KeNo's Housing and Economic Portal: Wednesday June 29 Housing and Economic stories

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Anglo Irish Bank Senior Bondholders to Share Losses, Finance Minister Says - (www.bloomberg.com) Irish Finance Minister Michael Noonan said senior bondholders should share in the losses of Anglo Irish Bank Corp. and Irish Nationwide Building Society, reversing a policy of protecting owners of senior securities. Noonan discussed sharing the cost of rescuing both lenders with senior bondholders at a meeting with the International Monetary Fund, he said in an interview with Dublin-based broadcaster RTE yesterday. The lenders have about 3.8 billion euros ($5.4 billion) of the securities. “We don’t think the Irish taxpayer should redeem what has become speculative investment -- we don’t believe it should be redeemed at par,” Noonan said. He said the IMF “understood our position fully.”

Greek Bank Threat is Main Stability Risk: ECB - (www.bloomberg.com) The European Central Bank said the threat of the Greek debt crisis spilling over into the banking sector is the biggest risk to the region’s financial stability. “Greece could have a contagion effect,” ECB Vice President Vitor Constancio said at a briefing in Frankfurt today, when presenting the bank’s semi-annual Financial Stability Review. “That’s the reason why we are against any sort of default with haircuts and any form of private-sector event that could lead to a credit event or a rating event.” The euro area’s sovereign-debt woes have worsened as investors increased bets that Greece will not be able to pay its debts, sparking the region’s first sovereign default. The risk that euro-area banks holding Greek government bonds will be saddled with losses has jumped, after Standard & Poor’s slapped Greece with the world’s lowest credit rating on June 13. "The euro area faces a very challenging situation that comes mostly from the interconnection of the sovereign debt crisis and the situation of the banking sector,’’ the ECB said in the review. “In light of the potentially very dangerous implications of sovereign-debt restructuring for the debtor country, including its banking system, a determined and unwavering focus on improving fundamentals” is required.

Protesters in Spain clash with police while trying to block regional parliament- (www.washingtonpost.com) About 2,000 demonstrators angry about planned budget cuts in education and health clashed with police outside a regional parliament in Spain on Wednesday. There were reports of 36 injuries. Some politicians could only reach Catalonia’s parliament using police helicopters. Scuffles broke out when police pushed back protesters so other lawmakers arriving on foot could get in. The politicians were heckled and at least two were sprayed with paint, a police spokeswoman said on condition of anonymity in keeping with rules. Spain’s state-run radio reported 36 injuries, including 12 police officers. Police declined to comment on whether there were any injuries. Regional President Artur Mas was among some 25 politicians who arrived by helicopter. About 400 police packed the Ciutadella park in central Barcelona to ensure protesters could not enter by climbing over the railings. Outside, riot police vans stood guard at the main park entrance.

GOP governors push back against Obama on federal Medicaid rules - (www.washingtonpost.com) Faced with severe budget problems, Republican governors are escalating their fight against federal rules requiring states to maintain current levels of health-care coverage for the poor and disabled. The growing resistance to the federal government over the hugely expensive Medicaid program poses a critical test for President Obama, who has the power to relax the rules for states. If he allows states to tighten eligibility requirements, it would outrage many of his core supporters while undermining the central goal of his signature health-care law: expanding health insurance coverage. But if the president turns his back on governors struggling to gain control of their finances by trimming their most costly program, he risks intense criticism just as his administration is locked in a battle with Republicans over the nation’s soaring debt. “There is a growing impatience among governors,” said Mike Schrimpf, communications director for the Republican Governors Association. “As the Medicaid portion of state budgets grows, the issue becomes even more pressing.”

A Slowdown for Small Businesses - (www.nytimes.com) In the latest sign that the economic recovery may have lost whatever modest oomph it had, more small businesses say that they are planning to shrink their payrolls than say they want to expand them. That is according to a new reportreleased Tuesday by the National Federation of Independent Business, a trade group that regularly surveys its membership of small businesses across America. The federation’s report for May showed the worst hiring prospects in eight months. The finding provides a glimpse into the pessimism of the nation’s small firms as they put together their budgets for the coming season, and depicts a more gloomy outlook than other recent (if equally lackluster) economic indicators because this one is forward-looking.