Sunday March 1 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Same bank execs who led collapse, now manage bailout - (www.insidebayarea.com) It's one of the ironies of the U.S. financial bailout: The banking executives now managing billions in taxpayer money are the same ones who oversaw the industry's near collapse. At banks receiving federal bailout money, nearly nine of every 10 of the most senior executives from 2006 are still on the job, according to an Associated Press analysis of regulatory and company documents. Even top executives whose banks made such risky loans they imperiled the economy have been largely spared any threat to their jobs. Less fortunate are more than 100,000 bank employees laid off during a two-year stretch when industry unemployment nearly tripled, bank stocks plummeted and credit dried up. "The same people at the top are still there, the same people who made the decisions causing a lot of our financial crisis," said Rebecca Trevino of Louisville, Ky., a mother of three who was laid off from her job as a Bank of America training coordinator in October. "But that's what tends to happen in leadership. The people at the top, there's always some other place to lay blame." It's hardly a surprise that workers and managers experience a recession differently. What's new is that taxpayers are now shareholders in the nation's bailed-out banks, yet they lack the usual shareholder power to question management decisions or demand house-cleaning in the executive suites. Wells Fargo & Co., for example, once was among the top lenders for subprime mortgages, loans to buyers with low credit scores. The company received $25 billion in bailout money and plans layoffs in the coming months. But longtime CEO Richard Kovacevich remains the company's chairman, and the board recently waived its mandatory retirement age for him. "Our senior leadership team of our CEO and his direct reports have an average tenure of almost a quarter-century with our company," Wells Fargo spokeswoman Julia Tunis Bernard said in a statement that also highlighted the company's "unchanging vision." Under the government's bailout plan, taxpayers must take it on faith that bank executives will make better decisions this time around, said Jamie Court, president of the California-based group Consumer Watchdog. "When you deal with the same dogs, you're going to end up with the same fleas," said Court.

Germany, France May Face Bailout of Nations, Not Just Banks - (www.bloomberg.com) - German Finance Minister Peer Steinbrueck became the first senior policy maker to broach the topic this week, saying some of the 16 euro nations are “getting into difficulties” and may need help. French officials are also concerned about market tensions as the cost of insuring Irish, Greek and Spanish debt against default rises to records and bond spreads widen. The nightmare for Angela Merkel and Nicolas Sarkozy is that widening deficits will prompt investors to shun the debt of some countries, sparking a region-wide crisis. While few investors are yet forecasting any defaults, the mere risk of it may prompt the bloc’s two richest economies to ignore the European Central Bank and announce their willingness to come to the rescue.

California budget includes tax relief for film, TV shoots - (www.latimes.com) Gov. Arnold Schwarzenegger, a former movie actor, has been trying for years to get tax credits to keep California's signature industry at home. He got his wish early Thursday when the Legislature approved tax credits for film and television productions as part of an economic stimulus provision of the new state budget. The credits -- capped at $500 million over five years -- are modest compared with those offered by other states. Still, the announcement was welcome news to many in Hollywood who were skeptical that the Legislature would help the entertainment industry given the enormousness of the task of plugging the state's $42-billion budget gap. "We applaud the passage of this incentive, which will help make California competitive and not only save jobs that are being lost but generate much-needed revenue for the state," said a joint statement from Hollywood's actors and directors unions and the Motion Picture Assn. of America, which have been lobbying for the credits for a decade. Previous attempts by Schwarzenegger to secure such credits have been torpedoed by lawmakers who viewed them as a handout to Hollywood. But those arguments weakened amid mounting evidence that other states were poaching jobs from Southern California. More than 30 states now offer tax credits and rebates to lure production crews to their locales. New York, New Mexico, Louisiana and Michigan have seen a surge in production and jobs since implementing incentive programs, contributing to historic lows in L.A. shoots. "So much has disappeared, anything we bring back will be a boon," said Paul Audley, president of FilmL.A., which processes filming permits.

The RAT hiding deep inside the stimulus bill - (www.dcexaminer.com) You’ve heard a lot about the astonishing spending in the $787 billion economic stimulus bill, signed into law this week by President Barack Obama. But you probably haven’t heard about a provision in the bill that threatens to politicize the way allegations of fraud and corruption are investigated — or not investigated — throughout the federal government. Photographers take pictures of the economic stimulus bill after President Barack Obama signed the document during a ceremony at the Denver Museum of Nature and Science in Denver, Tuesday, Feb. 17, 2009. (AP Photo/Gerald Herbert) The provision, which attracted virtually no attention in the debate over the 1,073-page stimulus bill, creates something called the Recovery Accountability and Transparency Board — the RAT Board, as it’s known by the few insiders who are aware of it. The board would oversee the in-house watchdogs, known as inspectors general, whose job is to independently investigate allegations of wrongdoing at various federal agencies, without fear of interference by political appointees or the White House. In the name of accountability and transparency, Congress has given the RAT Board the authority to ask “that an inspector general conduct or refrain from conducting an audit or investigation.” If the inspector general doesn’t want to follow the wishes of the RAT Board, he’ll have to write a report explaining his decision to the board, as well as to the head of his agency (from whom he is supposedly independent) and to Congress. In the end, a determined inspector general can probably get his way, but only after jumping through bureaucratic hoops that will inevitably make him hesitate to go forward. When Iowa Republican Sen. Charles Grassley, a longtime champion of inspectors general, read the words “conduct or refrain from conducting,” alarm bells went off. The language means that the board — whose chairman will be appointed by the president — can reach deep inside a federal agency and tell an inspector general to lay off some particularly sensitive subject. Or, conversely, it can tell the inspector general to go after a tempting political target.

Obama's Accounting Gimmick to Protect Lenders - (optionarmageddon.ml-implode.com) Bush’s strategy for dealing with the banking and housing crises was to bury his head in the sand, Obama’s strategy has been to bury his head even deeper. The housing crisis, like the banking crisis, isn’t going to be “solved” until asset prices are allowed to fall. The Bush administrations, in concert with the Fed, had a simple strategy: throw good money after bad in order to prop up asset prices, protecting failed homedebtors and bankers from absorbing their losses. Obama has simply doubled-down on the same strategies. Literally. The key part of Obama’s housing plan announced yesterday is to subsidize mortgage payments, reducing effective interest costs in order to put a floor under asset prices so banks and homeowners don’t have to declare bankruptcy. Naturally banks love the Obama plan. By subsidizing monthly payments, and not forcing banks to write down principal by more than a token amount of $1000 per year for 5 years, the plan will keep homedebtors tethered to vastly overpriced mortgages. Who does this really benefit? Not the homedebtor, who has little chance of ever building equity in the home. He’s effectively paying over-priced rent to a bank. No, the banks are the real beneficiaries.

Who are these 'responsible' houseowners? - (www.sfgate.com) President Obama's housing plan is designed to save "responsible" homeowners from foreclosure by having taxpayers subsidize their mortgage payments. The problem is, how do you define "responsible?" In his speech, Obama said his plan "will not help speculators who took risky bets on a rising market and bought homes not to live in but to sell. And it will not reward folks who bought homes they knew from the beginning they would never be able to afford." It should be fairly easy to identify speculators who bought homes to rent or flip. But how do you prove someone bought a home they knew they couldn't afford? I've spoken with many people who can't pay their mortgages and are desperate for help. All bought homes they thought they could afford and in many cases really could afford. Most got into trouble by refinancing their homes - often more than once - and extracting every possible dollar of equity. The money went toward granite countertops, stainless steel appliances, credit cards, student loans, vacations, weddings, cars, etc. Then came a job loss or a divorce or the roommate moved out, and suddenly they couldn't make the payment. They tried to sell or refinance but couldn't because the home's value had dropped below the loan balance. Responsible or reckless? Who's to say? Obama announced two new plans for "responsible" homeowners who want to reduce their mortgage payments. Neither excludes people who cashed out their equity. Both are open only to people whose mortgages are owned or guaranteed by Fannie Mae and Freddie Mac, which essentially have become arms of the government.

Housing relief becomes a fence between neighbors - (www.latimes.com) Ledeen Halloran and Harry Snegg live a few houses apart on Claiborne Drive in Long Beach. They both have good jobs, they both voted for John McCain -- and they both have seen their home values fall more than 40%. But when it comes to their views on mortgage relief, these two neighbors are on different sides of the street. Halloran, 50, is a fan of President Obama's new plan to stave off foreclosures and thinks it could provide the cushion she needs to stay in her home. "These bad mortgages started this whole recession, and if they don't do something about it we can't turn things around," she said. Snegg, 62, thinks the $75-billion plan amounts to a taxpayer-funded bailout for people who either couldn't manage their money or took a gamble to score easy winnings in the real estate boom. "People should get some help, but I don't think I should have to pay for it," Snegg said. Halloran and Snegg represent a debate that is happening across the country, although the two neighbors say they mostly keep their views to themselves. Snegg, who is divorced, worries that talking too negatively about people who are hurting isn't very neighborly. Halloran, also divorced, said she hadn't told her mother or her friends that she was having trouble with her mortgage. Halloran moved into the Bixby Knolls neighborhood of 1940s-era homes in 1996. In 2006, she was thinking about selling and moving to the East Coast, to be closer to her son's college. So she refinanced her 30-year fixed-rate mortgage, shifting to an adjustable rate loan and tapping some of her equity to pay for renovations. A few months later, she borrowed against her house again to pay for more home upgrades and to cover her son's tuition. There was one hitch, however: Her loan had an option that allowed her to pay the interest only, but when she did, the unpaid principal was added to her balance. Now her mortgage exceeds the value of her home by about $150,000, and her $3,400-a-month payment is more than an entire two-week paycheck.



OTHER STORIES:

ABC cuts Oscar ad rates - (www.latimes.com) Last year a 30-second commercial could command as much as $1.8 million. Now,...
Better fuel economy of Lexus RX450h doesn't justify the extra cost - (www.latimes.com) But buyers may still be attracted to the luxury crossover, given the...
SAG talks collapse as studios hold firm - (www.latimes.com) After three days, negotiations falter over the start date and duration of the actors' contract. No new...
Westfield malls to cut shopping hours - (www.latimes.com) Most of the centers in the U.S. will open 30 minutes later and close 30...
John Laing Homes files for Chapter 11 - (www.latimes.com) Little demand for new homes knocked the 161-year-old Irvine firm back on its heels, a representative...

BofA's Lewis Subpoenaed, Sees No Nationalization - (www.cnbc.com)
Santelli Leads Trader Mortgage Revolt - (www.cnbc.com)
Poll: Would You Join Santelli's 'Chicago Tea Party'? - (www.cnbc.com)
Analyst Whitney Opposed to Bank Nationalizations - (www.cnbc.com)
Stimulus Plans Delay the Inevitable - (www.cnbc.com)
When Will The Next Bull Market Begin? - (www.cnbc.com)
Wages Tumble as Chinese Workers Hunt Factory Jobs - (www.cnbc.com)
Allen Stanford Found by FBI Agents, Served Papers - (www.cnbc.com)

A Call To Arms Against The Bailout - (www.dailybail.com)
Questioning Obama's Mortgage Bailout Plan - (www.cbsnews.com)
Force Me To Bail Out The Asshats Who Live Next Door? - (www.dailybail.com)
Why Obama's Debtor Rescue Is Bound to Fail - (blogs.wsj.com)

How can we stop government debt-mongering? - (patrick.net)
There Are Banks Who Reject TARP Money - (nalert.blogspot.com)
VC Warning to CEOs - (www.patrick.net)
Stanislaus Co. leads California in "affordability" - (after 59% crash) - (www.modbee.com)
Commercial real estate's crisis point approaching? - (www.signonsandiego.com)
The Game Of Life! - (ashizashiz.blogspot.com)
Trouble even at the VERY high end of the market - (www.dailymail.co.uk)