KeNo's Housing and Economic Portal: Thursday June 3 Housing and Economic stories

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In bed with Fannie and Freddie - (www.washingtontimes.com) America's greatest economic liability is also the greatest political liability for the Democratic congressional leadership. Fannie Mae and Freddie Mac have exposed taxpayers to $5.4 trillion in risk from loan guarantees, with taxpayers already having covered $126 billion in losses. So far, Democrats have been reluctant to include tough reforms on the profligate government-sponsored enterprises in the financial regulation package currently making its way through the legislative process. A group of Republican senators led by John McCain, Arizona Republican, last week proposed to give the housing market giants five years either to become self-sufficient or to go out of business. They would also reduce the total amount of losses that taxpayers would cover to $400 billion. Rather than debate the particulars of this idea, Democratic leaders appear more interested in burying any and all such changes. And no wonder. Renewed scrutiny of the two institutions would remind the public that senior Democrats were in bed, sometimes literally, with Fannie and Freddie. House Financial Services Chairman Barney Frank of Massachusetts spent a number of years blocking various attempts to regulate government-sponsored enterprises, famously saying that that he did not see any "safety and soundness" problems worthy of note. There was good reason for Mr. Frank to look the other way, given his history of close association with Herb Moses, Fannie's assistant director for product initiatives from 1991 to 1998.

Union City landlords blast rental tax - (www.contracostatimes.com) Individuals upset by sudden notice that they owe years of business license fees. A group of outraged property owners is expected to descend upon City Hall tonight to blast the city's handling of a plan to recover years of business license fees it had neglected to collect from citizens. Since 1983, property owners who rent out houses or small complexes in Union City were required to pay an annual business license fee. But not everyone has been paying, nor has the city been enforcing the ordinance — until now. On April 30, the city mailed out 2,644 letters to property owners. Many who received the letters said they would have paid the fee had they known it existed. So to be slapped suddenly with a bill for several hundred dollars or more has infuriated property owners, especially, they said, because they're being assessed a late-payment penalty of up to 50 percent of what they owed each year, retroactive to 2006.

Food-stamp tally nears 40 million, sets record - (www.reuters.com) Nearly 40 million Americans received food stamps -- the latest in an ever-higher string of record enrollment that dates from December 2008 and the U.S. recession, according to a government update. Food stamps are the primary federal anti-hunger program, helping poor people buy food. Enrollment is highest during times of economic distress. The jobless rate was 9.9 percent, the government said on Friday. The Agriculture Department said 39.68 million people, or 1 in 8 Americans, were enrolled for food stamps during February, an increase of 260,000 from January. USDA updated its figures on Wednesday. "This is the highest share of the U.S. population on SNAP/food stamps," said the anti-hunger group Food Research and Action Center, using the new name for food stamps, Supplemental Nutrition Assistance Program (SNAP). "Research suggests that one in three eligible people are not receiving ... benefits." Enrollment has set a record each month since reaching 31.78 million in December 2008. USDA estimates enrollment will average 40.5 million people this fiscal year, which ends Sept 30, at a cost of up to $59 billion. For fiscal 2011, average enrollment is forecast for 43.3 million people.

JPMorgan Chase Warns Investors About Homedebtors Walking Away - (www.huffingtonpost.com) The nation's second-biggest bank is warning investors that underwater homeowners may walk away from their mortgages. In a Monday filing with the Securities and Exchange Commission, JPMorgan Chase told investors and regulators that homeowners who owe more on their mortgages than their homes are worth may not continue to make their payments -- even when they're able to. "Declining home prices have had a significant impact on the collateral value underlying the firm's residential real estate loan portfolio," the bank stated. "In general, the delinquency rate for loans with high LTV [loan-to-value] ratios is greater than the delinquency rate for loans in which the borrower has equity in the collateral. "While a large portion of the loans with estimated LTV ratios greater than 100% continue to pay and are current, the continued willingness and ability of these borrowers to pay is currently uncertain." Because of its size and reach, the bank, with more than $2 trillion in assets, is a bellwether for the industry, as well as for the broader economy. If the financial services giant can't reassure investors that underwater homeowners will continue to be willing to make their payments, it's a sign of how much the recent phenomenon of "strategic defaults" has grown.

Strike at Boeing C-17 plant might help end the program - (www.marketwatch.com) Yes, these union employees or fucking morons. Hopefully this will end their tenure at Boeing. The Pentagon has wrestled with Congress for years to cancel the C-17 military-transport jet program, but it could be a production-line strike at the Boeing Co. facility where the giant planes are built that will finally kill it. "The real rub is the life of the program," said Wayne Plucker, an aerospace analyst with the research firm Frost & Sullivan. "While both the union and Boeing talk about the potential for more sales to keep the line open, this may effectively seal its fate ... the defenders of the program in Congress have pretty well spent their chips on past rescues of the program," Plucker said in an interview. The 1,700 assembly-line workers at the Long Beach, Calif., plant walked picket lines for a second day Wednesday, demanding better pension and medical benefits. Talks between management and the United Aerospace Workers broke down last week after employees rejected a 46-month contract offer from the company.

New York Legislature approved the furlough of 100,000 state workers - (abclocal.go.com) Despite their strong objections, New York lawmakers voted to approve unprecedented furloughs for state workers to contend with a fiscal crisis, as thousands of workers rallied against furloughs across the state. The crowd of New York State workers chanted "We will remember in September," over and over again in Manhattan Monday afternoon. State workers sent a loud and clear message to Governor Paterson as they gathered at 14 separate rallies from Manhattan to the Bronx and Albany: Furloughs are a bad idea. "I won't be able to pay my bills. We won't be able to do our jobs," said NY State worker Bob Pugliese. "There could be other ways they can look into this issue of balancing their budget," insisted state worker, Luenda Hurditt. The mandatory furlough of 100,000 state workers is part of an emergency spending plan that lawmakers plan to vote on Monday in Albany. It's designed to keep state government from shutting down, since the budget is more than a month overdue and more than $9 billion in the red.