KeNo's Housing and Economic Portal: Sunday June 26 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Greek debt crisis stirs bank fears - (www.ft.com) Concern is growing among regulators that efforts to minimise the knock-on effects of a Greek government default would undercut the global drive to make banks safer by forcing them to hold more capital. The German government and the European Central Bank are at loggerheads over how to involve private-sector holders of Greek bonds in a second bail-out of Greece. Berlin wants a “soft restructuring” or extension of bond maturities, which ratings agencies and investors regard as a default. Some banking regulators suspect the German government is pushing for a form of technical Greek default but wants to shield its own banks – and those in the rest of the eurozone – from a big part of the impact by exploiting loopholes in banking regulation. Under current rules, most banks do not have to hold capital against sovereign bond stocks because they are considered to be very safe. A default would normally trigger a change in risk-weighting and prompt higher capital charges. But some European Union negotiators are looking for a way around that rule, because they are worried about the potential impact on banks that are already struggling to meet the new, tougher “Basel III” capital requirements.

$365K In Taxpayer Dollars To Teach People How To Fish? - (www.chicago.cbslocal.com) In his winter budget address, Gov. Pat Quinn pledged that “all unnecessary state spending will be eliminated.” Now it appears the state is preparing once again, to spend a third of a million dollars – taxpayer dollars – to teach people how to fish. With the Quinn administration facing billions of dollars in unpaid bills, the Governor is now under pressure to start cutting deeply into the newly passed state budget. Now there is a call to start with what’s known as the Illinois Urban Fishing program. Every year, thousands of people, mostly in Chicago are taught how to cast, how to bait a hook and how to haul in a fish. Program director Brenda McKinney says, “I definitely think the program makes an impact on children’s lives.” But a new report by the taxpayer watchdog group, the Illinois Policy Institute, calls on Quinn to put an end to it. “I don’t think teaching people how to fish in urban areas or rural areas is a core government service,” says CEO John Tillman. And he complains that in this year’s budget, “they’ve increased it from $351,000 to $365,000.” McKinney said that while she is not worried the program will be cut, “There are no guarantees in anything.”

California Republicans Block Brown’s Deficit Plan - (www.bloomberg.com) California’s Senate Republicans blocked Governor Jerry Brown’s plan to erase a $10 billion deficit as closed-door talks remain snagged on his demand for higher taxes as a deadline to pass a budget looms. Republicans oppose the governor’s proposal because it would extend tax and fee increases set to end June 30. The so-called bridge tax would preserve the revenue measures pending the outcome of a voter referendum, planned for September or later, to keep them for five years. Republicans said the extensions would harm California’s economy. Brown said he doesn’t want to raise taxes without voter support. “The Democrats have moved the goal post,” Senator Bob Huff, the Budget Committee’s Republican vice chairman, said in a telephone interview. “Now they are saying they need the taxes and then they will let the voters decide. But if the voters say ‘no,’ they still get stuck with another nine months of taxes.” While the defeat didn’t surprise party leaders, California faces a cash shortage next month if a workable budget isn’t passed by the July 1 start of fiscal 2012. The key to getting a spending plan through the Legislature, where Democrats lack the two-thirds majority needed to raise taxes, may hinge on finding a compromise agreement that enough Republicans will support.

Too Big to Fail, or Too Trifling for Oversight? - (www.nytimes.com) It is not very often that business people head to Washington to explain how unimportant they are. But over the last several months, executives from more than two dozen financial companies and their trade groups have paraded into the Treasury Department, the Federal Reserve and other government agencies to try to persuade top regulators that they are not large or risky enough to threaten the financial system if they should ever collapse. Big insurers like the Mass Mutual Financial Group and Zurich Financial Services; hedge funds like Citadel and Paulson & Company; and mutual-fund companies like BlackRock, Fidelity Investments and Pacific Investment Management Company have all been making the rounds, according to documents filed by the regulatory agencies. What they are all hoping to avoid is being designated “systemically important” by a council of financial regulators. That would require them to face stricter federal oversight and keep more cash on hand, which they fear would erode profits.

Ireland Seizes $7 Billion From Its Pension Fund To Boost Employment - (www.businessinsider.com) THE GOVERNMENT WILL use the last €5 billion in the National Pensions Reserve Fund (NPRF) to help create employment although it will need approval from the International Monetary Fund (IMF) and Europe before doing so. The Sunday Times reports today that the money will be used by the government to create as many as 80,000 jobs in Ireland. The paper cites government sources in reporting that the use of the money would be seen as more viable then the proposed sale of semi-state assets in the current weak market. One source says that the view of the troika of IMF, the European Union and the European Central Bank is that if you have money it should be spent rather than drawing on outside funding or money from selling off assets at the wrong-time. The NPRF was launched ten-years-ago by the then Minister for Finance Charlie McCreevy. Its purpose was to build up assets which would part-finance the cost to the exchequer of social welfare and public service pensions from 2025 onward. A total of €17.5 billion of it is being used as part of the €85 billion EU/IMF bailout that was agreed last November with €10 billion of that being used to recapitalise the banking sector in Ireland.