KeNo's Housing and Economic Portal: Tuesday September 27 Housing and Economic stories

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Fannie, Freddie get away with no monetary penalty or admission of fraud - (www.nytimes.com) Regulators are nearing a settlement with Fannie Mae and Freddie Mac over whether the mortgage finance giants adequately disclosed their exposure to risky subprime loans, bringing to a close a three-year investigation. The proposed agreement with the Securities and Exchange Commission, under the terms being discussed, would include no monetary penalty or admission of fraud, according to several people briefed on the case. But a settlement would represent the most significant acknowledgement yet by the mortgage companies that they played a central role in the housing boom and bust. And the action, however limited, may help refurbish the S.E.C.’s reputation as an aggressive regulator, particularly as the country struggles with the aftereffects of the financial crisis that the housing bubble fueled. But the potential settlement — even it if it is little more than a rebuke — comes at an awkward time for Fannie Mae and Freddie Mac. Last week, the government overseer of the two companies sued 17 large financial firms, blaming them for luring the mortgage giants into buying troubled loans. That is a similar accusation to the one the S.E.C. is leveling at Fannie and Freddie — that the two entities misled their own investors. The case against the financial firms could be complicated should Fannie and Freddie sound a note of contrition for their own role in the implosion of the mortgage market in settling with the S.E.C.

Carry Trades Lose Most in a Year as Stimulus No Barrier to Stronger Dollar - (www.bloomberg.com) Slowing economic growth around the world is punishing investors who bet on Australian and Brazilian assets using money borrowed in dollars and yen with the biggest losses in more than a year. A UBS AG index tracking the performance of carry trades where investors sell currencies with low interest rates to buy ones in 24 markets with higher yields has tumbled 2.6 percent this month after losing 2.2 percent in August and 3.1 percent in July, the biggest back-to-back monthly drop since May and June 2010. The dollar has appreciated 6.5 percent against a basket of nine developed-nation peers from its low this year on Aug. 1, with the yen up more than 7.3 percent from the same day, according to Bloomberg Correlation-Weighted Currency Indexes.

Greece has cash until October: deputy finance minister - (www.reuters.com) Debt-laden Greece has cash to operate until next month, the country's deputy finance minister said on Monday, highlighting the country's need to qualify for the next tranche out of its ongoing EU/IMF bailout. Filippos Sachinidis's statements confirm previous comments by Greek officials, made on condition of anonymity, that the country had cash for only a few more weeks. "We have definitely maneuvering space within October," Sachinidis said in an interview on television channel Mega, responding to questions how much longer the government will be able to pay wages and pensions. "We are trying to make sure the state can continue to operate without problems," he added.

Nevada wallops Bank of America with sweeping suit - (www.centralvalleybusinesstimes.com) The state of Nevada has dramatically expanded its lawsuit against Bank of America, 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 suit [1] could 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 [1].) 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.

For Graduates, a Shrinking Payoff - (www.nytimes.com) Attention recent college graduates — as well as parents who covered those big tuition bills. You may not want to hear this, but a study released on Wednesday found that entry-level wages for students who graduated from college in 2010 was lower than a decade earlier, after adjusting for inflation. The study was done by Heidi Shierholz, a labor market economist at the Economic Policy Institute, a liberal research and policy center. She found that after gains in the 1980s and 1990s, entry-level hourly wages for college-educated men (without advanced degrees) were $21.77 in 2010, down 4.5 percent from $22.75 in 2000. For college-educated women, entry-level wages were $18.43 in 2010, the study found, down 5.2 percent from $19.38 10 years earlier. (The figures are in 2010 dollars.) Ms. Shierholz said in an interview, “We’re seeing increased demand for college grads, but the fact that we see these declining wages suggests that demand is being more than met by the increased supply of college grads.” She said that in the decade after 2000, the business cycle was tough on workers and wages across the board, except for those at the very top. “These young people coming out of college get swooped up in the bottom part of the wage distribution that really suffered during the whole decade after 2000,” she said.