Thursday, October 31, 2013

Friday November 1 Housing and Economic stories


St. Louis alderman seeks hearing over stolen money from parks department - (www.stltoday.com) Nearly half a million dollars was stolen in the scams by two officials over eight years.  A St. Louis alderman is seeking committee hearings to investigate how two St. Louis parks officials were able to scheme and steal nearly half a million dollars in city funds over eight years without detection. The officials — Thomas “Dan” Stritzel, the chief park ranger, and Joseph Vacca, the deputy parks commissioner — pleaded guilty last month in federal court of a scheme that involved the complicity of at least two companies doing business with the city. The companies overcharged the city for services and passed the money back to a sham company controlled by Vacca and Stritzel, avoiding detection by city audits. City officials representing Mayor Francis Slay said there was nothing they could do to prevent the thefts because they involved the department’s senior officials and the complicity of bona fide vendors. But they said on Tuesday they are working to put into place additional safeguards. Now, Ward 21 Alderman Antonio French has called for an aldermanic committee, the Parks and Environmental Matters Committee, to hold hearings to investigate the “circumstances and failures that led to Stritzel and Vacca’s indictment.”

Fannie Mae, Freddie Mac to go after more strategic defaulters - (www.latimes.com) Anyone thinking of skating on mortgages owned by eitherFannie Mae or Freddie Mac may want to think again. As a result of new government reports, the two companies say they are going to do a better job of going after so-called strategic defaulters. Fannie and Freddie can pursue judgments against borrowers who walk away from their loans even though they have the ability to make their payments. That's called a strategic default, and many borrowers are taking that step — typically throwing in the towel because their homes are no longer worth as much as they owe. But when their homes are sold at foreclosure and the proceeds are not enough to cover their outstanding loan balances, it creates a deficiency for which many defaulters either don't realize they are liable or don't care. To date, the two government-sponsored enterprises, which are now highly profitable after five years of running in the red, haven't done a particularly good job at pursuing deficiency judgments, according to scathing reports from the Office of the Inspector General at the Federal Housing Finance Agency.

3 days after Fla AG Pam Bondi says she's considering investigating Donald Trump, Trump gives her campaign $25k - (www.stopforeclosurefraud.com) Last month, Attorney General Pam Bondi was supposedly thinking about going after Donald Trump for running a get-rich seminar that some Floridians said fleeced them out of thousands of dollars. New York's A.G. had already filed suit, saying that Trump's seminars — conducted there and in Florida — were little more than a "bait and switch" meant to separate customers from their money. So on Sept. 14, the Sentinel quoted a spokeswoman for Bondi who said that Florida's attorney general was studying the New York lawsuit to see whether she wanted to take action here as well. Three days later, on Sept. 17, Trump's foundation cut a $25,000 check to a committee associated with Bondi's campaign. It was one of the largest checks that the "And Justice for All" committee has received. And it looks awfully fishy. Think about it. A prosecutor says she's trying to decide whether to sue someone — and that someone suddenly gives her campaign war chest $25,000?

J.P. Morgan Offers to Front Benefits if Government Doesn't Pay - (www.online.wsj.com) As if conjuring up the spirit of his bank’s founder, James Dimon is planning to take the place of the U.S. government if it goes into default—at least as far as his clients’ federal benefits go. At a meeting of the Institute of International Finance on Saturday, Mr. Dimon, the chief executive of J.P. Morgan Chase & Co., said he expects a deal to be reached between the White House and Congress that will raise the debt ceiling before the borrowing capacity is otherwise forecast to be exhausted on Oct. 17.  But in the event that the government runs out of cash to make a $12 billion Social Security payment due on Oct. 23, J.P. Morgan has a plan. Mr. Dimon said his bank would fund the $6 billion to $8 billion in government benefits that the bank processes each week for its clients, even if the government doesn’t actually pay those obligations. “We have a huge amount of clients who get direct deposit from the government, like veterans and welfare checks and Social Security, and what we want to do is to take care of our clients [by making] sure they don’t run out money,” Mr. Dimon said, speaking after he’d mentioned the plan in the panel discussion. “So you’re basically advancing the money into their account.”

The student loan bubble is starting to burst - (www.cnbc.com) The largest bank in the United States will stop making student loans in a few weeks. JPMorgan Chase has sent a memorandum to colleges notifying them that the bank will stop making new student loans in October, according to Reuters. The official reason is quite bland. "We just don't see this as a market that we can significantly grow," Thasunda Duckett tells Reuters. Duckett is the chief executive for auto and student loans at Chase, which means she's basically delivering the news that a large part of her business is getting closed down. The move is eerily reminiscent of the subprime shutdown that happened in 2007. Each time a bank shuttered its subprime unit, the news was presented in much the same way that JPMorgan is spinning the end of its student lending.






Wednesday, October 30, 2013

Thursday October 31 Housing and Economic stories

TOP STORIES:

Inside Puerto Rico's looming debt threat - (www.cnbc.com) Representatives of the government of Puerto Rico talked to investors Tuesday afternoon, as the U.S. commonwealth tried to assuage market concerns about its ability to repay its massive debt load. The governor of Puerto Rico told investors, "We will do everything to honor all our commitments."  The comment was the beginning of what was expected to be an up to three-hour presentation, with 75 PowerPoint slides, all designed to calm investor worries. The island has more than $70 billion in debt, much of which has fallen in value as investor concerns have grown. As part of the presentation, the government announced its budget deficit for fiscal year 2014 is expected to be $820 million, down from a preliminary estimate of $1.29 billion in 2013, and $2.38 billion in 2012.

Obamacare deductibles a dose of sticker shock - (www.chicagotribune.com) Adam Weldzius, a nurse practitioner, considers himself better informed than most when it comes to the inner workings of health insurance. But even he wasn't prepared for the pocketbook hit he'll face next year under President Barack Obama's health care overhaul. If the 33-year-old single father wants the same level of coverage next year as what he has now with the same insurer and the same network of doctors and hospitals, his monthly premium of $233 will more than double. If he wants to keep his monthly payments in check, the Carpentersville resident is looking at an annual deductible for himself and his 7-year-old daughter of $12,700, a more than threefold increase from $3,500 today.

Obama sold voters bill of goods on health care - (www.sfgate.com) As a candidate for president, Barack Obamasold his signature universal health care plan with the promise that it would "cut the cost of a typical family's premium by up to $2,500 a year." Now that the Affordable Care Act exchanges are open for business, voters are finding that the biggest problem with Obamacare isn't that some Web sites crashed last week but that the Obama promise of big savings for the average family was too good to be true. Now that the exchanges are open for business, people who already have individual coverage have something new to not like: sticker shock. The Affordable Care Act isn't affordable after all. Last week, I began hearing from readers whose individual policy premiums are going up, not down. A local architect sent me a notice he received from Kaiser informing him that his individual coverage will increase by $199.95 per month, or 78.9 percent. When he added his two sons, the percentage increase was even greater. A freelance journalist told me she made $98,000 last year. But she and her retired husband, both 51, wouldn't pay $7,200 in premiums for high-deductible coverage. It's cheaper to pay the fine, she said. Besides, she added, "we're healthy."

Coal Slump Leaves Australia Port Half-Used, Lenders at Risk - (www.bloomberg.com) Australia & New Zealand Banking Group Ltd. (ANZ) and Westpac Banking Corp. are among lenders risking losses on $3 billion of loans backing a coal port in Australia that will be twice its required size. Wiggins Island Coal Export Terminal Pty, the group comprising the unfinished project’s owners, including Glencore Xstrata Plc and Wesfarmers Ltd., in 2011 borrowed the debt from 19 banks, according to data compiled by Bloomberg. When the port in the state of Queensland begins shipping in early 2015, only about half of its 27 million metric tons of initial annual export capacity will be used after a slump in coal demand, forecaster Wood Mackenzie Ltd. estimates.  “There will be more capacity than mines available to utilize it,” Daniel Morgan, a Sydney-based analyst at UBS AG said in a phone interview. “It may result in the banking syndicate having to renegotiate the terms or the price, or taking a write-down on their position.”

Time to take bets on Frexit and the French franc? - (www.telegraph.co.uk) We have a minor earthquake in France. A party committed to withdrawal from the euro, the restoration of French franc, and the complete destruction of monetary union has just defeated the establishment in the Brignoles run-off election. It is threatening Frexit as well, which rather alters the political chemistry of Britain's EU referendum. Marine Le Pen's Front National won 54pc of the vote. It was a bad defeat for the Gaulliste UMP, a party at risk of disintegration unless it can find a leader in short order. President Hollande's Socialists were knocked out in the first round, due to mass defection to the Front National by the working-class Socialist base. The Socialists thought the Front worked to their advantage by splitting the Right. They have at last woken up to the enormous political danger.





Tuesday, October 29, 2013

Wednesday October 30 Housing and Economic stories


Why Obamacare Could Worsen Uninsured By Encouraging "Cost-Benefit" Opt-Outs - (www.voiceofsandiego.org) Recently I got a notice that Health Net was terminating my family’s medical insurance effective Jan. 1. They offered new “Covered California insurance plans” compliant with the Affordable Care Act to replace my existing coverage. Five tiers of service were outlined: Platinum, Gold, Silver, Bronze and Catastrophic. The Silver plan most closely matched our previous coverage. To calculate the cost of this new plan, a Premium Rate Guide was provided. It is a multi-page chart listing rates for each age and different tables for Los Angeles, San Diego, Riverside, Orange and San Bernardino county residents. A quick analysis reveals San Diego County was the second most costly, about 10 percent higher than the lowest among them. By adding up the cost for each person on the plan, I determined the new family plan would be $10,523 per year, without a subsidy because our annual household income comes to more than $80,000. The cost of the Obamacare plan is an astounding 58 percent higher than the existing plan’s cost of $6,828. A $4,000 deductible means that only after paying $14,523 will the health care plan provide financial benefit.

After sudden plunge, gold traders cry conspiracy - (www.cnbc.com)  Gold dropped $25 in two minutes Friday morning following what appeared to be a single massive sell order, and professional traders are now pronouncing the sale a deliberate attempt to manipulate the market. At 8:42 a.m. ET Friday morning, a firm appeared to sell 5,000 gold futures contracts "at the market," meaning at whatever price was available. The massive order was more than the market could take at once and led the CME to automatically halt trading for 10 seconds. Eric Hunsader of Nanex told CNBC.com on Friday that 2,700 contracts were sold, which triggered the halt, and that the remaining 2,300 were sold once the market resumed trading.

Asmussen rejects Athens' call for ECB to roll over Greek bonds - (www.reuters.com) The European Central Bank cannot roll over Greek bonds as this goes against a ban on financing governments, a senior ECB policymaker said on Monday, dashing Athens' hopes it will help plug a funding gap next year through such a move. Athens will be financed by bailout loans until the second half of 2014, when it hopes to tap bond markets again. It then faces a funding gap of nearly 11 billion euros for 2014-15, the International Monetary Fund and Athens estimate. Finance Minister Yannis Stournaras said on Monday that Greece planned to roll over debt next year to narrow the funding shortfall. He said that euro zone central banks had promised to roll over Greek bonds and that if they did not they should make up the difference by other means.

Shutdown costs family $10,000 and dream house - (www.cnbc.com)  Tom and Casey Maloy are living every homebuyer's bad dream: Though they were able to sell their too-small house in Baton Rouge, La., the government shutdown has shut them and their five kids out of a great deal on a move-up house. "We get the phone call that, hey, you're approved, but the government is shut down, and your government backed-USDA loan cannot be processed, so you have to wait," Tom said. The Maloys had planned to use a Department of Agriculture rural development home loan, a 30-year fixed product requiring no down payment. The program, designed to help families just like the Maloys, is now on hold because of the shutdown. No loans are being processed. "I'm pretty stressed out, unsure of where our country is heading and how to provide day to day for our children if we can't finish our loan now, because we do have to be out of this house in a week for the new owners to move in," Casey said. "They've given us an extra week, so it's kind of stressful."

$57B of FHA Loans Big Banks May Have to Eat - (www.americanbanker.com) The nation's four largest banks are holding $57 billion of seriously delinquent loans that they've been slow to move into foreclosure over concerns that the Federal Housing Administration, the government mortgage insurer, will refuse to cover the losses and hit them with damages, according to industry sources. The banks — Bank of America (BAC), Citigroup (NYSE:C), JPMorgan Chase (JPM), and Wells Fargo (WFC) — have assured investors in the footnotes of quarterly filings that the loans are government-insured and therefore pose no threat to their bottom lines, even if they end up in foreclosure. What's more, the banks have used these supposedly iron-clad government guarantees as a pretext for continuing to classify the loans as performing and for holding no reserves against them.






Monday, October 28, 2013

Tuesday October 29 Housing and Economic stories

TOP STORIES:

Mainstream Media Finally Catches on to Disability Fraud: 60 Minutes Reports on "Disability USA"  - (Mish at globaleconomicanalysis.blogspot.com) At long last, mainstream media is giving play to widespread disability fraud running rampant in the US. Steve Kroft on 60 Minutes reports on the alarming state of the federal disability program, which has exploded in size in the last six years and could become the first federal benefits program to run out of money. The video is about 14 minutes long. Kroft interviews senator Tom Coburn of Oklahoma. Kroft also attempts to interview a couple of law firms that make the most off of putting people on disability for a fee. One firm has a perfect track record, where every disability case was approved. Coburn selected cases at random and found 25% of the cases were fraudulent and another 20% were "highly questionable". The "system is being gamed pretty big right now", said Coburn. "You need look no further than disability lawyers trolling for new clients." The 60 Minute report names the firms, and they are under investigation. None of them would talk to 60 Minutes, citing legal advice.

Health insurance shoppers suffer sticker shock - (www.sfgate.com) Shelly Ross of San Francisco was looking forward to the opening of the new health insurance marketplaces under the Affordable Care Act because she was hoping to get a better deal. But now that she's seen her options, Ross is disappointed. Turns out she earns slightly too much money to qualify for federal financial aid to help her buy coverage in the state's exchange, called Covered California. And because policies have to be upgraded to comply with the new law, her rates are going up nearly 10 percent. "Every plan is going to cost more than what I pay now. And what I pay now is ridiculous," said Ross, 47, who owns a cat-sitting business called Tales of the Kitty and pays more than $400 a month for her insurance. "It's a great thing for some people, but it's certainly not helping me." Ross is among the millions of Americans who buy coverage on their own, but must find new coverage because the health law has rendered their current policies outdated. But Ross, like many others, is not finding the plans sold through the Affordable Care Act to be particularly affordable.

JPMorgan’s Dimon Posts First Loss on $7.2 Billion Legal Cost - (www.bloomberg.com) JPMorgan Chase & Co. reported its first loss under Chief Executive Officer Jamie Dimon after taking a $7.2 billion charge to cover the cost of mounting litigation and regulatory probes. The third-quarter loss was $380 million, or 17 cents a share, compared with a profit of $5.71 billion, or $1.40, a year earlier, the New York-based company said today in a statement. The last time the bank failed to report a profit was the second quarter of 2004, when William Harrison was CEO. “Over the last few weeks the environment has become highly charged and very volatile,” Chief Financial Officer Marianne Lake said on a conference call. “Things have been very fluid and the situation escalated to the point where we are facing very large premiums and penalties, the level of which have gone far beyond what we reasonably expected.”

Massachusetts Weighs Puerto Rico Debt Impact on Mutual Funds - (www.bloomberg.com) Massachusetts’ chief securities regulator will open an inquiry into the impact of Puerto Rican debt on the state’s mutual fund investors. The investigation is meant to determine the extent of investors’ risk tied to the island’s weakening municipal debt obligations, Massachusetts Secretary of the Commonwealth William F. Galvin said today in a statement. “Puerto Rico is currently on the verge of insolvency and many of its obligations are at or near junk rating,” according to the statement. “The risks associated with its municipal debt obligation are disproportionally high.” Interest on debt issued by Puerto Rican governments is typically tax-free across the U.S., and yields on some issues topped 10 percent in recent weeks amid doubt about whether investors will be repaid. The bonds’ high yields and tax-exempt status make them popular with retail investors, according to the statement.

Law of Career Security: France's Minister of Digital Economy Orders Telecom Companies "to be Virtuous and Patriotic" and to Use Alcatel-Lucent to Prevent Layoffs - (Mish at globaleconomicanalysis.blogspot.com) In France, companies need approval from the unions and the government to fire workers. The government gets to decide if you make too much money to lay anyone off. Moreover, the government can decide you make too much money, even if you have a loss. Then there's the newly passed "Law of Career Security" to consider. Yes, that's the precise title. It took me a bit to piece this story together because translations from French are particularly difficult.




Sunday, October 27, 2013

Monday October 28 Housing and Economic stories


IMF sours on BRICs and doubts eurozone recovery claims - (www.telegraph.co.uk) The International Monetary Fund has thrown in the towel on emerging markets. After years of talking up the BRICS club of Brazil, Russia, India, China, and South Africa, it now admits that these countries have either exhausted their catch-up growth models, or run into the time-honoured problems of supply bottlenecks and bad government. The IMF was caught off guard by the ferocity of the emerging market rout when the Fed began to talk tough in May, threatening to turn down the spigot of dollar liquidity that has fuelled the booms -- and masked the woes -- in Asia, Latin America, and Africa. In what amounts to a mea culpa, the IMF hinted that it had for long been blind to festering problems in the BRICS and mini-BRICs.

Biggest Confidence Drop Since 2008  - (www.businessinsider.com) U.S. economic confidence plunged more in the past week than in any week since the collapse of Lehman Brothers on September 15, 2008 -- the catalyst for the financial crisis and U.S. recession. Gallup's Economic Confidence Index fell nine points in late February and early March 2013 as Congress and President Barack Obama failed to reach an agreement to avoid automatic federal spending cuts as part of sequestration. Economic confidence fell eight points during the week ending Feb. 20, 2011, as Congress and the president reached an agreement on the federal budget at the last minute, avoiding a government shutdown.

Amid slimdown, Arkansas prisoners get paid while guards do without - (www.foxnews.com) Some employees at an Arkansas federal prison are unsure when the next time they’ll receive a paycheck amid the government slimdown, but the inmates are continuing to get paid for jobs like landscaping, WMCTV.com reported. The report said that the inmates are still receiving checks because their funds come out of a trust fund that is not affected by the problems in Washington. About 600 workers at the federal prison in Forrest City are impacted by the slimdown, the report said. “The inmates who have committed the crimes in this country and are incarcerated by violating the laws of common society, they’re not affected by the shutdown, but the employees that we trust to keep our communities safe are,” Jeff Roberts, a prison employee who goes to work every day and does not get paid, told the station.

USDA Buyers Stuck in Limbo as Shutdown Hurts Housing - (www.bloomberg.com) Jacob Smith, a 25-year-old Florida firefighter, wasn’t paying much attention to the U.S. government shutdown until it threw his move to a new three-bedroom home near Daytona Beach into limbo. Smith was ready to complete the purchase Oct. 1, the day the closure began. Now he has to wait until the Department of Agriculture reopens its mortgage business. For now, Smith’s landlord is allowing him to stay in his one-bedroom rental, crammed with boxes and furniture meant for the larger property. His builder, Adams Homes of Gulf Breeze, Florida, said it has about 10 other customers on the east coast of the state with purchases also on hold.  “It’s pretty ridiculous,” Smith said. “It seems rare that what you see on the news is directly affecting you. Hopefully it will end soon.” USDA loans account for about 132,000 mortgages a year in areas designated by the agency as rural, according to the Mortgage Bankers Association. While they make up just 1.4 percent of the U.S. mortgage market, the product is one of the few available that allow zero-down payment loans and are an early warning of how the government’s first partial closing in 17 years could put a drag on the wider housing market.

Montana Towns Struggle With Oil Boom Cost as Dollars Flee - (www.bloomberg.com) Tractor-trailer trucks carrying oil, water and sand to drilling sites are lined up at one of two stoplights in Fairview, Montana, as the mayor tries to figure out how to squeeze more people into his town. The prairie community straddles the state line with North Dakota and needs a new water tank, improvements to its sewage treatment plant and curbs and gutters. The price tag: $14.4 million -- five times the city’s $2.7 million budget. “A town of 1,100 people just doesn’t run down to the bank and write a check for that kind of money,” said Mayor Bryan Cummins. “Our town has eight times the traffic traveling through it as it did five years ago.” Fairview is one of a half-dozen bucolic farming towns in eastern Montana transformed over the past 18 months into bedroom communities for workers toiling in the Bakken oil patch. Unlike North Dakota cities that reap tax money from oil production to help keep pace with double-digit growth, Montana municipalities get next to nothing. The towns’ new reality illustrates the tradeoffs that come with the energy boom and how the drilling that showered riches on its neighbor poses challenges in Montana.