Monday December 8 Housing and Economic stories

TOP STORIES:

Crude Oil Falls 24% This Week -- How Low Will It Go? (CHK) - (www.streetinsider.com) Crude oil has fallen another 4% today (Friday), pushing as low as $40.85. With today's continued move lower, the price of a barrel of crude oil has declined by about 24% in December, which has had only 5 trading days so far. This month's sharp slide in prices have left oil & gas related stocks in the gutter, which, in turn, have dragged down prices in the entire energy complex. Among numerous once-high-flyers now in the doldrums, one name is sticking out today as it has seen unusually high ...

Another Friday, Another Bank Failure: First Georgia Community Bank closed -- 23rd failure in '08 - (www.marketwatch.com) First Georgia Community Bank was closed by regulators Friday, the 23rd bank failure of the year and the fourth in the Atlanta area amid the ongoing financial crisis. The four branches of Jackson, Ga.-based First Georgia will re-open Saturday as United Bank, which has assumed First Georgia's deposits, the Federal Deposit Insurance Corporation said in a statement. As of Nov. 7, First Georgia had $237.5 million in assets and $197.4 million in deposits, the FDIC said. The FDIC estimated the closure will cost its Deposit Insurance Fund $72.2 million. In November, state regulators closed Community Bank of Loganville, while Integrity Bancshares Inc. and Alpha Bank & Trust, both in Alpharetta, Ga., have also been closed.

Activist moves homeless into foreclosures - (msnbc.msn.com) Man executes bailout plan of his own on Miami's empty streets. Max Rameau delivers his sales pitch like a pro. "All tile floor!" he says during a recent showing. "And the living room, wow! It has great blinds." But in nearly every other respect, he is unlike any real estate agent you've ever met. He is unshaven, drives a beat-up car and wears grungy cut-off sweat pants. He also breaks into the homes he shows. And his clients don't have a dime for a down payment. Rameau is an activist who has been executing a bailout plan of his own around Miami's empty streets: He is helping homeless people illegally move into foreclosed homes. "We're matching homeless people with people-less homes," he said with a grin. "I think everyone deserves a home," said Rameau, who said he takes no money from his work with the homeless. "Homeless people across the country are squatting in empty homes. The question is: Is this going to be done out of desperation or with direction?"

Former Treasury Undersecretary Proposes 100 Year Treasuries - (Mish at globaleconomicanalysis.blogspot.com) Those not thrilled with the prospect of getting 3% for 30 years on the long bond can now entertain the possibility of getting 3% for 100 years. Peter Fisher Says Treasury Should Consider 100-Year Debt. BlackRock Inc.’s Peter Fisher said the U.S. Treasury should consider selling 100-year bonds to ease the federal government’s borrowing costs as it faces a budget deficit expected to top $1 trillion. If you issued a 100-year bond and had principal and interest pay down smoothly over the last 50 years, you create a great borrowing device for the Treasury that would let us move this hump of borrowing over the generational retirement that’s coming up,” Fisher, managing director and co-head of fixed income at BlackRock in New York, said in a Bloomberg Radio interview.

Jesse Jackson plans rallies to support automakers - (www.freep.com) The Rev. Jesse Jackson says he will organize rallies in several cities to urge Congress to grant aid to the struggling U.S. automakers. At a press conference today with minority auto suppliers and dealers in Detroit, Jackson said, "It's time to go back to the streets for some action." The civil rights leader and former presidential hopeful says the issue is not about "the Big Three execs, it's the big 4 million jobs." Jackson spoke while the leaders of General Motors, Ford and Chrysler are in Washington for their second day of hearings to request up to $34 billion in emergency funding to stay in business.

China Won't "Dare" Invest in US Financial Firms - (www.bloomberg.com) China’s sovereign wealth fund said it wouldn’t “dare” invest in foreign financial firms after losing $6 billion on stakes in Morgan Stanley and Blackstone Group LP. “I don’t dare to invest in financial institutions now,” Lou Jiwei, chairman of China Investment Corp., said today at a conference in Hong Kong. “The policies of the developed nations on these institutions are not clear. Until they are clear, I don’t dare to invest in them. What if they go bust? I will lose everything.”

Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary - (www.villagevoice.com) Lehman Brothers CEO Dick Fuld told Congress on October 6 that the Wall Street investment bank was destroyed by a "financial tsunami"—a natural disaster, an act of God. In other words, it wasn't his fault. But the truth is that Lehman's fall in the subprime-mortgage crisis was a man-made disaster. The white-shoe firm was not just deeply involved in the murky subprime-mortgage market; Lehman and the other dominant Wall Street investment banks, experts tell the Voice, actually created the demand for the mortgages that they would then package and swap for enormous returns. Addicted to the profits that such securities brought in, Lehman was desperate for the risky mortgages they required. "Sure, there were sleazy brokers out there who were fooling people, but you have to understand—to use a drug analogy—they are like the 'corner boys,' " says Irv Ackelsberg, a Philadelphia lawyer who specializes in representing homeowners in foreclosure cases. "You have to look at the cartel at the top. The brokers were basically creating loans that had been ordered by Wall Street." Put another way, Lehman and other top financial firms "primed the pump and controlled production," says Kevin Byers, an Atlanta forensic accountant who has spent years tracing the evolution of the subprime market. "Lehman was very early in getting this deal machine into place," he says. "With one hand, they loaned the money to the mortgage lender to allow them to originate loans to home buyers. With the other hand, they ostensibly bought the loans originated with their line of credit, and resold them as securities to investors." The scheme worked like this: Homeowners signed mortgages with loan companies. Lehman bought those mortgages and bundled them into "tranches," which they then sold to investors—often large pension funds and other financial institutions. Jay Weiser, an associate professor of law and real estate at Baruch College, says the system was set up to assure the owners of the mortgage-backed securities that they would get a steady return. "Since everyone at the top was paid for how many mortgage-backed securities they put out each year, they had every incentive to look the other way and overstate the quality of the loans they were making," he says.

Federal judge rules Citibank must stand trial - (www.poconorecord.com) A six-year-old private civil suit alleging a conspiracy to sell Poconos homes at fraudulently inflated values could go to trial next spring, following a federal judge's rejection of a bank's motion to dismiss them as a defendant. U.S. District Judge Christopher Conner ruled Oct. 24 — for the second time this year — that Chase Manhattan Mortgage Corp. and branch manager William K. Spaner must stand trial on allegations that Chase conspired with Tannersville developer Gene Percudani to fraudulently sell homes in excess of market value through inflated appraisals. Nearly 100 sets of homeowners charge that Percudani, his construction and brokerage companies, Chase, and former home appraiser Dominick Stranieri violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and state consumer protection law. The suit was filed following a 2001 series of stories in the Pocono Record detailing the sales practices.



OTHER STORIES:

Detroit Finds Some Sympathy in House After Jobs Report - (www.nytimes.com) The Detroit automakers’ bid for federal aid was received more favorably by some lawmakers following the news that another 533,000 Americans lost their jobs.
Foreclosures soar 76% to record 1.35 million - (money.cnn.com)
Consumer credit drops $3.6B in October - (money.cnn.com)
Taxpayers will get a return on the bailout - (money.cnn.com)
Oil at 4-year low Gasoline down again - (money.cnn.com)
Taxpayers: Furious over homeowner bailouts - (money.cnn.com)
Let House Prices Fall - (www.cbsnews.com)
Stabilize House Prices By Cutting Them Drastically - (blogs.wsj.com)
To truly revitalize housing we must allow prices to fall - (optionarmageddon.ml-implode.com)
Mortgage fraud incidents up 45% in second quarter - (money.cnn.com)
Corporate Debt Protection Costs Climb Amid Depression Concern - (www.bloomberg.com)
The American Crisis and the Case for an Inflationary Depression - (www.seekingalpha.com)
Deflation: Bargains abound, which could be a problem - (www.usatoday.com)
Auto Sales Plunge To Lowest Level Since 1982 - (Mish at globaleconomicanalysis.blogspot.com)
Preemptive Housing-Bubble-Bursting - (www.cjr.org)
The Housing Bubble and the Boomer Generation - (www.newgeography.com)
Manhattan Awash in Open Office Space - (www.nytimes.com)

Citigroup Said to Cut Most of Asia Real Estate Team After Slump - (www.bloomberg.com)
Fed rushing headlong into liquidity trap - (www.monthlyreview.org)
Investor Sues to Block Mortgage Modifications - (news.yahoo.com)
Understanding Deleveraging and Credit Cards - (optionarmageddon.ml-implode.com)
Paulson Bucks Paulson as His Hedge Funds Score $1 Billion Gain - (www.bloomberg.com)
With Change in Season, House Prices Fall Together - (www.marketwatch.com)
Oahu house, condo sales plummet - (www.starbulletin.com)
Hawaii Real Estate: Back to 1981? - (Charles Hugh Smith)
Real estate a tough sell in troubled economy - (www.sfgate.com)
Financial troubles, unhappiness linked, but not directly - (www.idahostatesman.com)
Doris Dungey, Prescient Finance Blogger, Dies at 47 - (www.nytimes.com)
Bond Trading Trends Warn of Deflation - (www.seekingalpha.com)
Bernanke-san Evokes Japan Comparison - (www.bloomberg.com)
Somali Pirates to acquire Citigroup - (optionarmageddon.ml-implode.com)