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The Little State With a Big Mess - (www.nytimes.com) After decades of drift, denial and inaction, Rhode Island’s $14.8 billion pension system is in crisis. And its outcome could be a portent for other states. ON the night of Sept. 8, Gina M. Raimondo, a financier by trade, rolled up here with news no one wanted to hear: Rhode Island, she declared, was going broke. Maybe not today, and maybe not tomorrow. But if current trends held, Ms. Raimondo warned, the Ocean State would soon look like Athens on the Narragansett: undersized and overextended. Its economy would wither. Jobs would vanish. The state would be hollowed out. It is not the sort of message you might expect from Ms. Raimondo, a proud daughter of Providence, a successful venture capitalist and, not least, the current general treasurer of Rhode Island. But it is a message worth hearing. The smallest state in the union, it turns out, has a very big debt problem.
Greece may need 60 percent bond writedown; EU at odds - (www.reuters.com) EU finance ministers outlined a deal on Saturday for recapitalizing European banks, and the leaders of Germany and France said they hoped for a breakthrough in tackling the euro zone debt crisis at a summit on Wednesday. After nearly 10 hours of talks, finance ministers overcame strong opposition from Spain, Italy and Portugal and agreed on the need to inject around 100 billion euros into European banks to protect them from the threat of a Greek debt default, and the broader risks of financial contagion in the euro zone. The ministers will submit their thoughts to EU leaders, who meet on Sunday to discuss a "comprehensive" solution to the debt crisis, which needs to contain a second bailout programme for Greece, a scaling up of the euro zone's bailout fund, and the strengthening of European bank balance sheets.
Regulators close four more U.S. banks - (www.reuters.com) Regulators closed four banks in the United States on Friday, including one in Colorado with over $1 billion in assets, bringing the total number of closures this year to 84. The largest of the failed banks, the Community Banks of Colorado, had $1.38 billion in assets and $1.33 billion in total deposits as of June 30, the Federal Deposit Insurance Corp said. It is the largest bank to fail since August 19, 2011. Bank Midwest, NA, Kansas City, Mo., agreed to assume all the deposits of Greenwood-based Community Banks of Colorado and to purchase essentially all of the assets. Its 40 branches will reopen on Saturday as branches of Bank Midwest.
U.S. readies stronger lifeline for homeowners - (www.reuters.com) Homeowners who owe more than their houses are worth will get new help to refinance in a government plan to be unveiled as early as Monday to support the battered housing sector, sources familiar with the effort said. The Obama administration has been working with the regulator for Fannie Mae and Freddie Mac to find ways to make it easier for borrowers to switch to cheaper loans even if they have little to no equity in their homes. The regulator, the Federal Housing Finance Agency, intends to loosen the terms of the two-year-old Home Affordable Refinance Program, which helps borrowers who have been making mortgage payments on time but who have not been able to refinance as their home values have dropped. Officials have been frustrated that attempts to bolster housing -- the epicenter of the deepest U.S. recession since the Great Depression -- have borne little fruit. Some top Federal Reserve officials want the central bank to consider buying more mortgage-backed securities as a way to help.
Monster Prediction From BofA: Another US Debt Downgrade Is Coming In Just A Few Weeks - (www.businessinsider.com) In an analyst note, Bofa/ML Ethan S. Harris drops a bit of a bombshell prediction: We expect a moderate slowdown in the beginning of next year, as two small policy shocks—another debt downgrade and fiscal tightening—hit the economy. The “not-so-super” Deficit Commission is very unlikely to come up with a credible deficit-reduction plan. The committee is more divided than the overall Congress. Since the fall-back plan is sharp cuts in discretionary spending, the whole point of the Committee is to put taxes and entitlements on the table. However, all the Republican members have signed the Norquist “no taxes” pledge and with taxes off the table it is hard to imagine the liberal Democrats on the Committee agreeing to significant entitlement cuts. The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan. Hence, we expect at least one credit downgrade in late November or early December when the super Committee crashes.
Europe faces a summit strikeout - (www.washingtonpost.com)
France Retreats in Clash With Germany Over Expanding Bailout Fund’s Power - (www.bloomberg.com)
German tax cut row worsens ahead of EU summit - (www.reuters.com)
China’s Wen Urges Efforts to Control Food Costs, Inflation - (www.bloomberg.com)
China’s Control Over Property Market at Critical Stage, Wen Says - (www.bloomberg.com)
Fed’s Yellen: QE3 May Be Warranted - (www.bloomberg.com)
Merkel-Sarkozy Meeting Today to Include ECB, EU, IMF Officials - (www.bloomberg.com)
Eurozone to banks: Take bigger loss on Greek debt - (www.google.com/hostednews/ap)
Liquidity Pinched on Corporate Block Trades, JPMorgan Says - (www.bloomberg.com)
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