Tuesday July 15 Housing and Economic stories

Top Stories:

Citigroup's $1.1 Trillion of Mysterious Assets Shadows Earnings - (www.bloomberg.com) At an investor presentation in May, Citigroup Inc. Chief Executive Officer Vikram Pandit said shrinking the bank's $2.2 trillion balance sheet, the biggest in the U.S., was a cornerstone of his turnaround plan. Nowhere mentioned in the accompanying 66-page handout were the additional $1.1 trillion of assets that New York-based Citigroup keeps off its books: trusts to sell mortgage-backed securities, financing vehicles to issue short-term debt and collateralized debt obligations, or CDOs, to repackage bonds.

Lehman's Got a Reluctant Safety Net in Uncle Sam - (www.thestreet.com) Who will the Fed NOT bail-out? Seems like all the NY banks and investment houses are too large to fail: Though several factors will play a part in whether Lehman can keep its head above water, a key question is whether federal regulators will be willing to extend the same assistance they provided for Bear Stearns, Fannie Mae(FNM - Cramer's Take - Stockpickr) and Freddie Mac(FRE - Cramer's Take - Stockpickr) since the start of the year. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have made tough statements in recent weeks indicating that the government will not bail out any and every financial institution in need of help. And while regulators are trying to avoid the "moral hazard" of removing risk from the market, they're likely to do everything in their power to avoid a major bank failure that would force the financial markets into chaos. "They're not supporting the brokerage firms because of some vast outpouring of altruism on their part," said Brad Hintz, a Sanford C. Bernstein analyst and former Lehman CFO. "It's not because they want to save the brokerage firms, it's to save the fixed-income parties that continue to deal with them -- in a perfect world they'd be perfectly pleased to see mistakes cause economic losses."

Fifth Third stock drops; National City issues statement - (www.bizjournals.com) The failure Friday of a national mortgage bank took its toll on regional bank stocks Monday, with Fifth Third Bancorp's shares down more than 10 percent before heading back up, and National City Corp. seeking to head off rumors after its stock fell 27 percent. National City (NYSE: NCC) issued a news release stating that it is "experiencing no unusual depositor or creditor activity" after trading was halted on its stock Monday morning.

The Panic of 2008: a turning point - (www.economicpopulist.org) - This is NOT the Great Depression II. Nor is this the stagflationary 1970s. It is going to unfold as some other Beast. Only the broad outlines of this Beast appear discernable now: it will likely feature (1) increasing import prices; (2) wage stagnation (that does not keep up with price inflation); (3) real asset deflation; and (4) possibly a Japan-style "liquidity trap."

Jim Rogers: Bailout Plan an "Unmitigated Disaster" - (www.bloomberg.com) - ``I don't know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,'' Rogers, 65, said in an interview from Singapore. ``So we're going to bail out everybody else in the world. And it ruins the Federal Reserve's balance sheet and it makes the dollar more vulnerable and it increases inflation.'' The chairman of Rogers Holdings, who in April 2006 correctly predicted oil would reach $100 a barrel and gold $1,000 an ounce, also said the commodities bull market has a ``long way to go'' and advised buying agricultural commodities.

Update: Downey Savings & Loan - Next to Go? – (www.ml-implode.com) - Since our last update, shares in Downey Savings & Loan has fallen to a new low, closing today at $1.28 per share...

"If You're a Socialist, You Should Be Happy" - (www.nytimes.com) - Two years ago, when commercial banks were still jostling for fatter slices of the housing market, the share of outstanding mortgages Fannie and Freddie owned and guaranteed dipped below 40 percent, according to an analysis of Federal Reserve data by Moody’s Economy.com. By the first three months of this year, Fannie and Freddie were buying more than two-thirds of all new residential mortgages. A similar trend is playing out in the realm of student loans. As commercial banks concluded that the business of lending to college students was no longer quite so profitable, the Bush administration promised in May to buy their federally guaranteed student loans, giving the banks capital to continue lending.

More Banks Will Fail - (www.iht.com) As home prices continue to decline and loan defaults mount, U.S. regulators are bracing for dozens of American banks to fail over the next year. But after a large mortgage lender in California collapsed late Friday, Wall Street analysts began posing two crucial questions: Just how many banks might falter? And, more urgently, which one could be next? The nation's banks are in far less danger than they were in the late 1980s and early 1990s, when more than 1,000 federally insured institutions went under during the savings-and-loan crisis. The debacle, the greatest collapse of American financial institutions since the Depression, prompted a government bailout that cost taxpayers about $125 billion. But the troubles are growing so rapidly at some small and midsize banks that as many as 150 out of the 7,500 banks nationwide could fail over the next 12 to 18 months, analysts say. Other lenders are likely to shut branches or seek mergers. "Everybody is drawing up lists, trying to figure out who the next bank is, No. 1, and No. 2, how many of them are there," said Richard Bove, the banking analyst with Ladenburg Thalmann, who released a list of troubled banks over the weekend. "And No. 3, from the standpoint of Washington, how badly is it going to affect the economy?"

Bush Backs Israeli Plan for Strike on Iran - (www.timesonline.co.uk) Again, Bush and Cheney letting Israel be puppet-masters to US interests. President George W Bush has told the Israeli government that he may be prepared to approve a future military strike on Iranian nuclear facilities if negotiations with Tehran break down, according to a senior Pentagon official. Despite the opposition of his own generals and widespread scepticism that America is ready to risk the military, political and economic consequences of an airborne strike on Iran, the president has given an “amber light” to an Israeli plan to attack Iran’s main nuclear sites with long-range bombing sorties, the official told The Sunday Times.

Credit crunch takes toll on student loans - (www.ft.com)


Other Stories:

TSA launches media leak investigation - (www.cnn.com) – As usual, the administration is in the business of all-talk, no action, and punishing those who expose the truth. Federal officers charged with keeping terrorists off planes are now searching their own ranks for staff who told CNN that few flights were protected by air marshals. The Transportation Security Administration rejected as a "myth" CNN's report that less than 1 percent of the nation's daily flights carry armed federal air marshals. Now the agency is conducting an investigation into who talked to CNN and who encouraged other agents to do the same.

Kucinich: "How many more hearings do we need to have to prove this administration has violated the Constitution?" - (www.consortiumnews.com)
MSNBC Video: War Crimes Prosecutions Possible - (www.dailypaul.com)
Oil Spikes Back Up to $145 - (biz.yahoo.com/ap)
Fed Closes Barn Door After Horses Have Escaped - (www.marketwatch.com)
The Biggest Transfer of Wealth in History - (news.goldseek.com)
Not just dollars - American Lives Worth Less Today, too - (abcnews.go.com)

Fed's New Plan To Eliminate "Shady" Mortgages - (www.ml-implode.com) - '"The Federal Reserve has adopted rules to give home buyers more protection from the types of shady lending practices that have ...
Update: State revokes all Lending, Escrow Licenses of Sadek - (www.ml-implode.com) - According to the OC Register, Sadek says "that's not true." According to the Mortgage Lender Implode-O-Meter, the truth is stari...
Fannie and Freddie: The Worst of Both Worlds - (www.ml-implode.com) - "As with Bear Stearns, Treasury Secretary Hank Paulson is working to make sure Fannie's and Freddie's current shareholders don't...
The IndyMac / Pay Option ARM Effect in Full Force - (www.ml-implode.com) - "Spill over to other banks is why the IMB seizure was likely covered up for so long. We heard two weeks prior it was a seizure a...
Mr Mortgage: Fannie/Freddie Massively Underestimated Risks - (www.ml-implode.com) - "Things are changing for the worse daily and it is now clearer than ever that subprime is subprime, Alt-A is closer to subprime ..
Fannie Plan a 'Disaster' to Rogers; Goldman Says Sell - (www.ml-implode.com)
Freddie’s Charm Offensive - (www.ml-implode.com)
Video: IndyMac CEO Interview on CNBC - (www.ml-implode.com)
Introducing Indymac Federal Bank - (www.ml-implode.com)
The Real Test of the Not-Yet-A-Plan Fannie & Freddie Operation - (www.ml-implode.com)
Paulson Crosses Rubicon Lands In 5th Dimension - (www.ml-implode.com)
Many more bank failures likely after IndyMac - (www.ml-implode.com)

Nature of the Fannie Mae Bailout - (Mish at globaleconomicanalysis.blogspot.com)
Fannie, Freddie, Banks and Government Debt - (www.denninger.net)
Fannie , Freddie are $5 trillion mess - (money.cnn.com)
The Fannie and Freddie Fallout - (www.nytimes.com)
Fed's Bernanke offers foolish Fannie free cash at your expense - (www.reuters.com)
Obama Says U.S. May Not Aid foolish Fannie, Freddie - (www.bloomberg.com)
Time to Let Fannie and Freddie Wither? - (www.businessweek.com)
Chinese Government Top Foreign Holder of Fannie Bonds - (www.marketwatch.com)
US weighs takeover of Fannie, Freddie - (www.nytimes.com)
The Biggest Transfer of Wealth in History - (news.goldseek.com)
Buying Foreclosed Multi-Family and Retail Property - (patrick.net)
You Don't Own Real Estate - It Owns You - (www.seekingalpha.com)
America's mortgage chickens are coming home to roost - (www.marketwatch.com)
Bank losses from credit crisis may run to $1,600bn - (www.telegraph.co.uk)
Housing Bubble's Pop Could Doom Boomers - (www.thestreet.com)
Capitalism's Reality Check - (www.washingtonpost.com)
OTS Closes IndyMac, Transfers Operations to FDIC - (ots.treas.gov)
Bank Closing Information for IndyMac - (www.fdic.gov)

U.S. Stocks Fall, Led by Financials; Washington Mutual Tumbles - (www.bloomberg.com)
Treasuries Gain as Stocks Fall on Outlook for Banking System - (www.bloomberg.com)
ARM resets to hit peak this summer - (www.chicagotribune.com)
Oil Brings Americans Closer to OPEC Debtor Dependence - (www.bloomberg.com)

Rescue plan for US mortgage giants - (www.ft.com)
Treasury, Fed take bold steps to back Freddie and Fannie - (www.reuters.com)
Paulson Puts Treasury's Weight Behind Fannie, Freddie - (www.bloomberg.com)
Bank Fears Spread After Seizure of IndyMac - (online.wsj.com)
Lending Eroded, Leaving Fannie and Freddie as Pillars - (www.nytimes.com)
S.E.C. Warns Wall Street: Stop Spreading the False Rumors - (www.nytimes.com)
Aluminium hits peak as China reduces output - (www.ft.com)
Retailer's Collapse Hits Mall Owners - (online.wsj.com)
Banks at risk of failing almost double since 2006 - (www.usatoday.com)
New Rules Loom For Bond-Rating Firms - (online.wsj.com)
Home equity lines frozen at IndyMac - (www.latimes.com)


Paulson Seeks Authority to Shore Up Fannie, Freddie - (www.bloomberg.com)
Paulson Statement on Freddie Mac, Fannie Mae: Full Text - (www.bloomberg.com)
U.S. Announces Rescue Plan For Fannie Mae, Freddie Mac - (online.wsj.com)
Bleak choices for Fannie and Freddie - (www.ft.com)
Analysts say more U.S. banks will fail - (www.iht.com)
Slide gets steeper for magazine ads - (www.chicagotribune.com)
Auto Dealers Add Own Discounts - (online.wsj.com)
Senate Passes Housing Legislation - (online.wsj.com)
Lehman mulls strategic alliance, other options: report - (www.reuters.com)
U.S. Unveils Plan to Aid Mortgage Giants - (www.washingtonpost.com)
Retailer's Collapse Hits Mall Owners - (online.wsj.com)
Airbus cautious of struggling carriers - (www.ft.com)
Cerberus Struggles to Repeat Success Amid Chrysler, GMAC Losses - (www.bloomberg.com)
Gas-guzzling SUVs and light trucks become an obstacle for marketers - (www.latimes.com)
Car rental companies caught short as demand for smaller vehicles soars - (www.latimes.com)

European Industrial Production Declines Most in Almost 16 Years - (www.bloomberg.com)
U.K. Producer Prices Rise at Fastest Pace Since 1986 - (www.bloomberg.com)
Fannie Mae and Freddie Mac in the mire - (www.telegraph.co.uk)
China's Currency Reserves Rise 36% to $1.81 Trillion - (www.bloomberg.com)
Fannie, Freddie Deflected Risk Warnings - (www.washingtonpost.com)