Thursday, January 30, 2014

Friday January 31 Housing and Economic stories

TOP STORIES:

U.S. FATCA tax law catches unsuspecting Canadians in its crosshairs - (finance.yahoo.com) A Calgary woman's developmentally disabled son is caught in a U.S. tax quagmire that she fears may cost him the money she spent years setting aside for his financial future. "He's entrapped," said Carol Tapanila, the 70-year-old mother. "There's no way out. He is entrapped into U.S. citizenship." Her 40-year-old son was born in a Calgary hospital, but automatically received U.S. citizenship because both his parents were American. That simple fact may soon create financial woes for the Tapanila family. Starting in July, a new U.S. tax law, the Foreign Account Tax Compliance Act (FATCA), goes into effect. It requires banks around the world to sift through client accounts to find anyone with U.S. connections and send that information to the U.S. Internal Revenue Service. The law is aimed at Americans who are hiding offshore accounts, but the information sharing is likely to unearth many unsuspecting Canadians with U.S. citizenship, like Tapanila's son, who didn't realize they were required to file U.S. taxes. Tax law expert Allison Christians calls the Tapanila case "ridiculous" and a "classic example of why the law is unjust." "[FATCA] was intended to find rich American tax cheats hiding out in Switzerland," said Christians, who teaches tax law at McGill University, but it "will now punish poor, disabled Americans living in other countries, who are only American by birth."

Mortgage forecasts lowered for 2014  - (www.cnbc.com)  Rising interest rates and a still slow housing recovery have some of the nation's largest banks reporting huge drops in residential mortgage originations. Both Wells Fargo and JP Morgan Chase saw originations plummet in the fourth quarter of 2013, down 60 percent and 54 percent respectively from a year ago. "These guys are stuck with a lot of liquidity and not a lot of loan growth," said FBR analyst Paul Miller in an interview on CNBC. Barely an hour after the two banks reported their quarterly earnings, the Mortgage Bankers Association lowered its mortgage origination forecast for 2014 by $57 billion to $1.12 trillion for the year. 

Thai protesters start Bangkok "shutdown" in bid to topple PM - (www.cnbc.com)  Thousands of anti-government protesters began a blockade at major intersections in Bangkok on Monday as they sought to paralyse Thailand's capital, stepping up pressure on Prime Minister Yingluck Shinawatra to resign. Police and soldiers kept watch as the city of some 12 million people ground to a halt, but there were no signs that the government was preparing to resist the protesters with force. The upheaval is the latest chapter in an eight-year conflict pitting Bangkok's middle class and royalist establishment against the mostly poorer, rural supporters of Yingluck and her self-exiled brother, billionaire former premier Thaksin Shinawatra.

The Bullish Economic Story May Be On The Verge Of A Change - (www.businessinsider.com) There's been a lot of talk lately about how the U.S. economy seems to be breaking out, but it looks likely that such enthusiasm may be tempered going forward. The yield on the 10-year Treasury note broke through to a new multi-year high of 3.03% on the final day of 2013, following the Federal Reserve's Dec. 18 decision to begin tapering down its bond-buying program known as quantitative easing and the attendant sell-off in the U.S. government bond market. Friday's release of the December jobs report, however, sent yields tumbling 10 basis points in a single day, and they are now back below where they were when the tapering-induced sell-off began. Last week, before the jobs report, we highlighted Citi's Economic Surprise Index, which stood at its highest level in nearly two years headed into the release. The surprise index measures how much better or worse economic data progress relative to the expectations of market economists, so a high number means the data are blowing expectations out of the water.

U.S. Regulators Said Ready to Ease Volcker CDO Limits for Banks - (www.bloomberg.com)  U.S. regulators are set to give banks an exemption from Volcker Rule limits for collateralized debt obligations composed mostly of small-bank securities, according to two people briefed on the agencies’ plans. The adjustment to the rule, which could come as soon as today, would allow banks to keep CDOs backed by trust-preferred securities while limiting the level of insurance and big-bank content, said the people, who requested anonymity because the regulators haven’t acted. After regulators approved the Volcker Rule on Dec. 10, smaller U.S. banks said it could force them to take as much as $600 million in losses on certain CDOs held by about 300 firms. The Federal Reserve, Federal Deposit Insurance Corp., Securities and Exchange Commission and Office of the Comptroller of the Currency said they would consider exempting the securities and would deliver their answer by tomorrow. The exemption would grant grandfathering protection to CDOs held before last month, as long as they meet thresholds ensuring they are largely tied to securities issued by banks with less than $15 billion in assets, the people said. As a so-called interim final rule, it can be implemented while still allowing the agencies to collect comments.




Wednesday, January 29, 2014

Thursday January 30 Housing and Economic stories


Obamacare Customers Skew Older as Young Invincibles Wait to See - (www.bloomberg.com)  About 70 percent of Obamacare’s customers are 35 years of age or older, indicating that U.S. health-care overhaul is initially attracting a less healthy population that may drive up insurance premiums. The federal- and state-run insurance exchanges signed up 2.2 million people for private health plans in the three months ended Dec. 28, the U.S. Department of Health and Human Services said in a report released today. About 24 percent were 18- to 34-year-olds, and about one-third were 55 or older. The Obama administration wanted 18- to 34-year-olds to make up about 40 percent of total enrollment to help offset the cost of care for older and sicker people. Missing the target for the “young invincibles” may lead insurers to adjust prices if gains aren’t made by the March 31 end of enrollment.

Did Banks Dump Structured Financial Products in Your Pension Fund? | Janet Tavakoli  - (www.tavakolistructuredfinance.com) Banks and investment banks were large direct and indirect subprime lenders. I’ve written extensively how desperate banks accelerated sales of  fraud-riddled residential mortgage backed securities and collateralized debt obligations as the market unraveled. In addition, variable-rate auction securities (also known as auction-rate securities or ARS), backed by municipal bonds, student loans, subprime mortgages, and/or subprime backed collateralized debt obligations, comprised a $330 billion market. By the end of 2007, municipal bond insurers, including MBIA and Ambac, that credit wrapped the ARS were in trouble after writing credit default protection on toxic collateralized debt obligations with banks. The same banks that blew up the monoline bond insurers dumped doomed ARS on investors. Banks sold long-dated auction rate securities as if they were money market instruments. They told customers that if there were no buyers at the regular short-term interval auctions at which the ARS coupons reset, the banks would buy back the securities. Retail investors and condominium associations were told these were a prudent substitute for T-Bills, just before the market fell apart. To be clear, banks lied to unsophisticated buyers to foist losses on them.

Who's Buying Obamacare, in Three Charts - (www.bloomberg.com)  More than 2.1 million Americans selected private health plans throughhealthcare.gov and state-run websites through Dec. 28, the Obama administration announced today. Another 1.6 million were judged eligible for Medicaid, the federal-state insurance program for the poor. Most of the new enrollees in private health plans—1.8 million—signed up in December, after the White House relaunched the Affordable Care Act’s stuttering website on Dec. 1. People can still enroll in Obamacare plans through the end of March to get coverage this year. The White House is hoping for a mix of people that includes enough young and healthy folk to balance the medical costs of older enrollees who need more care. Here’s a snapshot of who signed up in the first three months. All data are from the Department of Health and Human Services, through Dec. 28.

The House Passed A HealthCare.gov 'Security' Bill That Helps No One And Fixes Nothing - (www.businessinsider.com) On Friday, the House passed the Health Exchange Security and Transparency Act, a one-sentence bill that, in the event of any security breach of HealthCare.gov, would require the government to notify affected individuals within two days. But the real purpose of the bill seems to be to keep negative attention on HealthCare.gov, not to keep users' information secure. The ranking Democrats on the House Committee on Oversight and Government Reform noted in a memo that "there have been no successful security attacks to date on HealthCare.gov," "HealthCare.gov does not collect or store detailed personal health information," and there are already protocols in place "for informing affected citizens as rapidly as possible in the event of a security breach."

Next financial crisis could be coming - (www.cnbc.com) The "Lehman weekend" five years ago has taken on symbolic importance as the fulcrum of the financial crisis, but the roots of the crisis were broad and deep—planted in years of unconstrained excess on Wall Street and prolonged complacency in Washington and financial capitals worldwide. "Shadow banking" permitted the financial sector to engage in highly leveraged, short-funded maturity transformation with too little transparency, not enough capital and little restraint. Large firms became more interconnected and became increasingly reliant on short-term funding from repo transactions, derivatives, money market funds, securities lenders and prime brokerage business. Huge amounts of risk moved outside the more regulated parts of the banking system to where it was easier to increase leverage. Legal loopholes and regulatory gaps allowed firms to evade oversight. Investment banks, insurance conglomerates and other entities performing the same market functions as banks escaped meaningful regulation on the basis of their corporate form, and banks could move activities off balance sheet and outside the reach of more stringent regulation. 




Tuesday, January 28, 2014

Wednesday January 29 Housing and Economic stories


Why 'Too Big to Fail' Is a Bigger Problem Than Ever - (www.thefiscaltimes.com) Just how big are the largest banks in the U.S.? Here’s a little perspective: In the past few months, JPMorgan Chase has agreed to pay, depending on how you do the math, somewhere between $22 billion and $25 billion in fines and penalties for various illegal activities, from hiding its suspicions about Ponzi schemer Bernie Madoff to misleading investors about the notorious London Whale. Meanwhile, as of the third quarter of 2013, 99.1 percent of banks chartered in the U.S. had less than $20 billion in total assets on their books. Think about that for a moment. In the space of less than 90 days, JPMorgan Chase has agreed to fines greater than the total value of all the assets held by almost every bank in the country. And not only is it still in business, it’s generating revenues roughly equal to all those fines every quarter. And its stock price is soaring. The bank’s share price rose again yesterday despite The Wall Street Journal’s revelation of yet more potential illegal activity – JPM is one of several banks being investigated for deliberately mispricing volatile residential mortgage-backed securities during the financial crisis.

White House ditching HealthCare.gov builder - (www.cnbc.com) The Obama administration will replace CGI Federal, its main IT contractor for the glitch-prone HealthCare.gov. "CGI and the Centers for Medicare & Medicaid Services (CMS) have mutually agreed to complete work on CGI's contract for the Federally-Facilitated Marketplace (FFM), in line with the previously-scheduled February 2014 contract end date," Linda F. Odorisio, CGI's vice president of global communications, said in a statement Friday to CNBC. Earlier Friday, The Washington Post reported that contractor that built the federal Obamacare health exchange had gotten the boot from the White House in favor of consulting firm Accenture. Citing a person familiar with the matter, the Post reported that federal health officials are preparing to sign a year-long contract with Accenture worth about $90 million. The company built California's exchange. The Post said Accenture officials declined to comment. In its statement, CGI said the move was a "joint decision [that] comes at a time when Healthcare.gov is performing well, due largely to CGI's key role during the 'tech surge.'"

Michelle Obama’s Princeton classmate is executive at company that built Obamacare website - (www.dailycaller.com) Hmmm, now we know how CGI got the Obamacare contract and it likely wasn't based on merit or qualifications. Just Michelle Obama giving a contract to a female Princeton classmate: There was a close link between Michelle Obama and one of the senior vice-presidents of CGI Federal, the failed website creator for Obamacare. A senior VP of CGI Federal is a former classmate of Michelle Obama. Toni Townes-Whitley and Michelle Obama are Princeton classmates. First Lady Michelle Obama’s Princeton classmate is a top executive at the company that earned the contract to build the failed Obamacare website. Toni Townes-Whitley, Princeton class of ’85, is senior vice president at CGI Federal, which earned the no-bid contract to build the $678 million Obamacare enrollment website at  Healthcare.gov. CGI Federal is the U.S. arm of a Canadian company. Townes-Whitley and her Princeton classmate Michelle Obama are both members of the Association of Black Princeton Alumni. Toni Townes ’85 is a onetime policy analysthttp://images.intellitxt.com/ast/adTypes/icon1.png with the General Accounting Office and previously served in the Peace Corps in Gabon, West Africa. Her decision to return to work, as an African-American woman, after six years of raising kids was applauded by a Princeton alumni publication in 1998.

U.S. Corporate Bond Issuance in Slowest Start to Year Since ’08 - (www.bloomberg.com)  Sales of corporate bonds in the U.S. are off to the slowest start in six years as relative yields narrow to the least since 2007. Offerings in the first 10 days of the year were $32.5 billion, the least since $27 billion at the beginning of 2008, according to data compiled by Bloomberg. General Electric Co. (GE), the borrower with the most debt maturing in 2014 of any issuer in the market, sold $3 billion of bonds while Icahn Enterprises LP raised $3.65 billion in its biggest sale. Issuance is decelerating after the busiest year ever as the Federal Reserve begins scaling back unprecedented stimulus efforts that pushed yields last year to a record low.

Corn Pile Biggest Since 1994 as Crop Overwhelms Use: Commodities - (www.bloomberg.com)  Stockpiles of corn in the U.S., the world’s top grower, are rising at the fastest pace in 19 years as a record crop overwhelms increased demand for the grain used to make livestock feed and ethanol. Inventories on Dec. 1, the first tally since the harvest was complete, probably totaled 10.764 billion bushels (273.4 million metric tons), 34 percent more than a year earlier, according to the average of 24 analyst estimates in a Bloomberg survey. The biggest gain for that date since 1994 signals ample supplies may extend the slump in March futures by 9 percent to $3.75 a bushel, according to Newedge USA LLC’s Dan Cekander.




Monday, January 27, 2014

Tuesday January 28 Housing and Economic stories


Jet-skiing ex-NYPD 'pension scammer' turns self in - (www.nypost.com)  The bird-flipping, jet-skiing ex-NYPD cop charged in the multi-million dollar pension fraud scam meekly surrendered Thursday morning in Manhattan Supreme Court. Glenn Lieberman, 48, had a scarf covering his face and declined comment as he silently walked into the courthouse with his lawyers about 8:30 a.m. for his arraignment on larceny charges. The former Brooklyn anti-gang cop allegedly scammed $175,758 in undeserved Social Security Disability payments after claiming he suffered from “depression and panic attacks” while working at Ground Zero after 9/11 – though a former colleague said he never worked at the hallowed site. And investigators from the Manhattan District Attorney Cyrus Vance’s office discovered a social media photo of a grinning Lieberman zooming along on a yellow jet ski while shooting a double middle finger salute at the camera.

Fed had no idea if the taper would terrify markets  - (www.washingtonpost.com)  Three weeks ago, the Federal Reserve announced it would begin slowing its bond-buying, beginning the long process of tapering its program of quantitative easing. Now we know more about how the internal debate over the taper caper played out, after the release of minutes of the Federal Open Market Committee’s meeting. Here are five points that stand out from the document. They weren't really sure how the taper would work: The minutes confirm what Chairman Ben Bernanke said in his press conference: The decision to taper wasn't a close call. "Most members" of the FOMC agreed that December was the right time to start, according to the documents. But that doesn't mean they were confident it would go off without a hitch. The minutes show they have varying degrees of confidence in their economic forecasts. Some also worried that markets would panic again once the Fed actually scaled back the program, as they did in June when Bernanke first signaled that tapering of bond purchases was imminent.

NYPD, FDNY members cashed in on bogus 9/11 woes as part of massive $400M Social Security fraud: prosecutor - (www.nydailynews.com) Dozens of former cops and firefighters claiming 9/11 trauma were among the 106 indicted for gaming the Social Security disability system to take early retirement and leech off the taxpayers, authorities said. They spat on the memory of the real victims of 9/11. Dozens of former city cops and firefighters used the 2001 terror attacks as an excuse to fund carefree lifestyles on the taxpayer’s dime, authorities said Tuesday. The former NYPD and FDNY members — who claimed to have suffered stress-related woes from the World Trade Center attacks — were among 106 people indicted for a longstanding Social Security disability scam, officials said. A former Brooklyn cop, Glenn Lieberman, 44, became the unwitting poster boy for the sprawling ripoff ring, which includes 71 other retired city cops, eight former firefighters and five ex-correction employees.

Spain Youth Unemployment Rises To Record 57.7%, Surpasses Greece - (www.zerohedge.com) There has been much speculation recently about some immaculately conceived Spanish economic recovery. And while it has certainly sent the local Ibex stock market soaring, we fail to see any indication of such a recovery, at least in official economic data. The latest example being, of course, today's European unemployment for November, which at the Euroarea level remained flat at 12.1%, which also is the all time record high following a prior revision. However, what is more troubling is that according to the official European statistics keeper, Spanish unemployment in November was 26.7%: tied for the all time high seen in October and hardly an indicator of some imminent economic renaissance.''

Selloff Accelerates in Emerging Markets - (www.online.wsj.com)  Investors are bailing out of emerging markets from Turkey and Brazil to Thailand and Indonesia, extending a selloff that began last year, amid concerns about faltering economies and political unrest. Indonesia's currency on Tuesday hit its lowest level against the dollar since the financial crisis in Asia trading. Meanwhile, the Turkish lira plumbed record lows against the greenback this week. The MSCI Emerging Markets Index, a gauge of stocks in 21 developing markets, slipped 3.1% in the first four trading days of 2014, building on a 5% loss in 2013. This compares with double-digit-percentage rallies in stock markets in the U.S., Japan and Europe last year. The bruising start to the year underscores the shift in investor sentiment. In past years, money managers of all stripes, hungry for yields and willing to take some risks, scrambled to boost exposure to emerging markets, coveted for fast growth and burgeoning consumer spending.