KeNo's Housing and Economic Portal: Thursday October 7 Housing and Economic stories

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TOP STORIES:

San Bruno blast throws spotlight on state regulators ... - (www.mercurynews.com) In the wake of the catastrophic Sept. 9 gas line explosion in San Bruno, the finger-pointing has begun to move beyond PG&E to the largely obscure, 99-year-old state agency that oversees the company, the California Public Utilities Commission. Officials with the 1,000-person PUC -- which regulates everything from gas and electricity suppliers to moving van operators and limo drivers -- speak proudly of the work they do. One local energy expert called the California agency perhaps the best in the nation at regulating utilities. But critics contend the agency has a history of cozy dealings with utilities that raises serious questions about how well it was paying attention to the potential hazards lurking within PG&E gas lines. And recent reports have faulted the PUC for its handling of thousands of consumer complaints against the companies it monitors. "People are starting to realize that the CPUC really seems to have been asleep at the wheel," said Mark Toney, executive director of the consumer group The Utility Reform Network, which has monitored the San Francisco agency for nearly four decades. "They have not exercised enough oversight."

Banks Keep Failing, No End in Sight - (online.wsj.com) Since WaMu Fell, 279 Lenders Have Collapsed; Lost Jobs, Curtailed Lending and the Big Get Bigger. The largest number of bank failures in nearly 20 years has eliminated jobs, accelerated a drought in lending and left the industry's survivors with more power to squeeze customers. Some 279 banks have collapsed since Sept. 25, 2008, when Washington Mutual Inc. became the biggest bank failure on record. That dwarfed the 1984 demise of Continental Illinois, which had only one-seventh of WaMu's assets. The failures of the past two years shattered the pace of the prior six-year period, when only three dozen banks died. Two more banks went down last Friday, and failures are expected to "persist for some time," according to a report issued Tuesday by Standard & Poor's. In the second quarter of this year, the Federal Deposit Insurance Corp. increased its number of problem banks by 6% to 829. Between failures and consolidation, the number of U.S. banks could fall to 5,000 over the next decade from the current 7,932, according to the top executive of investment-banking firm Keefe, Bruyette & Woods Inc.

Raters Ignored Proof of Unsafe Loans, Panel Is Told - (www.nytimes.com) As the mortgage market grew frothy in 2006 — leading to a housing bubble that nearly brought down the banking system two years later — ratings agencies charged with assessing risk in mortgage pools dismissed conclusive evidence that many of the loans were dubious, according to testimony given last week to the Financial Crisis Inquiry Commission. The commission, a bipartisan Congressional panel, has been holding hearings on the origins of the financial crisis. D. Keith Johnson, a former president of Clayton Holdings, a company that analyzed mortgage pools for the Wall Street firms that sold them, told the commission on Thursday that almost half the mortgages Clayton sampled from the beginning of 2006 through June 2007 failed to meet crucial quality benchmarks that banks had promised to investors. Yet, Clayton found, Wall Street was placing many of the troubled loans into bundles known as mortgage securities.

Hostilities escalate to hidden currency war - (www.ft.com) Everyone has been thinking it, but Guido Mantega, the Brazilian finance minister, has been one of the few policy makers publicly to admit it. His assertion that there is a currency war going on follows a recent escalation of competitive intervention in the foreign exchange markets, with heavyweight powers armed with serious weaponry getting involved. Although some argue that a generalised burst of foreign exchange intervention could act as a global monetary easing, a more widespread view is that such a round of competitive devaluation is more likely to inflame international tensions. It was a symbolic moment when Japan this month ended its six-year abstinence from intervening in the foreign exchange markets andsold an estimated $20bn of yen. Japan is the only one of the large industrialised Group of Seven economies regularly to have used currency intervention over the past 20 years. But its traditional rationale – that interest rates were so close to zero that conventional monetary policy was losing its strength – now applies to many more countries.

Judge says Harvey official can keep 4 elected jobs for now - (www.chicagotribune.com) A Cook County judge this afternoon granted an emergency stay for Keith Price, allowing him to continue to serve in four public offices in south suburban Harvey. "I just believe since I was elected by the people I should be able to do what they elected me to do," Price said after the emergency hearing. The hearing was prompted by a judge's ruling issued this morning that ousted Price from three of the four elected offices he holds, deeming the offices incompatible. Price is an alderman, park district president, library board member and school board member in HarveyPublic School District 152. He would have been allowed to only remain on the library board. The Cook County state's attorney's office argued Price's four positions had the potential for conflict of interest. For example, municipalities and school districts might have to decide how best to share property or revenue.