, as demand for the nation’s debt slumped at an auction. “Spain is facing an economic situation of extreme difficulty, I repeat, of extreme difficulty, and anyone who doesn’t understand that is fooling themselves,” Rajoy told a meeting of his People’s Party today in the southern coastal city of Malaga. Rajoy raised the threat of an international bailout for the second time this week as he sought to defend the deepest austeritymoves in at least three decades. While “no one likes” the budget presented last week, he said “the alternative is infinitely worse.” Spain sold 2.59 billion euros ($3.4 billion) of bonds today, just above the minimum amount it planned for the auction and below the 3.5 billion-euro maximum target. The average yield on the bonds due in October 2016, which act as the five-year benchmark, rose to 4.319 percent from 3.376 percent at last month’s sale. Secondary-market yields rose to 4.48 percent.
Tax Receipts Buoy State-Local Government Employment Trend - ( The city of Mesa, Arizona, fired 125 employees in 2009 as tax collections dropped amid a housing slump and a recession. Now, it is filling vacancies, training a class of police recruits for the first time in three years, and Mayor Scott Smith says he’s confident “revenue levels are going to stabilize.” As the Phoenix suburb’s experience shows, the worst may be near an end for city and state governments, and their recovery could in turn give a lift to the U.S. economy. After four years of shuttering fire houses, cutting school budgets and firing teachers and police, these governments are starting to steady as tax revenues rebound. Public employment at all levels declined by just 7,000 in the first two months of this year, well down from the 22,000 monthly average in 2011, according to Labor Department data.
Former Mrs. Pakistan used her striking appearance to scam California families - ( But the same physical assets that snared Hasnain that top title also helped her lure South Bay homeowners into a loan modification scam she and her husband, Jawad, operated from 2008 through October 2010, prosecutor Victor Chen contends. "She was really pretty," said Korina Diaz, a Gilroy waitress who lost her ranch after paying the couple $11,500 to lower her mortgage payments. "She wore a skirt suit, high heels, nylons -- like a real good-looking professional lady." Saman's striking appearance was crucial, Chen said, because the couple didn't know their victims and had to make a good first impression. They attracted homeowners by word-of-mouth and through fliers passed out at ethnic supermarkets after the housing market tanked, according to Chen. Now the Santa Clara County deputy district attorney has charged them with ripping off 17 people -- just a fraction of the 80 to 100 families he says they defrauded. The Hasnains each face 19 felony counts of conspiracy to commit grand theft in the loan-modification scheme, and Jawad has been charged with nine additional counts of felony grand theft for allegedly enticing victims from 2006 through July 2010 into investing in a fraudulent 10-unit condominium development in Fremont.
12 Underwater Homeowners Share Their Devastating Stories - ( Some of the 11.1 million homeowners with negative equity have started sharing their stories on a Tumblr called America Underwater. "There's so much shame where people feel like they've been tricked and feel like their banks have mistreated them," said Ian Kim, director of campaigns for the economic justice group behind the blog. "But putting a face on the housing crisis was very necessary." Kim has found a common thread in these stories: homeowners who played by the rules "got tricked by the banks," and banks were reluctant to throw them a lifeline, even when they were clearly struggling to make their mortgage payments. "These are paying customers who got their hours cut back at work, and who called to ask the bank to work with them so they could pay on time," Kim said. "Over and over, I'd hear about banks giving customers the runaround, losing paperwork, saying one thing and doing another. It's a form of torture that's disempowering."