Wednesday September 10 Housing and Economic stories

Top Stories:

GMAC in possible Bankruptcy mode – (www.ml-implode.com) - GMAC may file for Bankruptcy as early as Wednesday, September 10, 2008. We believe they are scrambling to move/sell assets prior to this tentative filing date, and we're attempting to find other sources to confirm the information received. Described on their web site

US Is "More Communist than China": Jim Rogers - (www.cnbc.com) The nationalization of Fannie Mae and Freddie Mac shows that the U.S. is "more communist than China right now" but its brand of socialism is meant only for the rich, investor Jim Rogers, CEO of Rogers Holdings, told CNBC Europe on Monday. "America is more communist than China is right now. You can see that this is welfare of the rich, it is socialism for the rich… it's just bailing out financial institutions," Rogers said. Stock markets jumped after the U.S. government's decision to launch what could be its biggest federal bailout ever, in a bid to support the housing market and ward off more global financial market turbulence. But Rogers said in the long term the move spelled trouble. "This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I'm not quite sure why I or anybody else should be paying for this," Rogers told "Squawk Box Europe."

Fannie & Freddie Bailout Won't Cure Market's Ills - (www.cnbc.com) Market pros remain unconvinced that the rescue plan by itself will be enough to snuff out the Wall Street bears. The government bailout of Fannie Mae and Freddie Mac has given investors at least a short-term reason to believe the worst has begun to pass, but it's hardly a game-changer. Market pros remain unconvinced that the rescue plan by itself will be enough to snuff out the Wall Street bears. "This is another good piece of news to help us," says Nadav Baum, managing director of investments at BPU Investment Management in Pittsburgh. "Are we going straight up from here? No. But what it does is gives us a lot of confidence."
· Rescue Won't Solve Crisis
· Poll: What Do You Think?
· What It Means to You

WaMu (& BKUNA, & DSL) on the brink? - (optionarmageddon.ml-implode.com) - As reported at length by Mr. Mortgage, and more recently, on this blog: WaMu is in deep trouble. CEO Kerry Kilinger was fired this weekend and today the bank signed a “memorandum of understanding” with its chief regulator, the Office of Thrift Supervision. Basically, OTS has put WaMu on notice. Remember, WaMu has about $120 billion worth of toxic mortgage assets sitting on its balance sheet. Subprime, Option ARMs, Home Equity Loans, etc. Taken together, these securities are likely worth 50 cents on the dollar. It’s not easy deciphering their balance sheet, but WaMu probably has in the neighborhood of $40 billion of capital backstopping these losses. So if they actually write down their assets to reflect their current value, it could wipe them out. Is it any wonder WaMu is desperate for capital? With $140 billion in insured deposits, any prospect that WaMu might fail has to be stressing regulators, especially the FDIC. Remember, FDIC has only $45 billion in its reserve fund, meaning that a failure the size of WaMu could come close to wiping THEM out. After Fannie and Freddie, the march of the bailouts will surely continue…

Luminent Mortgage files for Chapter 11 bankruptcy - (www.reuters.com) - Luminent Mortgage Capital Inc (LUMCE.OB: Quote, Profile, Research, Stock Buzz), which has struggled with liquidity problems because of mortgage investments, has filed for bankruptcy protection. The Philadelphia-based company filed for Chapter 11 protection from creditors on Friday with the U.S. bankruptcy court in Baltimore. It had $13.4 million of assets and $486.1 million of debts as of July 31, according to the bankruptcy petition. Luminent once invested in billions of dollars of mortgages, including many rated "triple-A," but collapsed as investor demand for many fixed-income securities vanished. The company said this resulted in heavy margin calls and write-downs, and forced it to sell many assets at a loss.

Why is it the Bush and McCain Families Seem to Be the Kiss of Death for Banks? Maybe because they are idiots or crooks, or a bit of both?? Need some examples?

· Failed bank had McCain's son on board The Australian - (www.theaustralian.news.com.au) This is not new news, but here is some more information to de-bunk the spin (by the Republicans) that McCain was only on the audit board for 5 months. However, Mr McCain's ties to Silver State date to 2006, when he became a director of Choice Bank, a small Scottsdale, Arizona lender that Silver State acquired that year. Mr McCain's family was an early investor in Choice, according to people familiar with the matter. Choice was smaller than Silver State, but its finances deteriorated just as quickly and hurt the parent company. As of March 31, 2008, Choice was facing $US7.9 million worth of delinquent loans, up from $US1.6 million three months earlier. Silver State recently logged an $US18.8 million write-down, representing the full remaining value of its investment in Choice, to reflect the "continued deterioration" of the franchise's credit quality, according to securities filings.
· Where Was Jeb? - (www.forbes.com) A government money market debacle unfolding in Florida is raising questions about former governor and presidential brother Jeb Bush's possible involvement in the mess. Florida froze withdrawals from a state investment fund earlier this week when local governments withdrew billions of dollars out of concern for the fund's financial stability. In the past few days, municipalities have withdrawn roughly $9 billion, nearly a third of the $28 billion fund (which is similar to a money market fund) controlled by the Florida's State Board of Administration (SBA). The run on the fund was triggered by worries that a percentage of the portfolio contained debt that had defaulted. A majority of this paper was sold to SBA by Lehman Brothers (nyse: LEH - news - people ). Bush, as the state's top elected official, served on a three-member board that oversaw the SBA until he retired as governor in January. In August, Bush was hired as a consultant to the bank. Lehman spokesperson Kerrie Cohen, speaking on behalf of Bush, said they had no comment and would not say when the bank had sold Florida the paper. SBA did not return calls. While SBA wouldn't confirm, Bloomberg reported the amount of debt in default is around $900 million. Edward Siedle, a former Securities and Exchange Commission attorney who investigates money management wrongdoing and has worked on behalf of several Florida public pension funds, thinks this is just the tip of the iceberg. He expects problems with defaulting debt to crop up in public funds across the country, especially in states with disclosure laws weaker than Florida's.
· Keating scandal flies under radar in McCain's '08 bid - (www.bizjournals.com) What hasn't come up is the Arizona senator's involvement with banker and real estate developer Charles Keating in what was arguably one of the largest scandals in the state's history: "The Keating Five." Five U.S. senators, including McCain and former Sen. Dennis DeConcini of Arizona, were investigated by the Senate Ethics Committee in 1991 for their ties to Keating, whose Lincoln Savings & Loan was at the center of the S&L crisis of the late 1980s and early '90s. The committee investigated whether the five senators improperly pressured federal regulators to help Keating's business. Keating was a contributor to McCain's congressional campaign in the 1980s and the two vacationed together, according to the committee. The ethics panel ruled that McCain made some judgmental missteps in the Keating matter, but his actions were not illegal. The failure of Keating's S&L and parent real estate venture resulted in lost money for investors and a federal bailout, including the takeover of some Phoenix-area properties. Keating was convicted of fraud and spent time in prison. Those convictions were overturned on appeal. Today, he is involved in some real estate developments in the Phoenix market.
· The Austin Chronicle: News: O, Brother! Where Art Thou? Like Hugh Rodham, the Bush Bros. Have Capitalized on Family Ties – (www.austinchronicle.com) Unless you've been reading the Houston Chronicle society page, it's unlikely you've seen any current news about Neil Bush. Neil was either part of the late Maxine Mesinger's "crème de la crème crowd" at a Houston social event, or a stale S&L footnote: "the director of Silverado Banking, Savings and Loan when it crashed in 1988 at a cost of $1 billion to taxpayers." In 1990, Bush paid a $50,000 fine and was banned from banking activities for his role in taking down Silverado, which actually cost taxpayers $1.3 billion. A Resolution Trust Corporation Suit against Bush and other officers of Silverado was settled in 1991 for $26.5 million. And the fine wasn't exactly paid by Neil Bush. A Republican fundraiser set up a fund to help defer costs Neil incurred in his S&L dealings. Friends and relatives contributed -- but not then-President and Barbara Bush, which would have been unseemly.
· Update on Riggs Bank Scandal & Jonathan Bush - (www.washingtonpost.com and http://en.wikipedia.org/wiki/Jonathan_Bush ) President Bush's uncle, Jonathan J. Bush, is a top executive at Riggs Bank, which this week agreed to pay a record $25 million in civil fines for violations of law intended to thwart money laundering. Jonathan Bush, who is a major fundraiser for his nephew, was appointed in 2000 to run Riggs Investment Management Co. His association with Riggs began when he headed J. Bush & Co., a New Haven, Conn., company he created in 1970 and built to offer advice on money management. On May 15, 2004, The Washington Post published an item about Jonathan Bush which states: "A political Web site written by a Democratic operative drew attention yesterday to the fact that President Bush's uncle, Jonathan J. Bush, is a top executive at Riggs Bank, which this week agreed to pay a record $25 million in civil fines for violations of law intended to thwart money laundering."[2] The bank accounts under investigation may have been Saudi, though the article does not state that. It does, however, go on to say: "...a source familiar with the multiple federal investigations of the bank's Saudi accounts and other embassy accounts say Jonathan Bush's investment advice unit has "no relationship whatsoever" with any of the Riggs's Saudi accounts." Moreover, the newspaper quotes a spokesman for the Office of the Comptroller of the Currency as saying "any suggestion of political influence in the Riggs situation is 'preposterous.'" In 1991, Bush was fined $30,000 in Massachusetts and several thousand in Connecticut for violating registration laws governing securities sales. He was barred from securities brokerage with the general public in Massachusetts for one year.[3]


Other Stories:

Update: Washington Mutual Ousts Killinger; Signs Memo of Understanding with OTS - (www.ml-implode.com) - CNBC reports that CEO and former Board Chairman Kerry Killinger was fired over the weekend, replaced by Alan Fishman, chairman o...
TransUnion: Mortgage Delinquencies Rise, Should Taper off in 2009 - (www.ml-implode.com) - "The rate of mortgage delinquency increased more than nine percent from the first to second quarter, rising to a national averag...
Bloggers React: The Bailout - (www.ml-implode.com) - "“This maneuver is 100% consistent with the government grand plan to boil us like frogs in a pot of debt since, in the govie’s e...
Poor, poor Manhattan - (www.ml-implode.com)
Fannie, Freddie Bailout Necessary, But Not Enough - (www.ml-implode.com)
BankUnited Sees Regulatory Capital Status Downgraded - (www.ml-implode.com)
Washington Mutual announces Memorandum of Understanding with the Office of Thrift Supervision - (www.ml-implode.com)
Treasurys Drop on GSE Action - (www.ml-implode.com)
Mr. Mortgage: Phonie/Fraudie Thoughts - (www.ml-implode.com)
CDS Market: Did Fannie and Freddie Default ? - (www.ml-implode.com)
Taxpayers to the rescue! - (www.ml-implode.com)
World markets soar after Freddie, Fannie bailouts - (www.ml-implode.com)
Comparing Fannie to Bear - (www.ml-implode.com)

Treasuries Fall After U.S. Takes Control of Fannie, Freddie - (www.bloomberg.com)
Oil falls as traders eye the dollar, Gulf storm, OPEC - (www.marketwatch.com)
U.S. Stocks Jump, Joining Global Rally, on Fannie, Freddie Plan - (www.bloomberg.com)
As Crisis Grew, a Few Options Shrank to One - (www.nytimes.com)
U.S. Takeover of Fannie, Freddie Offers `Stopgap' - (www.bloomberg.com)
Treasury Extends Secured Credit Line to Federal Home Loan Banks - (www.bloomberg.com)
Paulson Engineers U.S. Takeover of Fannie, Freddie - (www.bloomberg.com)
No End Yet to the Capital Punishment - (online.wsj.com)
Hedge Funds Get Rattled As Investors Seek Exits - (online.wsj.com)
Asset-based borrowing on the rise - (www.ft.com)
Regulators to Help Banks With Fannie, Freddie Shares - (www.bloomberg.com)
US government takes on big role in mortgage market - (www.ap.com)
Active equity managers lose favour - (www.ft.com)
Borrowing Binge Weakens Europe's Companies as Recession Looms - (www.bloomberg.com)
Japan Real Estate Bankruptcies Surge in August - (www.bloomberg.com)
Russia aims to corner energy markets: U.S. official - (www.reuters.com)
U.S. Seizes Mortgage Giants - (online.wsj.com)
US takes control of Fannie and Freddie - (www.ft.com)
Federal Highway Trust Fund declared bankrupt - (www.azcentral.com)
Taxpayers take on trillions in risk in Fannie, Freddie takeover - (www.usatoday.com)
Financial Crisis Isn't Over Yet, Nobel Economist Granger Says - (www.bloomberg.com)
It's a hard time to get new credit - (www.sfgate.com)
Radical Options In Play for New Structure of Firms - (www.washingtonpost.com)
Lehman's Fuld Shuffles Top Management for Third Time - (www.bloomberg.com)
WaMu ousts CEO Killinger: report - (www.reuters.com)
Treasury to Rescue Fannie and Freddie - (www.washingtonpost.com)
Auto industry to press Congress for $50B in loans - (www.signonsandiego.com)
Foodmakers plan big ad campaigns in down economy - (www.boston.com)
Talks fail; Boeing machinists strike - (www.chicagotribune.com)
Manufacturers turn to US - (www.ft.com)
In Crisis, Paulson's Stunning Use of Federal Power - (www.washingtonpost.com)
Few Stand to Gain on This Bailout, and Many Lose - (www.nytimes.com)
The Dilemma of Fannie and Freddie - (www.nytimes.com)