KeNo's Housing and Economic Portal: Thursday April 8 Housing and Economic stories

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TOP STORIES:

Could this be financial crisis’ first perp walk?: Fuld faces new probe on Lehman collapse - (www.ft.com) Barney Frank calls for inquiry into accounts. Dick Fuld, chief executive of failed Lehman Brothers, and regulators face a testing congressional hearing into the bank’s collapse next month after a report found a dubious accounting procedure helped the bank conceal the extent of its financial distress. Mr Fuld has kept out of the public eye since a dramatic congressional hearing in 2008 where his grim expression, protesters’ placards and haranguing by lawmakers provided iconic images of the financial crisis. He now faces another interrogation by lawmakers along with Tim Geithner, Treasury secretary, Ben Bernanke, chairman of the Federal Reserve, and Chris Cox, the former chairman of the Securities and Exchange Commission. The hearing, which is tentatively scheduled for April, has been called by Barney Frank, chairman of the House financial services committee, following the publication of a report by Anton Valukas, a court-appointed examiner. The committee announced the hearing last week, after requests from Mary Jo Kiley, a Democatic representative from Ohio, and Spencer Bachus, the senior Republican on the House financial services committee, but did not reveal the witness list or timing.

Supporting the War Instead of the Troops - (Ron Paul at www.safehaven.com) Still, the vote was significant because it places every member of Congress on the record as supporting or not supporting the unconstitutional, costly, violent occupation of a country that never attacked us. This vote should serve as an important reminder to the American people of where their representatives really stand when it comes to policing the world, empire building, and war. The War Powers Resolution was passed in 1973 in the aftermath of Vietnam. It was intended to prevent presidents from slipping this country so easily into unwinnable wars, wars with indistinct enemies and vague goals. Unfortunately, it has had the opposite effect by literally legalizing undeclared wars for 90 days. In the case of Afghanistan, 90 days has stretched into nearly a decade. The original purpose of the initial authorization of force - to pursue those responsible for the attacks on September 11 - is no longer applicable. Al Qaeda has left Afghanistan; we are now pursuing the Taliban, who never attacked us. The Taliban certainly are not our friends, but the more of them we kill, the more their ranks grow and the stronger they become. Meanwhile, we are spending hundreds of billions of dollars in Afghanistan and accelerating our plunge toward national bankruptcy. Whose interests do we serve by continuing this exercise in futility? Osama Bin Laden has said many times that his strategy was to bankrupt America, by forcing us into protracted fighting in the mountains of Afghanistan. The Soviet Union learned this lesson the hard way; and ultimately was forced to withdraw its troops from Afghanistan in defeat and humiliation. This same fate may await us unless we rethink our policy and resist any escalation of our military efforts in Afghanistan.

Paul Krugman Versus Reality - (Peter Schiff at www.safehaven.com) In his latest weekly New York Times column, Nobel Prize-winning economist Paul Krugman put forward arguments that were so nonsensical that the award committee should ask for its medal back. Recent rhetoric from Washington has put the economic relationship between the U.S. and China squarely on the front burner, and Krugman is demanding that we crank up the flame. This week 130 members of Congress sent a letter to Treasury Secretary Timothy Geithner demanding that the Obama administration designate China as a "currency manipulator". Following that, a bipartisan group of senators introduced a bill that looks to force the Obama administration's hand. For its own part, Beijing invites criticism by continuing to deny its utterly obvious currency agenda. As these tensions escalate, most economists urge Washington to tread lightly because of the negative fallout for America if China were to begin selling its enormous cache of U.S. Treasury bonds. Krugman pushes back, asserting that the U.S. risks little by playing hardball, and that China has more to lose. He asserts that a Chinese decision to end its purchases of U.S. Treasury debt would make only a marginal impact on long-term interest rates. Did you hear that Stockholm?

Germans oppose Greek aid, poll shows - (www.ft.com) Survey boosts Merkel before possible showdown. Fierce German resistance to helping crisis-hit Greece has emerged in a Financial Times opinion poll that strengthens the hand of Angela Merkel, the chancellor, before a possible European showdown this week over financial aid for Athens. Germans overwhelmingly opposed offering financial support to Greece as it struggles to control its public sector deficit and are strikingly more hostile than other Europeans, including the British, the FT/Harris poll showed. Almost a third of Germans believed Greece should be asked to leave the eurozone. Further highlighting flagging support for the euro, some 40 per cent of Germans also thought Europe’s biggest economy would be better off outside the single currency – a significantly higher level of scepticism than in France, Spain or Italy.

Pools That Need Some Sun - (www.nytimes.com) LAST week, the Federal Home Loan Bank of San Francisco sued a throng of Wall Street companies that sold the agency $5.4 billion in residential mortgage-backed securities during the height of the mortgage melee. The suit, filed March 15 in state court in California, seeks the return of the $5.4 billion as well as broader financial damages. The case also provides interesting details on what the Federal Home Loan Bank said were misrepresentations made by those companies about the loans underlying the securities it bought. It is not surprising, given the complexity of the instruments at the heart of this credit crisis, that it will require court battles for us to learn how so many of these loans could have gone so bad. The recent examiner’s report on the Lehman Brothers failure is a fine example of the in-depth investigation required to get to the bottom of this debacle. The defendants in the Federal Home Loan Bank case were among the biggest sellers of mortgage-backed securities back in the day; among those named are Deutsche Bank; Bear Stearns; Countrywide Securities, a division of Countrywide Financial; Credit Suisse Securities; and Merrill Lynch. The securities at the heart of the lawsuit were sold from mid-2004 into 2008 — a period that certainly encompasses those giddy, anything-goes years in the home loan business. None of the banks would comment on the litigation.

Health-Bill Horse Trading - (online.wsj.com) A frenzy of demands and last-minute deal-making threatened to gum up the Democrats' push to pass their landmark health bill Sunday, as wavering House members sought support for favored causes and home-state concerns before signing on. While Democratic leaders picked up some yes votes, they remained short of the 216 needed for passage, and the bill's chance of success remained unknown Friday as lawmakers pressed for changes to the bill. Demands from wavering Democrats included boosting Medicare payments to hospitals and doctors in rural states, easing the likely burden on California agricultural producers and securing a White House commitment to retool immigration laws. The deal-making appears to be at odds with a commitment from the White House to strip out provisions designed to benefit a particular state or special interest. The legislation has become controversial not only in the ways it would alter U.S. health care, but also because of public concern about the machinery employed to push it through the legislative process. Four previous opponents of the bill said they would now vote yes.