Friday April 17 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Treasury Looks Set to Extend TARP to Life Insurers - (www.cnbc.com) Treasury appears set to approve the applications for the Troubled Asset Relief Program submitted by some banks and thrifts owned by insurance companies people familiar with the situation tell CNBC. However, the treasury is unlikely at this time to provide tarp funds directly to insurance companies, for which the industry has been lobbying. The Wall Street Journal had earlier reported that the U.S. Treasury Department planned to extend the TARP to certain life insurers. The Treasury is expected to announce within the next several days the inclusion of life insurers that are bank holding companies or own a thrift, the Journal reported on its website. Several life insurers have applied, including Prudential Financial , Hartford Financial Services Group and Lincoln National, the Journal reported. No decisions have been made yet about which applications will be approved, sources told the Journal. Sources told Reuters in February that the Treasury was likely to approve insurers for TARP funds. In recent months, some insurance companies have received approval to acquire banks, paving the way for them to participate in the government's $250 billion capital injection program, which is part of the larger bailout fund. In January, bank regulators approved applications from Hartford and Lincoln to become savings and loan holding companies, which is needed for them to be considered for federal funds.

The bailouts have only one goal: keep rich people from taking losses - (www.sfgate.com) President Obama must stop the bailouts and start the prosecutions. It's time to focus on anti-poverty programs to protect the growing unemployed from hunger and homelessness. Stealth payments to billionaire bondholders must cease immediately. Since the mid-1970s, average Americans' wages have stayed flat when adjusted for inflation. Productivity rose, profits rose, but not wages. To compensate for stagnant wages and the desire to consume more each year, Americans worked more, retired later, spouses went to work, and many burned savings. Then they started borrowing. Debt became America's growth industry. The scheme collapsed because Americans' wages weren't sufficient to pay the interest on existing debts. The only way out of this is to tighten our belts and pay down debt, the opposite of what our bank-owned government is advising. The administration and the banks keep talking about a credit crisis, but there isn't one. Banks are lending. If you want a mortgage and can afford to pay it back, you can borrow at low rates today. You can finance a car at low rates for seven years. But most Americans don't want more debt because it is a debilitating path to poverty. The average American family already pays 14 percent of annual income in interest to banks. To fix this fake crisis, there are fake discussions about what the government must do. The endlessly recycled plan to buy "troubled" assets isn't to get banks lending again, because they haven't stopped lending. The plan seeks for taxpayers to buy worthless assets at high prices to absorb rich investors' losses. That's it. It keeps coming back as a different plan, but with that same goal. There is no goal beyond that one goal: keep rich people from taking losses. Obama and his economic gurus all chant, "Credit is the lifeblood of the economy," but they don't mean credit. They mean debt. Imagine the president saying, "Debt is the lifeblood of our economy. We desperately need to get more American families deeper in debt." That's what he means, and that's what these bailouts hope to do. In a Sept. 14 article in this newspaper, I noted that banks push senators, with the blessing of the administration, to introduce bills that are bailouts, but disguised to appear not to be bailouts. The goal is to accomplish the desired result without risking your bought-and-paid-for representative. Imagine you bet $500,000 on a stock and it dropped to $20,000. If you owned Treasury Secretary Tim Geithner, he'd get on TV and explain that if the government didn't buy your shares for $500,000, the economy would suffer because you couldn't invest anymore. He'd say the "free market" isn't pricing the stock "right," and we have to "help" the market with taxpayer money to make sure you get the "right" price. Bailout psychology is destroying the economy. Banks hold off on foreclosures in the hope of refinancing borrowers into government-backed loans that will almost certainly default - at taxpayer expense. I've talked to ordinary people delinquent on credit cards who put off bankruptcy because they "heard" the president was unhappy with unfair bank practices and "help was coming soon." Millions of homeowners desperate to sell are keeping empty houses off the market waiting for a "rebound," flushing a stream of income down the toilet.

Treasury Says GM, Chrysler Supplier Aid Launched - (www.cnbc.com) The U.S. Treasury said Wednesday that Chrysler and General Motors have launched supplier support programs backed by up to $5 billion in U.S. government funds. The programs will guarantee receivables owed to the auto parts suppliers for any good shipped after March 19. "The U.S. Treasury Department is pleased that both GM and Chrysler have moved quickly to launch supplier support programs," Treasury spokeswoman Jenni Engebretsen said in a statement. "These efforts, backed by U.S. Treasury resources, will help stabilize the auto supply base and restore credit flows in a critical sector that employs more than 500,000 American workers across the country," she said.

Are FHA loans the next housing time bomb? - (moneyfeatures.blogsmoney.cnn.com) As private mortgage lending all but dried up over the past year, the federal government swooped in and repositioned the Federal Housing Administration’s (FHA) insured-mortgage program to pick up a lot of slack. For those who aren’t familiar, the FHA program allows folks with middling credit scores and little down payment to qualify for a loan. However, borrowers must pay an upfront mortgage insurance fee of about 1.5% of the loan amount as well as an ongoing annual fee of 0.5% each month. Over the past year more than one-third of new mortgages are FHA-insured loans, compared to less than 3% at the peak of the real estate bubble. Moreover, in recent Senate testimony the inspector general for Housing and Urban Development said FHA-insured mortgages accounted for about 70% of loan biz in the first quarter. One of the big drivers of the increased FHA presence is the move that raised FHA-insured loan limits to as high as $729,750 in certain high cost markets. That made the program a viable option for plenty more borrowers. But rather than a glowing example of how the federal government can step in and boost an ailing financial market, there’s growing concern that the massive role taken by FHA to buoy the ailing mortgage market, could in fact lead to yet another taxpayer bailout.It turns out that a whole lot of borrowers getting FHA-insured loans can’t make the payments. At the end of February about 7.5% of FHA loans were “seriously delinquent;” up from 6.2% a year ago. (Seriously delinquent = 90 or more days overdue.) Not surprisingly, the reserve fund FHA keeps handy to cover bad loans has been seriously eaten into over the past year: it is down to about $13 billion today, compared to $21 billion a year ago.

FHLB Chairman Quits after Accounting Fraud Approved - (www.seekingalpha.com) When the man in charge of the second largest borrower in the U.S. is willing to lose his job due to his discomfort with the FASB's shift in accounting rules, you can bet that the tragic fallout of all the "market buoying" recent events is only a matter of time. Somehow this noteworthy event, which happened over a week ago, passed substantially unnoticed until Zero Hedge friend Jonathan Weil at Bloomberg dug it up. Charles Bowsher, who was most recently Chairman of the Federal Home Loan Bank System's Office of Finance and previously served as U.S. comptroller general may be the only truly honorable man in the socialist nexus of politics and finance. The reason for his departure from this critical post -- his discomfort in vouching for the banks' combined financial statements. And as Weil puts it succinctly: "Now the question for taxpayers is this: If Charles Bowsher can’t get comfortable with these banks’ financial statements, why should anybody else be?"

Fannie, Freddie Quietly Lift Moratorium on Foreclosures - (www.washingtonindependent.com) A ban on foreclosure sales and evictions from houses owned by mortgage giants Fannie Mae and Freddie Mac, which began as a high-profile effort just before the holidays to keep people in their homes as the government tried to come up with homeowner rescue plans, is over. Spokesmen for Fannie Mae and Freddie Mac confirmed the ban ended March 31, in a response to an inquiry from TWI. The agencies made a major announcement in November to roll out the ban, garnering headlines and extensive news coverage. Freddie Mac CEO David Moffett issued a statement at the time, saying the ban “provides a new measure of certainty” to families facing foreclosures during the holidays. But its expiration didn’t seem to merit the same level of fanfare, with some housing advocates caught by surprise, scrambling for information today and Wednesday on listservs and in phone calls. Danilo Pelletiere, research director for the National Low Income Housing Coalition, said the ban’s eventual expiration wasn’t unexpected - but it also wasn’t clear specifically when it was supposed to end. Some housing attorneys and advocates were confused because they were in the middle of cases that would be affected by the expiration. Fannie and Freddie have repeatedly extended the ban, which was originally expected to expire on Jan. 9. Fannie Mae said in a brief statement from spokesman Brian Faith that “Fannie Mae’s suspension of foreclosure-related evictions concludes as of March 31, 2009. The company has in place special foreclosure sale requirements that take into account the Making Home Affordable program. A foreclosure sale may not occur on any Fannie Mae loan until the loan servicer verifies that the borrower is ineligible for a Home Affordable Modification and all other foreclosure prevention alternatives have been exhausted.”

Madoff's house in Florida lost almost $2M in value - (www.news.yahoo.com) Even Bernie Madoff isn't exempt from the real estate slump. The Florida mansion that prosecutors seized from the Wall Street swindler appears to have lost a big chunk of its value sincePalm Beach County officials assessed its worth last year at $9.3 million. A new appraisal that federal officials had done in March pegged the property's likely market price at $7.45 million. Prosecutors disclosed in a court filing Thursday that Madoff and his wife tentatively agreed to let the government sell off the waterfront Palm Beach home while the courts decide how much of the family's fortune should be forfeited and distributed to victims of his Ponzi scheme. The planned seizure was accelerated, however, because of the hefty cost of maintaining the five-bedroom home and legal complications created by a competing claim to Madoff's assets posed by a lawsuit inConnecticut. Federal marshals seized the house Wednesday, along with a vintage, 55-foot yacht called Bull, docked in Fort Lauderdale, Fla., and a 24-foot motorboat.

Estimated U.S. taxpayer cost for bailout jumps - (www.reuters.com) U.S. congressional budget analysts have raised their estimate of the net cost to taxpayers for the government's financial rescue program to $356 billion, an increase of $167 billion from earlier estimates. The Congressional Budget Office had originally projected the $700 billion Troubled Asset Relief Program would cost taxpayers $189 billion. The additional cost, which applies to TARP spending for fiscal years 2009 and 2010, was included in the CBO's March projection of a $1.8 trillion deficit for fiscal 2009, which ends September 30. The TARP cost projection was raised due to changes in financial market conditions, new transactions and a shift in expected timing of payments, the CBO said.



OTHER STORIES:

Best Way to Rob a Bank Is to Own One - (www.pbs.org)
Government opposed to families' enjoying lower house prices - (www.cnn.com)
Appraisers struggle to keep lying about house values - (www.ajc.com)
Banks Encouraged to Fraudulently Price Their Assets - (www.nytimes.com)
Fannie, Freddie worker bonuses total $210M - (news.yahoo.com)

Aid to Borrowers Not Preventing Rising Delinquency - (www.washingtonpost.com)
Report finds U.S. mortgage problems increasing - (www.sfgate.com)
This housing correction has a way to go yet - (www.independent.co.uk)
Why lower interest rates won't lead to higher house prices - (www.interest.co.nz)
The real unemployment rate: 15.6% - (articles.moneycentral.msn.com)
Experts brace for new wave of foreclosures - (www.mydesert.com)
Dangerous Real Estate Investing Myths - (www.marketoracle.co.uk)
Geithner's Fecal Recycling Plan Nixed By Big Fund - (www.nypost.com)
Here's A Better Plan: Bite the Bullet - (www.seekingalpha.com)
Why Creditors Should Suffer, Too - (www.nytimes.com)
Gains get reported, losses get ignored! - (www.patrick.net)
Who Owns the World - Largest Landowner - (www.whoownstheworld.com)

Jobs continue to evaporate, eliminating more buyers - (www.biz.yahoo.com)
Consumers fall behind on loans at record rate - (www.usatoday.com)
On Bubbles And Depressions - (www.seekingalpha.com)
Loan losses may exceed Great Depression levels - (www.bloomberg.com)
US Recovery Is Far Off: Soros - (www.cnbc.com)
Analysis of Case-Shiller Price Data - (www.theaffordablemortgagedepression.com)
Lies, Damned Lies, and Housing Statistics - (www.debtdeflation.com)
How to Clean a Dirty Bank - (www.nytimes.com)

Did anyone care about those harmed by bubble prices? - (www.scoop.co.nz)
Two Documents To Understand the Crisis - (www.huffingtonpost.com)
Bill Moyers interview of Bill Black as video - (www.pbs.org)
Benefits of Single-Payer Health Care - (www.phimg.org)
Communities Printing Own Money To Keep Cash Flowing - (www.huffingtonpost.com)