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FHA
reverse mortgage losses may require bailout - (news.yahoo.com) The Federal Housing
Administration may need as much as a $1 billion rescue package before the end
of the year to bolster its reserves despite efforts to shore up its finances
with higher mortgage insurance premiums, a Senate subcommittee was told
Tuesday. FHA Commissioner Carol Galante said her agency, which insures
some 40 million home mortgages, is struggling with more than $5 billion in losses
on reverse mortgages that allow people over 62 to borrow against
their home equity and use the money for living expenses. Galante said the FHA played
a crucial role in bringing the housing market back from the brink of collapse,
but at a heavy financial price to itself. The FHA is required by law to
maintain reserves equal to 2 percent of the total amount of home mortgages it
insures. It currently has about $32 billion in reserves. The agency, created
during the Great Depression to create more affordable home ownership
opportunities, insures more than $1 trillion in mortgage loans to
primarily low-to-moderate-income families and first-time homebuyers. The Obama
administration said in its fiscal 2014 budget request six weeks ago that FHA
would probably need $943 million in taxpayer assistance to bolster its reserves
to cover losses from loans it insures. The government's mortgage insurer has
until Sept. 30 to decide whether or not it will need the cash infusion from the
Treasury, which does not require congressional approval and would be the first
in the agency's 79-year history.
Timber!
Falling Lumber Prices Shatter Housing Optimism - (finance.yahoo.com) Timber!!!! The price of framing lumber on CME
is barely over $300 per 1,000 board feet, down more than 20% since the
beginning of April. The last time prices were this low was October of last
year. Meanwhile, the price of copper is currently fighting back from its own
20% correction from February through April. Copper and lumber have one thing in
common: they're both used to build. If the economy is supposed to be in
recovery and housing is picking up, someone forgot to tell the commodity
markets. The question for traders is whether the copper and lumber price
declines have a great meaning or are just another piece of ambiguous data in a
recovery defined by such things. Jeff Saut of Raymond James Financial says
there's ample evidence to support the idea that weak lumber prices and a
housing recovery aren't mutually exclusive. "We think the price of lumber
is going to be volatile until you get a sustainable pick-up in volume in
housing," Saut says in the attached clip. Housing prices, according to
Saut, are strong at least in part as a function of the scarcity of new homes.
"We think when the volumes pick up at the spring of next year we'll go
back up on the price of lumber."
EU Hits China With Solar-Panel Duties in Dumping Dispute -
(www.bloomberg.com) The European Union imposed
tariffs as high as 67.9 percent on solar panels from China in the largest EU
commercial dispute of its kind, seeking to help revive a withering industry in
Europe. The duties punish Chinese manufacturers of solar panels for allegedly
selling them in the 27-nation EU below cost, a practice known as dumping. Yingli
Green Energy Holding Co., Wuxi Suntech Power Co. and Changzhou Trina Solar
Energy Co. are among the more than 100 companies targeted. EU producers such as Solarworld AG (SWV), Germany’s
No. 1 maker of the renewable-energy technology, have suffered “material injury”
as a result of dumped imports from China, the European Commission, the bloc’s
trade authority in Brussels, said today in the Official Journal.
The commission said 25,000 jobs in EU solar production would likely be lost
without the import taxes.
JPMorgan’s Alabama Debacle Set to Cost Bank $1.5 Billion -
(www.bloomberg.com) JPMorgan Chase & Co. may see as
much as $1.6 billion go down an Alabama sewer. The biggest U.S. bank
by assets agreed to forgive $842 million of debt owed to it by Jefferson
County, Alabama, where it took the lead in arranging risky securities deals
that pushed the county into the largest U.S. municipal bankruptcy, in November
2011. That agreement follows a $722 million settlement in 2009 with the U.S.
Securities and Exchange Commission related to the Jefferson County financing.
JPMorgan’s total costs amount to a quarter of the $6.2 billion trading loss in
2012 from corporate-credit bets by a trader known as the London Whale. Elizabeth C. Seymour,
a bank spokeswoman, had no comment on the accord announced yesterday. If
accepted by the court, it would cap almost a decade-long disaster in Alabama’s
largest county, where JPMorgan initially reaped substantial fees arranging interest-rate
swaps that subsequently proved tainted by municipal corruption and devastating
to taxpayers during the 2008 credit crisis.
Quant
hedge funds hit by US bonds sell-off - (www.ft.com)
Some of the world’s biggest
quant hedge funds have suffered steep losses in the past two weeks following
the sell-off in US bond
markets. So-called “CTAs”, which use computer models to spot and
ride market trends automatically, were caught out as investors anticipated an end to the US Federal Reserve’s measures to
stimulate the economy. Bond yields have risen from some of their lowest levels
in decades in the past fortnight, leaving funds with large holdings badly hit. Many
quant funds have been major buyers of bonds as their algorithms have followed
yields lower over the past few years.
Japan's
Abe targets income gains in growth strategy - (www.reuters.com)
Finnish Economy Enters Recession as Euro Slump Saps Output - (www.bloomberg.com)
Finnish Economy Enters Recession as Euro Slump Saps Output - (www.bloomberg.com)
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