Monday March 30 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Video: The Obama Deception - (bullnotbull.blogspot.com)
House Passes Volunteerism Bill Critics Call Pricey, Forced Service - (www.foxnews.com) The House of Representatives passed a measure Wednesday that supporters are calling the most sweeping reform of nationally-backed volunteer programs since AmeriCorps. But some opponents are strongly criticizing the legislation, calling it expensive indoctrination and forced advocacy. The Generations Invigorating Volunteerism and Education Act, known as the GIVE Act -- sponsored by Reps. Carolyn McCarthy, D-N.Y, and George Miller, D-Calif. -- was approved by a 321-105 vote and now goes to the Senate. The legislation, slated to cost $6 billion over five years, would create 175,000 "new service opportunities" under AmeriCorps, bringing the number of participants in the national volunteer program to 250,000. It would also create additional "corps" to expand the reach of volunteerism into new sectors, including a Clean Energy Corps, Education Corps, Healthy Futures Corps and Veterans Service Corps, and it expands the National Civilian Community Corps to focus on additional areas like disaster relief and energy conservation. It is the first time the AmeriCorps program, which was created by President Clinton in 1993, will be reauthorized, and supporters say it will have additional funding to match the renewed interest in national service since President Obama's election and the acute need for volunteerism and charity in tough economic times.

Dodd Blames Obama Administration for Bonus Amendment – (www.bloomberg.com) Senate Banking Committee Chairman Christopher Dodd said the Obama administration asked him to insert a provision in last month’s $787 billion economic- stimulus legislation that had the effect of authorizing American International Group Inc.’s bonuses. Dodd, a Connecticut Democrat, said yesterday he agreed to modify restrictions on executive pay at companies receiving taxpayer assistance to exempt bonuses already agreed upon in contracts. He said he did so without realizing the change would benefit AIG, whose recent $165 million payment to employees has sparked a public furor. Dodd said he had wanted to limit executive compensation at companies that got money from the government’s financial-rescue fund. AIG has received $173 billion in bailout money. His provision was changed as the stimulus legislation was negotiated between the House and Senate. “I did not want to make any changes to my original Senate-passed amendment” to the stimulus bill, “but I did so at the request of administration officials, who gave us no indication that this was in any way related to AIG,” Dodd said in a statement released last night. “Let me be clear -- I was completely unaware of these AIG bonuses until I learned of them last week.” He didn’t name the administration officials who made the request.

4 Fannie Execs Each to Get $400K in Govt.-Okayed Bonuses – (www.washingtonpost.com) At least four Fannie Mae executives are slated to receive more than $400,000 in bonuses each this year as a result of the company's government-approved retention program, The Post's Zach Goldfarb reports. The executives include chief operating officer Michael Williams ($611,000), deputy chief financial officer David Hisey ($517,000), and executive vice presidents Thomas Lund ($470,000) and Kenneth Bacon ($470,000). Each of these executives earned about $200,000 in retention payments last year and salaries ranging from $385,000 to $676,000. Fannie Mae's chief executive, Herbert M. Allison, did not receive any salary or retention payments. He received $60,000 in compensation related mostly to reimbursements. Fannie Mae, which suffered $59 billion in losses last year, has requested $15 billion in taxpayer assistance, and has said it expects to need plenty more. All major compensation decisions are authorized by Fannie Mae's federal regulator, the Federal Housing Finance Agency, which created a retention program when the company was seized last September to hold on to key employees.

Global Pros Say: U.S. Is Now 'Bankrupt' - (www.cnbc.com) Global stocks traded higher, as did the dollar against the euro, Thursday after the Federal Reserve's surprise announcement it would buy $300 billion in US Treasurys in order to help the ailing economy. But experts tell CNBC they have concerns over the Fed's latest move and that the current national balance sheet is a disaster. US is Already 'Bankrupt': Technically, the U.S. is already "bankrupt" because it has a debt that is almost four times the size of its economy, says Puru Saxena, CEO of Puru Saxena Wealth Management. He tells CNBC that the U.S. is at risk of hyperinflation. Fed to Buy Treasurys is Not a Good Sign : Stephen Roach, chairman for Asia at Morgan Stanley does not view the Fed's plan to buy $300 billion worth of long-dated government debt as a constructive sign for prospects going forward. Fed's Move Unlikely to Help Economy: The Fed pumping money into Treasurys won't help, says Martin Weiss, president of Weiss Research. He also discusses what can be done to turn the US economy around.


Auto suppliers to get $5B in aid - (www.usatoday.com) The Treasury Department on Thursday pledged to provide up to $5 billion in financing support to auto suppliers to help them survive a massive downturn in car sales.
The Treasury said the program, run through key participating U.S. auto companies, will provide government guarantees to suppliers to ensure they will receive payment for products shipped, no matter what happens to the recipient car manufacturer. Participating suppliers also will be able to sell receivables into the government program at a modest discount, giving them access to desperately needed liquidity and helping to unlock credit more broadly in the supplier industry, the Treasury said.

FDIC's Bair: 'Too Big to Fail' Strategy Must End - (www.cnbc.com) The head of the Federal Deposit Insurance Corporation said Thursday that the government's strategy in the financial crisis of bailing out huge institutions deemed "too big to fail" must be replaced by a new model. FDIC Chairman Sheila Bair told Congress a new system of supervision that prevents institutions from taking on excessive risk and becoming so large their failure would threaten the financial system is needed. A mechanism is needed to resolve troubled financial institutions similar to what the FDIC does with federally insured banks and thrifts, she added. Testifying at a packed Senate Banking Committee hearing, Bair said simply creating a co-called systemic risk regulator —a central idea in the discussion of overhauling the U.S. financial rules—"is not a panacea." Bair appeared with other top regulators to discuss the high-stakes issue of modernizing oversight of the nation's financial institutions amid the crisis gripping the U.S. and the global economies.

Fed to pump nearly $1.2 trillion into the financial system – (www.usatoday.com) The Federal Reserve made it clear Wednesday that it will do whatever it takes to end the worst U.S. downturn since the Great Depression, announcing new plans to pump nearly $1.2 trillion into the financial system, including a historic commitment to buy up to $300 billion in longer-term Treasury securities. As part of its unexpectedly aggressive plan, the Fed also committed to hold a key interest rate essentially at zero "for an extended period" and to buy up to another $850 billion in mortgage-backed securities and debt. The actions could quickly translate into lower borrowing costs for home buyers, homeowners and businesses — and that, in turn, could help get the stalled economy moving again. The Dow Jones industrial average surged 91 points, to 7487, on news of the Fed's actions. Interest rates on Treasuries plummeted, with 10-year notes posting the biggest one-day move in nearly 50 years. The U.S. dollar sank against other currencies, however, as traders worried about the long-term implications of the policies, including possible inflation. Nevertheless, most experts applauded the Fed. "When you have a forest fire, gradualism is not a good idea," said Richard Hoey, chief economist at Dreyfus. "The aggressiveness of the Fed's action is consistent with the view that they understand the risks and have the power to act. This is not Hamlet deciding what to do."

BofA linked to Merrill write-downs – (www.ft.com) Bank of America was directly involved in markdowns that contributed to Merrill Lynch’s $15.3bn loss in the last quarter of 2008, its final reporting period before the Wall Street bank was acquired by BofA, sources familiar with the matter say. Mounting losses at Merrill during December almost derailed the acquisition. Ken Lewis, BofA’s chief executive, threatened to walk away from the deal unless the US government provided $20bn in extra capital. The deal closed on January 1 after federal officials pledged their support.

Investors Request $4.7 Billion in TALF Loans – (www.cnbc.com) The New York Federal Reserve said on Thursday that investors had requested $4.7 billion in the first round of its consumer and small business lending program, far below the $200 billion on offer. Investors requested $1.9 billion of loans to buy securities backed by auto loans and $2.8 billion for loans to buy credit card asset-backed securities. There was no demand for loans for securities backed by student or small business loans in the March 17-19 subscription period for the first round of the Fed's Term-Asset Backed Securities Loan Facility, known by its acronym TALF. The U.S. central bank had pledged to lend up to $200 billion in this month's round and said eventually the program could grow to $1 trillion.

US Is Rushing to Get More Control Of Financial Giants - (www.cnbc.com) The White House and Congress are rushing to write legislation that allows the federal government to take over and unwind the businesses of a large financial institution—such as AIG or Citigroup —the way it now can with commercial banks, CNBC has learned. The regulatory authority—similar to the FDIC’s so-called bridge bank powers—was originally expected to be included in a broader reform package addressing systemic risk. But now it's being crafted as stand-alone legislation in the wake of the public uproar over the AIG executive bonuses. The legislation, being spearheaded by House Financial Services Chairman Barney Frank (D-Mass.) could be ready for mark-up before Congress’ spring recess, which starts April 6, according to a senior Congressional staffer. A public hearing is also expected. “The President has asked us to fast-track,” said the source. “Drafting is going on at both ends of Pennsylvania Avenue.” The President Wednesday referred to the pressing need for such authority “get a proper mechanism in place,” adding he had discussed the issue with Rep Frank. It is unclear who is handling it on the Senate side, but it would presumably come under the portfolio of the Finance Committee, chaired by Chris Dodd (D-Conn.)






OTHER STORIES:

How to Destroy Government in 3 Easy Steps - (www.commondreams.org) Trade War: Mexico Slaps Tariffs on 90 US Products - (www.nytimes.com) Gold Jumps 7% as Fed Stokes Inflation Fears - (www.marketwatch.com) Rambo Fed to Print $Trillions - (www.bloomberg.com) Philly Fed Manufacturing Survey Shrinks for 15th of 16 months - (www.bloomberg.com)Leading Indicators Fall - (www.marketwatch.com)Familes Continue to Cut Back ... Even More - (www.usatoday.com)Frugality is Back in Fashion - (www.thestar.com)

Blockbuster: No Bankruptcy Plans -- Seeking Alpha – (www.seekingalpha.com) Blockbuster (BBI) denies hiring Kirkland & Ellis to explore bankruptcy, and instead K&E's role will be to assist with refinancing. We do have our doubts as usually every K&E involvement ends up in a monthly retainer filed on Whitehall Street, but we'll go with the company on this one. Bloomberg amends its prior release: “We’ve hired them for refinancing and capital raising initiatives,” said Karen Raskopf, a Blockbuster spokeswoman..“We do not intend to file for bankruptcy.” Blockbuster is working with Kirkland and Ellis on refinancing, Raskopf said. The company previously announced plans to fund its own operations through the end of 2009 after two of its credit facilities expire this August, she said. “Balance sheet issues are easily solved with a prepackaged or prearranged bankruptcy,” said Paul Silverstein, a lawyer with Andrews & Kurth LLP, [ed. and a distinguished cigar aficionado in legal circles] who has no connection to Blockbuster. Silverstein, speaking in a phone interview, said operational issues and business problems are less easily solved with such filings.
Citigroup Offers Reverse Split, Defends Office Redo - (www.cnbc.com)
Auto Suppliers to Get $5 Billion in Aid from Treasury - (www.cnbc.com)
Back Taxes Owed By Firms Getting Bailout Money: Lewis - (www.cnbc.com)
Leading Economic Indicators Fall Less Than Expected - (www.cnbc.com)
Spitzer Jumps Into AIG Bonus Furor - (www.cnbc.com)

Oil hits high for 2009 as dollar plunges - (finance.yahoo.com)
Dollar Rally Crumbles as Fed Ramps Up Printing Press - (www.bloomberg.com)
Hedge Funds Lost $25 Billion in February on Recession - (www.bloomberg.com)
Role and value of U.S. dollar set to fall: Asia think tanks - (www.reuters.com)
Mortgage Rates May Fall to Lowest Since WWII on Fed Purchases - (www.bloomberg.com)
More car owners behind on auto loans - (www.usatoday.com)
U.K. Budget Deficit Swells as Recession Pounds Taxes - (www.bloomberg.com)
Canadian Inflation Unexpectedly Accelerates on Gasoline Prices - (www.bloomberg.com)
Iceland cuts base interest rate to 17 percent - (finance.yahoo.com)
China's factories get desperate as orders drop - (finance.yahoo.com)
Americans Getting Jobless Benefits Jump to Record 5.47 Million - (www.bloomberg.com)
Fed to Buy $1 Trillion in Securities to Aid Economy - (www.nytimes.com)
U.S. Leading Economic Indicators Index Fell 0.4% in February - (www.bloomberg.com)
Press Release from the (www.federalreserve.gov) - (www.federalreserve.gov)
Fed to Pump $1.2 Trillion Into Markets - (www.washingtonpost.com)
‘Rambo Fed’ Will Buy Treasuries to Combat Crisis - (www.bloomberg.com)
Philadelphia Area Factories Shrink as Orders Slump - (www.bloomberg.com)
Bernanke's economic strategy: Trillions now, worry later - (www.latimes.com)
Families that cut a little last year are cutting more now - (www.usatoday.com)
FedEx 3Q earnings tumble on weak global economy - (finance.yahoo.com)
A.I.G. Chief Asks Bonus Recipients to Give Back Half - (www.nytimes.com)
Fannie Plans Retention Bonuses As Outlined by the Government - (www.washingtonpost.com)
Why We Need Short-Sellers - (www.forbes.com)
A Defining Moment for Treasury Secretary - (www.nytimes.com)