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US Postal Service Seeks 30,000 Job Cuts Via Buyouts - (www.cnbc.com) The U.S. Postal Service, the nation's second-largest employer, offered buyouts on Tuesday to quickly slash up to 30,000 jobs as it grapples with declining mail volume and embraces more automation. The incentive for voluntary resignations and early retirements among a pool of veteran workers by the end of September is part of a drive to cut costs by $6 billion this fiscal year, the Postal Service said. "This decision reflects our desire to provide a fair and equitable opportunity for some of our longest-serving employees," said Anthony Vegliante, chief human resources officer and executive vice president. "It is important to the Postal Service that we take appropriate measures to address our current financial situation." The majority of those offered $15,000 to leave as part of an agreement with unions -- up to 30,000 people -- work in mail processing facilities, officials said. The Postal Service hopes to save up to $500 million from the move. The job cut target is similar in scope to employment reductions by U.S. automakers and certain banks, and comes amid signs that the recession may have bottomed out. The Postal Service, a quasi-government agency that relies on postage sales and revenue from other products and services to fund operations, reported a $2.4 billion loss in the quarter ended June 30. Traditional mail volume has been fallen sharply as email has proliferated along with online services such as electronic bill payment, officials have said. The Postal Service has 656,000 career employees, second behind Wal-Mart Stores which has more than 1.4 million workers in the United States.
Many subprime lenders are getting U.S. subsidies, report says - (www.latimes.com) Much of the money from the government's foreclosure prevention program is going to the same financial institutions that helped create the mortgage mess, the Center for Public Integrity says. Many of the lenders eligible to receive billions of dollars from the government's massive foreclosure prevention program helped fuel the housing crisis by issuing risky subprime loans, a report to be issued today by the Center for Public Integrity says. Under the $75-billion program, called Making Home Affordable, lenders are eligible for taxpayer subsidies to lower the mortgage payments of distressed borrowers. At least 21 of the top 25 participants in the program specialized in servicing or originating subprime loans, the nonprofit investigative reporting group says. Much "of this money is going directly to the same financial institutions that helped create the subprime mortgage mess in the first place," Bill Buzenberg, executive director of the center, said in a statement. For example, JPMorgan Chase & Co., Wells Fargo & Co. and Countrywide Financial Corp., which has been purchased by Bank of America Corp., are eligible to receive billions of dollars, the report says. The report comes as the Obama administration is prodding lenders to do more to help borrowers. Fewer than 10% of delinquent borrowers eligible for assistance through the Making Home Affordable program have received help so far, according to Treasury Department estimates this month. The administration aims to more than double the number of borrowers helped under the program to 500,000 by Nov. 1. "Mortgage lenders and servicers have been reluctant to participate in foreclosure prevention programs despite their role in creating the subprime debacle. Intense pressure from Congress and the White House hasn't worked either," the report said. "The stick has not been effective, so the Obama administration is offering a carrot -- billions of dollars in incentive payments to lenders and loan servicers." The report has drawn fire from lenders. It oversimplifies the causes of the housing crisis and misses the complexity of the markets, said Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents some of the nation's largest lenders. Lenders are working hard to help millions of homeowners through the federal program and other foreclosure prevention efforts, Talbott said.
Clinton fundraiser accused in alleged fraud Nemazee said to have secured $74m Citi loan - (www.ft.com) A prominent Democratic fundraiser who served as a national finance chairman of Hillary Clinton’s presidential campaign has been accused in an alleged $74m scheme to defraud Citigroup, federal prosecutors said on Monday. Hassan Nemazee was accused of using false documents to secure a loan of $74m from Citi. He was on his way to Rome on Sunday when he was interviewed by federal investigators at Newark Liberty International Airport. On Monday, prosecutors said, he repaid the loan. Mr Nemazee is chairman and chief executive of Nemazee Capital, which describes itself as an investor in businesses including healthcare, media, oil, insurance and investment banking. President Bill Clinton picked Mr Nemazee to be US ambassador to Argentina but the 1999 nomination fell through after questions were raised about his business dealings. Mr Nemazee served as New York finance chairman for Senator John Kerry’s 2004 presidential campaign, before joining Mrs Clinton’s presidential effort. He also later raised funds for Barack Obama’s presidential campaign. Mr Nemazee, 59, faces up to 30 years in prison if convicted of the bank fraud charges. Mr Nemazee’s lawyer, Marc Mukasey, said: “We are reviewing the allegations.” Citi said it was co-operating with the authorities. Mr Nemazee first contacted Citibank in December 2006 to borrow up to $25m and in November last year modified the arrangement to raise the amount he could borrow to $80m, according to the criminal complaint filed in a Manhattan federal court. Prosecutors allege that Mr Nemazee submitted documents to Citibank that indicated he held hundreds of millions of dollars in various financial accounts. “Those documents were fraudulent and forged,” and the accounts “either never existed or had previously existed, but had been closed years before”, the criminal complaint claims. Mr Nemazee also allegedly used fake addresses and phone numbers to mislead Citibank.
Cash for Cribs? Toys 'R Us Takes Aim at Old Baby Gear - (www.cnbc.com) The government's "Cash for Clunkers" program has shown that consumers are willing to bite at a good deal. And what's a better deal than trading in old, unwanted items to get a discount on a replacement? With that in mind, we'll no doubt start seeing marketers pitching some interesting trade-in programs. Long before "Clunkers" showed up on the scene, Toys R Us began working on its own trade-in program, aimed at getting potentially unsafe cribs, car seats and other baby items out of circulation. In drafting the program, it consulted with manufacturers of baby gear, such as Newell-Rubbermaid's Graco, and child safety advocates. But then the government announced its wildly successful trade-in program, and the retailer wondered what impact that would have on its own plans. "We wondered if that was going to create 'good excitement' or 'bad,'" said Toys R Us CEO Jerry Storch. But ultimately, the company realized that "Clunkers" had the positive goal of putting more environmentally friendly cars on the road. "That's a great cause," he said. "We're working for improvements in child safety, and that's a great cause, too." The way the program works is very simple: consumers can trade in a crib, car seat or a number of other baby products for a 20 percent discount on a new item at the store. The retailer will begin accepting the used cribs, car seats, strollers, high chairs and other items on Friday, and will continue to do so until Sept. 20 at all Babies R Us and Toys R Us stores. There are no limits to the number of products that can be redeemed, and a person doesn't need to swap a like item for a like item. (In other words, you can bring in a car seat and get a discount on a play yard if you'd like.) Once collected, the products will be destroyed. "There has been a rush to the cheap in this economy," Storch said. "...Cheap is not always good when it comes to safety."
Huge Plunge In Mortgage Cure Rates Portends Foreclosure Disaster - (Mish at http://globaleconomicanalysis.blogspot.com) Mortgage cure rates have fallen off a cliff. For those unfamiliar with the term, a "cure rate" pertains to those who go delinquent on loans then catch up and become current. Late payments that don't "cure" have a tendency to get later and later over time, before they eventually default. Fitch ratings notes Cure Rates Plunge Among Prime RMBS. According to Fitch, cure rate on prime mortgages plunged to 6.6% from an average 45% during 2000-2006. Alt-A cure rates plunged to 4.3% from an average 30.2% and subprime cure rates fell to 5.% from an average 19.4%. A couple of charts can help put this in context. Here is a chart from Hidden Backlog of Foreclosures.
34 Percent of Workers Have One Week or Less of Savings - (Mish at http://globaleconomicanalysis.blogspot.com) Many people are living paycheck to paycheck, on the edge of disaster as highlighted in a new Monster Poll that reveals 34 Percent of Workers Have One Week or Less of Savings. Over a one week period beginning July 6 and running through July 13, more than 16,000 visitors to Monster.com participated in the Monster Meter Poll question “If you were laid off without severance, how long would your savings cover your living expenses?” One Week or Less: 34%; 2-4 Weeks: 16%; 1-2 Months: 16%; 3-5 Months: 14%; 6 Months or Longer: 20%; Creating three broad groups, 50% have less than a month of savings, while only 20% have 6 months or more. The remaining 30% are in between. Although the Monster Poll is not scientific, I cannot help thinking it is reasonably accurate. The implications on the savings rate are obvious: It will continue to rise. Those out of work may wish to consider Monster's Layoff Survival Kitthat contains a few worthwhile albeit mostly obvious tips for people to follow. Monster's Is Starting Your Own Business the Answer? was disappointing. The odds of success even in good times are not very high, something the article failed to address. Certainly the odds of success in starting a business right now are much worse than in normal times. And for those down to their last few months of cash, the odds of success approach zero unless one has the proverbial rich uncle willing to provide cash for a large number of years. Banks certainly are not lending to startups with no cash. Heck, banks are tightening lending standards even for those who do have significant skin in the game.
OTHER STORIES:
Bernanke’s Next Tasks Will Be Undoing His First - (www.nytimes.com) Ben S. Bernanke’s challenge in his second term will be to undo much of what made him a hero during his first.
European Markets Struggle After Gains in Asia - (www.nytimes.com) European stocks edged lower as upbeat German and American economic data were not enough to convince investors that a global recovery can last.
Stocks rise after Obama renominates Bernanke - (www.latimes.com) It may not have been a rousing "welcome back," but Wall Street's reaction Tuesday to Ben S. Bernanke's renomination as Federal Reserve chairman showed...
Port of L.A. is urged to stop lobbying over clean-trucks program - (www.latimes.com) Several of the nation's biggest trade associations have fired a warning shot across the bow of the Port of Los Angeles, urging it to cease lobbying...
Downturn Dims Prospects Even at Top Law Schools - (www.nytimes.com) Law students deep in debt from elite schools would often count on being hired by big-name firms, but those opportunities are drying up, and competition is growing.
French Bank’s Parent to Guarantee Toxic Assets - (www.nytimes.com) The investment bank Natixis said that its partially state-owned parent company would guarantee about $50 billion in toxic assets on its books.
Bay Area mortgage delinquencies soar - (www.sfgate.com)
California mortgage delinquencies expected to rise through 2009 - (www.latimes.com)
California tax credit expires, house permits sink - (www.reuters.com)
U.S. House Prices Tumble 6.1% on Surging Foreclosures - (www.bloomberg.com)
House Price Crash Only 75% Done - (www.businessinsider.com)
Detailed Criticism of the Fed - (www.nolanchart.com)
What is wrong with them is not that they are wrong- (www.theautomaticearth.blogspot.com)
The Next Credit Bubble Is Now - (www.thebigmoney.com)
True Deleveraging Not Begun Yet Because Bank Losses Socialized- (www.washingtonsblog.com)
Estimate for 10-Year Deficit Raised to $9 Trillion - (www.nytimes.com)
Houses In Walkable Neighborhoods Are Worth More - (www.triplepundit.com)
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