KeNo's Housing and Economic Portal: Friday November 12 Housing and Economic stories

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TOP STORIES:

Dimon Beset by Bad WaMu Loans as JPMorgan Makes Overseas Push - (www.bloomberg.com) Jamie Dimon wanted Washington Mutual Inc. and he wanted it bad. The JPMorgan Chase & Co. chief executive officer was determined to expand on the West Coast, and Seattle-based WaMu, as it was called, was a prime target. Dimon had a team of auditors poring over WaMu’s books in March 2008, at the same moment the Treasury Department was pressing him to acquire struggling investment bank Bear Stearns Cos. While he initially couldn’t make a deal for the Seattle lender, JPMorgan did buy WaMu in September 2008 after it was seized by the Federal Deposit Insurance Corp., which meant the assets came at a bargain price of $1.9 billion, Bloomberg Markets magazine reports in its December issue. The 2,200 WaMu branches in California, Washington and 12 other states gave JPMorgan’s consumer bank, Chase, a total of 5,410 branches -- the second-biggest network in the nation. And it moved Chase to first from third in deposits, with $905 billion after the deal closed. Dimon, 54, got what he wanted -- and a lot that he didn’t want. JPMorgan is now saddled with $74.8 billion in nonperforming home loans inherited from WaMu, a third of the $230.7 billion in mortgages on its books. The WaMu losses are just one of the afflictions besetting the man who, in the midst of the recession two years ago, was dubbed the world’s most powerful financial executive by the New York Times and labeled President Barack Obama’s “favorite banker.”

Acorn Just Filed For Chapter 7 Bankruptcy - (www.businessinsider.com) Two years after becoming perhaps the most vocally maligned organization in the country, ACORN announced today it is filing for Chapter 7 bankruptcy. The community organizing group has been in the process of dissolving for the better part of the year. In March, it announced it was folding as a national entity. ACORN, which as part of its mission did voter registration drives in minority areas, became the target of conservative ire during the 2008 presidential campaign, accused of massive organized voter fraud. Opposition to the group reached a fever pitch after young conservative activist James O'Keefe released highly edited videos he claimed proved the group was engaging in illegal activity. Congress voted overwhelmingly last September to defund the group, and it's been withering ever since.

Ireland May Have One Month to Stave Off Bailout: Euro Credit - (www.bloomberg.com) Irish Finance Minister Brian Lenihan may have just one month to stave off an international bailout. The extra yield that investors demand to hold Irish 10-year bonds over German bunds surged to a record today as Lenihan tries to put together a 2011 budget by Dec. 7 that convinces investors he can get the country’s finances in order. “The behavior of international bond markets suggests the government’s various announcements haven’t convinced markets that we are on a credible, stable path,” said Karl Whelan, an economics professor at University College Dublin and a former economist at the Federal Reserve. “The budget is going to be crucial in determining if we can change that attitude.” The premium on Irish bonds has doubled since August and is now wider than the spread onGreek debt four days before it sought a European Union-led bailout in April. That’s putting pressure on Lenihan to cut the deficit and overcome both an economic slump and the rising cost of bailing out the country’s banks. While Ireland doesn’t need to raise money this year, its 20 billion euro ($28 billion) cash pile may only last until the middle of 2011. Lenihan will pave the way for the budget when he publishes a four-year roadmap for cutting the deficit in the next two weeks.

Debt costs jump for Dublin and Lisbon - (www.ft.com) Borrowing costs for Ireland and Portugal shot up as investors took fright at European proposals to force them to take a greater share of losses in future state bail-outs. The moves in the bond markets on Monday follow agreement at last week’s European Union summit on a Franco-German proposal on a mechanism to resolve future Greek-style sovereign debt crises. Ireland saw the premium it pays over German benchmark interest rates rise to 4.67 percentage points, while the yield on its 10-year bonds reached 7.14 per cent, up 0.22 percentage points. Both the premium and the yield set new records since the introduction of the euro. Meanwhile, Portugal’s yield rose 0.16 percentage points to 6.11 per cent, while Greece and Spain saw smaller rises and European banking shares fell sharply in a broadly flat market.

Ambac poised for bankruptcy protection - (www.bbc.co.uk) US bond insurer Ambac has said it may be forced to file for bankruptcy protection before the end of the year after failing to make an interest payment due on Monday. The company said it had been unable to raise the capital needed to avoid bankruptcy protection. Ambac shares in New York closed down 50% as a result of the announcement. The company has struggled for the past two years as a result of the collapse of the US housing market. It was forced to pay out huge sums on bonds linked to mortgages that defaulted during the downturn. 'Credit crisis': The company's debts currently total $1.6bn (£1bn). It said discussions with "senior debt holders" to restructure its debt through a pre-packaged bankruptcy were ongoing, but there was no guarantee that an agreement would be reached. If the discussions do prove unsuccessful, then the company would file for Chapter 11 bankruptcy protection "prior to the end of the year", it said.