Thursday August 14 Housing and Economic stories

Top Stories:

Japan Property Stocks Slide After Urban Failure - (www.cnbc.com) - Investors dumped stocks in Japanese property and builders on Thursday after developer Urban Corp failed in the biggest collapse by a listed Japanese company in six years, which fanned fears others might follow. Urban, which failed with debt of $2.4 billion, was the latest in a string of Japanese real estate firms to fold as banks rein in lending to small and medium-sized developers seen at risk as the world's No.2 economy flirts with recession. "Urban failed even after reporting a profit last year, and lots of firms in this sector have borrowed heavily. How can investors tell which companies are in danger?" said Tsutomu Yamada, a market analyst at Kabu.com Securities. "That's why real estate and related stocks, except for the biggest companies, have become untouchable." he said.

Foreclosure fallout: Houses go for a $1 - (www.detnews.com) One dollar can get you a large soda at McDonald's, a used VHS movie at 7-Eleven or a house in Detroit. The fact that a home on the city's east side was listed for $1 recently shows how depressed the real estate market has become in one of America's poorest big cities. And it still took 19 days to find a buyer. The sale price of the home may be an anomaly, but illustrates both the depths of the foreclosure crisis in Detroit and the rapid scuttling of vacant homes in some of the city's impoverished neighborhoods. The home, at 8111 Traverse Street, a few blocks from Detroit City Airport, was the nicest house on the block when it sold for $65,000 in November 2006, said neighbor Carl Upshaw. But the home was foreclosed last summer, and it wasn't long until "the vultures closed in," Upshaw said. "The siding was the first to go. Then they took the fence. Then they broke in and took everything else."

The Enronization of America & the Economic Cartel - (www.loanworkout.org) Citigroup, in particular, forged these agreements with investors purchasing CDOs backed in part by subprime mortgage assets. The agreements granted investors the option to sell the CDOs back to the bank in the event of financial difficulty. Citigroup moved the CDOs off its balance sheet without accounting for the fact that it could be required to re-purchase the assets at some point in the future. The top 5 investment banks will pay out a record $38 billion in bonuses in 2008 as the housing and mortgage crisis spirals out of control. Only in America will you see corporate executives that are rewarded with millions of dollars for making bad calls, bad deals and then when their employment is discontinued (either by force or by will), they are sent off into a cozy retirement with plush packages and bonus spiffs to last them forever. Last year, CEOs at the big five investment banks took home the following bonuses:
• Goldman Sachs CEO Lloyd Blankfein: $53.4 million
• Morgan Stanley CEO John Mack: $40 million
• Merrill Lynch CEO Stanley O’Neal: $47.3 million
• Lehman Brothers CEO Richard Fuld: $10.9 million
• Bear Stearns CEO James Cayne: $14.8 million
Only in America will you see billions of dollars dished out on Wall Street when we should be seeing indictments and arrests. The corporate culpability and off balance sheet accounting has been compared to that of the Enron scandal with comical mentions of “Lendron” that have been circulating around the internet.

Cramer: Why Does the SEC Hate the Banks? - (www.cnbc.com) – Cramer being an idiot again. If you have any doubts, look at previous story. These bank execs and insider investors like Cramer should be tried and potentially jailed. It’s no coincidence that the declines in Morgan Stanley [MS 40.15 -2.35 (-5.53%) ] , JPMorgan Chase [JPM 36.91 -1.01 (-2.66%) ] , Wachovia [WB 14.81 -1.19 (-7.44%) ] and Bank of America [BAC 28.86 -2.27 (-7.29%) ] came immediately after the Securities and Exchange Commission eased up on its prohibition against naked short selling some of America’s most important financials. At least that’s how Cramer sees it.

Allegations Of Allowing Fraud, Criminals In Mortgage Biz Lead to FL Regulators Resignation - (www.forbes.com) Florida's top mortgage industry regulator resigned Tuesday amid allegations his agency let thousands of convicted criminals, including bank robbers and racketeers, work in the home loan business. Gov. Charlie Crist and the state's three Cabinet members, who together oversee the Office of Financial Regulation, also approved emergency rules to stop the licensing of ex-convicts as mortgage brokers. The panel two weeks ago ordered their respective inspectors general to audit the office in response to a Miami Herald investigation. The newspaper found more than 10,000 people with criminal records were allowed to work in Florida's mortgage industry from 2000 through 2007 and that convicted felons had bilked at least $85 million from lenders and consumers.

Overbuilt market creating modern ghost towns - (www.msnbc.msn.com) Scott MacDonald, a 40-year-old lawyer, and his family were among the first buyers of new homes in Kirkway Estates, a residential community in the Detroit suburbs. The MacDonalds paid more than $500,000 in 2006 for a home that would be ready in July 2007. The Colonial-style brick home had four bedrooms, three-and-a-half bathrooms, and designer touches and offered everything they expected in a town known for great public schools and homes fit for Ford execs. Everything, that is, except neighbors. When the MacDonalds arrived, there were fewer than 15 homes in Kirkway Estates, where 179 were planned. Their home was the only one built thus far on a cul-de-sac with six lots. They expected more houses to appear soon after they purchased, but instead Kirkway’s builders ran into financing trouble and work on the community’s remaining lots halted, leaving the MacDonalds and their handful of neighbors in limbo.

Freddie to Stop Buying Subprime Loans in N.Y. State - (www.ml-implode.com) Payback is Hell!-- "Freddie Mac, the second-largest U.S. mortgage finance company, will stop buying subprime loans issued in New York state as a new law takes effect that holds investors accountable for mortgage fraud

Crybaby capitalists whine for more - (articles.moneycentral.msn.com) Freddie Mac's CEO collected $38 million while the company he ran fell into a financial morass. He's just one example of corporate chiefs who want taxpayers to bail them out.
It would be reasonable to expect that reckless behavior begets negative consequences. But on Wall Street, the rules are different. Especially if you are CEO Richard Syron of Freddie Mac (FRE, news, msgs). Financial trouble turns to disaster under your irresponsible watch, and for your efforts, you get to keep your job and earn $38 million. Syron says: What, me worry? That's the surreal theme of a story in last week's New York Times titled "At Freddie Mac, chief discarded the warning signs" (registration required). The subtitle wasn't "Gee, who'd have guessed?" but it should have been. To wit: "Mr. Syron received a memo stating that the firm's underwriting standards were becoming shoddier and that the company was becoming exposed to losses. . . . David Andrukonis (Freddie's former risk officer) recalled telling Mr. Syron in mid-2004 that the company was buying bad loans that 'would likely pose an enormous financial and reputational risk to the company and the country.' "


Other Stories:


Update: Chevy Chase Ceases Lending In All But 11 States - (www.ml-implode.com) In a memo sent to brokers today, Chevy Chase Bank announced they are restricting their mortgage lending to just eleven eastern states
Banks' Subprime Losses Top $500 Billion on Writedowns - (www.ml-implode.com)

The next wave of mortgage defaults - (money.cnn.com)
One Third of New Owners Owe More Than House Is Worth - (www.bloomberg.com)
Living here in Allentown - (www.ml-implode.com) - "The number of low-income workers living in poor neighborhoods rose in 34 of 58 metro areas, mostly in the Northeast and Midwest...
JPMorgan Loses $1.5 Billion Since July on Debt Prices - (www.bloomberg.com)
Financial bubbles are like epidemics - (www.theatlantic.com)

Dear Investor, - (www.ml-implode.com) - "Dear Investor, This letter is to inform you that the wheels have come off of the proverbial wagon at ACME Systematic Leveraged...
Regulators limit some Downey activities - (www.ml-implode.com) - "Downey Financial Corp.'s main regulator has imposed several restrictions on the lender's activities, including limits on divide...
Nearly One-Third of All Homeowners Who Purchased in Past 5-yrs Underwater…Best Case - (www.ml-implode.com) - ``Zillow just reported that according to new data, that nearly one-third of all US homeowners who bought in the past 5-years are...
Housing for poor gets big boost - (www.ml-implode.com) - ``A new federal housing program to fund rental housing for the extremely poor is being hailed by local housing advocates as a gr...
FANNIE AND FREDDIE: GIVING AWAY THE FARM - (www.ml-implode.com)
Update: Is Downey Savings & Loan Operating Under an OTS "Memo of Understanding"? - (www.ml-implode.com)
Fannie Mae, Freddie Mac Preferred Stock Cut by S&P - (www.ml-implode.com)
Google Maps StreetView House on Fire - (www.ml-implode.com)
Which way next for short-term rates? - (www.ml-implode.com)
Premium Alert: Three Implodes and More... - (www.ml-implode.com)
"Informal" SEC Probe of Nat'l City About First Franklin Financial Corp. - (www.ml-implode.com)
Thought Process of Many in Foreclosure. - (www.ml-implode.com)
ALT A is Broken? Really? - (www.ml-implode.com)
What Banks And The Government Are Not Telling Us About 2009—The Next Shoes You Hear Drop May Be Very Loud Ones - (www.ml-implode.com)

Crash Payoff: Affordable Housing, Disposable Income - (Charles Hugh Smith)Federal Reserve finds deepening credit crisis - (biz.yahoo.com)The Future Is Frugality and Deflation - (Mish)ALT A is Broken? Really? - (patrick.net)Realty Trac Underreports US Joint Economic Committee Data - (mainebubble)Pre-foreclosure Filings Set Record in July - (businesswire.com)Unwanted Neighbors Result Of Housing Bust - (nytimes.com)Housing Market Getting Worse, Not Better - (seekingalpha.com)Housing's Worst May Lie Ahead - (fool.com)In California, foreclosure's next wave? - (csmonitor.com)Houses come off market as average price in Mich. plummets - (freep.com)FDIC won't say if your bank is safe - find out yourself - (geldpress.com)Selling a Dallas House in a Down Market - (marketwatch.com)Economic slump battering marriages - (vvdailypress.com)101 Tips for the Upside-Down Houseowner - (intlistings.com)The Web as Real Estate Trove - (nytimes.com)How Fannie lost billions, house by house - (suntimes.com)Fannie Mae, Freddie Mac Look Close to Terminal - (washingtonindependent.com)Priciest of houses not immune to crunch - (lasvegassun.com)

More borrowers with good credit defaulting on their home loans - (money.cnn.com)
UBS set to drop investment banking unit as rich clients flee - (www.financialweek.com)
States may tax iTunes, other digital downloads - (www.cnet.com)
JPMorgan Sees $1.5 Billion in Writedowns - (www.thestreet.com)
Coming soon, more airline fees than you can count - (www.chron.com)
Many U.S. Homeowners Owe More Than House Is Worth, Zillow Says - (www.bloomberg.com)
Worry About Stretched Firms, Consumers Hits Debt Markets - (online.wsj.com)
Sovereign Funds Become Big Speculators - (www.washingtonpost.com)
Russia Calls Off Military Operations in Georgia - (www.bloomberg.com)
U.K. Inflation Reaches 4.4%, More Than Double Target - (www.bloomberg.com)

States may tax iTunes, other digital downloads - (www.cnet.com)
UBS set to drop investment banking unit as rich clients flee - (www.financialweek.com)
JPMorgan Sees $1.5 Billion in Writedowns - (www.thestreet.com)
Web firms acknowledge tracking behavior without consent - (www.latimes.com)
SEC Looks at Calpine, National City - (www.cfo.com)
Wachovia cuts 600 jobs earlier than planned - (www.azcentral.com)
JPMorgan Loses $1.5 Billion Since July on Debt Prices - (www.bloomberg.com)
UBS loss is greater than expected; bank announces plans to restructure - (www.iht.com)
Analyzing Wall Street’s Research - (www.nytimes.com)
Worry About Stretched Firms, Consumers Hits Debt Markets - (online.wsj.com)
Sovereign Funds Become Big Speculators - (www.washingtonpost.com)
New York AG Sends Letters to Three Banks - (www.cfo.com)
Borrowers Pour Into Fixed-Rate Mortgages - (www.thestreet.com)
Gold, commodities fall into bear territory - (www.chron.com)
Prime mortgages get hit, dashing recovery prospects - (money.cnn.com)
NY securities probe widens to JPMorgan Chase, Morgan Stanley - (news.yahoo.com/s/afp)
SEC working on short-selling proposals: report - (www.reuters.com)
Wall Street Losses Cut Tax Bill, Sap New York Revenue - (www.bloomberg.com)

Worry About Stretched Firms, Consumers Hits Debt Markets - (online.wsj.com)
Sovereign Funds Become Big Speculators - (www.washingtonpost.com)
New York AG Sends Letters to Three Banks - (www.cfo.com)
Borrowers Pour Into Fixed-Rate Mortgages - (www.thestreet.com)
Gold, commodities fall into bear territory - (www.chron.com)
Prime mortgages get hit, dashing recovery prospects - (money.cnn.com)
NY securities probe widens to JPMorgan Chase, Morgan Stanley - (news.yahoo.com/s/afp)
SEC working on short-selling proposals: report - (www.reuters.com)
Wall Street Losses Cut Tax Bill, Sap New York Revenue - (www.bloomberg.com)
More borrowers with good credit defaulting on their home loans - (money.cnn.com)
Many U.S. Homeowners Owe More Than House Is Worth, Zillow Says - (www.bloomberg.com)
Utility Rates Surge Around the U.S. - (www.thestreet.com)
U.S. Trade Gap Unexpectedly Narrows to $56.8 Billion - (www.bloomberg.com)
Crude reality and the CPI - (www.nypost.com)
Some older workers are rethinking retirement - (www.dallasnews.com)
Weaker tourism hits Southern Nevada's econoimy - (www.lvrj.com)
Higher milk prices don't mean more profits for farmers - (www.ajc.com)
Speculators blamed for mortgage defaults around San Francisco - (www.ft.com)
States may tax iTunes, other digital downloads - (www.cnet.com)
UBS set to drop investment banking unit as rich clients flee - (www.financialweek.com)
JPMorgan Sees $1.5 Billion in Writedowns - (www.thestreet.com)
Web firms acknowledge tracking behavior without consent - (www.latimes.com)
SEC Looks at Calpine, National City - (www.cfo.com)
Wachovia cuts 600 jobs earlier than planned - (www.azcentral.com)
JPMorgan Loses $1.5 Billion Since July on Debt Prices - (www.bloomberg.com)
UBS loss is greater than expected; bank announces plans to restructure - (www.iht.com)
Analyzing Wall Street’s Research - (www.nytimes.com)