Tuesday December 30 Housing and Economic stories

TOP STORIES:

Investors Unlikely to Find Relief From SIPC – (online.wsj.com) Investors who lost money with Bernard Madoff shouldn't count on the Securities Investor Protection Corp. riding to their rescue. The federally mandated SIPC has a narrow requirement as to what it covers -- generally theft in brokerage accounts. Furthermore, securities attorneys say the nonprofit organization, which is supported by brokerages' membership fees, has a miserly track record of paying out claims and its current reserves may not be nearly big enough to handle potential losses from the Madoff case.

Inside Madoff’s Empire: Former Employee Speaks Out - (www.cnbc.com) Andrew Cohen was a profitable trader at Bernard Madoff’s firm throughout the 1990s. Shortly before Cohen left the firm—and the financial sector altogether—he was given the opportunity to invest with Madoff. “I started to hear about people getting really good returns, so I was interested in making good returns,” he said. “It was almost a reward to be able to be allowed to invest with him.” Now, like many others, Cohen says he lost nearly his entire net worth in Madoff’s alleged Ponzi scheme. “One moment I was enjoying a very happy life, teaching a fitness class and a yoga class over at the gym, and suddenly I get a phone call from some friends of mine, and in one minute I find out my whole net worth is just about gone." See the accompanying video for the interview.

Chrysler to Shut Down All Production For One Month - (www.cnbc.com) Chrysler said it will shut down all of its manufacturing operations for at least a month from Dec. 19, and warned dealers that due to increasing withdrawls, it may be forced to stop financing vehicle inventories. Chrysler made the announcement in a letter sent Wednesday to its employees, suppliers and the United Auto Workers union that was also posted on its website. The blanket shutdown will come as Chrysler and its larger rival, General Motors, both seek to shore up cash as they seek a federal bailout they say they need to survive.

Chrysler Financial may briefly stop dealer loans - (www.reuters.com) Chrysler LLC's finance arm has told dealers it may temporarily stop loans used by dealers to stock vehicles because the retailers pulled money from a fund that helps finance them. Chrysler Financial Chief Executive Tom Gilman sent letters to dealers, dated Dec. 12, that asked them to refrain from withdrawing large amounts from a "cash management account" used to finance the loans, a source familiar with the letter said. Withdrawals from the fund, which have totaled more than $1.5 billion since July, have caused a drain on Chrysler's resources and could limit the company's ability to offer financing to dealers to buy vehicles, according to the letter. Chrysler Financial said in a statement that it finances 75 percent of all vehicles shipped to U.S. dealers and continues to support its dealer network with "uninterrupted" wholesale financing. The letter said about $60 million a day is being withdrawn from the account, which is "well above our historical daily advances." Chrysler dealers were paid a bonus if they kept money in the account. Talk about potential bankruptcy at Chrysler, which is seeking federal loans to survive through March, has spooked dealers, who withdrew heavily from the account in the past few months.

Dreier Law Firm Files for Bankruptcy After Founder Arrested - (www.bloomberg.com) The law firm Dreier LLP, after its founder was jailed and accused of cheating hedge funds out of more than $100 million, filed for bankruptcy protection. Marc Dreier is being held on federal criminal charges and may also seek court protection from creditors, said Mark Pomerantz, a receiver for the law firm chief. The Midtown Manhattan-based law firm yesterday listed assets of $100 million to $500 million and debt of $10 million to $50 million in its filing in U.S. Bankruptcy Court in New York. “In the aftermath of the arrest of Mr. Dreier, no effective management of the debtor or other Dreier entities exists,” Pomerantz said a statement to the bankruptcy court. “I have determined an orderly liquidation of the firm cannot take place without bankruptcy protection.” Pomerantz alerted U.S. District Judge Miriam Cedarbaum in Manhattan to the anticipated bankruptcy filing in a Dec. 11 letter made public on Dec. 15. Cedarbaum is presiding over Dreier’s criminal case.

Detroit newspapers to cut delivery to just 3 days a week - (www.chicagotribune.com) Fighting to stay in business, Detroit's two daily newspapers will radically change their relationship with readers by slashing home delivery to three days a week, printing small editions on other days and encouraging people to get information online. The Detroit market is the largest in the country to undergo that transformation. But it reflects a calculation facing newspapers across the country, with print circulation dropping as readers increasingly get their news on the Internet. By curtailing home delivery on certain days, the papers reduce printing, fuel and labor expenses for editions that tend to attract fewer advertisements. The chief executive of Detroit Media Partnership, which runs the Detroit Free Press and The Detroit News, said the move announced Tuesday was not an experiment. He predicted it would succeed in keeping two papers alive.

55% of SoCal home sales were foreclosures - (www.ocregister.com) Foreclosed homes made up 55% of resale transactions in Southern California – 44% in Orange County and nearly seven out of every 10 sales in the Inland Empire – driving down prices to levels not seen since the spring of 2003, market-tracker MDA DataQuick reported today. Last month’s price was roughly a buy-three-get-two-free sale for Southern California homes: The median price of a Southern California was $285,000, down 44% — or almost half off — from the value for similar homes at the market peak 18 months ago. That is, a single median-priced home cost $505,000 in June 2007. Last month, you could buy two median priced homes for $570,000, or just $65,000 more.


Restraints planned for coal-fired plants - (www.ft.com) Environmental regulators are laying the groundwork for tougher controls on new coal-fired power plants in the administration of president-elect Barack Obama. The industry was put on notice last month, when the Environmental Protection Agency’s appeals panel rejected a permit for a coal power plant in Utah issued by its Denver office. It found the office had not justified its failure to consider carbon emissions in the application.

Ecuador May Be Forced to Scrap Dollar After Defaulting on Debt - (www.bloomberg.com) Ecuador’s default on $3.9 billion of international bonds means it’s only a matter of time before the country drops the U.S. dollar as its currency, Goldman Sachs Group Inc. says. Ecuador’s use of the dollar gives President Rafael Correa no outlet for providing credit to the economy as access to foreign financing dries up and revenue from sales of oil, the nation’s biggest export, tumbles. Correa, a critic of so-called dollarization, also may use the default as an excuse to abandon the policy, said Alberto Ramos, a Latin America economist with Goldman Sachs in New York.

Commercial property fears deepen - (www.ft.com) The value of commercial property loans in breach of their agreed terms more than trebled in six months as rapidly falling real estate prices hit a heavily leveraged sector struggling under almost £208bn of debt. With more than £76bn of debt needing to be refinanced before the end of 2010 and increasing numbers of loans slipping into default, the findings of an influential survey of property lending, to be published on Wednesday, will add to warnings that commercial property could be a timebomb for banks that supported the real estate boom.



OTHER STORIES:

Apple ordered to end French iPhone deal – (finance.yahoo.com) Apple Inc. has been told by French officials that its exclusive deal to sell iPhones through France Telecom SA violates antitrust laws in that country. Regulators suspended the contract with Apple (NASDAQ: AAPL), although France Telecom has said it plans to appeal the decision. The decision came as a result of a complaint filed by Bouygues Telecom, a unit of French diversified construction group Bouygues SA.
Chrysler Warns Dealers on Loans - (online.wsj.com)
Governor Fights Impeachment Panel - (online.wsj.com)
Calif. Halts Infrastructure Spending - (online.wsj.com)
Second Thoughts Hamper Stocks - (online.wsj.com)
Jobs Won't Take Macworld Stage - (online.wsj.com)
U.K.: Iraq Pullout by May 31 - (online.wsj.com)
Perils of Debt on Display in Korea - (online.wsj.com)
U.S. Targets Iran-Controlled Firm - (online.wsj.com)

U.S. Stocks Fall on Concern Fed Is Running Out of Ammunition - (www.bloomberg.com)
Gold Climbs in New York After Dollar Weakens on Fed Rate Cut - (www.bloomberg.com)
Dollar Falls Most Against Euro Since 1999 Debut After Fed Cut - (www.bloomberg.com)
Oil tumbles despite huge OPEC production cuts - (biz.yahoo.com/ap)
Treasuries Touch Record Lows on Concern Slowdown Far From Over - (www.bloomberg.com)
Dollar No Longer Haven After Fed Rate Cut, State Street, CMC Say - (www.bloomberg.com)
OPEC ready for deepest oil cut to rescue prices - (www.reuters.com)
In Fraud Case, Middlemen in Spotlight - (www.nytimes.com)
Ultra-low US rates undermine repo market - (www.ft.com)
Southern California's median home price drops below $300,000 - (www.latimes.com)

World Confidence Drops as Slump Deepens, (www.bloomberg.com) Survey Shows - (www.bloomberg.com)
U.K. Jobless Claims Rose at Fastest Pace Since 1991 - (www.bloomberg.com)
UK businesses plan sharp cutbacks - (www.ft.com)
European Banks Tally Losses Linked to Fraud - (www.nytimes.com)

China Cuts Home-Sales Tax as Property Slump Deepens Slowdown - (www.bloomberg.com)
Banks Show No Signs of Easing Credit in Step With Fed’s Rates - (www.bloomberg.com)
HUD Chief Calls Aid on Mortgages A Failure - (www.washingtonpost.com)
Bernanke Charts New Fed Course With Zero Rate, Asset Purchases - (www.bloomberg.com)
U.S. MBA’s Mortgage Applications Index Rose 2.9% Last Week - (www.bloomberg.com)
New Poll Shows 63% Are Already Hurt by Downturn - (www.washingtonpost.com)
Morgan Stanley Posts Wider-Than-Estimated $2.2 Billion Loss - (www.bloomberg.com)
Auto suppliers fear White House bailout ignores them - (www.usatoday.com)
Bristol-Myers to cut 10 percent of workforce - (www.signonsandiego.com)
Mexico's Cemex expects 23 percent sales drop in 4th quarter - (www.chicagotribune.com)
Honda slashes profit forecast - (www.chicagotribune.com)