KeNo's Housing and Economic Portal: Tuesday February 15 Housing and Economic stories

Monday, February 14, 2011

Tuesday February 15 Housing and Economic stories

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Regulators Close 3 Failed Banks - (www.nytimes.com) Regulators on Friday shut down three small banks in Georgia and Illinois, bringing to 14 the number of bank failures this year. The Federal Deposit Insurance Corporation seized the American Trust Bank, based in Roswell, Ga., with $238.2 million in assets and $222.2 million in deposits; the North Georgia Bank of Watkinsville, Ga., with $153.2 million in assets and $139.7 million in deposits; and the Chicago-based Community First Bank, with $51.1 million in assets and $49.5 million in deposits.

Investors pull $7bn from emerging funds - (www.ft.com) Investors have pulled more than $7bn from emerging market equity funds in the past week, the biggest withdrawal in more than three years after turmoil in the Middle East and rising food inflation raised fears of economic instability. Violence on the streets of Egypt and a jump in oil prices to more than $100 a barrel set off a wave of anxiety across developing markets. But the fund outflows also reflected deeper unease about economic overheating in China, India, Brazil and other big emerging economies. Emerging markets attracted record investor inflows of $95bn last year as they became a defining investment theme in the wake of the financial crisis. The latest figures have raised concern that the bull run may be about to end as investors look for value in beaten-down markets in the west.

ETFs in the heat of the US muni-bond battle - (www.ft.com) Investors have been withdrawing from the $2,900bn US municipal bond market amid concerns that there could be multiple defaults by borrowers in state and local governments due to their weakened financial positions following the US economic recession. Meredith Whitney, a well-known analyst who came to fame during the financial crisis for her prescient warnings about problems at Citigroup and other US banks, said on a widely watched news programme in December that there could be “50 to 100 sizeable defaults” in the muni bond market. Her warnings have struck a chord with investors. By the end of January, outflows from US muni bond funds had reached $28.26bn since the beginning of October, including $514m which has been withdrawn from muni bond exchange traded funds, according to EPFR. One looming issue is that aid from the federal government to state and local authorities, a big part of the stimulus package, is due to decline sharply, from $59bn in the current fiscal year which ends in June to only $6bn in 2011/12.

BofA Creates Foreclosure Unit, Appoints Chief - (www.cnbc.com) Bank of America appointed on Friday a new foreclosure and loan modifications czar, and created a new unit to oversee problem home loans in a bid to sort out its on-going foreclosure issues, becoming the first large U.S. bank to do so. The new unit creates a seventh major division at the bank reporting directly to Chief Executive Brian Moynihan, an indication that the largest U.S. mortgage servicer is attempting to be more aggressive in resolving its problem mortgage loan portfolio. The change splits the largest U.S. bank by assets' mortgage business into two parts: One focused on current and new mortgages, and another dedicated to foreclosures and workouts.

Health Care Fraud No Longer a Faceless Crime - (www.cnbc.com) Medicare and Medicaid scams cost taxpayers more than $60 billion a year, but bank holdups are more likely to get greater attention. The government wants the public's help in trying to catch more than 170 fugitives wanted for fraud, so it's developed a new health care most-wanted list, with its own website — http://www.oig.hhs.gov . Most are dour; some sport smiles. One name on the list is Leonard Nwafor, convicted in Los Angeles of billing Medicare more than $1 million for motorized wheelchairs that people didn't need. One person who got a wheelchair was a blind man who later testified he couldn't see to operate it. Facing time in federal prison, Nwafor disappeared before his sentencing. "We're looking for new ways to press the issue of catching fugitives," said Gerald Roy, deputy inspector general for investigations at the Health and Human Services Department. "If someone walks into a bank and steals $3,000 or $4,000, it would be all over the newspaper. These people manage to do it from a less high profile position, but they still have a tremendous impact."