Wednesday March 4 Housing and Economic stories

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TOP STORIES:

Jobless hit with bank fees on benefits - (www.latimes.com) For hundreds of thousands of workers losing their jobs during the recession, there's a new twist to their financial pain: Even as they're collecting unemployment benefits, they're paying bank fees just to get access to their money. Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JPMorgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 -- even though they could decline charges for more than what's on the card. "It's a racket. It's a scam," said Rachel Davis, a 38-year-old dental technician from St. Louis who was laid off in October. Davis was given a MasterCard issued through Central Bank of Jefferson City and recently paid $6 to make two $40 withdrawals. The banks say their programs offer convenience. They also provide at least one way to tap the money at no charge, such as using a single free withdrawal to get all the cash at once from a bank teller. But the banks benefit from human nature, as people end up treating the cards like all the other plastic in their wallets. The fees are raising questions from lawmakers who just recently voted to infuse banks with taxpayer money to keep them afloat. Rep. Carolyn Maloney, D-N.Y., a member of the House Financial Services Committee, said the situation points to "yet another example of how we need to regulate the ways in which banks charge overdraft and other fees." "Banks, particularly ones that have received federal help, should not be imposing endless fees and charges on the unemployed in this time of economic crisis," said Maloney, who has written a bill to require that consumers be notified at the point of sale if they're about to incur overdraft fees. Some banks, depending on the agreement negotiated with each state, also make money on the interest they earn after the state deposits the money and before it's spent. The banks and credit card companies also get roughly 1 to 3 percent off the top of each transaction made with the cards. Neither banks nor credit card companies will say how much money they are making off the programs, or what proportion of the revenue comes from user versus merchant fees or interest. It's difficult to estimate the profits because they depend on how often recipients use their cards and where they use them.

Obama and White House Press Secretary Gibbs shamelessly rebukes CNBC's Santelli because he spoke out against housing bill – (www.politico.co) White House Press Secretary Robert Gibbs jumped at the chance Friday to rebuke a CNBC reporter whose attack on President Barack Obama’s anti-foreclosure plan caught fire on the Internet. Gibbs took on CNBC’s Rick Santelli in unusually personal terms after being asked a question about Santelli’s bracing critique during a regular White House briefing. “I’ve watched Mr. Santelli on cable the past 24 hours or so. I’m not entirely sure where Mr. Santelli lives or in what house he lives but the American people are struggling every day to meet their mortgages, stay in their jobs, pay their bills, send their kids to school,” Gibbs said. “I think we left a few months ago the adage that if it was good for a derivatives trader that it was good for Main Street. I think the verdict is in on that,” the press secretary said, poking directly at the cable journalist, who reports from the trading floor at the Chicago Mercantile Exchange. Gibbs insisted Santelli was misinformed when he said Obama’s program would amount to a transfer of money from prudent taxpayers to those who had taken reckless risks.

Santelli Responds to White House Criticism - (www.cnbc.com) Santelli responds to White House Press Secretary Gibbs.
Becky Quick: Rick Santelli Gains Rockstar Net Status - (www.cnbc.com)

California Offers Its Own Homebuyer Tax Credit - (www.cnbc.com) Clueless politicians in California continuing to do things that will create excess inventory and to pay back political donations from the homebuilders. All this will do is keep the game going a little longer. California lawmakers have approved a $10,000 homebuyer tax credit, throwing a juicy bone to homebuilders disappointed by the federal stimulus bill. The credit, approved Thursday, applies to newly constructed, previously unoccupied homes and is available for a year starting March 1, or until the $100 million earmarked for it is drawn down, according to the California Building Industry Association. "It's a $100 million 'gimme' to someone," said Fox-Pitt analyst Robert Stevenson. "The builders' lobby seems to be much more effective in California than it is in Washington." The credit will provide a near-term boost to builders, but does nothing to address the underlying problem of excess housing supply, Stevenson said. "No game changers here," said Citi analyst Josh Levin, who puts the U.S. stock of excess homes at about 2 million. "There's no dial that someone in Washington can twist. These are deep, systemic problems."

Don't Panic, This Decline Is Different! - (www.cnbc.com) Anxiety about the state of our banking system has sent investors scrambling every which way. But this decline in stocks may be different. "The stock market wants to know what’s going on with the banks and it appears it’s willing to go as low as it has to go to get an answer," explains Dylan Ratigan. Although the White House says they strongly believe a privately held banking system is the way to go -- investors don't buy it, entirely. It's true the comments helped lift the Dow and S&P off their lows, but investors still clobbered shares of Bank of America and Citigroup; in fact this is the sixth day in a row that investors have pummeled these stocks. "It's a clear sign that the markets are expecting a high probability of them being nationalized," says Mike Holland, founder of Holland & Co. "The clear expectation is that shareholders would effectively be wiped out."

Lebanon central bank chief got it right - (www.latimes.com) Riad Toufic Salame bucked pressure in 2005 and kept Lebanese banks from investing in mortgage-backed securities. Now the sector is prospering amid the global downturn. Reporting from Beirut -- Throughout history, men braved the odds to perform great feats. Outmatched generals snatched victory from the jaws of defeat. Titans of industry gambled on bold innovations to reap jackpots. Athletes tested the limits of human endurance in quests for glory. Riad Toufic Salame, the governor of Lebanon's central bank, is not one of those men. Instead, the silver-haired banker became a hero by playing it very, very safe. In 2005, he defied pressure from the Lebanese business community and bucked international trends to issue what now looks like a prophetic decree: a blanket order barring any bank in his country from investing in mortgage-backed securities, which contributed to the most dramatic collapse of financial institutions since the Great Depression. So as major banks in America and Europe were shuttered or partly nationalized and thousands of people in the U.S. financial sector were laid off, Lebanon's banks had one of their best years ever.

After Losses, a Move to Reclaim Executives’ Pay - (www.nytimes.com) SHOULD executives get to keep lavish pay packages when the profits that generated their compensation go up in smoke? Skip to next paragraphAs the financial crisis deepens, what might have been a philosophical question is now the topic of the day. With losses mounting at the nation’s largest financial institutions, years of earnings have been erased, investors have lost billions, thousands of employees have been let go, and taxpayers have been tapped to rescue the financial system. But executives who helped set the problems in motion, or ignored them as they mounted, are still doing fine. Humbled, perhaps, but well paid for their anguish. Executives at seven major financial institutions that have collapsed, were sold at distressed prices or are in deep to the taxpayer received $464 million in performance pay since 2005, according to an analysis performed for The New York Times. Almost half of that consisted of cash compensation. Yet these firms have reported losses of $107 billion since 2007, a result of their own missteps and the ensuing economic downturn. And $740 billion in stock market value has been lost since these companies’ shares peaked in 2007, just before the housing bubble burst. Against that landscape, a growing chorus is demanding that executive compensation snared shortly before problems emerged be given back.

Joblessness takes a toll on the soul - (www.latimes.com) For more than 17 years, Yvonne Nance knew just who she was -- the helpful voice at the other end of the line when people called AT&T for directory assistance. That ended in December, when AT&T Inc. informed the 47-year-old mother of four that she was among 12,000 workers being cut from the telecom giant's payroll. "Right now, I don't feel so good about myself," Nance said. "I've always had a job. I've never been laid off from a job. Some days, I don't even want to get out of bed." The statistics are alarming: Nearly 2 million people have lost their jobs in the last three months, almost 600,000 in January alone. The national unemployment rate has reached 7.6%. In California it's 9.3%. But the numbers are only half the story. The other half is what happens to people and families when a job disappears. The psychological and emotional toll can be devastating. "Our culture is based on what people do and how much they make," said Sharon Tucker, an L.A. psychologist who says an increasing number of her clients are dealing with layoff-related issues. "For a lot of people, being laid off means your identity has been taken away."



OTHER STORIES:

Carmakers seek Canada aid - (www.ft.com) Request doubles earlier aid estimate
Hummer beginning to run out of road - (www.ft.com)
Saab left in the cold as GM cuts it adrift - (www.ft.com)
Dow sinks to 7,365 -- the lowest point of the current bear market - (www.latimes.com) The blue-chip index falls 100 points amid vagueness about financial rescue plans...
Oregon Bank Is 14th Bank to Fail in 2009 - (www.cnbc.com)

Obama Tells Treasury to Begin Tax Cuts - (www.cnbc.com)
No Patience, Some Hope. . . Looking for a Bottom - (www.cnbc.com)
European Leaders Agree to Crack Down on Tax Havens - (www.cnbc.com)
Yahoo May Announce Major Overhaul This Week: Report - (www.cnbc.com)
UAE Throws Dubai a $10 Billion Lifeline - (www.cnbc.com)

Gold Tops $1,000, Highest Since March, as Global Equities Slide - (www.bloomberg.com)
Growing Worry on Rescue Takes a Toll on Banks - (www.nytimes.com)
Bear Market's Bite Could Go Deeper - (www.washingtonpost.com)
Madoff Never Made Supposed Investments - (www.nytimes.com)
Soros sees no bottom for world financial "collapse" - (www.reuters.com)
Support Urged for Eastern Europe - (www.washingtonpost.com)
U.S. Lawmakers Clash Over Nationalizing Banks to Stem Declines - (www.bloomberg.com)
Fraud Case Shakes a Billionaire’s Caribbean Realm - (www.nytimes.com)
Madoff Left No Sign of Trades Reported to Clients, Trustee Says - (www.bloomberg.com)

Geithner, Summers Meet With Auto Task Force - (www.cnbc.com)
The Week: Stone Cold, Except for Gold - (www.cnbc.com)
Soros Sees No Bottom for World Financial "Collapse" - (www.cnbc.com)
Madoff Trustee: No Securities Bought in 13 Years - (www.cnbc.com)
Morgan Stanley to Pay Up to $3 Billion to Keep Brokers - (www.cnbc.com)

When Consumers Cut Back: A Lesson From Japan - (www.nytimes.com)
Fraud Case Shakes a Billionaire’s Caribbean Realm - (www.nytimes.com)
Fears rise over Russia’s foreign debt - (www.ft.com)