Thursday March 26 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Pakistan storms closer to civil breakdown - (www.ft.com) ftikhar Mohammad Chaudhary’s return as chief justice of Pakistan’s Supreme Court, two years after his dismissal by Pervez Musharraf, the then military ruler, will be seen as a triumph by the opposition lawyers and activists involved in protests on his behalf. Asif Ali Zardari, the president who is under growing pressure from Pakistan’s military as well as foreign partners, notably the US, has finally given the green light to the reinstatement. The move followed a day of violence in Lahore, the country’s second largest city and Pakistan’s political nerve centre, where Nawaz Sharif, the former prime minister, led anti-government protests. The mayhem seems to have convinced Mr Zardari of his limited choices – to allow Mr Chaudhary’s return or witness the erosion of his government, with the outside chance of eventual military intervention. The clashes between demonstrators and police, before another protest planned for Monday in Islamabad, the capital, were compared by opposition leaders to Ukraine’s Orange Revolution of 2004, which forced the reversal of a disputed election.

Texas teacher pension shortfall is billions worse than expected - (www.star-telegram.com) - The Teacher Retirement System of Texas has sustained investment losses that were billions of dollars more than expected, according to a newly released valuation. On Friday, state lawmakers were soberly assessing the report, which showed that the pension’s unfunded liabilities have more than tripled in six months, to $40.4 billion from $11.5 billion. That shortfall will eventually have to be made up, or in the long term the pension won’t be able to meet its obligations to all its members. Overall, from Aug. 31 to Feb. 28, the fund’s value declined about 32 percent, the report states. The news shatters hopes for a cost-of-living adjustment for hundreds of thousands of retired Texas public school employees. What’s more, lawmakers will be forced to consider increasing contributions from active members and from the state to shore up losses, one key lawmaker said. "Candidly, I’m not optimistic," said state Rep. Vicki Truitt, R-Keller, chairwoman of the House Pensions, Investments and Financial Services Committee. "My No. 1 goal is to preserve and grow this fund so it will be here for the members," she said after the report was released. "We’re just in a very difficult time right now." Pension officials warned legislators for weeks that fund values had dropped significantly. The expectation was that the fund’s value had fallen to $80 billion, from about $104.9 billion last year. So the current estimate was shocking to many. "I didn’t know it was going to be that bad," said state Rep. Marc Veasey, D-Fort Worth, who is also a member of the Pensions and Investments Committee.

Bankruptcy judge opens door to employee contracts being voided - (www.timesheraldonline.com) - A bankruptcy judge has ruled that the city of Vallejo may be able to void contracts with two key employee groups as a way to escape bankruptcy and looming deficits. Stopping short of ordering the contracts voided, however, U.S. Bankruptcy Judge Michael McManus urged both sides to continue to try to settle the wage-and-benefit dispute before he intervenes. He set a further hearing for March 23. McManus, in an 11-page ruling issued late Friday, held that neither state labor laws nor a 1979 state Supreme Court ruling in a Sonoma County case prevents the federal bankruptcy court from setting aside the city's contracts with firefighters and electrical workers. Mayor Osby Davis said Saturday that he, too, hopes that city and union negotiators will reach a conclusion before the court hearing. "Maybe what the judge's ruling says is it's incumbent upon the unions to sit down and work it out with the city," Davis said. Two months ago, the City Council reached agreements with city police and a union representing management workers that yielded concessions on wages in exchange for contract extensions beyond June 2010. But the International Association of Firefighters, Local 1186, and the International Brotherhood of Electrical Workers, Local 2376, have not yet settled with the city. "I am hopeful that the court's opinion regarding the law will be a factor that would cause the unions to sit down and work out a solution," Davis said. "I would be foolish to say that the same terms would be available to the remaining unions as to the first unions. The sooner we get to the table the better it is for our labor groups." Davis noted that the worsening economy paired with continued court challenges from the union have resulted in a financial "double whammy." "We need to stop spending money in bankruptcy court so we can start talking about contract resolution," the mayor said.

Getty slashes its budget after severe losses - (www.latimes.com) The J. Paul Getty Trust, envied as the economic Goliath of the museum world, is cutting its operating budget nearly 25 percent for the coming fiscal year -- an emergency response to investment losses that have totaled $1.5 billion since July and nearly $2 billion since mid-2007. President James Wood said the financial stability of the Getty, the world's richest arts institution, could "fall off a huge cliff" if it delayed drastic cuts and hard times continue. The Getty relies almost exclusively on investment earnings to cover expenses for its two Los Angeles art museums as well as the research, art-conservation and grant-making operations that extend the trust's reach around the world. Its investment portfolio dropped 25 percent during the last half of 2008, from $6 billion to $4.5 billion. That still dwarfs the $2.1-billion endowment of New York's Metropolitan Museum of Art, which announced plans Thursday to lay off 10 percent of its work force, partly because of an endowment loss approaching 28 percent. The reductions at the Getty should focus on operations that can easily expand again, Wood said Friday. Cuts may well be in store for temporary exhibitions, which have totaled more than 20 a year. The Getty also might defer buying new works for its collections of ancient art, European art from before the 20th century, illuminated manuscripts and photography.

Second homes, investment properties could get Fannie, Freddie refis - (www.latimes.com) The mortgage lenders' mass refinancing programs go beyond owner-occupied primary residences. Fannie Mae and Freddie Mac have published the rules governing their upcoming mass refinancing campaigns, and they're more favorable -- especially for owners of second homes and small investment properties -- than indicated by the White House and Treasury last month. Although initial reports suggested that the refis would be for owner-occupied primary residences, the information sent to lenders March 4 by Fannie and Freddie says second homes and small rental properties are eligible, provided their mortgages already are in the companies' portfolios or securitizations and have been paid on time. Brad German, a spokesman for Freddie Mac, said second homes and investment properties with one to four units are important because they may "help stabilize neighborhoods and housing markets." Refinancing investor-owned rental units, he added, can "help reduce renter evictions by putting landlords in a refi that improves their chance of success." Under both companies' new programs, which are being undertaken at the behest of the Obama administration, an estimated 4 million to 5 million owners whose mortgages are held by Fannie and Freddie will be eligible for refinancing to lower rates even though they'd normally not qualify because of property value declines. Applications are being taken by participating lenders now, though no loans are scheduled for funding by Fannie or Freddie until early April.

Merkel tips Brown's grand plan into crisis - (www.independent.co.uk) - Gordon Brown's grand plan to save the global economy was in crisis last night when the German Chancellor, Angela Merkel, refused to commit to a new global fiscal stimulus package to steer the world out of recession. In a pointed warning to the Prime Minister, the German leader said it was too early to measure the effects of the first multibillion-dollar stimulus to give the go-ahead for any more state aid. Mrs Merkel was backed up by Christine Lagarde, the French Finance Minister, who said nations needed to assess the impact of earlier measures before making any further tax and spend decisions. Mrs Merkel's remarks, made in a press conference alongside Mr Brown after talks in Downing Street, cast a shadow over yesterday's G20 meeting of finance ministers in Horsham, West Sussex, and Britain's attempts to secure a lasting rescue plan in the wake of the world's worst economic crisis since the 1930s. France and Germany, two of Europe's largest economies, are reluctant to back the moves, instead calling for tougher financial regulation.

Madoff Had Accomplices: His Victims - (www.nytimes.com) Sorry, but I do not believe these guys should be receiving any SIPC money. This was a private hedge fund only open to a select group of “privileged” Jewish investors. It was not paying into SIPC funds, so should not qualify. Standing in the security line Thursday morning, waiting to get into the federal courthouse in Manhattan, I started chatting with the man behind me. He looked to be in his early 60s, and though he was well dressed, he looked a little haggard. I asked him if he was a victim of Bernard L. Madoff, who would soon be pleading guilty to masterminding the greatest Ponzi scheme in history. He said he was. Skip to next paragraphDid he want to talk about it? He wasn’t sure, he said. I asked his name. “I’m not going to give my name unless there is some benefit for me,” he said dourly. “I haven’t had too many benefits lately.” How much had he lost? I asked. He grimaced. “I don’t really want to say,” he replied, but conceded that it was a lot. What was he hoping for today? He shrugged. As we passed through security, I asked him what role he thought the government should be playing. It was as if I had flipped a switch. Suddenly, his reticence fell away. “The S.E.C.,” he said, referring to the Securities and Exchange Commission, which muffed multiple opportunities to catch Mr. Madoff, “they played a big role in this. They have a lot to answer for.” He said that the tax code should be changed so that Madoff victims can recoup taxes they paid on profits that turned out to be illusory — no matter how far in the past those taxes were paid. He thought the Securities Investor Protection Corporation, which tries to put at least a little money in the hands of investors whose firms have gone under, should give victims more than the current $500,000 maximum. “I think there should be some legislation,” he said finally. What kind of legislation? What he was hoping for, he said, was that the government would set up a fund for Madoff victims — maybe give them 60 percent of their losses, he suggested. We turned a corner, and saw a long line of people waiting for a spot in the courtroom — far more people, it was obvious, than could ever fit in the chambers. (There was a large overflow room, where I watched the proceedings.) Most of them were holding notebooks; this was clearly the media line. “Is there a line for the victims?” the man asked the marshal.

AIG's bonus round - (www.marketwatch.com) American International Group is set to pay $450 million of bonuses to employees of the unit that was largely responsible for the New York insurer's near collapse last fall. The decision to pay bonuses elicited howls of protest in Washington, which has prevented the failure of AIG by providing the insurer with more than $173 billion in aid. The federal government now owns 80% of AIG. Larry Summers, one of President Barack Obama's top economic advisers, called the payments "outrageous," and a key House lawmaker, Barney Frank, D.-Mass., told Fox News that the government should examine whether the bonuses are "legally recoverable." Another Democrat, Rep. Elijah Cummings, D.-Md., renewed his call for AIG Chief Executive Edward Liddy to resign. Liddy, in a letter to Treasury Secretary Timothy Geithner dated Saturday, said AIG had committed to paying the bonuses to employees of the financial-products unit and that they were "binding obligations" the company cannot legally rescind. The first payments are due March 15. "I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them," wrote Liddy, citing the recommendation from the insurer's legal counsel. The payments to 400 employees of the financial-services unit -- some of whom no longer work at the insurer -- were promised last year before the federal government bailout. Bonuses range from as little as $1,000 to as much as $6.5 million.

Police Stress Deterrence Measures as Bank Robberies Surge in the City - (www.nytimes.com) - Police Commissioner Raymond W. Kelly has expressed concern over the frequency of bank robberies and the seeming ease in carrying them out, particularly at certain branches. He met in January with executives of major banks to push a set of “best practices” for security that were developed in 2003, during the last wave of robberies. Inspector Neacy, who commands the Major Case Squad, has followed up with branch managers



OTHER STORIES:

Ailing AIG stands by need for bonuses - (www.latimes.com) Treasury Secretary Timothy Geithner initially objected to the $165 million in payments but agreed the...
How could savvy investors have been fooled by Madoff? Easy - (www.latimes.com) I have a confession to make:
Bill would limit loan, credit card rates - (www.latimes.com) Since the beginning of the year, millions of credit card customers have been hit...
Stimulus scams are flourishing on the Web - (www.latimes.com) No sooner is one bogus grant site suppressed than another pops up, warns an...
Payment default not required to get mortgage aid - (www.latimes.com)

Treasury soon to offer details on toxic-asset plan - (www.reuters.com)
G-20 Pledges to Restore Growth, Tackle Toxic Assets - (www.bloomberg.com)
Economic Advisers Warn of No Quick Turnarounds - (www.nytimes.com)
California Teachers Rally as 26,000 Job Cuts Loom - (www.bloomberg.com)
As Oil and Gas Prices Plunge, Drilling Frenzy Ends - (www.nytimes.com)
Treasury Demands AIG Cut Bonuses as $165 Million Payment Looms - (www.bloomberg.com)
Three Wise Men Offer Three Takes On Markets - (www.washingtonpost.com)

Is US Debt Still Desirable to China? - (www.cnbc.com)
Bernanke Sees US Recovery Beginning in 2010 - (www.cnbc.com)
AIG's Millions in Bonuses Set Off Political Firestorm - (www.cnbc.com)
AIG Bailout Benefited Big European Banks - (www.cnbc.com)
BOJ Mulls Capital Support Steps for Banks - (www.cnbc.com)
OPEC Keeps Output Steady, Will Meet Again in May - (www.cnbc.com)
Oil Falls by $2 as OPEC Opts Against Output Cut - (www.cnbc.com)
G20 Offers No Magic Bullet to Fix Financial Crisis - (www.cnbc.com)