KeNo's Housing and Economic Portal: Sunday September 18 Housing and Economic stories

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Chief Of Failing Bank: "There Is Only One Thing To Do – Party!” - (www.businessinsider.com) Chief Of Failing Bank: "There Is Only One Thing To Do – Party!” Lesson: If the ship is going down, you might as well enjoy your last few minutes above water. On September 5, 2008, weeks before it needed a guarantee from the government, Anglo Irish Bank CEO David Drumm decided it was a good time to spend €80,000 to have some fun. From the Irish Times: David Drumm, the chief executive of the bank, organised the party – themed the “Back To School Doombuster Party” – to lift staff spirits at a time when the financial crisis was deteriorating, banks were struggling to fund themselves and the economy was turning deeply negative. Mr Drumm invited staff to the party in an e-mail the previous July: “Dear colleague, the stock markets are down. They say the economy is in recession. It rained most of the ‘summer’. The holidays are over. This is Anglo so there is only one thing to do – party!”

The Post Office May Shut Down This Winter Unless Congress Authorizes A Bailout - (www.businessinsider.com) The Post Office May Shut Down This Winter Unless Congress Authorizes A Bailout. “Neither rain, nor snow, nor sleet, nor hail shall keep the postmen from their appointed rounds.” But unless Congress steps in, bankruptcy will. The New York Times reports that unless the House and Senate take drastic action in the next few months, one of the nation's oldest institutions — which employs 574,000 Americans — may be forced to shut down. A combination of labor costs and a declining number of packages and letters has the United States Postal Service running short on cash. The independent government agency will be unable to make a $5.5 billion payment to its employee healthcare plan by the Sept. 30 due date. “Our situation is extremely serious,” the postmaster general, Patrick R. Donahoe, told the Times. “If Congress doesn’t act, we will default.”

Nevada Wallops Bank of America With Sweeping Suit - (www.ukprogressive.co.uk) The state of Nevada dramatically expanded its lawsuit against Bank of America today, turning the narrow case it filed late last year into a broadside that targets virtually all aspects of the bank’s mortgage operations. Bank of America has previously denied wrongdoing. The sweeping new suitcould have repercussions far beyond Nevada’s borders. It further jeopardizes a possible nationwide settlement with the five largest U.S. banks over their foreclosure practices, especially given concerns voiced by other attorneys general, New York’s foremost among them. (You can read the suit here.) In a statement, Bank of America spokeswoman Jumana Bauwens said reaching a settlement would bring a better outcome for homeowners than litigation. “We believe that the best way to get the housing market going again in every state is a global settlement that addresses these issues fairly, comprehensively and with finality.” The suit also weakens a separate, 2008 multistate settlement in which Countrywide promised to evaluate troubled homeowners for loan modifications.

Postal Service Is Nearing Default as Losses Mount - (www.nytimes.com) The United States Postal Service has long lived on the financial edge, but it has never been as close to the precipice as it is today: the agency is so low on cash that it will not be able to make a $5.5 billion payment due this month and may have to shut down entirely this winter unless Congress takes emergency action to stabilize its finances. “Our situation is extremely serious,” the postmaster general, Patrick R. Donahoe, said in an interview. “If Congress doesn’t act, we will default.” In recent weeks, Mr. Donahoe has been pushing a series of painful cost-cutting measures to erase the agency’s deficit, which will reach $9.2 billion this fiscal year. They include eliminating Saturday mail delivery, closing up to 3,700 postal locations and laying off 120,000 workers — nearly one-fifth of the agency’s work force — despite a no-layoffs clause in the unions’ contracts. The post office’s problems stem from one hard reality: it is being squeezed on both revenue and costs.

Finland Searches for Collateral Compromise as IMF Becomes Latest Detractor - (www.bloomberg.com) Finland is stepping up efforts to find a compromise with Europe on its collateral demands amid International Monetary Fund opposition to forcing Greece to give euro members extra security for new loans. “We absolutely don’t want to hurt other member states or the stability of the euro,” Finland’s Prime Minister Jyrki Katainen said Sept. 3 in an interview broadcast by YLE’s TV1. “We’re now working towards a deal on collateral. The negotiations are ongoing. We’re looking for a model that’s technically feasible, acceptable to all member states and would provide Finland with collateral in exchange for the loan guarantees to Greece.” Europe’s efforts to contain its debt crisis risk unraveling as individual nations' demands for collateral, Greece’s deteriorating economic predicament and wavering commitment to austerity packages from euro members such as Italy throw any recovery in doubt.