Thursday September 25 Housing and Economic stories

TOP STORIES:

Is the California Association of Mortgage Brokers insolvent? - (www.ml-implode.com) With membership dropping into the low 1,400 range, the once strong California Association of Mortgage Brokers (CAMB) teeters on the brink of insolvency. The 2006-2007 Annual Report shows 4,751 members, now down to 30% of its former power and glory. A couple of years ago (June 2006) CAMB had over 1.5 million dollars in cash and reserves, which has been virtually wiped out -- it's gone. Where it went is a BIG question, with bickering Board members looking for answers, and an audit. We don't think there is even enough funds left for an audit. A report sent to us titled "CAMB weekly cash management system" shows current available cash is just over $3,000.00 (The budget spreadsheet shows $3,074.00 as of August 22, 2008). Most companies run a Profit and Loss Statement at the end of each month -- CAMB runs their figures weekly. Check it out here. As a non-profit corporation (501-c6) there is no requirement for public disclosure, and we're pretty sure there is no way to ever find out where the money went. In California, Non-Profits are governed by the AG's office, but with the current budget cuts, there is not enough manpower to even 'think' about looking into what might be the obvious. Although CAMB's many Board members carry (non-profit remember) Credit Cards, it appears the Membership at large is not allowed to see the individual expenditures and rationale for the dollars. Granted the Board gets no pay (all volunteer), it's the Credit Cards that could tell the real story. After all... the money is gone -- somewhere. We spoke with CAMB President Fred Arnold, and he acknowledged money was tight, but felt there were sufficient funds to make it through until at least January or February. Mr. Arnold suggested operating dollars would come from incoming dues, but we found out 90% of the current members run on an April-to-April payment basis, and they are paid up! So it looks like very few (some of the 140 as they come due) left will be footing the bills. The day-to-day administration of CAMB's activities are handled by the "Association Resource Center" in Folsom, CA. We believe their contract for services was just renewed this month. We have not seen the actual 'signed' Management Agreement, but the one presented for signatures says $17,682.00 per month. Here's a copy. Fred Arnold, current President of CAMB said in a conference call that "anyone that talks to the Implode-O-Meter will be fired on the spot." Not surprising considering someone inadvertently released the weekly budget. Should we have kept it private? We think the internal expenditures and financial brinkmanship should at the very least be exposed to the membership. And yes... Fred has used the word "insolvent" in front of numerous people.


Wells Fargo 30 Year Jumbo Mortgage Rate Now Up to 9.2% - (www.wellsfargo.com)
Jumbo Loans – Amounts that exceed conforming loan limits1
30-Year Fixed 9.000% 9.176%
15-Year Fixed 8.250% 8.512%
10-Year ARM 8.625% 7.913%
5-Year ARM 7.625% 6.659%

Greenspan Hurt America More Than Osama - (www.latimes.com) But the economic meltdown that wrought its wrath from Rome to Madrid to Berlin this week brought Europeans together in a harsh chorus of condemnation of the excess and disarray on Wall Street. The finance minister of Italy's conservative and pro-U.S. government warned of nothing less than a systemic breakdown. Giulio Tremonti excoriated the "voracious selfishness" of speculators and "stupid sluggishness" of regulators. And he singled out Alan Greenspan, the former chairman of the U.S. Federal Reserve, with startling scorn."Greenspan was considered a master," Tremonti declared. "Now we must ask ourselves whether he is not, after [Osama] bin Laden, the man who hurt America the most. It is clear that what is happening is a disease. It is not the failure of a bank, but the failure of a system. Until a few days ago, very few were willing to realize the intensity and the dramatic nature of the crisis." In an interview Thursday in the Italian newspaper Corriere della Sera, Tremonti drew a comparison to corruption-ridden Albania in 1997, when a nationwide pyramid scheme cost hundreds of thousands of people their savings and ignited anarchic civil conflict. "The system is collapsing, exactly like the Albanian pyramids collapsed," Tremonti said. "The idea is gaining ground that the way out of the crisis is mainly with large public investments. . . The return of rules is accompanied by a return of the public sector."

IT IS TIME TO FORCE HENRY “HANK” PAULSON FROM OFFICE (through any legal means). This man should be tried and potentially put into prison. Here are some reasons why:

· Paulson is Stealing ALL THE CASH IN AMERICA - (patrick.net) $700,000,000,000 divided by United States Population: 301,139,947 (July 2007 est.) EQUALS $2324.50 collected for every man woman and child. How much is it for the average family? Average family (mother, father, 2.5 kids) = $10,460 stolen from the average family, and then handed to banks. It's reverse bank robbery! But what is the "bailout's" percentage of total cash in circulation? According to Wikipedia, 700 billion is 100% of ALL THE CASH IN CIRCULATION used throughout the United States. (in 2007)
· Oil Prices Surge By Largest Jump Ever, Thanks Hank! - (news.yahoo.com) Oil prices briefly spiked more than $25 a barrel Monday, shattering the record for the biggest one-day gain as unease about the government's $700 billion bailout plan pummeled the dollar and spurred investors to buy safe-haven assets. An expiring crude contract added fuel to the frenzied rally. Light, sweet crude for October delivery jumped as much as $25.45 to $130 a barrel on the New York Mercantile Exchange before falling back to settle at $120.92, up $16.37. The contract expired at the end of the day, adding to the volatility as traders rushed to cover positions; the October price began accelerating sharply in the last hour of regular trading, a common occurrence when a contract is about to go off the board. Still, the rally, which shattered crude's previous one-day price jump of $10.75, set June 6, showed the intensity of emotion in the market.
· Weep For The Unites States of America- (Mish at globaleconomicanalysis.blogspot.com) Unconstitutional Provisions. Pay particular attention to section 8. Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency. Essentially the law will state that whatever the Treasury does it is above the law. Such a provision is undoubtedly unconstitutional. Weep For The Free Market. It's time to Weep For The Free Market (or rather what little free market the US had left). Weep For The Unites States of America. At taxpayer expense, Bernanke and Paulson are willing to bail out their banking buddies at enormous expense to the average taxpayer of this country. Bernanke and Paulson both should be fired. Instead Congressional sheep will baa yes to this bailout and Bush will baa yes when he signs it. It is a sickeningly sad that day for America that Congress will go along with this proposal that makes the US Taxpayer A Giant Dumpster For Illiquid Assets.
· Single largest rip-off scheme in the history of America - (dadtalk.typepad.com) I may not be a Constitutional scholar, but consider what this means. If Treasury Secretary Hank Paulson – or his successor – wish to favor cash on buddies, there is no legal mechanism to stop him or her. Do we really want to give a cabinet secretary the ability to write a $700 billion check without any review or oversight? How will Americans, who have continually and successfully argued for less government intervention in corporate America, react to such a bailout?
· Bank of America Says "Paulson Plan Benefits Mostly Goldman, Morgan" - (Mish at globaleconomicanalysis.blogspot.com) Surprise, surprise, surprise. Guess who the Paulson plan benefits? Bank of America's top credit strategy analyst says Paulson Debt Plan May Benefit Mostly Goldman, Morgan. Goldman Sachs Group Inc. and Morgan Stanley may be among the biggest beneficiaries of the $700 billion U.S. plan to buy assets from financial companies while many banks see limited aid, according to Bank of America Corp. "Its benefits, in its current form, will be largely limited to investment banks and other banks that have aggressively written down the value of their holdings and have already recognized the attendant capital impairment," Jeffrey Rosenberg, Bank of America's head of credit strategy research, wrote in a report dated yesterday, without identifying particular banks. Many banks may not participate in the Troubled Asset Relief Program because they haven't had to write down as much assets under accounting rules, meaning decisions to sell into the program would cause them to lose capital, Rosenberg wrote. Investment banks operate "under a mark-to-market accounting model while commercial banks hold assets at cost until realizing a loss (or until they reasonably expect one)," he wrote.
· Welcome to the U.S.S.A. - Thanks Hank! - (jonnyob.blogspot.com) Hank used to run Goldman Sachs. Worth approximately $700 Million, he recently cashed out and took a cozy job looking out for the good old boys as Secretary of the Treasury - a job handed to him by our infinitely wise President, George Bush. Hank was one of the guys who engineered the biggest housing bubble of all time. See back in the day when you wanted to buy a crash pad you would go to a bank. The manager would be real concerned about your ability to pay them back so they did a lot of careful homework about you. They were on the hook for your debt for 30 or so years until you serviced the loan completely, and so they had a keen interest in your ability to repay. One day, some bright financial engineers figured out a way to buy your loan from the bank and package it with a bunch of other loans, sell them off to foreign investors and pocket a tidy fee for their troubles. Suddenly your bank didn't care whether or not you could pay them back, since the sucker foreign investors were on the hook for your debt, and not them. Then the party began in earnest and mortgage lending was cranked into high gear. Out of nowhere came high-school dropouts making six figure incomes peddling loans to anyone with a pulse.
· Lies From Paulson Keep Stacking Up: What You Can Do About It - (Mish at globaleconomicanalysis.blogspot.com) Somehow Paulson has gone from "Our banking system is a safe and a sound one" (See You Know The Banking System Is Unsound When....) to Paulson telling Congress “That we’re literally maybe days away from a complete meltdown of our financial system, with all the implications here at home and globally.” Inquiring minds may wish to consider a recap of things that have happened since Paulson made his "Our banking system is a safe and a sound one" speech.
· Paulson announced "Financial Institutions Must Be Allowed To Fail", arguably one of the most amazing financial lies in history.
· Fannie Mae and Freddie Mac were placed in Conservatorship putting taxpayers at risk to the tune of $200 Billion or more. Equity and preferred shareholders were wipe out while the treasury (taxpayer), guaranteed the agency bonds.
· Lehman went bankrupt after a long weekend poker party. See Fed Sponsored Poker Party Morphs Into "Old Maid" for more details.
· AIG was nationalized. The treasury took an 80% stake in AIG in return for $85 billion. Taxpayers are at risk of that $85 billion.
· Merrill Lynch (MER) merged with Bank of America (BAC) as noted in Another Shotgun Marriage: Bank of America and Merrill Lynch.
· 3 Month Treasury Yields Effectively Hit Zero in a systemic distrust of banks and money market funds.
· The Fed Intervenes In Money Markets with non-recourse funding of asset backed commercial paper.
· The US Taxpayer Becomes A Giant Dumpster For Illiquid Assets.
· In the biggest financial witch hunt in history the SEC banned short selling of financials. See Peak Insanity: SEC Plans to Temporarily Ban Short-Selling and Paulson's Shorting Ban Needs Revisions Already.
· Of course Congressional Leaders Are Stunned That Bernanke Finally Admits The Truth.
· Bush Administration Seeks "Dictatorial Power"
The implications are twofold. 1) Paulson and Bernanke are liars 2) Paulson and Bernanke are incompetent

ALMOST ARMAGEDDON - MARKETS WERE 500 TRADES FROM A MELTDOWN - (www.nypost.com) The market was 500 trades away from Armageddon on Thursday, traders inside two large custodial banks tell The Post. Had the Treasury and Fed not quickly stepped into the fray that morning with a quick $105 billion injection of liquidity, the Dow could have collapsed to the 8,300-level - a 22 percent decline! - while the clang of the opening bell was still echoing around the cavernous exchange floor. According to traders, who spoke on the condition of anonymity, money market funds were inundated with $500 billion in sell orders prior to the opening. The total money-market capitalization was roughly $4 trillion that morning. The panicked selling was directly linked to the seizing up of the credit markets - including a $52 billion constriction in commercial paper - and the rumors of additional money market funds "breaking the buck," or dropping below $1 net asset value. The Fed's dramatic $105 billion liquidity injection on Thursday (pre-market) was just enough to keep key institutional accounts from following through on the sell orders and starting a stampede of cash that could have brought large tracts of the US economy to a halt.


OTHER STORIES:

Fed Report Reveals Another 'Wealth Contraction' - (www.seekingalpha.com)
Letter To Senator Feinstein - (patrick.net)
The $700 Billion Bailout: One More Weapon of Mass Deception - (www.alternet.org)
Morgan Stanley's CEO Seeks Protection From You, At Your Expense - (www.bloomberg.com)

The financial meltdown explained - (www.onlinejournal.com)
Seeing the Forest: Why The Bailout Plan CAN'T Work - (seeingtheforest.com)
How We Became the United States of France Under Bush - (www.time.com)
Why am I responsible for the fact that you were not? - (www.washingtonpost.com)
Paulson's Plan As An Image - (patrick.net)

Senator Tim Johnson of South Dakota Wimps Out - (Mish at globaleconomicanalysis.blogspot.com)
Paulson Debt Plan To Benefit Mostly Goldman, Morgan - (www.bloomberg.com)
What the latest bailout plan means: You're Screwed - (www.chrismartenson.com)
Petition against bailout - (Pitchforks and torches would be better) - (www.financialpetition.org)
Housing crisis has spread to well-to-do - (www.indystar.com)
Senator Email Blast List Simplified: Flood Them With Emails With One Click - (Mish at globaleconomicanalysis.blogspot.com)
Phone And Fax Numbers For All US Senators; More On What To Do - (Mish at globaleconomicanalysis.blogspot.com)
Open Letter To Congress On The $700 Billion Paulson Bailout Plan - (Mish at globaleconomicanalysis.blogspot.com)
Bush Administration Seeks "Dictatorial Power" - (Mish at globaleconomicanalysis.blogspot.com)

Stronger Oversight Gets Nod in Talks - (online.wsj.com)
Currency's Dive Points to Further Pain - (www.washingtonpost.com)
Bailout Plan Talks Advance in Congress - (www.nytimes.com)
Retail trade group forecasts weak holiday sales growth - (www.latimes.com)
Paulson Plan May Push National Debt to Post-World War II Levels - (www.bloomberg.com)
More to Fear in World of Retirees - (www.nytimes.com)
Workers to pay 9% more for health-care in 2009 - (www.chicagotribune.com)
More Americans strain to meet housing costs - (www.usatoday.com)
Federal Reserve makes it easier for private equity firms to take minority stakes in banks - (www.chicagotribune.com)
Lennar Reports Quarterly Loss as Foreclosures Rise - (www.bloomberg.com)
This Season, Tense Times for Retailers - (www.nytimes.com)
McDonald's says Bank of America won't boost franchisee loans - (www.latimes.com)
Harley-Davidson thrown by bumps in the road - (www.latimes.com)
Weak sales drive CarMax net down 78% - (www.chicagotribune.com)
Fitch downgrades GM's credit rating - (www.chicagotribune.com)
'Crony' Capitalism Is Root Cause Of Fannie And Freddie Troubles - (biz.yahoo.com/ibd)
With its fiscal health at 4th and long, GM punts Super Bowl ads - (www.chicagotribune.com)
Morgan Stanley, Goldman Search for Deposits; Banks Are `Lunch' - (www.bloomberg.com)
A Bailout Above the Law - (www.nytimes.com)
The era of leverage is over - (www.ft.com)
U.S. futures in tight range before Bernanke, Paulson - (www.marketwatch.com)
Dollar Snaps Four-Day Drop Versus Euro Before Testimony on Plan - (www.bloomberg.com)
Russia, China Lead Emerging Market Declines, End Record Rally - (www.bloomberg.com)
Oil Falls as Stock Losses Signal Concern Over U.S. Bailout Plan - (www.bloomberg.com)
Scramble to handle structured credit - (www.ft.com)
Democrats, Treasury Dept. Agree on Outline of Rescue Package - (www.washingtonpost.com)
U.S. bailout of financial system runs into resistance - (www.iht.com)
Fannie Mae, Freddie Mac Takeovers Cost U.S. Banks Billions - (online.wsj.com)
Faith in Ratings - (online.wsj.com)
Eveillard Says Gold May Surge as Investors Seek `Insurance' - (www.bloomberg.com)
New York Tries Taming Credit-Default Swaps - (online.wsj.com)
Money market funds suffer huge outflows - (www.ft.com)
Authorities struggle to determine what is toxic - (www.ft.com)
Hedge Funds Also Caught in Tempest - (www.washingtonpost.com)
Funds look to circumvent shorting ban - (www.ft.com)
Push for central credit derivatives counterparty - (www.ft.com)
Freddie and Fannie bank losses grow - (www.ft.com)
Crisis to spur big Asia hedge fund shake-out - (www.reuters.com)
U.K. Mortgage Approvals Sink to Decade-Low, BBA Says - (www.bloomberg.com)
European Services, Manufacturing Contract Further - (www.bloomberg.com)
Foreign Nations Pledge Support, but Not Financing - (www.nytimes.com)