Tuesday May 5 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Pelosi To Push for Pecora-style Investigation of Wall Street - (www.bloomberg.com) Pelosi should cut the crap and let Ron Paul provide the report and save everyone a lot of time and money. He was one of a few that has been writing about the crisis 5 years before it happened while Pelosi, Frank and the other showboaters were clueless. Why let people who caused the crisis or did not see the crisis coming investigate the crisis. Wall Street may be heading for the deepest investigation of its practices since a congressional panel’s probe of abuses following the 1929 stock market crash. House Speaker Nancy Pelosi plans to push for a comprehensive inquiry, saying that three-quarters of Americans want to know what led to the bankruptcy of Lehman Brothers Holdings Inc. and the collapse of Bear Stearns Cos. and Merrill Lynch & Co. She favors one patterned after Senate Banking Committee hearings led by Ferdinand Pecora starting in 1933, according to her spokesman, Nadeam Elshami. The Pecora review “was probably the single most important congressional investigation in the history of our country, except perhaps the Watergate hearings,” Donald Ritchie, associate historian for the U.S. Senate, said in an interview. Congress is reacting to an economic collapse that has generated $1.3 trillion in financial industry losses, $700 billion in U.S. taxpayer cash infusions and loans, and $37 trillion in destroyed world stock market value since 2007. The Pecora Commission generated public support for creating the Securities and Exchange Commission and laws that governed financial services for seven decades. Pelosi, a California Democrat, will speak about hearings this week to lawmakers, including Representative Barney Frank, chairman of the panel that writes banking law, Elshami said. “I think it’s useful to have it, but that should not be a reason to hold off on legislating,” Frank, a Massachusetts Democrat, said of Pelosi’s proposal after a speech in Washington yesterday. Rewriting Rules: President Barack Obama, Frank and other congressional leaders have made rewriting the rules governing Wall Street a top priority. Several lawmakers have proposed a commission or select committee to investigate the causes of the meltdown. Pelosi’s backing, expressed during an appearance in San Francisco last week, was the first show of support from the congressional leadership.

California Foreclosures Are Back—with a Vengeance - (www.cnbc.com) We knew it was coming, and now it's here...the return of California's foreclosure crisis. Okay, it wasn't exactly gone, but maybe just on hiatus thanks to a new state law that went into effect last fall. That law requires lenders to take additional steps to keep troubled borrowers in their homes. Then of course there were various bank and Fannie / Freddie moratoria on foreclosures. Today DataQuick reports "lenders filed a record number of mortgage default notices against California during the first three months of this year, the result of the recession and of lenders playing catch-up after a temporary lull in foreclosure activity." Default notices surged 80 percnet from 75,230 for the prior quarter to 135,431 notices in Q1 2009. That's also up 19 percent from the first quarter of 2008. This is a new all-time high for any quarter in DataQuick's statistics, which go back to 1992. Now you may say, well, these are default notices, not foreclosures, and we've got that great Making Homes Affordable adminstration plan all ready to help all these folks. I'm wondering just how they're going to handle these folks, let alone help them. According to DataQuick, the bulk of the loans were originated in late 2006, at the very height and most desperate frenzy of the housing boom, when lenders were trying to get everyone and their brother into a new loan. I wonder how many of those loans are now so far underwater, given the huge home price declines in California, that no modification is going to help.

Freddie Mac Executive Commits Suicide - (Mish at globaleconomicanalysis.blogspot.com) The New York Times is reporting Executive at Freddie Mac Is Found Dead. David B. Kellermann, the acting chief financial officer of the troubled mortgage giant Freddie Mac, was found dead Wednesday morning at his home in Northern Virginia, the police said. The executive apparently committed suicide by hanging himself, according to people with knowledge of the investigation. Mr. Kellermann, 41, had been Freddie Mac’s chief financial officer since September. He was named to the position when the federal government seized the company and ousted its top executives last fall. In recent weeks, according to neighbors and company officials, Mr. Kellermann had received a bonus of about $800,000. Such bonuses — which totaled $210 million for executives at Freddie Mac and its sibling company Fannie Mae — caused some controversy earlier this month, and some lawmakers called for them to be rescinded. According to neighbors, Mr. Kellermann hired a private security firm after reporters came to his house to ask about his bonus. The Associated Press reported that Mr. Kellermann and his wife had a daughter. Some neighbors told The A.P. that Mr. Kellermann had lost a noticeable amount of weight under the strain of the job, and some said they suggested to him he should quit to avoid the stress. Mr. Kellermann was also involved in recent tense conversations with the company’s federal regulator over its public disclosures. Freddie Mac executives wanted to emphasize to investors that the company was being run for the benefit of the government, rather than shareholders. The company’s regulator, the Federal Housing Finance Authority, had reportedly pushed to play down that language. Freddie Mac was (and still is) being run the same way nearly all public corporations are run: For the benefit of the top executives not the benefit of shareholders. There is no other explanation for executive pay, bonuses, stock options and other perks that all cause massive shareholder dilution over time. Countrywide CEO Angelo Mozilo took out $1 billion in stock options and pay while running the company into the ground. Now taxpayers have to clean up the mess. Greed is everywhere you look. I cannot begin to list it all.
Treasury Raises Offer to Chrysler Lenders - (www.cnbc.com) The U.S. Treasury has raised its offer to Chrysler lenders, sources said on Wednesday, as the embattled automaker races to cut its debt and labor costs and reach an alliance with Italy's Fiat SpA by the end of the month. Treasury has offered the lenders $1.5 billion of first-lien debt and a 5 percent equity stake in a restructured Chrysler in exchange for about $7 billion of debt they now hold, said the sources, who had direct knowledge of the talks. They spoke on condition of anonymity because of the confidential nature of the ongoing negotiations. The offer showed a quickening pace in the discussions with Chrysler facing an April 30 deadline to cement agreements with debtholders, unions and Fiat or face a bankruptcy that could result in its liquidation. Representatives from Treasury and Chrysler could not be reached immediately for comment.The Chrysler lending group on Monday had sought $4.5 billion of first-lien debt and a 40 percent stake in the restructured automaker, sources have said. That proposal was far above an initial offer from Treasury and quickly rejected by the Obama administration, which had proposed in early April that lenders write off all but $1 billion of the debt and receive no equity.

State revenue falls 4% - (money.cnn.com) Revenue of U.S. states fell 4% in the 2008 fourth quarter as sales tax collections had their biggest drop in 50 years, and 41 states were on track for revenue declines of more than triple that rate for the first quarter of 2009, according to a report released on Tuesday. States, which have been struggling with lower revenue as the recession hits everything from sales taxes to property taxes, are likely to suffer more this month with an expected sharp fall in collected income taxes, according to the report by the Rockefeller Institute of Government. Total tax revenue declined in 35 states, while six saw double-digit declines, according to the institute, which is the public policy research arm of the State University of New York. Initial data for the first quarter of 2009 showed 41 states reporting that overall tax collections were down 12.8% in January and February versus the same two months in 2008, the report said. "Preliminary data for the January-March quarter suggests that fiscal conditions deteriorated even further, and the second major tax source for states - the income tax - is likely to weaken dramatically in April," said Donald J. Boyd, senior fellow at the Rockefeller Institute and co-author of the study, in a statement. Sales tax collections, a major revenue generator for states, fell by 6.1% in the fourth quarter of 2008 from the year-earlier period. The decline was wide-spread, hitting 34 out of the 45 states with broad-based sales taxes, according to the report.

Lewis testified that U.S. urged silence on Merrill deal: report - (news.yahoo.com/s/nm) Bank of America Corp Chief Executive Kenneth Lewis testified under oath that U.S. Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson pressured the bank to not discuss its plan to buy Merrill Lynch & Co, the Wall Street Journal said. In a testimony before New York's attorney general Andrew Cuomo in February, Lewis told prosecutors that he believed Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, which BofA acquired in January. Lewis testified that the government wanted him to remain silent while the two sides negotiated government funding to help BofA absorb Merrill and its losses, the paper said, citing transcripts of the testimony. A representative of Cuomo questioned Lewis about his failure to disclose Merrill's fourth-quarter losses, which eventually totaled $15.84 billion, according to the paper. Lewis said he was told by Bernanke and Paulson that the BofA-Merrill deal needed to be completed, otherwise it would "impose a big risk to the financial system" of the United States as a whole, according to the paper. A person in government familiar with Bernanke's conversations with Lewis told the paper that the Fed chairman did not offer the BofA chief advice on the question of disclosure, and suggested that Lewis consult his own counsel. Paulson repeatedly told Lewis that "the U.S. government was committed to ensuring that no systemically important financial institution would fail," the Journal cited the former Treasury Secretary's spokeswoman as saying.




OTHER STORIES:

GM employees may get shutdown details this week - (news.yahoo.com/s/ap)
US Moves Closer to Becoming A Major Shareholder In GM - (www.cnbc.com)
GM to Shut Most US Plants Up to 9 Weeks - (www.cnbc.com)
Toll Bros CEO: 80% of U.S. ‘On the Way Back’ - (www.cnbc.com)
'Time To Get Off This Ride,' Says Popular Strategist - (www.cnbc.com)
Credit-Card Reforms Being Pushed by Obama, Congress - (www.cnbc.com)
Banks Hinder Efforts to Offer Mortgage, Credit-Card Relief - (www.cnbc.com)
Wells Fargo CFO: Economy Has Encouraging Signs - (www.cnbc.com)

Detroit Councilman Walks Away From His Mortgage - (www.sacbee.com) A Crash This Way Cometh... - (www.321gold.com)Banks Realize: Lending is BAD business right now. - (www.marketwatch.com)TARP is Wide Open to Fraud - (www.nytimes.com)20 Criminal Tarp Probes - (money.cnn.com)Oil Falls to $45 - (finance.yahoo.com)Deflation Fears in Europe - (www.nytimes.com)US Leading Indicators Show Extended Recession - (www.bloomberg.com) Toyota's Japan Output Falls to 1978 Levels. 1978! - (www.marketwatch.com)

U.S. Existing Home Sales Dropped More Than Forecast - (www.bloomberg.com)
New jobless claims rise more than expected to 640K - (finance.yahoo.com)
U.S. Initial Jobless Claims Rose to 640,000 Last Week - (www.bloomberg.com)
Countries trying to cope with severe global slump - (news.yahoo.com/s/ap)
Global Economy Called Worst Since 1945 - (www.nytimes.com)
Rising Home Vacancies Give Bernanke Extra Time to Withdraw Cash - (www.bloomberg.com)
As Housing Market Dips, More in U.S. Are Staying Put - (www.nytimes.com)
UPS 1Q profit plunges more than 55 pct. - (finance.yahoo.com)
Regulators to Meet With Banks on Friday on ‘Stress’ Tests - (www.nytimes.com)
U.S. Weighs Revealing Each Bank’s Capital Needs After Tests - (www.bloomberg.com)
Treasury Is Said to Increase Its Offer to Chrysler Lenders - (www.nytimes.com)
Mortgage Bondholders Form Battle Lines Over Obama Housing Plan - (www.bloomberg.com)