Monday September 29 Housing and Economic stories

TOP STORIES:

Bailout Backlash: Surprising Things That Happened on Thursday - (www.alternet.org) And as Steven Wishnia reports for AlterNet, protesters took to New York's financial district: Enraged by the prospect of $700 billion of their taxes going to reimburse Wall Street speculators for their dubious investments, about 500 protesters paraded through Lower Manhattan's financial district Thursday afternoon, their chants of "You broke it, you bought it" reverberating through the narrow office building canyons and off the flag-draped wall of the New York Stock Exchange.

Bush Gets Army Ready To Attack Americans - (www.armytimes.com) Beginning Oct. 1 for 12 months, the 1st BCT will be under the day-to-day control of U.S. Army North, the Army service component of Northern Command, as an on-call federal response force for natural or manmade emergencies and disasters, including terrorist attacks. It is not the first time an active-duty unit has been tapped to help at home. In August 2005, for example, when Hurricane Katrina unleashed hell in Mississippi and Louisiana, several active-duty units were pulled from various posts and mobilized to those areas. But this new mission marks the first time an active unit has been given a dedicated assignment to NorthCom, a joint command established in 2002 to provide command and control for federal homeland defense efforts and coordinate defense support of civil authorities.

Army to station active-duty unit in the U.S. for 'crowd control' - (www.examiner.com)

Where's the Fire? Fed Nearly Busted - (londonbanker.blogspot.com) - The Fed is very close to being illiquid. That is the fear factor we are seeing at work, and the reason no one will discuss why the bailout is needed - only emphasize the urgency. In the last two weeks — if I am reading the Federal Reserves’ balance sheet data correctly — the Fed has: Increased “other loans” to the financial system by around $230 billion (from $23.56b to $262.34b); Increased its “other assets” by about $80b (from $98.67b to $183.89b); Increased the securities it lends out to dealers by $60b (from $117.3b to $190.5b); That works out to the provision of something like $370b of credit to the financial system in a two week period. And that is just what I saw on a cursory glance. The most that the IMF ever lent out to cash strapped emerging economies in a year? $30b, in the four quarters through September 1998 (i.e. the peak of the 97-98 crisis). The most the IMF ever lend out over two years? $40b, in the eight quarters through June 2003 (this covered crises in Argentina, Brazil, Uruguay and Turkey). This is a very real crisis. The Fed’s balance tells a story of extraordinary stress. I never would have expected to see the Fed lent out these kinds of sums over such a short-period.

Was WaMu Takeover Illegal Siezure In JP Morgan's Favor To Protect FDIC? - (www.ml-implode.com) - If WaMu had been placed in liquidation I am pretty sure the seniors would have got something. If the senior debtors had been allowed to conduct an auction for WaMu (compromising all the junior stuff including the prefs I owned) then they would have got something. ... the future of WaMu was uncertain. They clearly had plenty of losses coming at them. The company estimated those losses as 19 billion. JPM has estimated 31 billion. On both those numbers incidentally the senior debt holders in WaMu should – in an orderly liquidation – be made whole. Get that – on JPM’s own numbers the senior debt holders should have been made whole – and yet the rights of these debt holders were confiscated.

FDIC May Need $150 Billion Bailout as More Banks Fail - (bloomberg.com) The FDIC knows which banks are at risk; it has a watch list with 117 institutions. The agency won't disclose their names because doing so could cause depositors to panic and pull out all of their funds. It won't take many more failures before the FDIC itself runs out of money. The agency had $45.2 billion in its coffers as of June 30, far short of the $200 billion Whalen says it will need to pay claims by the end of next year. The U.S. Treasury will almost certainly come to the rescue by lending money to the FDIC.

FDIC Replies to Bloomberg - (www.fdic.gov) Bloomberg reporter David Evans' piece ("FDIC May Need $150 Billion Bailout as Local Bank Failures Mount," Sept. 25) does a serious disservice to your organization and your readers by painting a skewed picture of the FDIC insurance fund. Let me be clear: The insurance fund is in a strong financial position to weather a significant upsurge in bank failures. The FDIC has all the tools and resources necessary to meet our commitment to insured depositors, which we view as sacred. I do not foresee – as Mr. Evans suggests – that taxpayers may have to foot the bill for a "bailout."

China asks local lenders not to lend to U.S. banks - (www.marketwatch.com) Chinese regulators have asked domestic banks to stop lending to U.S. financial institutions in the interbank money markets to prevent possible losses during the financial crisis, the South China Morning Post reported Thursday. The China Banking Regulatory Commission's ban on interbank lending of all currencies applied to U.S. banks, but not to lenders from other countries, the report added, citing a source

The post-bailout agenda - (www.csmonitor.com) House Speaker Nancy Pelosi says Congress bears no blame for the current crisis. And in a Thursday night TV speech, President Bush cited a large influx of foreign money as a primary cause for American's financial excess. Such political deflection doesn't bode well for what should be the biggest rethink of the government's role in financial markets since the New Deal, or even since Alexander Hamilton set up the first central bank. Congress too often fails to find a balance between letting business regulate itself and forcing a government's hand on markets. Two mistakes stand out from this crisis and call for correction: One is the 1999 repeal of a Depression-era Glass-Steagall law that prevented the financial institution from both lending money and investing it. The repeal recreated the same conflict of interest and casino-like culture of greed that led to the 1929 market crash. It also led to companies becoming "too big to fail," forcing government bailouts.



OTHER STORIES:

JPMorgan Chase Acquires Banking Operations of Washington Mutual - (www.fdic.gov)
Congress Ignoring The People's 95% Opposition To Bailout - (dadtalk.typepad.com)
192 Economists Against Paulson Theft - (faculty.chicagogsb.edu)
Bailout Could Deepen Crisis, CBO Chief Says - (www.washingtonpost.com)
Hate the Bailout? Speak Now! - (finance.yahoo.com)
Take Back America - (Mish)

Backlash grows over bonuses for culprits of disaster - (www.guardian.co.uk)
J.P. Morgan says California house prices face further drop - (www.marketwatch.com)
You don't buy a house in uncertain times like these - (www.marketwatch.com)
Why Mark-to-Paulson Accounting Won't Save Banks - (www.bloomberg.com)
No panic on Main Street. Bailout is just for Wall Street. - (www.journalnow.com)
Main Street's Rage at the Financial Crisis - (www.businessweek.com)

11,666,666 Home Owners Could be Rescued from Foreclosure - (www.ml-implode.com) - $700,000,000,000 (divided by) $60,000 = 11,666,666 Homeowners who could be rescued from foreclosure. Wow, that is more homeowne...
So, Who Won The Debate? - (www.ml-implode.com) - ``For the first time in history, I am proclaiming a moderator to be the winner of the debate. Jim Lehrer asked very good, pointe...
Bailout Scare-Mongering: "Another Bank Teetering on the Edge" Listen to this article - (www.ml-implode.com) - "The quote above comes from Robert Bennett (Senate, R-Utah) and while no doubt narrowly true (presumably it's Wachovia), implyin...
No Amnesty For Wall Street by Chuck Baldwin - (www.ml-implode.com)
Short-Sale Ban Wallops Convertible-Bond Market - (www.ml-implode.com)
Bailout Protest Pics - (www.ml-implode.com)
New Program Finds Errors in Over 80 Percent of ARM Loans - (www.ml-implode.com)
Goldman's Revolving Door: Enter Paulson's Pig (in Lipstick) - (www.ml-implode.com)
Consensus on Wall Street Rescue Plan Is Said to Be Near - (www.ml-implode.com)
Conservatives Viewed Bailout Plan as Last Straw - (www.ml-implode.com)
A Memo Found in the Street - (www.ml-implode.com)
SEC: Brokerage Collapse Was Our Fault - (www.ml-implode.com)
Other Fallout from the Downturn - (www.ml-implode.com)

Wall Street, R.I.P.: The End of an Era, Even at Goldman - (www.nytimes.com)
Out of the Shadows and Into the Harsh Light - (www.nytimes.com)
Power Shifts From N.Y. to D.C. - (www.washingtonpost.com)
Maybe Short-Selling Isn’t So Bad, After All - (www.nytimes.com)
Wall Street Lays Egg With Its Nest Eggs - (online.wsj.com)
Muni Money-Fund Yields Surge - (online.wsj.com)
Municipalities Also Find Credit Is Scarce - (www.nytimes.com)
The End of the 'BSD' - (www.newsweek.com)
The Monster That Ate Wall Street - (www.newsweek.com)
Talks on future of Fortis to run into Sunday - (www.reuters.com)
U.K. Officials in Talks on Bradford & Bingley Rescue - (www.bloomberg.com)
U.K. Banks Seek Government Funding Plan to Help Restart Lending - (www.bloomberg.com)
Pakistan faces twin threats - (www.iht.com)
Just a hint of weakness is fatal in this market - (business.timesonline.co.uk)
MKM to liquidate its flagship fund - (www.ft.com)
Lawmakers Get Down to Details of Drafting Bill - (www.washingtonpost.com)
Bailout battle heads to weekend showdown - (www.reuters.com)
Conservatives Viewed Bailout Plan as Last Straw - (www.nytimes.com)
What $700B won't buy: a quick fix for the economy - (www.ap.com)
Wall Street wreckage washes up on west coast - (www.ft.com)
Troubled Wachovia Seeks Out a Merger - (online.wsj.com)
Wachovia, Looking for Help, Turns to Citigroup - (www.nytimes.com)
Behind Insurer’s Crisis, a Blind Eye to a Web of Risk - (www.nytimes.com)
Lehman Brokerage Lost $400 Billion in Assets Before Bankruptcy - (www.bloomberg.com)
What’s Free About Free Enterprise? - (www.nytimes.com)
Regulator in Chief? - (www.nytimes.com)