Thursday April 2 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Banks Selling Properties in Bulk for Cheap - (www.builderonline.com) Lenders have become so overwhelmed by the foreclosure crisis that they are starting to unload properties in bulk to investor groups at steep discounts. Investors then flip the properties for a profit without necessarily improving the home. For example, a unit of Citigroup, the troubled financial giant, sold a foreclosure in Temecula to an Arizona investment firm for $139,000 when comparable homes in the area were selling for $240,000 to $260,000. The firm listed the home for $249,000, received multiple offers and the property has entered escrow, said Amber Schlieder, the real estate agent who handled the listing. The Temecula foreclosure was first listed for sale by Citigroup in May 2007 for $420,000, according to Multi-Regional Multiple Listing Service, a real estate posting site used by real estate agents. The property was listed on the site for 19 months before selling to the investors in a bulk sale in December 2008. The lowest price it was listed for was $314,000. "It should have been listed for less," said Craig Finlayson, a real estate agent in the area who listed the property for Citigroup. "But it would have sold for more than 139 (thousand); 139 was a giveaway price." CR Capital was the firm that flipped the Temecula foreclosure property, an investment group based in Tucson, Ariz. Calls to CR Capital were not immediately returned.

How Citigroup Incompetence Squanders Taxpayer Money - (Mish at globaleconomicanalysis.blogspot.com) Incompetence In Pricing: The house never sold because Citigroup had it priced way above market. That is incompetence, lack of concern, an overworked unit or a combination of the above. I vote for the latter. In Banks Leaving Money on the Table "All Day Long" Calculated Risk said "Citi just left $100,000 on the table. I hear stories like this all the time." Debt Guarantees: Debt guarantees are another piece of the puzzle. Flashback February 4, 2009 Triage For Troubled Assets. In November, the government agreed to limit Citigroup's losses on a portfolio of $301 billion of troubled assets. Last month, the government issued a similar guarantee to Bank of America covering $118 billion in troubled assets. In both cases, the companies agreed to absorb an initial increment of losses -- about $30 billion for Citigroup and $10 billion for Bank of America -- with the government absorbing 90 percent of any subsequent losses. When taxpayers are guaranteeing 90% of the losses above $30 billion, a figure that was no doubt reached months ago, there is only a 10% incentive to do a job well. Clearly this opens the door for allegations of graft, corruption, kickbacks, and sweetheart deals. Did any of that take place with this firesale of assets? Who knows? What we do know is that Geithner worked out a sweetheart deal with the banks, and that deal gives the banks every incentive to get this stuff behind them, regardless of cost to taxpayers.

U.S. Central Credit Union may form "bad bank": CEO - (www.reuters.com) Two days after regulators seized the largest U.S. corporate credit union, the newly installed CEO said he is considering a variety of options, including setting up a "bad bank," to handle a mixture of troubled mortgage assets. Several options are on the table at the $34 billion-asset U.S. Central Federal Credit Union, said new CEO James Nance, who quit as chief administrative officer at Icap Capital Markets Llc in New Jersey to helm the Lenexa, Kansas-based institution at the request of regulators. In addition to setting up a separate entity, a so-called "bad bank," to take toxic assets off the books of U.S. Central, Nance told Reuters in an interview that he will look at options for securitizing the troubled assets in ways that would allow for them to be held for an extended periods, and he will explore the sale of certain assets to non-credit union buyers. "We want to try to avoid having the situation deteriorate," said Nance, who prior to his work at Icap, oversaw asset and liability management at U.S. Central from 1993-1996.

In credit drought, U.S. car dealers battle to survive - (www.reuters.com) Deep in the last stronghold of the struggling U.S. auto industry, Rosario Criscuolo says he owes the survival of his business to Toyota Motor Corp. "If it weren't for Toyota, I'd be gone," said the owner of Spartan Auto Group, which runs three auto dealerships selling Toyota, Lexus, Infiniti, Volkswagen and Mazda brand cars. "Without them I'd be selling papers on the corner." To fund the $25 million worth of gleaming new cars at his showrooms, including here in Michigan's capital, Criscuolo needs floorplan financing, or inventory loans. Floorplan financing is the lifeblood of U.S. auto dealers because it allows them to pay for vehicles when they take delivery and carry them until they find a buyers. But many auto dealers say the credit crunch has left them unable to bring in new cars or keep those they already have, choking off production by the U.S. automakers. "If we don't fix this wholesale credit issue, this whole thing collapses," said John McEleney, National Auto Dealers Association chairman, who owns two dealerships that between them sell Toyota, General Motors and Hyundai branded cars. "Every week there are more dealers that are being impacted and going out of business."

As bankruptcy filings mount, attention turns again to reform - (www.usatoday.com) Cash-strapped families are seeking bankruptcy protection at nearly the same rate and in the same manner as they did before the much-debated 2005 bankruptcy law reform, a trend critics say proves the reform was a failure. Congress wrangled for eight years before passing a reform act aimed at curbing abuse and ending an alarming rise in bankruptcy filings. With the economy in tatters and personal fortunes often in even worse shape these days, the bankruptcy law is beginning to undergo scrutiny again. For now, Congress is focused on efforts to stem home foreclosures by altering the law so that bankruptcy court judges will be allowed to modify certain mortgages to help people keep their homes. But once that's settled, attention will turn to the 2005 bankruptcy reform.

The virtues of public anger and the need for more - (www.salon.com) - The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide."…….The real question from here is whether the Obama administration is going to move to bring the financial system back to a place where sanity is restored and the general public can have a say in things or whether the new financial bureaucracy will remain obscure, secretive and hopelessly complex. It might not bode well that Geithner, Obama's Treasury secretary, is one of the architects of the Paulson bailouts; as chief of the New York Fed, he helped orchestrate the Goldman-friendly AIG bailout and the secretive Maiden Lane facilities used to funnel funds to the dying company. Neither did it look good when Geithner — himself a protégé of notorious Goldman alum John Thain, the Merrill Lynch chief who paid out billions in bonuses after the state spent billions bailing out his firm — picked a former Goldman lobbyist named Mark Patterson to be his top aide."

Adding Insult to Injury – Homeowners Told to Walk Away From Loan Modifications - (www.ml-implode.com) - The fact is, in terms of the foreclosure crisis in this country, the government has failed us at every level and at every turn. Now they’ve apparently decided to tell the public that the companies that have formed to help distressed homeowners get their existing mortgages modified so they can keep their homes, are to be avoided. Why? Because they charge a fee for their services, that’s why. Well, isn’t that nice. After two years watching the housing meltdown, two years seeing family after family lose their homes to foreclosure, two years of watching the Keystone Cops in congress stand around debating the rules about transporting monkeys across state lines and whether GM pays too much for retiree health plans… and the last so many months watching Washington shovel money into Wall Street banks… the private sector has finally come up with a meaningful solution for many people, one that helps people stay in their homes… and now we’re being told that we should forego that solution because there’s a fee? Oh, dear God. From insult to injury. President Obama even said it, during his speech that introduced his version of a housing rescue program: “If you have to pay, walk away.” Excuse me… but that’s one of the most ridiculous things I’ve ever heard a president say. Don’t worry… the government is going to help me for free? Does he think we’re all six? And, to make matters even worse, here’s what it says on the front page of the US Treasury’s Website that is dedicated to helping homeowners, well… at least the homeowners that qualify for Obama’s program, so maybe there’ll be twenty or thirty in every state. It says: BEWARE OF FORECLOSURE RESCUE SCAMS - HELP IS FREE! Beware of any person or organization that asks you to pay a fee in exchange for housing counseling services or modification of a delinquent loan. Do not pay – walk away! Now, before anyone starts getting all fired up about the loan modification companies that, according to the media, are defrauding distressed homeowners left and right, I want to be very clear that I think that those seeking to defraud homeowners in jeopardy of foreclosure are justification for keeping the prison at Guantanamo Bay open for a few more years. Ripped off a homeowner with a loan modification scam… Waterboarding for $200 Alex. Talk about a deterrent… that’s a damn deterrent.

Did Citigroup CEO Vikram Pandit lie to Congress about his compensation? - (www.thinkprogress.org) As ThinkProgress noted, in February, bailed-out Citigroup CEO Vikram Pandit told a House committee that he received only $1 million in salary and “no bonus” in 2008: PANDIT: My compensation was for the year 2008 was my salary, which was a million dollars. I received no bonus. And as I stated earlier, I plan to take a dollar per year salary and no bonus until we return to profitability. But Reuters reports today that Citigroup awarded Pandit “$10.82 million of compensation in 2008,” despite the bank accepting $45 billion in TARP funds. The package included a “$958,333 salary, $9.84 million of stock and option awards and $16,193 of other compensation,” according to an SEC filing. As of February, Citigroup still owned or was leasing a private jet.

Pandit Told Congress Compensation Was $1 Million, But Bank Filing Shows $10.8 Million - (www.huffingtonpost.com) Citigroup Chief Executive Vikram Pandit received nearly $11 million of compensation in 2008. A month earlier, he testified to Congress that his compensation for 2008 was just $1 million. "My compensation for the year 2008 was my salary, which was $1 million," he told the House Committee on Financial Services on February 11, failing to mention his sign-on and retention awards, as well as stock and option awards. At the same hearing, Pandit pledged to accept a salary of just $1 a year and no bonus until Citibank once again posted a profit. The $10.82 million in total compensation for 2008 consisted of $7.73 million in sign-on and retention awards, a $958,333 salary, $9.84 million of stock and option awards and $16,193 of other compensation. According to Crain's New York Business, Pandit originally was paid $40 million, not $11 million, but lost a significant bulk of the money when the stock tumbled, recently dipping to below $1 a share. The vast majority of Mr. Pandit's compensation last year came in the form of stock granted in January 2008 as a "sign-on award" a month after he became CEO. The value of the shares at the grant date was $37 million, reflecting Citi's stock price at the time, $24.40 a share. Since then, Citi's share price has collapsed into penny-stock territory, and the shares given Mr. Pandit were worth only $1.8 million as of last Friday.





OTHER STORIES:

Geithner - My Plan for Bad Bank Assets - (www.ml-implode.com) - Timmy's plan, advocated, straight from the horse's mouth. Note that when he says the "Treasury, the FDIC and the Fed" are goin...
The Mother of All Bells - (www.ml-implode.com) - There is a growing consensus that if China no longer wants to buy our bonds, we can simply print the money and buy them ourselve...
Mistakes Beget Greater Mistakes - (www.ml-implode.com) - And while on the topic of mortgage finance, the Fed’s prodding has borrowing costs back below 5%. This cost of finance also gro...

Warning over cuts in credit card lines - (www.ft.com) Banks trying to reduce their exposure to losses on credit card loans are driving some borrowers deeper into trouble, say credit counsellors and analysts in the US. Major card issuers such as Bank of America, Citigroup and American Express have reacted to the economic crisis and rising credit card defaults by raising interest rates, closing inactive accounts and paring credit lines.
Existing-Home Sales Jump More Than Forecast - (www.cnbc.com) Sales of existing home rose 5.1 percent in February, rebounding from the previous month's drop, while prices fell further.
Ross: Due Diligence Integral to Success of US Plan - (www.cnbc.com)
Farrell: Bernanke Was So Right - (www.cnbc.com)
China Will Keep Buying Treasurys: Central Bank Official - (www.cnbc.com)
Pimco Intends to Participate in Toxic Asset Plan - (www.cnbc.com)
Tiffany Profit Tops Estimates, Despite Sales Drop - (www.cnbc.com)
Intel Seeks to Reprice Worthless Stock Options - (www.cnbc.com)
Japan Firms' Mood Bleak, BOJ Tankan Likely Grim - (www.cnbc.com)

Crude flat as Treasury unveils 'toxics' plan for banks - (www.marketwatch.com)
Market opens up 2 percent after bank plan - (www.reuters.com)
U.S. Treasury Announces $1 Trillion Plan to Buy Distressed Debt - (www.bloomberg.com)
U.S. Rounding Up Investors to Buy Bad Assets - (www.nytimes.com)
Euro Currency of Choice as Fed Easing Devalues Dollar - (www.bloomberg.com)
Toxic assets plan is big White House test - (www.ft.com)

Hedge-Fund Investors Hire Private Eyes to Avoid New Madoffs - (www.bloomberg.com)
Geithner's Bank Plan: Winners And Losers - (www.forbes.com)
ECB could cut rates, take other steps - Trichet - (www.reuters.com)
Japan Home Prices Slump to 24-Year Low as Recession Deepens - (www.bloomberg.com)
Obama Relies on Private Help to Buy Illiquid Assets - (www.bloomberg.com)
Obama to Outline Regulation Changes to Avoid Crisis - (www.bloomberg.com)
Trade Barriers Rise as the Recession’s Grip Tightens - (www.nytimes.com)