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Fannie, Freddie re-defaults reach 34 pct in 3rd-qtr - (www.reuters.com) More than a third of U.S. residential loans modified by Fannie Mae and Freddie Mac early last year were in arrears again after six months, though the default rate has improved, according to the regulator of the two largest mortgage finance companies. About 34 percent of homeowners with loans guaranteed by the companies modified in the first quarter of 2009 were at least 60 days delinquent, the Federal Housing Finance Agency said in a quarterly report on Friday. That compares with 39 percent of mortgages going bad after the companies agreed to ease terms of the loans in the last quarter of 2008, the report said. The re-default measures cover loans modified before the start of President Barack Obama's Home Affordable Modification Program that gives lenders a standard blueprint to ease terms of loans for troubled borrowers. Both companies have boosted trial modifications under HAMP, though progress is challenged by document collection and as borrowers are found ineligible.
California in call for $6.9bn - (www.ft.com) Arnold Schwarzenegger published his last budget as governor of California on Friday and immediately walked into a political storm when he said the state needed $6.9bn from the federal government to help address a $19.9bn budget deficit. Mr Schwarzenegger leaves office at the end of the year, having served two terms in which he has been unable to stabilise the rocky finances of the most populous US state. California faced a similar budget crisis last year and was forced to issue IOUs to thousands of workers in lieu of payment until it passed a budget containing billions of dollars in cuts to public services. The current fiscal year, in which the state’s finances have been decimated by the global recession and real estate slowdown, seems to be heading in the same direction. Mr Schwarzenegger’s budget proposes $8.5bn in spending cuts, with a 5 per cent reduction in the state workforce among his proposals. The plan also proposes reduced healthcare funding for poor families and for benefits for legal immigrants who have lived in the US for less than five years. Mr Schwarzenegger, who said the budget would protect education funding, has also outlined $4.5bn in “funding shifts”. But it is the $6.9bn the state is seeking from the federal government that is the most contentious part of his budget.
Horizon Bank first U.S. bank failure of 2010 - (www.reuters.com) U.S. regulators closed Horizon Bank (HRZB.O) of Bellingham, Washington, on Friday, kicking off what has been forecast as a peak year for small bank failures. The Federal Deposit Insurance Corp said Horizon Bank had approximately $1.3 billion in total assets and $1.1 billion in total deposits as Sept. 30. Friday's bank failure is expected to cost the FDIC's insurance fund a total of $539.1 million. The 18 branches of Horizon Bank will reopen during their normal business hours beginning on Saturday as branches of Washington Federal Savings and Loan Association and deposits will continued to be insured by the FDIC. Community banks are facing persistent pressure from deteriorating loans, many tied to commercial real estate projects that have collapsed or are in decline. Regulators closed 140 banks last year, the highest level since 1992 when officials were still cleaning up from the savings and loan crisis. That compares with 25 in 2008 and only three in 2007.
Chavez Cuts Bolivar By Half in First Devaluation Since 2005 - (www.bloomberg.com) Venezuela devalued its currency by half yesterday, the first such action since March 2005, as President Hugo Chavez seeks to pull the economy from recession amid falling oil revenue. Chavez said the bolivar will be devalued to 4.3 per dollar from 2.15 per dollar for most imports. A second, subsidized peg of 2.60 bolivars per dollar will be used for importing food, medicine and machinery intended to boost the economy’s competitiveness. The Central Bank, which agreed yesterday to transfer $7 billion in reserves to the government, will “intervene” to prop up the bolivar in the unregulated parallel market, Chavez said, without providing details. “This is to boost the productive economy, to reduce imports that aren’t strictly necessary and to stimulate exports,” Chavez, 55, said in comments on state television. “We need to stop being a country that only exports oil.” Chavez is trying to maintain spending for his 21st century socialist revolution as South America’s largest oil exporter fails to emerge from its first recession in six years. The government is seeking to stem its falling popularity and the highest inflation rate among 78 economies tracked by Bloomberg ahead of parliamentary elections scheduled for September.
State workers blast governor's pay cut plan - (www.sacbee.com) State workers and union leaders on Friday blasted Gov. Arnold Schwarzenegger's budget proposal to cut employee pay by up to 15 percent next year as a move to circumvent labor talks, although an administration spokesman said bargaining with the unions would begin "right away." Under the governor's 2010-11 budget plan, about 200,000 state employees who are losing 14 percent of their pay to three furlough days each month would go back to work full time starting July 1. But they'd be working for less money, since Schwarzenegger wants to cut their wages by 5 percent and impose a 5 percent increase in employee contributions to their retirement plans. Unless the federal government comes up with more money for the state – an unlikely scenario – Schwarzenegger would cut state worker pay another 5 percent. The governor's plan would fill in $1.6 billion of the state $20 billion budget gap between now and June 2011. Dave Low, chairman of Californians for Health Care and Retirement Security, a state union coalition, said trading furloughs for pay cuts is a "terrible deal" for government workers.
Stockton: Foreclosureville, USA - (www.sacbee.com) Stockton hardly looks like the most miserable city in the country. But the statistics and stories over the last two years make a case that it is: Since the housing crisis began, this inland port city 80 miles east of San Francisco has had one of the worst foreclosure rates in the country - for most of the time, the worst. At the height of it, about 1 in 10 houses fell to foreclosure. Houses that sold for more than $500,000 before the crash now go for $200,000. In some neighborhoods, fixer-uppers cost less than a new Honda Fit - under $20,000. To spend time in Stockton, a plain-jane city of single-family home neighborhoods edged by freeways and lingering farms, is to begin to understand the calamitous effects of the nation's foreclosure crisis, which has devastated so many once-booming places. Stockton is the San Joaquin County seat. And according to the Associated Press Economic Stress Index, a month-by-month scoring of U.S. counties' rates of unemployment, bankruptcy and foreclosures, San Joaquin had a score of 23.55 in November, making it the fourth-most stressed of counties with a population over 25,000. Its foreclosure rate of 6 percent was exceeded only by metro Las Vegas, metro Fort Myers, Fla., metro Orlando, Merced County, Calif., and Kendall County, Ill.
OTHER STORIES:
JAL Seen Closer to Bankruptcy - (online.wsj.com) Momentum is gathering for Japan Airlines to file for the Japanese equivalent of Chapter 11 bankruptcy protection, in a move that would mark one of the country's biggest ever insolvencies.
Dollar Drops From Four-Month High Versus Yen on U.S. Payrolls - (www.bloomberg.com)
Oil Is Little Changed as U.S. Payrolls Decline, Dollar Drops - (www.bloomberg.com)
Treasury 2-Year Notes Gain Most in Three Weeks on Job Losses - (www.bloomberg.com)
U.S. Stocks Gain on Earnings Optimism, Fed Rate Speculation - (www.bloomberg.com)
A Bizarre Year for the Estate Tax Will Require Extra Planning - (www.nytimes.com)
China Auto Sales Growth to Slow to 15% This Year, Miao Says - (www.bloomberg.com)
China’s ‘Big Step’ on Futures May Boost Investments - (www.bloomberg.com)
Jobs gloom hits west’s recovery hopes - (www.ft.com)
Shrinking U.S. Labor Force Keeps Unemployment Rate From Rising - (www.bloomberg.com)
Geithner under pressure on AIG payments - (www.ft.com)
Bear Stearns name set for scrapheap - (www.ft.com)
Hank Greenberg Tells WSJ Goldman Sachs Behind AIG’s Collapse - (www.bloomberg.com)
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