KeNo's Housing and Economic Portal: Saturday February 13 Housing and Economic stories

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TOP STORIES:

Church of England loses big in NYC real estate - (www.news.sky.com) The Church of England says it is "learning lessons" after a failed property development in New York City saw it suffer a loss of around £40m. The Church Commissioners had paid the cash to real estate firm Tishman Speyer, which was redeveloping a giant complex of apartments in Manhattan called the Stuyvesant Town-Peter Cooper Village. However, the housing market crash and restrictions posed by controlled rents for tenants of the 1940s-build development saw Tishman Speyer fail to make enough money to pay back its debts. The property was handed over to the real estate firm's creditors on Monday. "Stuyvesant Town offered the opportunity to invest in a large residential complex in a major international city, with Tishman Speyer, a respected world class manager," the Church said in statement. "In doing so we believed that the investment would provide strong financial returns and investment diversification." The Church said it undertook detailed due diligence in conjunction with external professional advisers and the fund manager, including an assessment of the identified investment risks. "However, the investment was affected by the sharp fall in residential property values, and a legal ruling that many apartment rents would continue to be regulated regardless of value or the income of residents," it said.

In anti-tax Oregon, voters consider tapping the rich - (www.latimes.com) Two measures will test how willing residents are to increase taxes on those theoretically best equipped to pay them -- the wealthy and big companies. Oregon officials know all about anti-tax fervor. Over the years, voters here have capped property taxes (saddling the state with two-thirds the cost of running the schools) and passed a constitutional amendment requiring rebates whenever tax receipts come in 2% over budget. Nine times they have been asked to OK a sales tax -- and said no. Proposals to increase the state income tax? Down in flames twice. But now the Legislature is taking a tack that analysts think could finally pull the rug out from under the tax revolt: soaking the rich. In mail-in voting that ends today, Oregon is considering measures to raise taxes on households earning $250,000 or more and on individuals earning at least $125,000, as well as hike corporate taxes. About 39,000 of the state's 1.5 million taxpayers would be subject to the higher tax, and some big companies could see their annual bills go from $10 to $100,000. The success or failure of Measures 66 and 67 will be a concrete test -- one of the few in the country this year -- of how willing voters are to accept tax increases targeted at those theoretically best equipped to pay them. "These measures are the first test of a progressive solution to the recession," said Cynthia Kain, a spokeswoman for the National Education Assn. who has been working to help pass the ballot measures.

After the Massachusetts Massacre - (www.nytimes.com) It was not a referendum on Barack Obama, who in every poll remains one of the most popular politicians in America. It was not a rejection of universal health care, which Massachusetts mandated (with Scott Brown’s State Senate vote) in 2006. It was not a harbinger of a resurgent G.O.P., whose numbers remain in the toilet. Brown had the good sense not to identify himself as a Republican ineither his campaign advertising or his victory speech. And yet Tuesday’s special election was a dire omen for this White House. If the administration sticks to this trajectory, all bets are off for the political future of a president who rode into office blessed with more high hopes, good will and serious promise than any in modern memory. It’s time for him to stop deluding himself. Yes, last week’s political obituaries were ludicrously premature. Obama’s 50-ish percent first-anniversary approval rating matches not just Carter’s but Reagan’s. (Bushes 41 and 43 both skyrocketed in Year One.) Still, minor adjustments can’t right what’s wrong. Obama’s plight has been unchanged for months. Neither in action nor in message is he in front of the anger roiling a country where high unemployment remains unchecked and spiraling foreclosures are demolishing the bedrock American dream of home ownership. The president is no longer seen as a savior but as a captive of the interests who ginned up the mess and still profit, hugely, from it.

AIG Draws $2.4 Billion From Fed Credit Line, Most Since October‎ - (www.bloomberg.com) American International Group Inc., the insurer bailed out by the U.S., increased its borrowing under a Federal Reserve credit line by the most since October to repay debt from an expiring government commercial paper program. AIG owes $25.8 billion on the line, about $2.4 billion more than last week, according to Fed data released yesterday. The draw has increased for six straight weeks. The company said in November that it may borrow additional funds from its five-year Fed credit line to make payments on maturing commercial paper. “This helps to highlight the risks we’re exposed to as citizens standing behind AIG,” said Bill Bergman, an analyst at Morningstar Inc. in Chicago. “While there’s much more liquidity in markets as a whole, lenders are still being selective.” AIG, which got a $182.3 billion government bailout, had relied on the U.S. commercial paper program as firms including MetLife Inc. and General Electric Co. reduced their use of government-backed funds. New York-based AIG said it lost access to traditional sources of liquidity after the 2008 rescue.

countrywide fails to add promised texas jobs – (www.thetruthaboutmortgage.com) Former top mortgage lender Countrywide, now owned by Bank of America, failed to bring an additional 7,500 jobs to the state of Texas as promised back in 2004. Six years ago, the Calabasas, CA-based home loan lender received a $20 million grant after pledging to create 7,500 new jobs in the Lone Star State by 2010. But after the unprecedented mortgage crisis, subsequent layoffs, and its merger with Bank of America, the company failed to make good on the promise. Bank of America reportedly notified Texas Governor Rick Perry’s office on December 31, 2009 that it was terminating the $20 million deal, as it was unable to meet the goal, falling more than 1,600 jobs short of target. As a result, the company will repay $8.45 million to the state. Countrywide said it had created 4,530 net new jobs in Texas in 2005 and 2006, exceeding its target for those two years, as well as its third year target of 4,000 jobs by January 2008, including layoffs and attrition. But the company was expected to create 5,500 new jobs by the end of 2008, and could only squeeze out 3,876. A year later, BofA spokesman Rick Simon concluded that it was best interest of all parties involved to bring the contract to an end. Back in 2007, a fifth of Countrywide’s staff was based in Texas, and the company still has 23,000 employees based there. Countrywide wasn’t the only company unable to fulfill its promise; 20 other companies receiving grants from the fund failed or struggled to meet job creation targets in 2008 as well.

Goal is money shift, no tax hike - (www.sacbee.com) Tempers are short, coffers low and a partisan skirmish Thursday on the Assembly floor made the target clear: Take money from some to help others while avoiding the dreaded two-thirds vote requirement. Assembly Democrats decided to find money to cut textbook costs for college students by closing a corporate tax loophole on multinational corporations. By casting Assembly Bill 1178 as revenue neutral, raising and cutting equal sums in taxes, Democrats could ignore Republican opposition and pass the measure by a simple majority. The bill moved to the Senate by the bare-minimum number of votes required, 41-28. "They will look for every loophole, gimmick and subterfuge to move money around," said John J. Pitney Jr., professor of politics at Claremont McKenna College.

OTHER STORIES:

Outlook for housing market muddied by anemic rise in prices - (www.latimes.com)

Was that a real increase? Case Shiller house prices go up ... and down - (www.themessthatgreenspanmade.blogspot.com)

Existing House Sales: The Lemmings Slow Down - (www.seekingalpha.com)

Housing Market: Even More Pain in Store? - (www.foxbusiness.com)

Bottom In House Prices, a Decade Away - (www.zerohedge.com)

The doomsday view of of the mortgage market in Canada - (www.kelowna.com)

The New Mortgage Revolution: Walk Away - (www.housingwatch.com)

Fun Underwater Real Estate Graphic - (www.patrick.net)

Apartment deals in abundance in Atlanta, for renters - (www.ajc.com)

FDIC Friday Lotto: Another Reason Why Banks Not Lending - (www.Mish)

Wall Street's Stranglehold on the Economy Is Choking Americans - (www.moneymorning.com)