KeNo's Housing and Economic Portal: Monday December 20 Housing and Economic stories

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Money For Nothing: Wall Street Borrowed From Fed At 0.0078 Percent - (www.huffingtonpost.com) For the lucky few on Wall Street, the Federal Reserve sure was sweet. Nine firms -- five of them foreign -- were able to borrow between $5.2 billion and $6.2 billion in U.S. government securities, which effectively act like cash on Wall Street, for four-week intervals while paying one-time fees that amounted to the minuscule rate of 0.0078 percent. That is not a typo. On 33 separate transactions, the lucky nine were able to borrow billions as part of a crisis-era Fed program that lent the securities, known as Treasuries, for 28-day chunks to the now-18 firms known as primary dealers that are empowered to trade with the Federal Reserve Bank of New York. The program, called the Term Securities Lending Facility, ensured that the firms had cash on hand to lend, invest and trade. The market was freezing up. Effectively free money, courtesy of Uncle Sam, helped it thaw. The European firms -- Credit Suisse (Switzerland), Deutsche Bank (Germany), Royal Bank of Scotland (U.K.), Barclays (U.K.), and BNP Paribas (France) -- borrowed $5.2-6.2 billion in Treasuries 20 different times. The one-time fees they paid on each transaction ranged from $403,277.78 to $481,110. Deutsche led the way with seven such deals.

Another vendor quits doing business with Illinois - (www.pantagraph.com) Records show the Illinois Department of Corrections was forced to scramble this week when a vendor refused to deliver foam food trays to Menard Correctional Center because it hadn’t been paid. Industrial Soap Co., which holds the master contract for the foam trays, “will not deliver due to delinquent invoices,” prison officials noted. The St. Louis-based vendor wouldn’t discuss the contract situation Tuesday, but records show the company is owed about $166,000 dating to last year. In order to avoid gaps in meal service, state officials gave another company a $36,000 emergency contract to keep the foam trays in stock. The trays are needed to serve meals to the 3,400 inmates because they have been mostly locked in their cells since mid-October due to rising violence in the maximum-security facility. The state is facing a $13 billion deficit that could grow larger by next year. The current backlog of bills is listed by Comptroller Dan Hynes at nearly $5.6 billion. The state owes at least one vendor for services dating back to March.

Judgment against Bank of America: you must own the note - (www.usawatchdog.com) With all the attention stories such as WikiLeaks and Irish bailout have gotten the last few days, a bombshell judgment against Bank of America in a New Jersey foreclosure case has been overlooked. The judgment happened 2 weeks ago in a case involving the home of John T. Kemp. His original mortgage company was Countrywide, but B of A bought Countrywide a few years back and, in turn, also acquired servicing rights to Kemp’s mortgage. U.S. Bankruptcy Judge Judith Wizmur rejected a claim by Bank of America to foreclose on Kemp’s home. According to a Bloomberg story yesterday, “Bank of America had failed to deliver the note to the trustee. That could leave the trustee with no standing to take the property, and raises the question of whether other foreclosures could similarly be blocked.” According to one witness, this was a common practice. The Bloomberg story goes on to say, “Linda DeMartini, a team leader in the company’s mortgage- litigation management division, said during a U.S. Bankruptcy Court hearing in Camden last year that it was routine for the lender to keep mortgage promissory notes even after loans were bundled by the thousands into bonds and sold to investors, according to a transcript.

Food Stamp Rolls Continue to Rise - (www.blogs.wsj.com) 42.9 million people collected food stamps last month, up 1.2% from the prior month and 16.2% higher than the same time a year ago, according to the U.S. Department of Agriculture. Nationwide 14% of the population relied on food stamps as of September but in some states the percentage was much higher. In Washington, D.C., Mississippi and Tennessee – the states with the largest share of citizens receiving benefits – more than a fifth of the population in each was collecting food stamps. Click on the above link to see a table of all 50 states.

Federal Reserve made $9 trillion in emergency loans - (money.cnn.com) The Federal Reserve made $9 trillion in overnight loans to major banks and Wall Street firms during the financial crisis, according to newly revealed data released Wednesday. The loans were made through a special loan program set up by the Fed in the wake of the Bear Stearns collapse in March 2008 to keep the nation's bond markets trading normally. The amount of cash being pumped out to the financial giants was not previously disclosed. All the loans were backed by collateral and all were paid back with a very low interest rate to the Fed -- an annual rate of between 0.5% to 3.5%. Still, the total amount was a surprise, even to some who had followed the Fed's rescue efforts closely. "That's a real number, even for the Fed," said FusionIQ's Barry Ritholtz, author of the book "Bailout Nation." While the fact that the markets were in trouble was already well known, he said the amount of help they needed is still surprising.