KeNo's Housing and Economic Portal: Thursday September 2 Housing and Economic stories

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TOP STORIES:

Obama Is Failing Because He Doesn't Understand That He Can't Create Jobs - (www.businessinsider.com) Billions in stimulus money have failed to make the economy soar. Douglas Schoen on how Obama has hurt the recovery by flooding America with free cash. Recent reports from the Federal Reserve, the Labor Department , and the Commerce Department clearly and demonstratively show that the Obama Administration’s policies have not succeeded – indeed they have failed in ways that are clear and unambiguous. The Obama administration’s policies and programs are not producing real, long lasting results, and there has been no real growth. Put another way, an unprecedented degree of federal government spending and intervention vis-à-vis the $787 billion dollar economic stimulus package, the $81 billion dollar bailouts of GM and Chrysler, and the enactment of health care and financial regulatory and reform bills have done nothing to stimulate our anemic recovery and have fundamentally failed at creating private sector jobs, or generating economic growth necessary for a sustainable, healthy recovery. Indeed, they have done little more than generate an unsustainable national debt, which now exceeds $13 trillion. The Federal Reserve reported that the pace of recovery in the United States “has slowed in recent months” – with a growth rate of just 2.4 percent in the second quarter down from 3.7 percent in the first quarter of 2010, and an annual rate of 5 percent at the end of 2009.

California Defers $2.9 Billion for Schools, Counties - (www.bloomberg.com) California will delay paying $2.9 billion of subsidies to schools and counties in September, a month earlier than projected, to save cash amid an impasse that has left the state without a budget for 54 days. The state’s top financial officials -- the controller, treasurer and finance director -- told lawmakers today that the 90-day deferrals need to start next month instead of October to make sure there’s enough money to pay bondholders. The amount is in addition to $3.2 billion the state pushed back in July. California began its fiscal year on July 1 without a spending plan after Republican Governor Arnold Schwarzenegger and Democrats who lead the Legislature remained deadlocked over how to fill a $19 billion deficit. Controller John Chiang has warned he may need to issue IOUs within two weeks to pay for everything from supplies to contracted services and health-care costs if the impasse continues into next month. “This is the salt in the wound,” said Rick Pratt, assistant executive director of the West Sacramento-based California School Boards Association, which represents districts statewide. “It’s the state taking its cash flow problem and making it a school district problem,” he said. He said deferrals from previous years have raised costs while the state has cut aid.

California to Delay Payments Sooner than Expected - (www.cnbc.com) Gov. Arnold Schwarzenegger, California's state controller and treasurer, decided Monday to delay $2.9 billion a month in payments to school districts and counties sooner than expected so the state can meet debt and pension obligations. The leaders issued a joint letter notifying state lawmakers of their decision to begin withholding the payments in September instead of October. The move reflected the limited resources the state has to work with as the impasse over California's $19 billion budget shortfall has dragged on for nearly two months. Controller John Chiang has warned that the state could again issue IOUs, perhaps as soon as the end of August. The Legislature gave authority in February to the three officers to delay $2.5 billion a month in payments to schools and $400 million in monthly payments to counties during October, November and December to help manage cash flow. The step came on top of a July deferral of $2.5 billion for schools and $700 million for counties. Bob Wells, executive director of the Association of California School Administrators, said the state is only shifting its problems to school districts.

Fed Loses Bid for Review of Bailout Disclosure Ruling - (www.bloomberg.com) An appeals court refused to reconsider a decision compelling the Federal Reserve Board to release documents identifying banks that might have failed without the U.S. government bailout. The full U.S. Court of Appeals in New York, in a docket entry dated Aug. 20, denied a May 4 request by the Fed to review a three-judge panel’s unanimous March 19 decision requiring the agency to release records of the unprecedented $2 trillion U.S. loan program begun primarily after the 2008 collapse of Bear Stearns Cos. Unless the court stays its decision, the Fed will have seven days to disclose the documents. In the event of a stay, the central bank and the Clearing House Association LLC, an organization of 20 commercial banks that joined the Fed in defense of the lawsuit, will have 90 days to petition the Supreme Court to consider their appeal. The Clearing House has already said it will ask the high court to rule on the case. “We are reviewing the decision and considering our options for appeal,” David Skidmore, a Fed spokesman, said. At issue are 231 “term sheets” documenting Fed loans to financial firms during 2008. The records, which include the banks’ names, the amounts borrowed and the collateral posted in return, were originally requested by late Bloomberg News reporter Mark Pittman through the Freedom of Information Act, which allows citizens access to government papers.

Citigroup Consumer Unit’s Overhaul Said to Spur Overdue Loans - (www.bloomberg.com) Citigroup Inc.’s effort to streamline its North American consumer finance unit caused overdue loans to jump more than expected as the bank moved 750,000 customer accounts to new locations, a person briefed on the matter said. CitiFinancial’s delinquency rate last month was 0.25 percentage points more than executives had forecast, according to the person, who declined to be identified because the figures aren’t public. The firm had expected disruptions in its operations would lead to more missed payments as 330 branches were closed and about 180 were converted into “servicing centers” for troubled loans, the person said. Any losses will add to the cost of Chief Executive Officer Vikram Pandit’s effort to restructure and rebrand CitiFinancial to make it attractive for an eventual sale. He has been trying to sell CitiFinancial since January 2009 after Citigroup’s $45 billion bailout by U.S. taxpayers. Buyers have stayed away amid consumer joblessness and rising costs for financing loans. “There’s a risk if the economy turns down sharply that Vikram Pandit is throwing good money after bad,” said Richard Staite, an analyst with Atlantic Equities LLP. Some investors in the New York-based bank “would like Citigroup to exit the business, even if the very best price isn’t achieved.”