KeNo's Housing and Economic Portal: Wednesday November 17 Housing and Economic stories

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TOP STORIES:

New food stamps drive post-midnight sales spikes - (www.chicagotribune.com) In a sign of hard economic times, supermarkets are reporting post-midnight sales spikes early in the month shortly after the government updates food stamp accounts with new allotments. The Indianapolis Star reports stores have had to call in more clerks and open as many as seven checkout lanes to accommodate the early morning grocery runs by parents like Christy Hickey of Indianapolis, who was shopping at a Walmart Supercenter after midnight Thursday morning to put food on the table a few hours later. "There's like nothing at home," said Hickey, who is unemployed and has three teenagers with her boyfriend. "This is breakfast for the kids, a snack for them tomorrow after school." The government typically updates food stamp accounts shortly after midnight on a date early in the month. Recipients then use electronic-benefit transfer cards to pay for items.

Unemployment payouts push California deeper into debt - (www.chicagotribune.com) The state is borrowing $40 million a day from the federal government to provide assistance to jobless workers, but has resisted changing the formulas it uses to determine and fund those benefits. California's fund for paying unemployment insurance is broke. With one in every eight workers out of a job, the state is borrowing billions of dollars from the federal government to pay benefits at the rate of $40 million a day. The debt, now at $8.6 billion, is expected to reach $10.3 billion for the year, two-thirds greater than last year. Worse, the deficit is projected to hit $13.4 billion by the end of next year and $16 billion in 2012, according to the California Employment Development Department, which runs the program. Interest on that debt will soon start piling up, forcing the state to come up with a $362-million payment to Washington by the end of next September. That's money that otherwise would go into the state's general fund, where it could be spent to hire new teachers, provide healthcare to children and beef up law enforcement. Continued borrowing, meanwhile, means that employers face an automatic hike in their federal unemployment insurance taxes, pushing up annual payroll costs $21 a year for each worker.
Those costs are expected to more than double over the next five years if California continues to borrow from the federal government.

Indiana agency to have armed guards at 36 unemployment offices around the state - (www.chicagotribune.com) A state agency has decided to have armed security guards on hand at 36 unemployment offices around Indiana. Department of Workforce Development spokesman Marc Lotter says no specific incidents prompted the action. Lotter tells The Journal Gazette that some offices have had guards for nearly two years but that they were hired on a regional basis. Other agency offices around the state that provide job training or are not full-service branches will continue to have unarmed guards.

Millions of houseowners keep paying on underwater mortgages - (www.latimes.com) For almost two years, home foreclosures have swept the nation, spreading misery among once-buoyant families, spattering lenders with red ink and undermining efforts to restart the economy. But a bigger problem may turn out to be the millions of Americans who are still faithfully paying their mortgages, but on houses worth far less than before the bubble burst. It's not that these homeowners will stop making their payments. It's just the opposite — that they will keep doing it. How could that be a source of future trouble? Because, with home prices stagnant in much of the country, payments on mortgages that are underwater could absorb billions of dollars that might be used for other forms of consumer spending — a drag on family finances, the housing market and the overall economy.

Conflict of interest continue at the banks - (www.nytimes.com) Ben Bernanke, chairman of the Federal Reserve, said recently that federal regulators are “looking intensively” at banks’ foreclosure practices. An investigation is long overdue, though it shouldn’t take a lot of digging. Consumer advocates, the press, investors and homeowners have already compiled a compelling list of transgressions: conflicts of interest that have banks pushing foreclosures, without a good-faith effort to modify troubled loans. Dubious fees that inflate mortgage balances. The hundreds of thousands of flawed foreclosure affidavits that violated homeowners’ legal protections. The misplaced documents. And it goes on.

Mortgage bond insurer Ambac misses bond payment. Oh the irony. - (news.yahoo.com) Ambac Financial Group Inc (ABK.N), which was the second-largest U.S. bond insurer before suffering huge losses on risky mortgages, said it may file for bankruptcy protection as soon as this year after skipping a bond interest payment. Ambac shares fell as much as 59.8 percent before closing down 50.4 percent, or 41.9 cents, at 41.2 cents on the New York Stock Exchange. Ambac bond prices tumbled and the cost of protecting Ambac debt against default rose. The announcement is the latest setback for Ambac, which has struggled to stay solvent after the housing market collapse. Ambac had pursued higher profit by expanding beyond municipal bond insurance and starting to insure riskier debt. That move backfired as credit tightened and more borrowers defaulted. In a regulatory filing, Ambac said it has been unable to raise capital to avoid bankruptcy and is in talks with a group of senior bondholders to pursue a bankruptcy filing that would preserve a $7 billion tax benefit.