KeNo's Housing and Economic Portal: Sunday February 21 Housing and Economic stories

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TOP STORIES:

Villaraigosa orders 1,000 city job cuts - (www.latimes.com) Stubborn and clueless Villaraigosa finally gets a clue, as city is on verge of bankruptcy. Los Angeles Mayor Antonio Villaraigosa moved Thursday to eliminate 1,000 city jobs and begin planning layoffs of city employees, one day after the City Council failed to muster the votes to do so to deal with an ongoing budget crisis. “We’re living beyond our means, we have difficult choices to make, we must protect our economic future,” Villaraigosa said during a late afternoon news conference. “Unfortunately, instead of making progress, we are headed in the wrong direction. That ends today.” “If you think I’m not going to move ahead, you don’t know me well,” Villaraigosa told reporters. “I don’t do this because I want to, I do this because I must.” A day after the City Council delayed action on the job cuts for 30 days, Villaraigosa sent a letter to department heads stating he would first use powers provided within the City Charter to eliminate jobs, moving as many employees as possible to other vacant positions. Two city officials said the mayor’s layoff action would most immediately apply to members of the Engineers and Architects Assn., which represents roughly 6,500 city employees, as well as workers who are not represented by any union. The city’s labor agreement bars Villaraigosa from laying off workers with the Coalition for L.A. City Unions, which represents another 22,000 civilian employees. That process cannot occur until July 1 at the earliest.

Kaptur Exposes Tim 'Goldman Sachs' Geithner - (www.dailybail.com) Great video of Congresswoman Marcy Kaptur ripping Tiny Tim Geithner a new one. Video: Congresswoman Marcy Kaptur questions Turbo on AIG, Goldman Sachs, and NY Federal Reserve actions regarding AIG counterparty payouts at PAR. It shows Geithner looking like a Goldman shill.

Kaptur: A lot of people think that the president of the New York Fed works for the U.S. government, but in fact, you work for the private banks that elected you. Can you provide —
Geithner: No, that is not true.
Kaptur: Can you provide for the record the names of the bankers that elected you in 2002?
Geithner: That is a matter of public record, and of course we can do that.
Kaptur: Thank you. Goldman —
Geithner: But Congresswoman, can I just say, what you just said is not true. I work for the public interest, officials in the Federal Reserve work for the public interest and they for the government.
Kaptur: But the people don't elect you, the heads of the Fed around the country don't elect you, it's the individuals that sit on the board of the New York Fed that elect you.
Geithner: It's slightly more complicated than that. [Geithner smirks, then slowly continues in a manner that distinctly says, "Let me speak slowly, so that it sounds like I'm being helpful when, in fact, I'm trying to figure out ways to have you locked in a vault beneath the Treasury Department.] You see, what the Congress did in setting up the Fed, is set up a system where the presidents of the regional reserve banks are elected by the board but it requires the approval of the chairman of the board in Washington for them to serve. It's a delicate system of checks and balances, and Congress designed that system. [Cocks an eyebrow: Isn't that interesting, Marcy? People just like you! Well, not exactly like you. Smarter.]
Kaptur: Yes, but it was largely private banks that elected you and I would like you to admit that for the record.
Geithner: Yes, that is a matter of public record.
Kaptur: Uh, number three: Goldman Sachs was the largest domestic recipient of funds, in this AIG counterparty arrangement. Let me ask you, your chief of staff is the gateway for access to you. Can you provide his name?
Geithner : [Lifts eyebrow, affects exaggerated patience.] His name is Mark Patterson?
Kaptur: And, um, for whom did he work before you selected him as your chief of staff?
Geithner: He worked for the president's transition team.
Kaptur: No, who did he work for before that?
Geithner: [Eye roll] Before that—and this is a matter of public record and you know the answer to this question—he worked for Goldman Sachs, but —
Kaptur: Thank you.
Geithner: But Congresswoman — [Getting pissed.]
Kaptur: Thank you, Mr. Secretary, you answered the question.
Geithner: But Congresswoman —
Kaptur: [Lifts hand.] YOU ANSWERED THE QUESTION.
Geithner: But —
Kaptur: YOU ANSWERED THE QUESTION!

Kaptur later called Geithner's performance weak and said it showed that "he shouldn't have been appointed in the first place." "but removing him would be an empty change without eliminating the revolving door between Washington and Wall Street."

Stocks Plunge Risk at Highest Since April 1984 - (www.bloomberg.com) Expectations that U.S. stocks will tumble 10 percent or more rose to highest level since April 1984 this week, according to Investors Intelligence’s weekly survey of newsletter writers. The proportion of investment writers who anticipate a so- called correction climbed to 38.9 percent in the week ended yesterday, an increase from 36.7 percent in the period ended Jan. 27. The New Rochelle, New York-based company has tracked the projections of newsletters since 1963. Mohamed A. El-Erian, whose firm runs the world’s biggest mutual fund, said today that the largest stock market decline in 11 months may worsen amid persistent U.S. joblessness and economic growth that trails analysts’ forecasts. “Investors may well find that January’s global equity sell-off was just a precursor to a disappointing year for several asset classes,” El-Erian, 51, wrote in a column published by Bloomberg News. He is the chief executive officer of Pacific Investment Management Co., which manages $1 trillion from Newport Beach, California.

It's now official government policy to overcharge house buyers - (www.housingwatch.com) With home prices continuing to plummet every month, it may be hard to believe. But it's now officially government policy to keep those home values as high as possible. And Neil Barofsky, the Special Inspector General of the Troubled Asset Relief Program, doesn't like it one bit. In his latest quarterly report to Congress, Barofsky accuses the Obama administration of recklessly reinflating the real estate bubble in an attempt to keep the housing market going and prevent the collapse of financial institutions. SIGTARP -- not a Bond villain but Barofsky's shorthand title -- sums up all the sundry spending in one handy place. The Federal Reserve has been buying mortgage-backed securities and other mortgage-related debt in enormous volume, projected to reach $1.2 trillion by the time the effort expires at the end of March. Treasury is spending hundreds of billions more to capitalize Fannie Mae and Freddie Mac, so the agencies can continue to finance home mortgages. Congress has extended the $8,000 tax credit for first-time homebuyers and added a $6,500 credit for existing owners buying new homes. And while Treasury's $75 billion Home Affordable Modification Program is designed to forestall foreclosure for homeowners, its direct (and intended) effect is to keep home prices high.

Mortgage lenders "pursue" homedebtors even after foreclosure - (money.cnn.com) As terrible as it is to lose your house to foreclosure, at least it's a relief to put your biggest financial headache behind you, right? Wrong. Former homeowners may still be on the hook if there's a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these "deficiency judgments" are ticking time bombs that can explode years after borrowers lose their homes. It can even happen to people who got their bank to approve them selling their home for less than it is worth. Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it. "My understanding was that the deficiency was negotiated away," she said. "Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it."

California Deadbeats Ditch Their Mortgage, And Save Their Cash For Their Credit Card Bills – (www.businessinsider.com) Credit history company TransUnion has found that Americans are shifting their priorities when it comes to paying down debt. Consumers are paying down their credit cards while ignoring their mortgage payments. The company's most recent study found that a rising percentage of Americans are current with their credit cards but delinquent on their mortgage payments. At the same time, a falling percentage are deliquent on their credit card while current on their mortgage. Moreover, this shift in debt payment priorities has been most striking in California and Florida: