KeNo's Housing and Economic Portal: Saturday October 3 Housing and Economic stories

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TOP STORIES:

Owner of 70 Jack in the Box restaurants seeks bankruptcy protection - (www.sacbee.com) An already financially troubled Roseville real estate developer who owns 70 Jack in the Box restaurants from Fresno to Redding filed for bankruptcy protection Friday. Abe Alizadeh of Kobra Associates Inc., who owns and operates the restaurants, signaled trouble on Thursday when he suddenly closed them all, including six in Sacramento, temporarily stranding as many as 2,100 employees. The restaurants just as abruptly reopened Friday afternoon, but under protection from creditors with a Chapter 11 petition filed in U.S. Bankruptcy Court for the Eastern District of California. Alizadeh, whose company owes $1.5 million in back state taxes and whose restaurant business has liens from the state against it, could not be reached for comment Friday. "Our focus in the days ahead will be to return to normal business operations and to work cooperatively with our creditors to complete this process as quickly as possible," Alizadeh said in a written statement. "We apologize to our customers and our employees for the disruption in service, deeply appreciate their patience and are eager to resume fulfilling our commitment to them." The company had reached an impasse with creditors, which is why it sought protection in Chapter 11, the statement said, adding that the firm is talking to possible lenders. Jack in the Box corporate representatives were caught off-guard by the shutdown but were relieved when the stores reopened so quickly, said Brian Luscomb, a spokesman for the San Diego-based chain. "We're happy about that," he said, declining to discuss the bankruptcy court action. Alizadeh's restaurants are in virtually every town and city in Northern California. He is not the only Jack in the Box franchisee in Sacramento, however. Eleven local Jack in the Boxes are either owned by the corporate parent or other franchisees. But in some smaller cities, such as Galt and Woodland, the company's only presence is Alizadeh's restaurants. Another of Alizadeh's companies, Kobra Properties Inc., a real estate development firm, has been in Chapter 11 bankruptcy protection since November, staving off a $277 million debt. Among the largest creditors listed in court papers filed on Friday were an insurance company, utilities and the Jack in the Box corporation. Alizadeh, who started with the chain as a college student making tacos, is one of 90 franchisees who own 42 percent of Jack in the Box's 2,200 restaurants, Luscomb said. Alizadeh is not the largest owner among the 90, although the typical franchisee owns 10 restaurants, he said.

Low expectations for new loan help program - (www.sacbee.com) Dial back the pie-in-the-sky projections. Last month, the Obama administration launched a program to help homeowners with loans insured by the Federal Housing Administration. About 850,000 FHA borrowers are behind on their payments or in foreclosure, yet the program will assist just 45,000. The effort targets homeowners who were ineligible for the government's other loan modification plans. But the decision not to rescue more FHA homeowners reflects the Obama administration's need to protect the financial health of the agency, and to set more realistic goals for helping borrowers as its other loan modification programs fall short. On Friday, the FHA said its financial reserves had sunk below mandatory levels for the first time in its 75-year history. While officials insist the agency won't require a taxpayer rescue, falling home prices, rising unemployment and shady lenders continue to drive up default rates. Nationwide, about 17 percent of FHA borrowers have missed at least one payment or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association. The FHA said it will raise the financial requirements for lenders and request annual audits, and it is cracking down on lenders suspected of fraud. But the agency's powers to modify more loans for distressed borrowers are being weakened by the poor economy. FHA borrowers are concentrated in states like Michigan and Ohio, where job losses, rather than lax lending practices, are the main problem. And officials are weeding out borrowers who have too much debt. "Stretching too far, not only risks taxpayer funds and greater losses than we would otherwise have ... it also is not good for those homeowners," said Shaun Donovan, President Barack Obama's housing secretary. The new steps reflect the increasing dominance and vulnerability of the FHA. About 20 percent of new loans today are insured by the FHA, up from as low as 2 percent during the subprime loan boom. Lou Tisler, executive director or Neighborhood Housing Services of Greater Cleveland, says FHA loans accounted for one in four of the foreclosures handled by his nonprofit in the 12 months that ended in June. That's up from about one in five the year before. Many of those homeowners have lost their jobs and drained their savings and retirement accounts. Now they're out of options. Lorrin Montag and his wife, Dianna, are fearful about their future. Their unemployment and disability benefits run out next year, and the couple's one-story manufactured home in Corona, Calif. is worth around $150,000, far short of their $280,000 FHA loan.

Ron Paul's End the Fed on Amazon: #1 in Economy, #1 in Government, #10 in all books, #2 in Non-Fiction (Behind Glenn Beck - Ack!) - (www.amazon.com) Keep up the good work, Ron Paul!!! Kill the fed, and get rid of the corruption with the Central Bank (owned by the banks) as the watchdog allows banks and investment companies to manage themselves and the US Government.

Debtor's Revolt Makes the Huffington Post - (www.huffingtonpost.com) For years, Ann Minch of Red Bluff, Calif., has carried a balance of several thousand dollars on her Bank of America credit card, making minimum monthly payments of about $130, sometimes paying an extra $50 or $100. She says she's never missed a payment. Bank of America rewarded her loyalty this year by repeatedly raising her interest rate, which reached 30 percent in July. Fed up, the 46-year-old stepmother of two turned to YouTube. "There comes a time when a person must be willing to sacrifice in order to take a stand for what's right," said Minch in a Sept. 8 webcam video. "Now, this is one of those times, and if I'm successful this will be the proverbial first shot fired in an American debtors' revolution against the usury and plunder perpetrated by the banking elite, the Federal Reserve and the federal government." Minch announced that she'd be dumping Bank of America, refusing to pay off her credit card debt unless she was offered a lower rate. She explained that she'd been a reliable customer even though she'd lost her job as a mental health case manager. She said bank reps refused to negotiate her interest rate when she called them to complain a few weeks ago. "You are evil, thieving bastards," she said in her video. "Stick that in your bailout pipe and smoke it." The video made a splash online, getting links from all kinds of venues and garnering over 96,000 views as of Monday morning. Minch told the Huffington Post she fulfilled part of her threat on Saturday, when she went to her local BofA branch and closed out her checking and savings accounts. She took her money (around $5,000, she said) and put in a local community bank. She brought printouts of web pages that had linked to her video, but a manager wasn't interested in looking at them.

Peter Schiff Announces Senate Bid: Video & Letter - (www.dailypaul.com) Dear Friend, Well, it looks like you have made a difference. Based upon the unbelievable support that I have received from 10,000 supporters like you, I have decided to throw my hat into the ring to challenge Chris Dodd for the honor of representing the state of Connecticut in the United States Senate. I will announce my candidacy on MSNBC's Morning Joe show on Thursday, September 17 at 8:15am eastern time. Sorry for the short notice, but its important to honor commitments and keep these things under raps until the day the news breaks. At this time last year I could not have imagined that that I would be making such an announcement today. I had never intended to become a candidate for public office. But these are extraordinary times. Our economy is falling apart in front of our eyes and Washington seems intent on making the wheels come off even faster. At a time when we desperately need adult supervison, the economically illiterate are running the show. As I love my country, it now seems clear that I must try to do something to help. The emotional and material support I have received from across the country has made the decision much easier. So today it begins. As I'm sure you are aware, the rules in politics bear only scant resemblance to those which govern polite society. As a result, I am wading into strange waters, and I'm sure strange things will happen. But I promise to maintain my composure and give it my best shot. Based on the support that I have received thus far, I fully expect to be facing down Chris Dodd in the general election just 14 months from now. As my campaign takes flight, I appreciate the patience and trust that you have shown. To commit time and money to a long shot candidate for high office is a hard choice. I hope to repay that trust with a first class campaign. I look forward to your feedback and your continued support. Thanks again, Peter Schiff

Already hobbled by recession, ACORN gets slammed by scandal - (www.latimes.com) No new clients are being signed up as the group scales back or shuts down in many cities. An internal investigation is underway. Stung by the recession and a string of scandals, the ACORN community activist organization has been shutting down in many of the communities it once worked to empower. No new clients are being signed up, said national spokesman Brian Kettenring, while the group conducts an internal investigation into how its business is conducted. The Assn. of Community Organizations for Reform Now had already shuttered 40% of its centers -- in cities including Chicago, Salt Lake City, Atlanta and Omaha -- since its high of 105 offices two years ago, he said. The branches helped low- and middle-income clients with housing, jobs and navigating government aid programs. Kettenring said that the closures were mostly due to the poor economy and had become more frequent in the last year. "We're seeing the same challenges the entire nonprofit sector is seeing," he said. But former ACORN members say the scandals that have recently dogged the organization -- including allegations of mismanagement and voter registration fraud -- have been a bigger problem. In the latest controversy, ACORN workers in several cities, including New York, Baltimore and Washington, were secretly videotaped giving advice to two conservative activists who posed as a prostitute and her pimp and said that they wanted to buy a house and run it as a brothel with teenage girls. Workers were recorded giving advice on how to evade taxes and conceal the nature of their business. The appearance of the videos last week on a Fox News program set off a furor. The U.S. House voted this week to deny all federal funds for ACORN, while state lawmakers in California, Georgia and Minnesota called for investigations or a cutoff of state funds. "When you have this big of a mess, it takes time to clean up and your funders drop like flies," said Madeline Talbott, a former head organizer for ACORN's operations in Illinois.
ACORN's Chicago office closed in January 2008, when Talbott -- along with 365 community members, the local ACORN board and at least a dozen paid staff members -- quit over concerns about mismanagement and a lack of financial transparency at the group's national headquarters. "I feel so torn about what's happening now," said Talbott, who today is an organizer with Action Now, an advocacy group for the poor in Chicago.

California's unemployment rate hits 12.2% in August - (www.latimes.com) California's jobless rate set a fresh postwar high in August, rising to 12.2% from 11.9% in July and putting more pressure on the state's tattered unemployment insurance fund. Though the state may be in the early stages of an economic rebound, the latest figures underscore what many economists fear: There is no obvious engine of job growth to put California's more than 2.2 million unemployed residents back to work quickly. There was some encouraging news in the job figures released Friday by the state Employment Development Department. The pace of payroll job losses has slowed dramatically. California employers slashed a net 12,300 jobs last month. That's down from 39,000 jobs lost in July and the average of more than 70,000 jobs shed monthly during the first half of the year. Still, the sheer number of Californians out of work -- and the lengthening duration of their joblessness -- is worrisome to economists and public officials. Nearly 30% of the state's unemployed have been out of work at least 27 weeks. California's unemployment rate is well above the national rate of 9.7%. And it's the fourth-highest in the nation; only Michigan, Nevada and Rhode Island, at 15.2%, 13.2% and 12.8%, respectively, are faring worse. Unemployment will not decline until industries such as renewable energy, healthcare and construction experience significant growth, economists say. Most don't expect that any time soon.

OTHER STORIES:

Paul's HR 1207 - Audit the Fed Bill Officially Hits 290 Cosponsors - (www.dailypaul.com)
Working Class Zero - (www.nytimes.com)
Bank failure toll reaches 94 - (money.cnn.com)

Now the Fed wants to tame risk. Puh-leeze - (money.cnn.com)

U.S. bolsters mortgage insurance agency - (money.cnn.com)

"A corporation, after all, is not endowed by its creator with inalienable rights." - Justice Ruth Bader Ginsburg - (online.wsj.com)
David Korten: Who Really Crashed the Economy? And why do we keep blaming the wrong people? - (www.yesmagazine.org)
Uncle Sam Bets the House on Mortgages - (online.wsj.com)
Bill O'Reilly Backs Public Option (Just don't call it that) - (www.dailypaul.com)
Obama adviser blasts big business ads - (money.cnn.com)