KeNo's Housing and Economic Portal: Friday October 16 Housing and Economic stories

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TOP STORIES:

Michigan slides toward partial government shutdown - (www.contracostatimes.com) Michigan's state government stumbled toward a partial shutdown Thursday as one of the nation's most economically battered states remained without a budget. State lawmakers failed Wednesday to agree on deep spending cuts proposed to balance the budget by a midnight deadline. They also failed to finalize a temporary budget that could have averted Michigan's second shutdown since 2007. Secretary of State offices could close and state parks could begin asking visitors to leave if the impasse isn't resolved before state workers are to report for work Thursday. Essential services such as state police and prisons will continue running. Lawmakers could not agree to steep cuts in tax payments to local governments and shallower cuts to K-12 education.

Simmons Calls On Rep. Towns To Subpoena Countrywide Records; Proposes All Members And Candidates Disclose Their Mortgages - (www.joinrobsimmons.com) House Oversight Chair Who Had Countrywide VIP Loans Makes Mockery Of Congressional Investigation. In light of new reports that recorded conversations between Countrywide employees and recipients of controversial VIP mortgages have been destroyed, U.S. Senate candidate Rob Simmons today called on House Oversight and Government Reform Committee Chairman Edolphus Towns (D-NY), who himself has been found to possess two VIP mortgages, to subpoena all information related to the Countrywide "Friends of Angelo" Scandal. On the same day in August that Senate investigators criticized Sen. Dodd for his involvement in the VIP program, Towns himself was found to have secured two Countrywide loans through the VIP program, raising questions about members' of Congress motivation in seeing the investigation come to a halt. Towns' continued refusal to do subpoena key documents related to the scandal makes a mockery of congressional investigations said Simmons. "It's like the fox watching the henhouse," said Simmons. "In addition to Rep. Towns, how many other members of Congress hold VIP Countrywide loans? This investigation is seriously clouded by the possibility that many other members of Congress of both parties, including possibly those who sit on the Senate Ethics Committee itself, are beneficiaries of Countrywide VIP mortgages." "With these new revelations that tapes of conversations between Countrywide employees and VIP loan recipients were destroyed, it becomes all the more imperative that Congress finally subpoena key information necessary to complete a thorough investigation," said Simmons. Simmons promised that the first bill he would propose as a member of the Senate would close the loophole in the reporting of personal finances that allows members of Congress and candidates to avoid disclosing the details of their mortgages. Simmons said all current mortgage documents should be included in the disclosure requirements. "Public office is a public trust, and at a time when many Americans are losing faith in their elected officials it is imperative that we fix the broken system of ethics reporting that has contributed to this shameful affair," Simmons said. Although Sen. Dodd promised full transparency regarding his mortgages 431 days ago, he has yet to fulfill that promise. Nonetheless, that did not stop Dodd from suggesting in August that all members' mortgages be investigated. FACTS:

- The Wall Street Journal Today Reports That Recorded Conversations Between Countrywide And VIP Loan Recipients Have Been Destroyed. "The discovery that Countrywide Financial Corp. recorded phone conversations with borrowers in a controversial mortgage program that included public officials -- and that those recordings have been destroyed -- has prompted new congressional calls for more information about the program." (John R. Emshwiller, "Phone Calls Add To Din Over Loans," The Wall Street Journal, 9/28/09)

- House Oversight And Government Reform Committee Chairman Edolphus Towns Refuses To Supoena Key Information Related To The Countrywide Scandal. "Darrell Issa of California, the ranking Republican on the House Oversight and Government Reform Committee, is trying to subpoena the remaining records of Countrywide's VIP loan program. So far, the committee's chairman, New York Democratic Rep. Edolphus Towns, has turned down that request." (John R. Emshwiller, "Phone Calls Add To Din Over Loans," The Wall Street Journal, 9/28/09)

- On The Same Day The Senate Ethics Committee Released Its Report On Dodd, It Was Revealed That Rep. Edophus Towns (D-NY), Who Is Obstructing A Full Investigation Into The Countrywide VIP Scandal In The House, Received Two Loans Through Countrywide. "A leading Democrat in the House of Representatives who has rebuffed Republican efforts to subpoena records of a mortgage program for favored borrowers at Countrywide Financial Corp got home loans from that lender, the Wall Street Journal reported on Friday. Representative Edolphus Towns, chairman of the House Oversight and Government Reform Committee, obtained two loans from Countrywide, which was bought last year by Bank of America, the newspaper said, citing information from the lawmaker's mortgage documents. Towns has turned down calls from the committee's ranking Republican, Darrell Issa, for the panel to subpoena mortgage records showing who received loans through Countrywide's VIP program, the journal said." ("House Democrat Received Countrywide Loans: Report," Reuters, 8/7/09)

Drop in Buying Plans Shows Home Tax Credit Fading, Vitner Says - (www.bloomberg.com) Fewer Americans told the Conference Board in September that they plan to buy a home within six months, indicating the effects of the government’s tax credit for first-time homebuyers may be fading, according to Wells Fargo Securities LLC senior economist Mark Vitner. The Conference Board, a private New York-based research group, said yesterday the share of Americans expecting to purchase a home within six months fell to 2.3 percent this month from 3 percent in August. The measure was one of the components of the group’s consumer confidence report. The government’s $787 billion stimulus included an $8,000 tax credit for first-time buyers that will expire at the end of November. Economists have said the incentive, combined with lower prices and mortgage rates, has helped lift sales from the depths of the worst housing slump since the Great Depression. Buyers are “running out of time to find a home, put it under contract and line up financing so they can qualify for the tax credit,” Vitner said in a note to clients. Most of the drop in buying plans occurred among those looking to purchase an existing home rather than a new house, Vitner said. Economists at UBS Securities LLC were among those that said recent gains in home prices may also fade with the end of the first-time buyer credit. A separate report yesterday showed home values in 20 U.S. cities rose in July by the most in almost four years. The S&P/Case-Shiller home-price index rose 1.2 percent from a month earlier.

CIT near plan to turn over company to bondholders: sources - (www.reuters.com) CIT Group Inc is nearing a plan that likely would hand the commercial lender over to its bondholders, sources familiar with the matter said on Tuesday. CIT was preparing an exchange offer that would eliminate up to 40 percent of its more than $30 billion in outstanding debt, said the sources, who did not wish to be identified because they were not authorized to make public comments about the deal. The plan would offer bondholders new debt secured by CIT assets, as well as nearly all of the equity in a restructured company, one source said. If not enough bondholders agreed to the plan, the company could seek to restructure in bankruptcy court, the source said. This would result in one of the largest Chapter 11 bankruptcy-court filings in U.S. history. A second source said that while some bondholders supported the plan, a majority was not yet on board. CIT's board has yet to approve any course of action, the first source said. CIT spokesman Curt Ritter declined to comment. Although CIT received $2.3 billion in December under the Troubled Asset Relief Program (TARP), federal regulators this year declined further requests by CIT for funds. U.S. taxpayers are likely to see much of their investment wiped out under a bankruptcy, but not under a successful exchange offer, the first source said, adding that U.S. regulators had been frequently briefed on the developments of the plan. The lender to small and medium-sized businesses, as well as to commercial real estate borrowers, has until October 1 to present a restructuring plan to lenders.

Fisher Sees Limit to Fed’s ‘Life Support’ for Housing - (www.bloomberg.com) ederal Reserve Bank of Dallas President Richard Fisher said there’s a limit to the “life support” the central bank can provide to boost U.S. housing, and suggested the industry is showing signs of bottoming. “The market for housing will not become truly robust until market forces replace the prostheses of government support,” Fisher said today in a speech in Dallas. “There is, in my opinion, a limit to the life support that can be provided by either the Federal Reserve on the monetary front or the Congress on the fiscal front.” Fed policy makers last week committed to complete their $1.45 trillion in purchases of mortgage securities and extended the end of the program to March from December, while indicating for the first time since August 2008 that the economy is accelerating. Home values in 20 U.S. metropolitan areas climbed in July by the most in almost four years, a report today showed. “I expect that when it comes time to tighten monetary policy, my colleagues and I will move with an alacrity that, if needed, will be equal in speed and intensity to that with which we pursued monetary accommodation,” said Fisher, 60. The Dallas Fed chief dissented in favor of tighter policy five times last year and doesn’t vote on the Federal Open Market Committee this year. The Fed has taken unprecedented steps to combat the worst recession in seven decades by lowering the target for the fed funds rate, or overnight lending rate between banks, to almost zero in December and switching to asset purchases and credit programs as the main policy tools.

Ex-Dem fundraiser sentenced in NYC to 24 years‎ - (www.google.com/hostednews/ap) Former Democratic fundraiser Norman Hsu was sentenced Tuesday to more than 24 years in prison by a judge who accused him of funding his fraud by manipulating the political process in a way that "strikes at the very core of our democracy." U.S. District Judge Victor Marrero sentenced the 58-year-old Hsu, who raised money for Hillary Rodham Clinton and others, to 20 years in prison for his guilty plea to fraud charges and another four years and four months in prison for his conviction at trial for reaking campaign finance laws. In a lengthy criticism of Hsu's fraud, the judge said the former fundraiser used political contributions to win respect and impress investors as he committed campaign finance fraud. "Mr. Hsu's disgraceful use of political campaigns to perpetuate hisPonzi schemes, as well as his acts of campaign finance fraud, strikes at the very core of our democracy," Marrero said. The judge said Hsu stole more than $50 million from hundreds of investors in a 10-year Ponzi scheme by winning their confidence with his pristine reputation and friendly nature, a two-faced quality the judge noted was common among certain white collar criminals. He described Hsu as a wolf in sheep's clothing. He said his "conniving use of the political process to fund his fraud" made his crimes much more sinister and reprehensible. Before he was sentenced, Hsu apologized. His donations became an embarrassment for Clinton's presidential campaign. His arrest led Clinton to return more than $800,000 to donors linked to him.

OTHER STORIES:

Gold Heads for Biggest Gain in Six Quarters as Dollar Declines - (www.bloomberg.com)

Oil rises towards $68 as dollar slips - (www.reuters.com)

Bank-Bailout Fund Faces Years in Red as Failures Jolt System - (online.wsj.com)

FDIC Proposes Banks Prepay Deposit Fees Through 2012 - (www.bloomberg.com)

IMF Cuts Forecast for Global Losses to $3.4 Trillion - (www.bloomberg.com)

I.M.F. Calls for Restructuring of Financial System - (www.nytimes.com)

China orders crackdown on industrial overcapacity - (finance.yahoo.com)

ECB Lends Banks 75.2 Billion Euros in Second 12-Month Auction - (www.bloomberg.com)

BOJ Said to Consider Ending Corporate Debt Purchases - (www.bloomberg.com)

CIC Buys Stake in Kazakh Gas Company for $939 Million - (www.bloomberg.com)

ADP Says U.S. Companies Cut 254,000 Jobs This Month - (www.bloomberg.com)