KeNo's Housing and Economic Portal: Sunday March 28 Housing and Economic stories

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TOP STORIES:

Public Pension Funds Are Adding Risk to Raise Returns - (www.nytimes.com) States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers’ retirement. Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds. But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk. “In effect, they’re going to Las Vegas,” said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. “Double up to catch up.” Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now. The Texas teachers’ pension fund recently paid Chicago to receive a stream of payments from the money going into the city’s parking meters in the coming years. The deal gave Chicago an upfront payment that it could use to help balance its budget. Alas, Chicago did not have enough money to contribute to its own pension fund, which has been stung by real estate deals that fizzled when the city lost out in the bidding for the 2016 Olympics.

Proposed initiative aims at Muni drivers' pay - (www.sfgate.com) A San Francisco supervisor is following through on his plan to curb Muni's labor costs and on Monday submitted a proposed initiative for the November ballot. The plan takes direct aim at a controversial salary formula enshrined in the city charter that for more than four decades has guaranteed Muni drivers their spot as the second highest-paid transit operators in the nation. It also would eliminate a trust fund for Muni operators that has resulted in yearly payouts of up to $3,000 for full-time operators. The fund originally was established to help defray health care costs for dependents, but operators can use that money any way they choose. Under the proposed charter amendment, the city would be required - in the first contract only - to provide the same health coverage to Muni operators as the majority of other city employees. Supervisor Sean Elsbernd believes that by making the big-ticket costs of salaries and benefits part of contract negotiations, management may have more leverage to enact changes in work rules, such as scheduling and discipline, to make the system more efficient.

San Francisco Infested with Union Parasites and Pestilence; Outrage Over Transit Worker Pay - (Mish at globaleconomicanalysis.blogspot.com) In San Francisco, greedy public unions finally overplayed their hand. It's happening all across the country actually, but every city, county, township thinks "It's different here". The news of the day for unions and their sympathizers is the public is finally fed up being raped by public unions. The San Francisco Chronicle reports Outrage grows over Muni operators' pay. The city's Muni operators are about to have one of those "uh-oh" moments. You know, that awkward instant when a group realizes that it overplayed its hand - badly. Even in San Francisco, a union town where labor issues are treated with kid gloves, politicians and transit riders are teeing off on the drivers like they stole rent money from little old ladies. "There is no question in my mind that they completely misread the public," Mayor Gavin Newsom said Wednesday. "Either they step up or the people of San Francisco will." Friday, the Municipal Transportation Agency will vote on ways to balance its budget.

Merkel calls for urgent CDS clampdown - (www.ft.com) Germany and France are stepping up the pressure for urgent action by the European Union to regulate speculation in sovereign debt markets, in the wake of the Greek debt crisis. Angela Merkel, German chancellor, called on Tuesday for the “fastest possible” adoption of new rules to clamp down on the most speculative elements of derivatives trading, including so-called naked transactions, which do not hedge the value of real assets. Speaking after talks with Jean-Claude Juncker, the Luxembourg prime minister, and chairman of the Eurogroup of finance ministers from the eurozone, she said: “We are all agreed that we must put a stop to financial speculation.” Mr Juncker also pledged his support for the longer-term German initiative to set up a European Monetary Fund to deal with national debt crises within the 16-country eurozone. But France and Germany seem to be going slow on that idea in favour of their anti-speculation drive, after criticism in both countries. Axel Weber, president of the German Bundesbank, described the debate over a monetary fund as “unhelpful” and “a sideshow that will distract from the necessary (fiscal) consolidation”.

Making Sure Wrong Home Isn't Seized - (www.nationalmortgagenews.com) Reports of lenders repossessing the wrong home are further tarnishing the banking industry's image, already bruised by bailouts and bonuses. The mix-ups have been perpetuated by the sheer number of foreclosures being processed today as well as the various layers of communication involved. Addresses and other information passed from one department to another, or from a contractor to a subcontractor, can get garbled along the way. "It's what you call a new weakness," said Joe Bada, chief executive of Five Brothers Mortgage Co. Services and Securing Inc., a Warren, Mich., company that inspects and manages foreclosed properties for lenders. "There's just so much happening at the same time. The means of communicating haven't been refined. Information is not moving fast enough from one department to the other." Though such gaffes are rare, they have happened enough times to lead at least one major servicer to rethink and retool its default-management process. Bank of America Corp., the nation's largest servicer, is updating its contractor-training tools and adding a step when securing a property to ensure that the right home receives the repossession notice. B of A "rekeys" - changes the locks - on about 16,000 properties a month, said Rebecca Mairone, the Charlotte company's head of servicing. In the last seven months, B of A is aware of just 11 mistakes. That gives it an accuracy rate of about 99.99%. Still, B of A has been burned. Many of the more recent stories in the news about foreclosure mistakes have involved the company. There's the case of Alan Schroit, for example, who filed a lawsuit against B of A in January claiming the lender mistakenly seized his Galveston, Texas, vacation home. According to the suit, Schroit did not have a mortgage with B of A, or any other lender. His case in federal court in Texas is still pending. Similar incidents involving B of A have been reported in Spring Hill, Fla., in January and Trenton, N.J., in December.

OTHER STORIES:

States, Cities Likely to Slash Jobs as Stimulus Dwindles - (www.cnbc.com)

Greece says finance problems a broader issue - (www.reuters.com)

World stocks off 6-week high; oil tumbles - (www.reuters.com)

Bailed-Out Financials Surge on Optimism About Assets - (www.cnbc.com)

Citi Pricing Preferred Offering: Pisani - (www.cnbc.com)

Yuan Faces Appreciation Pressure on Rates, SAFE Says - (www.bloomberg.com)

World equities up 73 percent a year after crisis low - (www.reuters.com)

Greece to Press U.S. to Crack Down on ‘Speculators’ - (www.bloomberg.com)

Toyota, US Officials Investigate Runaway Prius - (www.cnbc.com)

US Looking to Legally Challenge China Censorship - (www.cnbc.com)

China May Raise Rates ‘Within Weeks’ as Prices, Exports Climb - (www.bloomberg.com)