KeNo's Housing and Economic Portal: Friday March 26 Housing and Economic stories

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TOP STORIES:

Germans Suggest Greece Could Sell Islands to Cut Debt - (www.cnbc.com) Greece should consider selling some of its islands as one option to reduce debt, two members of the German parliament in Chancellor Angela Merkel's centre-right coalition said. Josef Schlarmann, a senior member of Merkel's Christian Democrats, and Frank Schaeffler, a finance policy expert in the Free Democrats, were quoted on Thursday as saying that selling islands and other assets could help Greece out of its crisis. "Those in insolvency have to sell everything they have to pay their creditors," Schlarmann told Bild newspaper. "Greece owns buildings, companies and uninhabited islands, which could all be used for debt redemption." Greece has launched an austerity program designed to secure European help to tackle its crippling debt burden. Opinion polls show Germans are overwhelmingly against taxpayers bailing out Greece.

Repurchased Loans Putting Banks in Hole - (online.wsj.com) Lenders such as Bank of America Corp., J.P. Morgan Chase & Co., Wells Fargo & Co. andCitigroup Inc. will brave stiff headwinds this year as they face demands to buy back defectively underwritten mortgages. Annual reports filed by major mortgage lenders show big surges in the volume of loans being repurchased in 2009. Wells Fargo said it bought back mortgages with balances of $1.3 billion, triple the 2008 total of $426 million. Losses on bought-back loans doubled to $514 million from $251 million in 2008, according to the San Francisco company. Bank of America repurchased $1.5 billion of first-lien mortgages that were sold off by the Charlotte, N.C., bank through securitizations but are tied to faulty underwriting, up sharply from $448 million in 2008. As of Dec. 31, J.P. Morgan had set aside $1.7 billion to meet repurchase claims from investors, a 55% jump from $1.1 billion a year earlier. Last year, lenders bought back about $20 billion of loans with faulty underwriting, according to Barclays Capital estimates. About half of the total was written off because the loans were delinquent. The rising tide "is definitely a surprise," said Ajay Rajadhyaksha, head of U.S. fixed-income and securitized strategy at the Barclays PLC unit. "Most investors haven't really focused on this issue and are surprised on how much impact this could have, including on earnings."

Presidential Reunion - (www.funnyordie.com) Pretty good video. Barack Obama gets a surprise visit in the night from ex-Presidents Bush Sr., Bush Jr., Clinton, Ford, Reagan and Carter to get a few pointers about the Consumer Financial Protection Agency and why it's so important.

Nobel Prize-Winning Economist Says Federal Reserve System 'Corrupt' - (www.huffingtonpost.com) One of the world's leading economists said Wednesday that the very structure of the Federal Reserve system is so fraught with conflicts that it's "corrupt." Nobel laureate Joseph Stiglitz, a former chief economist at the World Bank, said that if a country had applied for World Bank aid during his tenure, with a financial regulatory system similar to the Federal Reserve's -- in which regional Feds are partly governed by the very banks they're supposed to police -- it would have raised alarms. "If we had seen a governance structure that corresponds to our Federal Reserve system, we would have been yelling and screaming and saying that country does not deserve any assistance, this is a corrupt governing structure," Stiglitz said during a conference on financial reform in New York. "It's time for us to reflect on our own structure today, and to say there are parts that can be improved."

Housing bust exposes the cost of unplanned growth - (minnesota.publicradio.org) Baldwin Township, Minn. — Baldwin Township used to be mostly farmland. But like much of Sherburne County, it experienced a population explosion in recent decades. It went from 1,100 people in 1970 to around 6,500 today. "We wanted to raise our kids in the country with what we thought was not so much pressure to conform to what's hip and what's current -- to give our kids a better childhood," resident Sue Wondra said. That yearning for the country -- along with the allure of cheap land -- is what made Baldwin boom, and there is a ring of places just like it surrounding the Twin Cities. Drive about 50 miles from Minneapolis-St. Paul in any direction and you'll hit one. Scott, Wright, Sherburne and Carver were among the 100 fastest growing counties in the United States over the last decade. Geographers call them "the exurbs." These are bedroom communities; people here generally commute to the city for work. Baldwin Township has only 30 or so businesses, but it has more than 2,000 houses. Driving past one of Baldwin's many snaking cul de sacs, Town Board Chair Jeff Holm describes the growth as "totally unplanned." Wherever there was a farmer ready to sell his land, that's where the housing development went. "Their location has nothing to do with proximity to transportation routes," Holm said. "It's kind of a hodge podge." When development is spread out, it takes many more miles of road to connect the houses than when you pack properties close together. Today, Baldwin has 80 miles of paved road, and maintaining it all is a challenge. The sheer volume is one problem. To make matters worse, some of the roads were poorly engineered.

Secret millionaire leaves fortune to Lake Forest College - (www.chicagotribune.com) Woman who lived frugally donates $7 million to alma mater. Like many people who lived through the Great Depression, Grace Groner was exceptionally restrained with her money. She got her clothes from rummage sales. She walked everywhere rather than buy a car. And her one-bedroom house in Lake Forest held little more than a few plain pieces of furniture, some mismatched dishes and a hulking TV set that appeared left over from the Johnson administration. Her one splurge was a small scholarship program she had created for Lake Forest College, her alma mater. She planned to contribute more upon her death, and when she passed away in January, at the age of 100, her attorney informed the college president what that gift added up to. "Oh, my God," the president said. Groner's estate, which stemmed from a $180 stock purchase she made in 1935, was worth $7 million. The money is going into a foundation that will enable many of Lake Forest's 1,300 students to pursue internships and study-abroad programs they otherwise might have had to forgo. It will be an appropriate memorial to a woman whose life was a testament to the higher possibilities of wealth. "She did not have the (material) needs that other people have," said William Marlatt, her attorney and longtime friend. "She could have lived in any house in Lake Forest but she chose not to. … She enjoyed other people, and every friend she had was a friend for who she was. They weren't friends for what she had."

OTHER STORIES:

Don't Be Brainwashed by the Housing Cult - (www.blogs.wsj.com)

Let the housing market stand on its own - (articles.moneycentral.msn.com)

Pending Sales of Existing Houses Decline - (www.bloomberg.com)

Housing is "in a precarious state" says Yale's Robert Shiller - (finance.yahoo.com)

Longer jobless benefits the cause of long-term unemployment? - (www.chicagotribune.com)

The costs of financial reform: realistic interest rates - (blogs.reuters.com)

Greek Debt Problems Unlikely to Spread: IMF Head - (www.cnbc.com)

EU Will Stand by Greece: Sarkozy - (www.cnbc.com)

Dubai World Deal Hope Lifts Markets, Divides Creditors - (www.cnbc.com)

The Middle Class Financial Compact Being Washed Away - (www.mybudget360.com)

America, the fragile empire - (www.latimes.com)