KeNo's Housing and Economic Portal: Tuesday March 16 Housing and Economic stories

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TOP STORIES:

Fannie Taps Treasury for $15.3 Billion More After a 10th Loss - (www.bloomberg.com) Fannie Mae will seek $15.3 billion in U.S. aid, bringing the total owed under a government lifeline to $76.2 billion, after its 10th consecutive quarterly loss. The mortgage-finance company posted a fourth-quarter net loss of $16.3 billion, or $2.87 a share, Washington-based Fannie Mae said in a filing yesterday with the Securities and Exchange Commission. Fannie Mae, which owns or guarantees about 28 percent of the $11.8 trillion U.S. home-loan market, has been hobbled by a three-year housing slump that wiped 28 percent from home values nationwide and led to record foreclosures. The company, which posted $120.5 billion in losses over the previous nine quarters, and rival Freddie Mac were seized by regulators in September 2008. “Our financial results for 2009 reflected the continued adverse impact of the weak economy and housing market, which has resulted in record mortgage delinquencies and contributed to our recording significant credit-related expenses and net losses during each quarter of the year,” Fannie Mae said in the filing. For the full year, Fannie Mae’s loss widened to $74.4 billion from $59.8 billion in 2008. The company’s shares, which peaked at $87.81 in December 2000, closed at 99 cents yesterday in New York Stock Exchange composite trading. The Treasury owns 79.9 percent of the company’s outstanding common stock.

Swindler awaiting sentencing commits suicide - (www.pe.com) An admitted swindler has hanged himself in Palm Desert where he was awaiting sentencing to as much as 32 years in federal prison for filing false tax returns and for his role in a mortgage and security scheme that prosecutors say cost investors $142 million. Christopher J. Oetting was found dead at 7:50 p.m. Feb. 16 at his home along the 40000 block of Sagewood Drive. He was free on $225,000 bond. Oetting pleaded guilty Dec. 21 in federal court in Los Angeles to money-laundering, conspiracy and four counts of filing false tax returns, court records show. He was scheduled to be sentenced July 19. In addition to the prison term, he faced a fine of up to $900,000 and restitution to victims. In the 16-page plea agreement, federal prosecutors made no recommendation on how long Oetting should be imprisoned. Most likely, he would have drawn a substantially lower sentence and fine, said U.S. attorney spokesman Thom Mrozek. And although Oetting agreed to answer all questions from federal investigators and prosecutors, both co-defendants in the federal case have pleaded guilty, eliminating the need for a federal trial. Those co-defendants are Linda Brooks, of Murrieta, and Steven Kayden, of Cathedral City. However, state prosecutors continue to pursue additional defendants involved in the case. In his plea agreement, Oetting admitted helping someone identified in the documents as "J.D." by setting up numerous financial ventures and acting as paymaster in depositing proceeds and transferring funds among accounts, with much of the money diverted for JD's benefit.

For Buyout Kingpins, the TXU Utility Deal Gets Tricky - (www.nytimes.com) As such disputes heated up, senior deal makers at Kohlberg, Kravis, Roberts, the powerful buyout shop, complained that Jamie Dimon, the chief executive of JPMorgan Chase, was fanning the flames by openly criticizing the private equity industry. Trying to smooth things over, Henry Kravis, one of the firm’s founders, met with Mr. Dimon and others for dinner. Things quickly turned tense. Mr. Dimon, whose bank was a major lender to K.K.R. and potentially on the hook for losses, explained that their relationship needed to work for both parties. “This relationship feels a bit one-way to me,” he told Mr. Kravis, according to someone briefed on the dinner who requested anonymity because it was private. One thing that caused strain was the 2007 buyout of TXU, an energy giant based in Dallas. The TXU deal was Texas-sized in every way: valued at $48 billion, it was the largest private equity deal in history, and it involved the country’s fifth-largest energy concern — one that served about two million customers. A group of high-powered buyout barons, including K.K.R., the Texas Pacific Group and the private equity arm of Goldman Sachs, orchestrated the deal. To push it through, the deal makers pulled out all the stops. They courted environmental groups, heavily lobbied the Texas Legislature and tempted banks with the prospect of hundreds of millions of dollars in fees. Today, the TXU deal is unwieldy and unpredictable. The buyout was, in effect, a gargantuan bet that natural gas prices would keep climbing; instead, plunging prices coupled with a hobbled national economy have cut into the cash the company generates.

Fannie Posts $72 Billion Loss for '09 - (online.wsj.com) Fannie Mae reported a staggering $72 billion net loss for 2009, underscoring the challenges that still face the nation's largest mortgage financier and offering more grim news for taxpayers who may ultimately pick up the bill. The Washington-based company posted a $15.2 billion fourth-quarter loss and said it asked the U.S. Treasury for another $15.3 billion to stay afloat, bringing its total bailout tab past $76 billion. The quarterly results were an improvement from the year-ago period, when Fannie reported a $25.2 billion loss, but the annual loss surpassed the year-earlier loss of $58.7 billion. The Fannie Mae earnings release came days after Freddie Mac, its smaller competitor, reported smaller losses. Freddie Mac posted a fourth-quarter net loss of $6.5 billion, didn't ask for more bailout cash and posted a $21.6 billion loss for 2009, down by more than half from a year earlier. Freddie's results have been better, in part, because it has a smaller loan book that has been performing better than Fannie's. But some analysts warn that Freddie's losses could rise.

Greece must take more measures or face sanctions: report - (www.reuters.com) Greece must take further measures to reduce the deficit or it will face sanctions, Eurogroup chairman Jean-Claude Juncker was quoted as saying by a Greek newspaper. Greece has until March 16 to convince EU finance ministers and the executive European Commission that proposed measures to cut its budget shortfall this year to 8.7 percent of gross domestic product from 12.7 percent in 2009 are sufficient. "Greece must intensify its efforts and move to further actions to reduce its deficit," Juncker, who heads the Eurogroup of euro zone finance ministers, told Eleftherotypia newspaper. "If it doesn't convince us then it will possibly face sanctions. Greece must understand that the taxpayers in Germany, Belgium or Luxembourg are not ready to fix the mistakes of Greece's fiscal policy," Juncker said. "Euro zone finance ministers have agreed that more efforts are required from Greece," he said. Juncker, who is also Luxembourg's prime minister, said euro zone finance ministers had discussed ways to help Greece.