Friday February 6 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Failed Bank Sues Regulators For Failing To Give It Money - (www.capitalbeacon.com) $432 million asset National Bank of Commerce in Berkeley, Ill., failed two weeks ago. It sued the Treasury Department, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp. after its application for the program was denied in November. I think NBC has a great case - except that it is against the government. Even if they do win it would be years and years and years before it was settled…. The bank argued that it had been well capitalized before the government took over Fannie Mae and Freddie Mac in September, and that its capitalization was damaged by the losses suffered after preferred shares in the two government-sponsored enterprises lost value. The suit hinged on a provision in the Emergency Economic Stabilization Act that directed the Treasury to consider the hit community banks took on GSE preferred shares. The same provision was used to justify the recapitalization of OneUnited, a Boston bank that House Financial Services Committee Chairman Barney Frank lobbied regulators to save. The provision “was meant to cover banks that were heavily invested in Fannie and Freddie preferred and common stock, and as a result of government action that wiped out their preferred stock, their capital base was affected,” a spokesman for the Massachusetts Democrat said. “The Fannie and Freddie issue affected small community and minority-owned institutions far more than larger institutions who had a wider capital base.” The provision requires the Treasury to consider recapitalizing banks with under $1 billion of assets that were well or adequately capitalized as of June 30 and fell below that level as a result of losses on GSE preferred shares. The law specifies that consideration should go to banks “serving low- and moderate-income populations and other underserved communities.” Kenneth Thomas, a Community Reinvestment Act consultant, said National Bank of Commerce met those requirements. “They had a stronger CRA rating than OneUnited did,” Mr. Thomas said. “If they would have looked at everything and put aside the minority bank aspect of OneUnited, National Bank of Commerce should have gotten the money.”

Obama administration brings in key lobbyists after making rules barring lobbyists in administration:
· Another Lobbyist Enters the Obama Administration – (www.usnews.com) Another former lobbyist enters the Obama administration ...After unveiling the rules on his first full day in office, Obama was forced to waive them for a Raytheon executive nominated as deputy secretary of Defense. On Tuesday, Treasury Secretary Timothy Geithner announced new department rules on lobbying even as he was hiring former Goldman Sachs lobbyist Mark Patterson as his chief of staff. I've blogged a couple of times on the Obama lobbying ban. As I've said before, I'm not unsympathetic to the concerns about the government-lobbyist revolving door, but the rhetoric on this issue was too sweeping and led to a ban that is unworkable, as evidenced by the increasing number of waivers (at least three now, including Patterson and Defense Department nominee William Lynn) being granted to get around it. "These waivers are supposed to be very select and very rare," said Public Citizen's Craig Holman, who advised Obama's transition team as it crafted the lobbying rules. He said there are "plenty of competent people" available to the Defense Department who do not work for major defense contractors.
· Geithner announces new lobbying rules for bailout – (news.yahoo.com/s/ap) Treasury Secretary Timothy Geithner, in his first full day on the job, is announcing new rules to limit special-interest influence on the government's $700 billion financial rescue program. The new rules are designed to crack down on lobbyist influence over the rescue program. The Obama administration says they go farther than the lobbying rules imposed by the Bush administration. The new rules are aimed at making sure political influence is not a factor in awarding rescue money. This official, who spoke to The Associated Press on grounds of anonymity because the new rules had not yet been announced, said that they went farther than restrictions the Bush administration imposed. The new rules will restrict the contact officials can have with lobbyists in connection with applications for funds from the bailout program, the official said. This official said the rules, which are aimed at making sure political influence is not a factor in awarding rescue money, will take as a model the limits that are imposed on political lobbying of the Treasury Department on tax matters. In making required reports to Congress on the operation of the $700 billion rescue program, officials will have to certify that each investment decision was based only on objective criteria and the facts of each case. The rescue program will be required to publish a detailed description of the review process conducted in making the awards, and no bank will be considered for an award unless it was recommended for the assistance by the firm's primary bank regulator. The new rules are coming in the wake of new lobbying reports filed with the government showing that some big banks had stepped up their lobbying efforts late last year even as they received billions of dollars from the bailout program
· Geithner enlists lobbyist as top aide Newly installed Treasury Secretary - (www.politico.com) Timothy Geithner issued new rules Tuesday restricting contacts with lobbyists – and then hired one to be his top aide. Mark Patterson, a former advocate for Goldman Sachs, will serve as chief of staff to Geithner as the Treasury Department revamps the Wall Street bailout program that sent an infusion of cash to his former employer. Patterson’s appointment marks the second time in President Barack Obama’s first week in office that the administration has had to explain how it’s complying with its own ethics rules as it hires a bevy of Washington insiders for administration jobs. Last week, the White House announced the president had waived the ethics rules to clear the way for the nomination of William Lynn, a former Raytheon lobbyist, to be deputy defense secretary. “This is exactly the kind of thing that makes the American public suspicious of politicians. You say one thing and do another,” said Melanie Sloan, founder of Citizens for Responsibility and Ethics in Washington. Treasury spokeswoman Stephanie Cutter lauded Patterson’s “long history of public service in the U.S. Senate, both as a staff director of the Senate Finance Committee and policy director for the Senate leader. “He brings significant expertise to the job of chief of staff and has agreed to a far-reaching ethics pledge to remove any hint of a conflict of interest,” she added. According to that pledge, Patterson will be prohibited for the next two years from participating in Treasury decisions related to Goldman Sachs and the specific issues on which he lobbied. Still, Sloan and financial service lobbyists question how Treasury will make those determinations. “Goldman so permeates the markets, how can you separate them out?” Sloan asked. Patterson was a registered lobbyist for Goldman Sachs from 2005 until April of 2008. Lobbying disclosure forms suggest he represented the financial giant on a wide array of issues, including visas, tax credits for cellulosic ethanol and an Indian gaming facility in New York state. His reports also list a July 2007 meeting at Treasury, but sources familiar with the meeting say it was an informational session about Goldman’s business practices organized at the department’s request. The Treasury lobbying rules issued by Geithner Tuesday would restrict department lobbyist contacts connected to applications for funding from the Troubled Asset Relief Program and those associated with banks receiving government assistance. Geithner also pledged that only banks recommended by top regulators would be eligible for TARP funding and that a detailed description of the review process would be made public. “American taxpayers deserve to know that their money is spent in the most effective way to stabilize the financial system,” Geithner said in a statement. “Today’s actions reaffirm our commitment toward that goal.”

JPMorgan’s Staley Says Money Markets Pose ‘Systemic Risk’ - (www.bloomberg.com) James “Jes” Staley, head of JPMorgan Chase & Co.’s investment unit, said the $4 trillion money-market fund industry is the “greatest systemic risk” to the financial system that hasn’t been adequately addressed. “What keeps me up at night most of anything we do at JPMorgan Asset Management is the money-market fund space,” Staley said at a discussion hosted today by Credit Suisse Group AG in Davos, Switzerland. “One of the things that has to come out and get a lot more attention and discussion is how do we take the systemic risk posed by money funds out of the system?” JPMorgan Asset Management oversees about $500 billion of money-market funds, Staley said. The funds aren’t allowed to set aside capital to absorb investment losses, leaving no “margin of error” against a potential collapse, he said. Staley’s remarks follow a set of proposed regulatory changes for the money-market fund industry from the Group of Thirty, an independent policy organization whose members include Treasury Secretary Timothy Geithner and Lawrence Summers, head of the White House’s National Economic Council.

If Christopher Dodd is Delighted... - (thelastgoodidea.blogspot.com) If Christopher Dodd is Delighted ... We are all in deep kaka. When the chairman of the Senate Banking Committee is happy with a policy decision at the Fed, I immediately reach for my wallet, to make sure its still there. Sort of like when I am in a crowd and someone bumps into me. The Fed decision to take action against foreclosures can only turn out poorly. For 2 decades Washington and the economists they have employed, have meddled with and held back economic tides which were not meant to be messed with. Preventing foreclosures should not be the goal of the Fed, the Treasury or the Senate Banking Committee. They should be concerned with guiding the US economy out of the wilderness and back to an equilibrium which we can use as a starting point for new growth. Preventing foreclosures is like holding back the tides. It can't work for long and its likely to cause stiffer consequences. If anything has been evident over the last couple of years, its exactly that. Our financial policy makers need to take their hands off of things which they can't really control and allow our economy to reset itself to a normal and sustainable level.




OTHER STORIES:

Wall Street Bonuses May Go Way of Dodo Amid Government Bailouts - (www.bloomberg.com)
Senators Bid To Regulate Hedge Funds - (www.nytimes.com)
Consumers cut credit payments, struggle to pay bills - (www.usatoday.com)
Japan Heads for Worst Recession as Output Tumbles - (www.bloomberg.com)

Annual house prices plunge 16.6 per cent in England - (business.timesonline.co.uk)
House sales fall to record lows - (news.yahoo.com)
U.S. New-House Sales Fall to Lowest Level on Record - (www.bloomberg.com)
Expect Prices to Keep Falling as New House Sales Hit All-Time Low - (www.forextv.com)
Sweden offers lessons for US toxic clean up - (www.ft.com)
Trichet warns on capital hoarding - (www.ft.com)
U.K. Consumer Confidence Drops Near Record Low, GfK NOP Says - (www.bloomberg.com)
U.S. Economy Shrank 3.8% in Fourth Quarter, Most Since 1982 - (www.bloomberg.com)
Economic Signs Turn From Grim To Worse - (www.washingtonpost.com)
Obama slams Wall Street over bonuses - (www.ft.com)
Economy Pinches the Billable Hour at Law Firms - (www.nytimes.com)
Grim Japan, U.S. figures show world crisis deepening - (www.reuters.com)
Temp workers becoming recession's overlooked casualties as payrolls purged - (www.chicagotribune.com)
Honda cuts annual forecast as 3Q profit tumbles - (www.signonsandiego.com)
Bonus Bummer in Manhattan - (urbandigs.com)
MC Bailout rap video - (dailybail.com)
Sinking Boat comic - (dailybail.com)

NEC to cut 20,000 jobs worldwide as losses widen - (www.signonsandiego.com)
U.S. airlines lose $4 billion in 4th quarter - (www.chicagotribune.com)
Ford to draw bank credit of $10.1bn - (www.ft.com)

U.S. GDP Shrank 3.8% Last Quarter, Most Since 1982 - (www.bloomberg.com)
Economic Signs Turn From Grim To Worse - (www.washingtonpost.com)
U.S. Durable Goods Orders Decline for Fifth Month - (www.bloomberg.com)
Americans receiving jobless benefits hits record - (finance.yahoo.com)
Fed Warns of Global Slowdown That Adds to U.S. Deflation Risk - (www.bloomberg.com)

Orange County luxury-house sellers face 9-year supply - (lansner.freedomblogging.com)
Billions more "needed" for financial rescue - (news.yahoo.com)
Chinese Premier Blames Recession on U.S. Actions - (online.wsj.com)
Transactions under the Troubled Asset Relief Program - (TARP) - (www.subsidyscope.com)

The World Won't Buy Unlimited U.S. Debt - (europac.net)
With landlords pressed by banks, rents drop - (lvbusinesspress.com)