KeNo's Housing and Economic Portal: Friday August 21 Housing and Economic stories

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After Railing on Private Businessmen, Elitists in Congress order 8 more private jets - (online.wsj.com) $550 Million Slated for Purchase of Eight More Planes as Lawmakers' Travel Soars. Congress plans to spend $550 million to buy eight jets, a substantial upgrade to the fleet used by federal officials at a time when lawmakers have criticized the use of corporate jets by companies receiving taxpayer funds. The purchases will help accommodate growing travel demand by congressional officials. The planes augment a fleet of about two dozen passenger jets maintained by the Air Force for lawmakers, administration officials and military chiefs to fly on government trips in the U.S. and abroad. The congressional shopping list goes beyond what the Air Force had initially requested as part of its annual appropriations. The Pentagon sought to buy one Gulfstream V and one business-class equivalent of a Boeing 737 to replace aging planes. The Defense Department also asked to buy two additional 737s that were being leased. Lawmakers in the House last week added funds to buy those planes, and plus funds to buy an additional two 737s and two Gulfstream V planes. The purchases must still be approved by the Senate. The Air Force version of the Gulfstream V each costs $66 million, according to the Department of Defense, and the 737s cost about $70 million. Geoff Morrell, the Pentagon press secretary, said the Department of Defense didn't request the additional planes and doesn't need them. "We ask for what we need and only what we need," he told reporters Wednesday. "We've always frowned upon earmarks and additives that are above and beyond what we ask for." Congress turned harshly critical of companies that fly executives on private jets in the weeks following the government bailout of banks and auto makers last year. General Motors, Chrysler LLC and Citigroup Inc. were among those caught in the cross hairs of angry lawmakers. The House Appropriations Committee says the new purchases are designed to replace seven aging and more expensive business jets. The net impact is one additional plane owned by the federal government and a substantial increase in its passenger capacity. Ellis Brachman, a spokesman for the House Appropriations Committee, said the changes were part of "Congress's normal oversight responsibility" to make sure "the troops have everything they need." The 737s, known as C-40s by the military, are designed to be an "office in the sky" for government leaders, according to Air Force documents describing the plane. The plane is configured with all first-class leather seats, worktables, two large galleys for cooking and a "distinguished visitor compartment with sleep accommodations. Mr. Brachman said Air Force's passenger planes were mostly used by military officials, the White House and other members of the Executive Branch. Over the past five years, 44% of the use of the planes has been for the military, 42% for the administration and 14.5% for members of Congress, Mr. Brachman said. A Wall Street Journal analysis of congressional records found that foreign travel by members of Congress and aides was increasing. Last year, House members spent about 3,000 days overseas on taxpayer-funded trips, up from about 550 in 1995, according to the Journal's analysis. Lawmakers disclosed they spent about $13 million traveling the world last year, a tenfold increase since 1995, when travel records first were made available electronically. The travel costs are covered by an unlimited fund created by a three-decade-old law. This month, for example, 11 separate congressional delegations will swing through Germany. House Minority Leader John Boehner of Ohio is leading five other lawmakers on a trip around the world. Sen. Richard Shelby (R., Ala.) is taking a group of senators and their spouses to Europe for three weeks. A spokesman for Mr. Boehner said he couldn't comment on the trip for security reasons. A spokeswoman for Mr. Shelby said the same. Most travel must be approved by congressional committees. Once approved, the lawmaker who is leading a delegation can decide whether to fly on a commercial airline or to request a business jet from the Department of Defense. Lawmakers typically fly on military jets, where members of the Armed Services carry bags and take drink orders. When flying on military jets, lawmakers are permitted to bring along spouses at no cost. When there are too many requests for military planes, the speaker of the House or the Senate majority leader decides who gets to go. Two House employees work full time to organize overseas trips. There is often a shortage of military planes for use by lawmakers when Congress is in recess, according to emails from 2007 obtained by the conservative group Judicial Watch under a Freedom of Information Act Request. In June 2007, the House's travel coordinator, Kay King, was told that all military planes were booked for the July 4 recess. She replied to the Air Force officer: "This is not good news, and we will have some very disappointed folks, as well as a very upset Speaker." Drew Hammill, a spokesman for Democratic House Speaker Nancy Pelosi, said Thursday, "The speaker is extraordinarily appreciative of the Department of Defense's efforts to accommodate requests from Congress." Most of the planes available for lawmaker's travel are based at Andrews Air Force Base, Md., a few miles from Capitol Hill. The D.C. Air National Guard maintains three 737s and two Gulfstream V planes there. The 89th Airlift Wing operates 18 planes, including two military versions of the Boeing 747 that serve as Air Force One. The Air Force also keeps several more passenger planes at bases in Illinois, Germany and elsewhere. Most of the planes are painted light blue and white, with "United States of America" painted on the fuselage. The C-40 costs about $5,700-an-hour to fly, according to the Department of Defense. The smaller Gulfstream V, called a C-37 by the military, seats as many as 12 passengers and costs about $3,000 an hour to operate.

CNN Refusing To Run Ad Critical Of Insurance Industry - (theplumline.whorunsgov.com) The network — already taking criticism for declining to run an ad criticizing Lou Dobbs — is now refusing to run an ad nationally criticizing the insurance industry, the group that tried to place the ad tells me. CNN’s reason: The ad “unnecessarily” singles out a top insurance industry executive by name for criticism. The labor-backed Americans United for Change, a top White House ally in the health care wars, tried to book time on CNN and MSNBC for the ad, which hits the insurance industry for wanting to preserve the status quo and levels harsh criticism at insurance giant Cigna’s CEO, Ed Hanway. “Why do insurance companies and Republicans want to kill health insurance reform? Because they like things the way they are now,” the ad says, and then slams Hanway’s annual salary of over $12 million and golden parachute retirement package of over $70 million. Americans United for Change’s spokesman, Jeremy Funk, tells me that CNN refused to run the ad nationally. He says CNN emailed the following reason for rejection: “This ad does not comply with our clearance guidelines because it unnecessarily singles out an individual company and person.” That very well may be CNN’s policy. But AUC maintains that the mention of Cigna’s CEO was necessary to dramatize the enormous stake the insurance industry has in the health care wars. What’s more, AUC argues, the industry is made up of companies that are run by individuals deciding how to spend huge money to impact the health care debate — so why are they off limits? “The bottom line question is: Would CNN run ads from Cigna that are positive about the company?” Funk asks. “If yes, why would they turn down an ad critical of the company for their role in trying to kill health insurance reform?” By contrast, the ad will air nationally on MSNBC tomorrow. Here’s the spot:

Hunger hits Detroit - (money.cnn.com) On a side street in an old industrial neighborhood, a delivery man stacks a dolly of goods outside a store. Ten feet away stands another man clad in military fatigues, combat boots and what appears to be a flak jacket. He looks straight out of Baghdad. But this isn't Iraq. It's southeast Detroit, and he's there to guard the groceries. "No pictures, put the camera down," he yells. My companion and I, on a tour of how people in this city are using urban farms to grow their own food, speed off. In this recession-racked town, the lack of food is a serious problem. It's a theme that comes up again and again in conversations in Detroit. There isn't a single major chainsupermarket in the city, forcing residents to buy food from corner stores. Often less healthy and more expensive food. As the area's economy worsens --unemployment was over 16% in July -- food stamp applications and pantry visits have surged. Detroiters have responded to this crisis. Huge amounts of vacant land has led to a resurgence in urban farming. Volunteers at local food pantries have also increased. But the food crunch is intensifying, and spreading to people not used to dealing with hunger. As middle class workers lose their jobs, the same folks that used to donate to soup kitchens and pantries have become their fastest growing set of recipients. "We've seen about a third more people than before," said Jean Hagopian, a volunteer at the New Life food pantry, part of the New Life Assembly of God church in Roseville, a suburb some 20 miles northeast of Detroit. Hagopian said many of the new people seeking assistance are men, former breadwinners now in desperate need of a food basket. Hagopian is an 83-year old retired school teacher. She works at the pantry four days a week, spending two of those days driving her own minivan around town collecting food from local distributors. The pantry, housed in the church basement, gives away boxes of food that might feed a family of four for a week. It includes dry and packaged goods like cereals and pasta, peanut butter, canned fruits and vegetables, 7 or 8 pounds of frozen meat (usually chicken or hot dogs), and eight pan pizzas donated from a local Pizza Hut. Most of the other food is purchased from a distributor or donated by the county food program. Last month they gave out 519 boxes. Hagopian hopes the demand for food doesn't get much worse. "I hope we're at the top of it because we'll run out of food, and then we'll have to go out and find some more," she said. She should brace for the worst. Across metro Detroit, social service agencies are reporting a huge spike in demand for food assistance.

Banks line up for more money - (money.cnn.com) Under regulatory pressure and facing few capital-raising options, some small lenders are looking to the government for help. Again. For some banks, the grim reality is that another dose of TARP may be their best shot at salvation. Overwhelmed by loan losses, some hard-hit lenders are hitting up the Treasury Department for even more money from the Troubled Asset Relief Program. Last week, Midwest Banc Holdings (MBHI), a community bank based just outside of Chicago, outlined an extensive capital raising initiative after suffering its second consecutive quarterly loss. The bank said it had applied for as much as $138 million under Treasury's Capital Assistance Program, or CAP, an extension of the original TARP. The bank received $84.7 million in TARP funds last December. Citizens Republic Bancorp (CRBC), a Flint, Mich.-based bank that has suffered along with the local automotive industry, revealed in late June that it too was considering tapping up to $290 million from CAP, part of which would be used to redeem a portion of the Treasury's original $300 million investment made last December. Experts say it seems certain that more small banks will follow the lead of Midwest and Citizens Republic. "I think we have only started to hear about the applications for CAP," said Eileen Rooney, an analyst with Keefe, Bruyette & Woods. Feeling the pressure: A combination of factors are driving banks to seek even more government assistance. Banks are facing intense pressure from regulators to raise new capital, particularly in the form of stock, which boosts a firm's closely-watched tangible common equity levels, a key gauge of their capital health. Complicating matters further is the fact that many community and regional lenders are having a difficult time attracting fresh funds from the private markets. Investor demand for new stock and debt from smaller banks has tapered off significantly over the past two years.

Trucks win in Cash for Clunkers game‎ - (money.cnn.com) Government manipulating statistics to disguise Cash for Clunkers as a green initiative, when in reality, trucks and SUVs are big winners. Because of distorted sales figures, Ford's Escape cross-over SUV, not the Focus small car, tops the list for most popular 'clunker' buy. What are people trading their clunkers in for? It depends on who you ask. The government's results showed small cars as the top choice for shoppers looking for Cash for Clunker deals. But an independent analysis by Edmunds.com disputed those results, and showed that two full-size trucks and a small crossover SUV were actually among the top-ten buys. The discrepancy is a result of the methods used. Edmunds.com uses traditional sales measurements, tallying sales by make and model. The government uses a more arcane measurement method that subdivides models according to engine and transmission types, counting them as separate models. For example, the Ford Escape is available in six different versions including two- and four-wheel drive and hybrid versions. The government counts each version as a different vehicle using guidelines from the Environmental Protection Agency. Only the front wheel drive, non-hybrid version made the government's top ten list. The Ford Escape crossover SUV, instead of being the seventh-most popular vehicle under the program, as the government ranked it, was actually the best seller, according to Edmunds.com. The government pegged the Ford Focus as the top seller.