KeNo's Housing and Economic Portal: Saturday December 19 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

DPA wants court to reject SEIU arbitration request - (www.sacbee.com) The Department of Personnel Administration has launched another preemptive legal strike against a state worker union. This time the administration is asking the courts to keep SEIU Local 1000 from seeking contract arbitration over holiday and overtime changes in SBX3 8. DPA's 285-page document argues that Local 1000 can't seek arbitration for matters already taken to the Public Employee Relations Board and the courts. It's the same kind of litigation DPA filed against the International Union of Operating Engineers and Professional Engineers in California Government when those unions said they wanted furlough arbitration. The complaint, filed with the court on Tuesday, is too big for our blog software to load. If you want to read the document, click here and enter 00064854 in the case number field. Scroll down to "Complaint" and click "View." The 9,566-kilobyte file could take several minutes to load depending on your Internet speed.

Cautionary saga of a failed San Francisco bank - (www.sfgate.com) United Commercial Bank of San Francisco liked to boast that it was the first U.S. bank to buy a bank in China. Instead it will go down in history as the first U.S. depository institution to fail after its parent company took money from the Treasury's Troubled Asset Relief Program. As investigators seek to uncover the exact causes of the bank's death, some big questions remain:

-- Should the government have done more due diligence before investing $300 million worth of taxpayer money in parent company UCBH Holdings?

-- Would it have made any difference if the Federal Reserve had allowed China Minsheng Bank to acquire a controlling interest in UCBH?

-- What role did fraud play?

When regulators shut down United Commercial Bank on Nov. 6 , "it was like deja vu," says Richard Newsom, a retired West Coast bank and thrift regulator. United Commercial Bank grew from the ashes of United Bank, a San Francisco thrift that failed in the mid-1980s as a result of "reckless construction lending," Newsom says. Likewise, the FDIC cited commercial real estate and construction loans as a cause of United Commercial Bank's failure, along with "alleged fraud." That may have surprised people who still saw it as a conservative bank catering to Chinese Americans in San Francisco, Los Angeles and a few other cities with large Asian communities. "It was a great franchise for a while," says James Ellman, president of hedge fund Seacliff Capital. "It took in deposits from primarily Chinese Americans and made very conservative loans to the same ethnic group." But the bank "had a mismatch: its original depositor base was growing rapidly, but its ability to make loans to that depositor base was difficult. Heavy savers tend not to be big borrowers." Like other smaller banks, it also faced growing competition from Fannie Mae and Freddie Mac in home mortgages, from the large credit card companies in consumer loans and from the automakers' finance arms for car loans. That left United Commercial increasingly dependent on riskier commercial real estate and construction loans. "This bank, more than others, had its life or death tied to the health of the commercial real estate market, particularly in California," says Ellman. "As the health of commercial real estate weakened, so did this bank."

Vt. senator opposes a second Bernanke term at Fed - (www.signonsandiego.com) Federal Reserve Chairman Ben Bernanke is expected to face tough questioning during a reappointment hearing this week, and one senator already says he won't support another term for the Fed chief. Vermont independent Bernie Sanders says Bernanke is "part of the problem" facing the U.S. economy. The Senate Banking, Housing and Urban Affairs Committee has scheduled a hearing Thursday to consider President Barack Obama's nomination of Bernanke. The Fed chief was first appointed by President George W. Bush. Bernanke has been Fed chief during the worst economic decline since the Depression. He defended his actions in a column published Sunday in The Washington Post, saying the Fed played a major role in "arresting the crisis." Sanders appeared Sunday on ABC's "This Week."

Detroit needs housing rebound to spur pickup sales - (www.signonsandiego.com) At Kevin Haner's construction company in Las Vegas, three of the four Dodge Ram pickup trucks are starting to get a little old. He may replace one if he gets a great deal, but he'll keep running the others until he's convinced that the housing slump has ended. Haner's reluctance to spend is typical of contractors nationwide. This presents a huge problem for the Detroit automakers because truck sales are directly tied to new home construction. Pickup sales are on pace for their worst performance in 17 years, and GM, Chrysler and Ford still sell 91 percent of all full-size pickups in the U.S. Even as Detroit tries to gain traction with new small cars and electric vehicles in a government-mandated shift toward greater fuel economy, it needs to sell more Rams, Chevrolet Silverados and Ford F-150s. Pickups often sell for $30,000 or more and typically command higher prices and generate more profits than small and midsize cars. They account for 22 percent of sales for the Detroit Three. Until pickup sales rebound, steady profits and solid financial footing will likely prove hard to come by. Haner and others have reason to be cautious. While October new home sales were up 6.2 percent over September, construction of homes and apartments fell a larger-than-expected 10.6 percent, and building permits, a key indicator of future construction, slid 4 percent. "I'm not inclined to take on any more exposure until I see that the building-housing market is thoroughly back out of recession," Haner said Wednesday after the Commerce Department released the latest reading on new home sales. "Right now, construction companies are going out of business," said Erich Merkle, president of the auto industry consulting firm autoconomy.com in Grand Rapids, Mich. "And those companies that are surviving are making do with the existing fleet." The housing slump has pushed U.S. pickup sales downward for the past three years. Sales routinely topped 200,000 per month as recently as 2007, but in February they fell to less than 89,000, the low point for the year. They're off 32 percent from the first 10 months of 2008, according to Ward's AutoInfoBank. Ford, Chrysler and GM combined to sell 843,000 pickups through October. In Las Vegas, once among the hottest housing markets in the nation, building declined rapidly in the recession and is just starting to show signs of recovery, Haner said.

So Long Jobs, Hello Mom & Dad - (news.yahoo.com/s/ap) Faced with limited job options, many young adults are turning to an old standby to weather the recession: moving back in with mom and dad. Nearly 1 in 7 parents with grown children say they had a "boomerang kid" move back home in the past year, according to a study released Tuesday by the Pew Research Center. In a turnabout in the rite of passage in which a college graduate finds a job and an apartment, many are returning to their parents' empty nests because of tight finances or as they pursue an advanced degree. "The journey home for Thanksgiving won't be quite so far this year for many adults," said researchers Wendy Wang and Rich Morin, who wrote the report. "Instead of traveling across country or across town, many grown sons or daughters will be coming to dinner from their old bedroom down the hall." Pew's survey and analysis of government data found that the share of adults 18 to 29 who lived alone declined from 7.9 percent in 2007 to 7.3 percent this year. Drops of that magnitude were also seen during or immediately after the recessions of 1982 and 2001. Roughly one-third, or 35 percent, of boomerang kids said they had lived independently at some point in their lives but had to move back in with their parents. About half of the grown children worked full- or part-time, while 25 percent were unemployed and 20 percent were full-time students. The findings are the latest to highlight the sweeping social impact of a recession that began in December 2007. The effects have included declining immigration and U.S. migration between states, as well as increased carpools, use of public transit and "doubling up" of families in single-residence homes. Data released earlier this year showed that older Americans will make up virtually all of the growth in the U.S. work force in the coming years as a nearly unprecedented number hold onto jobs and younger people decide to stay in school. Among 16- to 24-year-olds, less than half, or 46.1 percent, are currently employed, the smallest share since the government began collecting such data in 1948. At the same time, a record high of about 11.5 million Americans ages 18 to 24, or nearly 40 percent, attended college in October 2008. "Boomerang kids are a major trend, and they represent a shift in cultural norms," said David Morrison, president and founder of Twentysomething Inc., a marketing and research firm. "Young adults are the first to feel the brunt of a bad economy and the last to feel the benefits of a recovering economy. So the first way you hedge your bets is to minimize your expenses." Saying there is now less of a stigma in moving back home, Morrison predicted that the trend of boomerang kids may lessen somewhat but still continue after the economy recovers. That could create longer-term ripple effects in social relationships, from multigenerational family tensions to delayed marriage, he said.

Plundering California - (www.city-journal.org) Public-sector unions have brought the state to its knees. The economy is struggling, the unemployment rate is high, and many Americans are struggling to pay the bills, but one class of Americans is doing quite well: government workers. Their pay levels are soaring, they enjoy unmatched benefits, and they remain largely immune from layoffs, except for some overly publicized cutbacks around the margins. To make matters worse, government employees—thanks largely to the power of their unions—have carved out special protections that exempt them from many of the rules that other working Americans must live by. California has been on the cutting edge of this dangerous trend, which has essentially turned government employees into a special class of citizens. When I recently appeared on Glenn Beck’s TV show to discuss California’s dreadful fiscal situation, I mentioned that in Orange County, where I had been a columnist for the Orange County Register, the average pay and benefits package for firefighters was $175,000 per year. After the show, I heard from viewers who couldn’t believe the figure, but it’s true. Firefighters, like all public-safety officials in California, also receive a gold-plated retirement plan: a defined-benefit annual pension that offers 90 percent or more of the worker’s final year’s pay, guaranteed for the rest of his life (and the life of his spouse). Government employees use various scams to boost their already generous benefits, which include fully paid health care and cost-of-living adjustments. The Sacramento Bee coined the term “chief’s disease,” for example, to refer to the 82 percent (in 2002) of chief’s-level employees at the California Highway Patrol who discovered a disabling injury about one year before retiring. That provides an extra year off work, with pay, and shields 50 percent of their final retirement pay from taxes. Most of these disabilities stem from back pain, knee pain, irritable bowel syndrome, and the like—not from taking bullets from bad guys. The disability numbers soared after CHP disbanded its fraud unit. As I document in my new book, Plunder!, government employees of all stripes have manipulated the system to spike their pensions. Because California bases pensions for employees on their final year’s salary, some workers move to other jurisdictions for just that final year to increase their pay and thus the pension. Even government employees convicted of on-the-job crimes continue to collect benefits. Municipalities have adopted Defined Retirement Option Plans, or DROPs, in which the employee earns his salary and his full defined-benefit retirement pay at the same time, with the retirement pay going into an account payable upon actual retirement. And as average Americans work longer to sustain themselves, public employees can retire in their early fifties with their plush benefits.

L.A., Long Beach clash over ports - (www.latimes.com) Should truckers be required to work for companies -- and therefore more likely to unionize? The ports disagree so strongly, economists worry that customers might avoid the harbor altogether. Just 13 months after Los Angeles and Long Beach set their maritime rivalry aside to fight diesel pollution at the nation's busiest seaport complex, the partnership has collapsed. In a disagreement that hinges on labor practices, the two cities are now so fundamentally at odds that some experts fear customers will seek out other harbors to escape a storm of complications, confusion and acrimony. At issue is whether the drivers who haul freight to and from the ports of Los Angeles and Long Beach should be required to work for trucking companies -- and therefore be more likely to be recruited by the International Brotherhood of Teamsters union. L.A., as part of its plan to encourage drivers to use lower-emission trucks at the harbor, has taken a pro-union position by requiring truckers to work for a company instead of being self-employed. Long Beach has not supported such a requirement. Their disagreement was hidden for a time beneath the rhetoric of working together to clean the air. But when Long Beach publicly settled a lawsuit by an industry organization that opposes the pro-union position, the gloves came off. If the two cities continue to clash, importers and exporters might begin avoiding the harbor altogether, dodging confusion over which trucks would be allowed to move cargo. That's a scenario that could devastate businesses that depend on international trade at a time when the value of goods passing through the ports is on track to drop 29% this year. "You will reach a point where shippers decide they just don't want to come here," said John Husing, an economist who tracks the effects of international trade on the Inland Empire. "It's too complicated, too political, and the cargo begins to go somewhere else." The two ports presented a united front to the public in October 2008, on the day that the oldest and dirtiest of the trucks were taken off the road. Los Angeles Mayor Antonio Villaraigosa, himself a former labor organizer, stood with Long Beach Mayor Bob Foster just over a year ago, pledging to work with the rival port to clean up the air. Shifting alliances: But since Long Beach reached its settlement with the American Trucking Assn., Villaraigosa has forged alliances with Oakland Mayor Ron Dellums, New York Mayor Michael R. Bloomberg and Newark, N.J., Mayor Cory A. Booker, all supporters of a clean-air plan that includes incentives for organized labor. The four mayors, who represent three of the nation's top 10 container ports, are pushing for a change in federal law that would give seaports limited regulatory authority over trucking. They argue that expensive new trucks can be maintained over the long term only if employers cover part of the cost and if the truckers gain collective bargaining rights that allow them to fight for good wages and benefits. "I have seen firsthand the unintended consequences" of a deregulated, nonunion system, Dellums said. "These include increased pollution, low-paid jobs with high turnover, inefficiency within goods movement, and destructive competition for motor carriers and ports." Teamsters General President Jim Hoffa said nonunion truck drivers work up to 16 hours a day in old, polluting trucks that he called "sweatshops on wheels." What's the issue?: Richard Steinke, executive director of the Port of Long Beach, argues that the clean air issue is separate from that of whether drivers should work for trucking companies. Steinke said Long Beach was already ahead of its goals of putting cleaner trucks on the road and that the city would keep working with truckers to improve air quality around its port. His counterpart, Port of Los Angeles Executive Director Geraldine Knatz, said her city's plan was necessary to preserve gains. "Who will pay for the next fleet of clean trucks when today's new trucks will need to be replaced?" she said. L.A.'s plan is not currently in effect -- the U.S. District Court in Los Angeles has barred the city from implementing it, under a temporary injunction won by the trucking association as part of a lawsuit. Experts say Southern California is the only region in the U.S. where different freight hauling standards could collide at a single harbor. The port of New York-New Jersey, for example, serves two states but is run by one port authority. In Virginia, the state oversees all seaports. Any confusion over which drivers are allowed to operate might be too much for L.A. and Long Beach customers who just want their cargo to move quickly.

OTHER STORIES:

Recession slows plan to build bunker data ce... - (www.signonsandiego.com)

Tough times turning newspaper lenders into o... - (www.signonsandiego.com)

Full gas tanks could stop many small plane c... - (www.signonsandiego.com)

AP Impact: For-profit colleges haul in gov't... - (www.signonsandiego.com)

China tries to fix crumbling health care sys... - (www.signonsandiego.com)

Upfront money needed to ease UN climate deal... - (www.signonsandiego.com)

Northeast scallopers decry cuts as stocks bo... - (www.signonsandiego.com)

Housing Bottom "Not Even Close" - (finance.yahoo.com)

Distressed houseowners ponder whether to stay or go - (finance.yahoo.com)

Nearly half of Tampa Bay houseowners underwater - (www.tampabay.com)

Housing threat looms in South Orange County - (mortgage.freedomblogging.com)