Monday April 6 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Rahm Emanuel Made $320,000 for 14-month Stint at Freddie Mac - (www.chicagotribune.com) Before its portfolio of bad loans helped trigger the current housing crisis, mortgage giant Freddie Mac was the focus of a major accounting scandal that led to a management shake-up, huge fines and scalding condemnation of passive directors by a top federal regulator. One of those allegedly asleep-at-the-switch board members was Chicago's Rahm Emanuel—now chief of staff to President Barack Obama—who made at least $320,000 for a 14-month stint at Freddie Mac that required little effort. As gatekeeper to Obama, Emanuel now plays a critical role in addressing the nation's mortgage woes and fulfilling the administration's pledge to impose responsibility on the financial world. Emanuel's Freddie Mac involvement has been a prominent point on his political résumé, and his healthy payday from the firm has been no secret either. What is less known, however, is how little he apparently did for his money and how he benefited from the kind of cozy ties between Washington and Wall Street that have fueled the nation's current economic mess. Though just 49, Emanuel is a veteran Democratic strategist and fundraiser who served three terms in the U.S. House after helping elect Mayor Richard Daley and former President Bill Clinton. The Freddie Mac money was a small piece of the $16 million he made in a three-year interlude as an investment banker a decade ago. In business as in politics, Emanuel has cultivated an aggressive, take-charge reputation that made him rich and propelled his rise to the front of the national stage. But buried deep in corporate and government documents on the Freddie Mac scandal is a little-known and very different story involving Emanuel. He was named to the Freddie Mac board in February 2000 by Clinton, whom Emanuel had served as White House political director and vocal defender during the Whitewater and Monica Lewinsky scandals. The board met no more than six times a year. Unlike most fellow directors, Emanuel was not assigned to any of the board's working committees, according to company proxy statements. Immediately upon joining the board, Emanuel and other new directors qualified for $380,000 in stock and options plus a $20,000 annual fee, records indicate.On Emanuel's watch, the board was told by executives of a plan to use accounting tricks to mislead shareholders about outsize profits the government-chartered firm was then reaping from risky investments. The goal was to push earnings onto the books in future years, ensuring that Freddie Mac would appear profitable on paper for years to come and helping maximize annual bonuses for company brass. The accounting scandal wasn't the only one that brewed during Emanuel's tenure. During his brief time on the board, the company hatched a plan to enhance its political muscle. That scheme, also reviewed by the board, led to a record $3.8 million fine from the Federal Election Commission for illegally using corporate resources to host fundraisers for politicians. Emanuel was the beneficiary of one of those parties after he left the board and ran in 2002 for a seat in Congress from the North Side of Chicago.

MGM Vegas Project Considers Bankruptcy: Report - (www.cnbc.com) City Center, an $8 billion Las Vegas project owned by MGM Mirage and Dubai World, has hired counsel to advise on a possible bankruptcy filing, the Wall Street Journal reported on Thursday, citing people familiar with the matter. The casino operator, controlled by billionaire Kirk Kerkorian, and its joint venture partner Dubai World are likely to struggle to pay $220 million due Friday on CityCenter, the newspaper said. When contacted by Reuters, a spokeswoman for MGM Mirage declined comment. CityCenter has hired Dewey & LeBoeuf to prepare for a possible Chapter 11 filing as soon as this weekend, depending on the outcome of talks between MGM Mirage, the lenders and Dubai World, the people told the WSJ.
Dubai World said on Monday it sued MGM over the CityCenter development, asking Delaware Chancery Court to find that some financial disclosures in a recent MGM filing constitute events of default under the joint venture.

Brown ‘Terribly Fragile’ After Bond Auction Flops – (www.bloomberg.com) The first failed British bond auction in more than seven years leaves Prime Minister Gordon Brown’s reputation for economic competence even more tarnished as he battles recession and a rising tide of voter anger. Brown, who had the backing of 30 percent of the electorate in a ComRes Ltd. poll last week, must now cope with what amounts to a vote of no confidence by investors in his ability to end the recession. Bank of England Governor Mervyn King, his ally for much of the past decade, warned a day earlier that there’s no more money for further spending. “The notion that Brown is leading us to the promised land is laughable,” said Ruth Lea, economic adviser to the Arbuthnot Banking Group Plc in Solihull, England. “He cannot get to grips with how other people see this country now, as the sick man of Europe.” Chancellor of the Exchequer Alistair Darling brushed aside concerns about the gilt auction, noting that a sale of bonds today was fully covered. “You always have to be careful about reading too much into one particular auction,” Darling said in response to a question in Parliament in London today. He also signaled a limit to more stimulus, saying “we have to have a sustainable position.”

A Surge in Shantytowns Across the Land - (www.nytimes.com) As the operations manager of an outreach center for the homeless here, Paul Stack is used to seeing people down on their luck. What he had never seen before was people living in tents and lean-tos on the railroad lot across from the center. “They just popped up about 18 months ago,” Mr. Stack said. “One day it was empty. The next day, there were people living there.” Like a dozen or so other cities across the nation, Fresno is dealing with an unhappy déjà vu: the arrival of modern-day Hoovervilles, illegal encampments of homeless people that are reminiscent, on a far smaller scale, of Depression-era shantytowns. At his news conference on Tuesday night, President Obama was asked directly about the tent cities and responded by saying that it was “not acceptable for children and families to be without a roof over their heads in a country as wealthy as ours.” While encampments and street living have always been a part of the landscape in big cities like Los Angeles and New York, these new tent cities have taken root — or grown from smaller enclaves of the homeless as more people lose jobs and housing — in such disparate places as Nashville, Olympia, Wash., and St. Petersburg, Fla.

Violence in Chicago - Against Privatized Parking Meters - (www.cbs2chicago.com) They are taking more of your quarters every day. And Chicagoans are in revolt. While some are saying enough by avoiding them, others are taking out their frustrations on the parking meters - literally! CBS 2 Chief Correspondent Jay Levine reports with the anger behind the new meter rate increases. You think eight is enough? How about 12? That's how many quarters buy an hour of parking time in some places now. And its why some people have had enough. Near Broadway and Addison, meter after meter are broken. "I called the company and I said I don't want a ticket," one woman said. LAZ is a Chicago company which collects the money for the New York owner which paid the city $1.2 billion to lease the city's 36,000 meters for 75 years. They've pasted new stickers on them, doubled the rates to as much as a quarter for five minutes in the Loop. That's $3 an hour to $2 an hour in many other neighborhoods. People are angry. "People come into this neighborhood for entertainment reasons, and you can't anymore because meters are so expensive," said Joe DiSalvo. And people are frustrated. "It's jammed," a woman said. CBS 2 called the company, too; twice to New York, another to Chicago. They didn't call back. We also called the city. They called back but basically said, 'not our meters anymore, not our problem anymore.' Enter a guy who calls himself 'Mike The Parking Ticket Geek.' He contacted us via Twitter and showed us his website, theexpiredmeter.com, which he used to give people advice on how to beat parking tickets. The site has become a lightning rod for peoples' complaints about the new rates and operators.
Stiglitz: Geithner Plan is Robbery of the American People - (www.telegraph.co.uk) The Nobel Prize-winning economist, speaking a day after the Dow Jones Industrial Average rose by almost 7pc in support of the novel public-private partnership (PPIP), said that the plan is "very flawed" and "amounts to robbery of the American people." Professor Stiglitz on Tuesday led a list of well-known economists and high-profile industry figures who have said Treasury Secretary Tim Geithner's toxic asset plan may not be as successful as it first seems. The plan involves ensuring up to $100bn of government funding is matched by private investors, with the monies combined and leveraged up, in some cases to by as much as 20:1, with the help of the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC), to buy pools of unwanted assets. Professor Stiglitz, speaking at a conference in Hong Kong, said that the US government is essentially using the taxpayer to guarantee the downside risks, namely that these assets will fall further in value, while the upside risks, in terms of future profits, are being handed to private investors such as insurance companies, bond investors and private equity funds. "Quite frankly, this amounts to robbery of the American people. I don't think it's going to work because I think there'll be a lot of anger about putting the losses so much on the shoulder of the American taxpayer." His comments echo those of fellow Nobel Prize winner Paul Krugman, who said on Monday that the plan is almost certain to fail, something which fills him "with a sense of despair."

Galbraith: Geithner, Obama Kowtowing to "Massively Corrupted" Banks - (finance.yahoo.com) Like it or not, many people seem to be resigned to the idea there's no alternative to the public-private investment fund scheme Treasury Secretary Geithner detailed this morning. (Click here for part one of our discussion of the plan.) That's hogwash, says University of Texas professor James Galbraith, author of The Predator State. Of course there's an alternative: FDIC receivership of insolvent banks. Aside from being legally proscribed, the upside of FDIC receivership is the banks are restructured and reorganized for potential sale (either in whole or parts), Galbraith says. Such was the fate in 2008 of, most notably, Washington Mutual and IndyMac. Crucially, FDIC receivership also means new management teams for insolvent banks; and Galbraith notes new leaders will have no incentive to cover up the fraudulent or predatory lending practices of their predecessors. Given the entire system was "massively corrupted by the subprime debacle," the professor believes criminal prosecutions on par with the aftermath of the S&L crisis - when hundreds of insiders went to jail - is a likely (and necessary) outcome of the current crisis.But don't expect to see many "perp walks" if Geithner's current plan comes to fruition. That's one reason Galbraith called the plan "extremely dangerous" in part one of our interview. So why isn't the Obama administration pushing for FDIC receivership? "Political influence of big banks," the economist says.

Sacramento, Calif., OKs Plan to Close `Tent City' - (abcnews.go.com) Gov. Arnold Schwarzenegger said Wednesday he would try to find state money to help city officials relocate about 150 people from a homeless encampment that put California's capital in the international spotlight. The governor said he had promised to help Mayor Kevin Johnson deal with the city's homelessness "without really knowing yet the whole issue and what we can do," but told Johnson: "I will be 100 percent behind you." Schwarzenegger visited the state fairgrounds with Johnson on Wednesday, a day after the City Council approved Johnson's proposal for those at the so-called "tent city," which sits along the banks of the American River about one mile northeast of the state Capitol.




OTHER STORIES:

Madoff's Wife Got $2 Million from UK Unit: Report - (www.cnbc.com)
Swiss Banks Ban Travel, Fear Detention: Report - (www.cnbc.com)
Popular Culture and the Stock Market - (www.elliottwave.com)
Hemp is Not Pot! It's the Economic Stimulus & Green Jobs Solution We Need - (www.alternet.org)
Economy Shrinks at 6.3% Pace - (www.google.com/hostednews/ap)
Jobless Rolls Increase to Record 5.56 Million - (www.bloomberg.com)
Weak Demand At Treasury Auction Gives Washington Pause - (www.nytimes.com)
IBM to Cut 5,000 - (www.cnbc.com)
Another Nuclear Winter in Silicon Valley - (www.economist.com)
Asian Billionaire Says China Will Lead Recovery - (www.bloomberg.com)
Obama, Banks to Chart Future Course at Gathering - (www.cnbc.com)
Barclays Passes Stress Test, Won't Need Capital - (www.cnbc.com)
Printing Presses Start Rolling Today: Fed Starts Buying Treasuries; Markets Jump for Joy - (www.bloomberg.com)
Japanese Exports Drop 49% - (www.bloomberg.com)
Hard Times Hit Toyota City, Japan - (www.latimes.com)
Video: Americans Talk About Their Experiences With the Crash - (bullnotbull.blogspot.com)
KB Home Posts Narrower Quarterly Loss - (www.cnbc.com)
Brazil President Blames 'White People' for Crisis - (www.cnbc.com)
Troubled US Post Office Turns to Congress - (finance.yahoo.com)
Geithner's Naked Subsidy Redefines Toxic - (www.reuters.com)
Video: Ron Paul Questions Bernanke & Geithner - (www.dailypaul.com)
Silver Lining for Yellow Cabs in the Depression - (www.nytimes.com)
YouTube is Down ... in China - (www.nytimes.com)
Japan Is on the Brink of Deflation as CPI Stalls - (www.cnbc.com)