Tuesday April 7 Housing and Economic stories

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TOP STORIES:

Soros warns Britain may need IMF help - (www.upi.com) U.S. investor George Soros warned Saturday the British government may have to go to the International Monetary Fund for a bailout. Soros said Britain is particularly vulnerable to the global economic downturn, and could have trouble financing its mounting debt, The Times of London reported. He warned also that next week's G20 summit of world leaders in London was the last chance to avert a British depression. "You have a problem that the banking system is bigger than the economy ... so for Britain to absorb it alone would really pile up the debt," Soros said. As for getting help from the IMF, Soros said it was "not a likelihood," the newspaper reported. The Times noted that Britain has not sought IMF help since 1976, when inflation was approaching 27 percent and the government sought a loan.

Goldman Bailed Out 2 Executives - (www.nytimes.com) The financial giant Goldman Sachs spent tens of millions of dollars to bail out two senior executives last fall who were short on cash, according to the bank’s proxy statement filed on Friday. Skip to next paragraph In an unusual move, Goldman bought back stakes in some internal investment funds from Jon Winkelried, the bank’s co-chief operating officer, and Gregory K. Palm, its general counsel. Both executives are among the largest shareholders in the bank, owning more than a million shares each, and directors were concerned that a large sale of Goldman shares by the two men would alarm investors during a period of market turmoil, according to a person briefed on the matter. To avoid the stock sales, Goldman paid Mr. Winkelried, who retired last month, $19.7 million to purchase about 30 percent of his investments in internal hedge funds and private equity investments. The bank paid $38.3 million to Mr. Palm for about a quarter of his investments. Soon after the bank aided the two executives, Warren E. Buffett invested $5 billion in Goldman, and the bank’s top four executives agreed not to sell more than 10 percent of their stock for three years.

Spanish Unions Want 4-Day Work Week: Report - (www.cnbc.com) Spain's second largest union UGT is calling for a four-day work week to bring the country's working hours in line with the rest of Europe and increase productivity, its general secretary said on Saturday. "Of the original 15-member European Union, Spain has the longest working day and yet we're the least productive," UGT's Candido Mendez told Spanish financial daily Expansion. The measure also fits with the union's strategy to make Spanish working hours -- which generally run from 9 am until 8 pm with three hours for the traditional afternoon siesta -- more adaptable to family life. Mendez also called for increased government action to fight the deepening economic crisis in Spain, where unemployment has hit 15 percent and is rising fast. While some sectors have threatened strikes against the crisis, Mendez said UGT will only use such measures to protest specific actions on workers' rights and employee protection. "We're not going down that path," Mendez said.

Optimism about U.S. banks might be misplaced - (www.reuters.com) The U.S. banking system showed some signs of thawing this week, but it may prove to be a false spring. The U.S. government offered a plan to help banks sell toxic loans and securities and President Barack Obama launched a charm offensive to try to win back lenders alienated by recent legislative efforts to scale back Wall Street pay. But analysts cautioned the government's efforts to jumpstart the markets for loans and securities will likely have limited success. Banks still face a series of difficult obstacles, including expected weakness in commercial property markets and losses on credit card loans. Add it all up and some investors reckon recent optimism about banks -- which helped lift shares in the sector more than 50 percent over the last three weeks -- is excessive. "Let's not get our hopes up too high," said Marshall Front, chairman at Front Barnett Associates in Chicago. Hope does seem to be rising. Citigroup Inc (C.N) shares and Bank of America Corp (BAC.N) have more than doubled over the last three weeks. Morgan Stanley (MS.N) is up 40 percent.

Geithner: The Regulatory War Ahead - (www.businessweek.com) The Treasury Secretary promised specifics in coming weeks, including separate proposals addressing consumer protection, gaps in U.S. regulation, and ways to coordinate regulatory reform with other countries. Those details are sure to throw into sharper relief the battles that lie ahead. Many of the proposals will bring some measure of scrutiny to corners of the financial markets that have gone for years without significant regulation, including private equity and hedge funds and the market for most financial derivatives. Defining which institutions should be deemed "systemically important"—whose failure could pose a risk not only to their own investors but to the financial system itself—and imposing stricter capital requirements on them will lead to jockeying among banks, insurers, and fund managers. Tightening consumer protections—which many Democrats say would go a long way toward preventing another financial crisis—will likely mean restricting mortgage companies and credit-card lenders, among others. Closing regulatory gaps could spark disputes among government agencies and even congressional committees with overlapping or related jurisdiction. Lawmakers on the committees that oversee the Commodity Futures Trading Commission and the Securities & Exchange Commission won't be eager to cede authority to one another, for example. In making his case to the House Financial Services Committee, Geithner called his proposal "not modest repairs at the margin, but new rules of the game." In focusing on systemic risk, he said regulators must be retooled to look beyond the soundness of individual institutions "but must also ensure the stability of the system itself."

Intense job destruction hasn't let up - (www.marketwatch.com) -- American companies are still shedding jobs at a furious pace, with upcoming data likely to reveal the unemployment rate for March rising to 8.5% as nonfarm payrolls contracted by nearly 700,000, economists said. "The U.S. labor market continues to melt down as companies scramble to adjust their head counts in the face of a deepening economic slump that is among the most serious downturns in the postwar period," wrote Meny Grauman, an economist for CIBC World Markets. U.S. employment figures for March will be released on Friday. Other top economic indicators of the coming week include the Institute for Supply management index on Wednesday and the consumer confidence index, both for March, on Tuesday.
All of the data are expected to confirm that the nation's economy remains ensnared in a deep recession. While there have been some tentative signs that the worst may be in the past for consumer spending and home sales, there's little hope for any immediate relief from the intense and dramatic job destruction that began last November. Indeed, more than 4 million jobs have already been lost in this recession -- and another 2 million or more could find themselves without work before it's all over. More than 650,000 jobs have been lost in each of the past three months, including 651,000 in February. "We actually expect to see an even-steeper drop in jobs this month," said economists for Morgan Stanley -- namely, 700,000 jobs lost.

Obama Says Auto Aid Hinges on Changes - (online.wsj.com) President Barack Obama is prepared to give struggling U.S. automakers billions more in aid, but only if all sides show that they are ready to make sacrifices to assure the companies have a viable future. Speaking the day before he announces his first assessment of the fates of General Motors Corp. and Chrysler LLC, Mr. Obama said on CBS's "Face the Nation" Sunday that he intends to lay out "a set of sacrifices from all parties involved -- management, labor, shareholders, creditors, suppliers, dealers." The industry, he said, must "take serious restructuring steps now in order to preserve a brighter future down the road." The two companies "are not there yet," he added. The president's auto task force has spent more than a month digging into the restructuring plans of GM and Chrysler while trying to assess when the steep plunge in car sales might end. The two companies received a total of $17.4 billion in government loans in December, and have requested another $22 billion to keep them going through this year. Of that, GM is seeking $16.6 billion more, while Chrysler has asked for $5 billion more.

'Broker price opinions' may be depressing property values - (www.latimes.com) Reporting from Washington -- Are lowball valuation estimates on short sales and bank-owned foreclosures artificially depressing property values in neighborhoods across the country? Growing numbers of appraisers and consumer groups believe the answer is yes -- and are demanding that either Congress or state regulators crack down. Their complaints focus on what are called "broker price opinions," or BPOs, that substitute for appraisals. Unlike standard property valuations performed by licensed appraisers -- which can run to hundreds of dollars -- BPOs often cost $50 and are performed by real estate agents who may have minimal or no appraisal training and are subject to no regulatory oversight. Realty agents defend BPOs, contending that their extensive knowledge of local market trends equips them to render accurate estimates. BPOs have become a booming business as foreclosures and short sales have risen sharply. When banks that own foreclosed houses need to put values on them for resale, increasingly they order BPOs that can be delivered quickly at rock-bottom fees.




OTHER STORIES:

Homeowners have the right to inspect attorney invoices - (www.latimes.com) Question: I have repeatedly asked my association board for copies of attorney invoices, but the...
Investors agonize: Is it time to get back into stocks? - (www.latimes.com) They're worried that a striking rally in the last three weeks will prove...
FDIC orders changes at six California banks - (www.latimes.com) The banks, including two in Los Angeles County, received 'cease and desist'...
Charter Communications files for Chapter 11 bankruptcy - (www.latimes.com) The No. 4 cable operator's Bankruptcy Court filing is aimed at reducing the interest payments on its...

Oil Next Week: What Energy Traders Will Be Watching - (www.cnbc.com)
UK Wants G20 to Pledge $2 Trillion Stimulus: Report - (www.cnbc.com)
Geithner Faces Own Stress Test amid Economic Woes- (www.cnbc.com)
Market-Making Arm of Madoff's Firm to Be Sold Off - (www.cnbc.com)
Obama Announces 3 Treasury Dept. Nominees - (www.cnbc.com)
Bank of America Extends Yankee Sponsorship - (www.cnbc.com)

M&A volume starts year with 36% fall - (www.ft.com)
Overhaul Targets Money Market - (www.washingtonpost.com)
Now the Long Run Looks Riskier, Too - (www.nytimes.com)
No Time For T-Bonds - (www.forbest.com)
Thousands demonstrate ahead of G20 summit - (www.ft.com)
G20 marches begin week of protests in Europe - (www.reuters.com)

New reserve currency idea needs work-German minister - (www.reuters.com)
Obama Will Face a Defiant World on Foreign Visit - (www.nytimes.com)
Obama, Bankers Sit Face to Face - (www.washingtonpost.com)

Florida unemployment rate hits 9.4 percent - (www.miamiherald.com)
Omni National Bank in Georgia Shut, 21st U.S. Failure - (www.bloomberg.com)
U.S. Expected to Give More Financing to Automakers - (www.nytimes.com)
Auto rescue details coming; GM's debt-deal deadline looms - (www.freep.com)
Dylan Ratigan of CNBC’s ‘Fast Money’ Leaves Network - (www.nytimes.com)

Inflation looms over deflation risk - (www.ft.com)
This Time, Geithner’s Plan for Banks Makes Sense - (www.nytimes.com)
Shareholders Who Act Like Owners - (www.nytimes.com)