Credit
union regulator sues Morgan Stanley over mortgage losses - (www.bloomberg.com) Morgan Stanley is
being sued by a U.S. credit union regulator to recover losses on more than $566
million of residential mortgage-backed securities sold to two corporate credit
unions that later failed. The National Credit Union Administration said on
Friday that Morgan Stanley made
misrepresentations in offering documents for securities sold between 2004 and
2007 to the U.S. Central Federal Credit Union, once the largest federally
chartered corporate credit union, and the Western Corporate Federal Credit
Union. "Originators had systematically abandoned the stated underwriting
guidelines in the offering documents," according to an August 16 complaint
filed in a Kansas federal court. "A material percentage of the loans were
all but certain to become delinquent or default shortly after origination. As a
result, the RMBS were destined from inception to perform poorly."
Black
Homeownership Dying Where Obama Revitalized - (www.bloomberg.com) Helene
Pearson’s belief in homeownership was shattered in Roseland, the mostly black
Chicago neighborhood where President Barack Obama got his start as a community organizer. Pearson,
who bought her two-bedroom, red-brick bungalow on South Calumet Avenue in
Roseland for $160,000 in 2006 with a high-interest loan, put it on the market a
year ago for $55,000 and didn’t attract a single offer. Her bank has agreed to
take it back. “I was so excited to buy my first house right down the street
from my mother but they got me good,” said Pearson, a 35-year-old guidance
counselor and mother of two girls. “This scarred me so badly that I never want
to buy again.” For most Americans, the real estate crash is finally behind them
and personal wealth is back where it was in the boom. For
blacks in the U.S., 18 years of economic progress has vanished, with a rebound
in housing slipping further out of reach and the unemployment
rate almost
twice that of whites. The homeownership rate for blacks fell from 50 percent
during the housing bubble to 43 percent in the second quarter, the lowest since
1995. The rate for whites stopped falling two years ago, settling at about 73
percent, only 3 percentage points below the 2004 peak, according to the Census
Bureau.
Michigan’s
Oakland County Poised to Delay $350 Million Bond Sale - (www.bloomberg.com) Michigan’s Oakland County, which borders Detroit to the north along 8 Mile Road, may delay
a $350 million debt sale that was set for next week because officials are
behind schedule in assembling bond documents, Deputy Executive Robert Daddow
said. The offering would be the biggest from the eighth-most-populous state
since Detroit filed a record municipal bankruptcy on July 18, data compiled by
Bloomberg show. The county is probably two weeks behind schedule and will
determine tomorrow if issuing the general-obligation bonds next week is
feasible, Daddow said. At least three Michigan localities -- Genesee County,
Battle Creek and Saginaw County -- postponed bond sales after Detroit’s Chapter
9 filing because interest rates were higher than they were willing to pay.
Oakland County, rated Aaa by Moody’s Investors Service, would have issued its
debt earlier if possible, Daddow said in a telephone interview. “It has nothing
to do with Michigan -- it has everything to do with the fact that this is a
very complicated transaction,” Daddow said. “We set an unrealistic target to
try to get the deal done before our year-end,” which is Sept. 30, he said.
Cooper's
Chinese workers lock out U.S. managers to protest Indian buyout - (www.reuters.com) Workers
at a Cooper Tire and Rubber Co joint venture factory in China locked
out their U.S. managers to protest against a $2.5 billion buyout by India's
Apollo Tyres that they say will put their jobs at risk. Foreign managers could
face the risk of "bodily injuries", Yue Chunxue, director of the
labor union at Cooper Chengshan Tire Co in China's eastern Shandong province
said. Apollo agreed to buy Cooper Tire in June in a debt-funded deal, sparking
a three-month strike. "Unless the deal is canceled, we will continue to
boycott it, to the very end," Yue said. No other details about the
lock-out were immediately available, and it was not clear whether the American
managers had tried to enter the factory.
How
37-Year-Old Teacher Imperils Pimco’s Bond Bet: Mexico Credit - (www.bloomberg.com) For
Pedro Hernandez, a striking elementary-school teacher from the southern state
of Oaxaca, his union’s protests disrupting Mexico’s capital aren’t just about education. They’re
about stopping President Enrique Pena Nieto. “We’re against all the structural
reforms,” the 37-year-old said last week as he walked down Mexico City’s
central boulevard as part of an organized march of 15,000. Hernandez held a
sign that read, “Mexico has no president.” The demonstrations, which persuaded
Mexican lawmakers to delay votes on education-reform legislation that would
have subjected teachers to standardized evaluations, are a sign to Barclays Plc
that Pena Nieto may struggle to push through his energy and tax-law proposals
without modification. Opposition to those pledges, which carried him to victory
in July 2012, is also undermining confidence in Mexico’s economy that led
foreign investors such as Pacific Investment Management Co. to increase bond
holdings to a record this year.
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