KeNo's Housing and Economic Portal: Thursday December 1 Housing and Economic stories

Thursday, December 1, 2011

Thursday December 1 Housing and Economic stories

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TOP STORIES:

Fannie takes $7.8 billion from Treasury to give to banks, loss widens - (www.reuters.com) Fannie Mae, the biggest source of money for U.S. home loans, on Tuesday said it needed a further $7.8 billion in federal aid to stay afloat as a shaky housing market widened its third-quarter loss to $5.1 billion. The government-controlled firm also attributed the deeper cash drain to losses on derivatives used to hedge its exposure to interest-rate swings and on expenses related to home loans made prior to the 2008 financial collapse. In the year-earlier quarter it had a loss of a $1.3 billion. Fannie Mae has now drawn $112.6 billion in bailout funds from the Treasury Department since being seized by the government in 2008 as mortgage losses mounted, and it has returned $17.2 billion to taxpayers in the form of dividends.

Realtors bribing congress to get buyers deeper in debt - (www.washingtonpost.com) The debate over setting new limits on government support for the housing industry is facing a crucial test in Congress this week as lawmakers decide whether to extend federal guarantees for home loans up to $729,750. The National Association of Realtors has been pushing hard for the extension and managed to gather 60 votes for an amendment that would accomplish it, sponsored by Sen. Johnny Isakson (R-Ga.). The Realtors, perhaps not coincidentally, have been Isakson’s biggest benefactor, spending $604,000 last year on his reelection and a total of $1.3 million, including for his first run for office in 2004. The support for Isakson is part of an unusual strategy by the trade association tospend large amounts not directly in donations to candidates but rather on independent campaign advertising. The strategy is one that other large trade associations may start to adopt in the wake of the Supreme Court’s Citizens United decision last year, which freed corporate and union spending on campaign advertising.

Congressmen using inside knowledge for stock trading - (www.jessescrossroadscafe.blogspot.com) These dozen Congressmen are just the ones that would brag about it openly to Jack Abramoff. Trading in insider information amongst the Congress and their staffs is a form of soft bribery that undermines the character of the legislation, and is a relative side dish compared to the huge amounts of lobbying funds being thrown around by corporate special interests. And both parties are in on it to varying degrees. It can seem an odd corruption to the average person, given the lavish benefits and pensions granted to members of Congress. What is shocking is not that officials sell themselves, but rather, that they sell themselves so brazenly and often for so little. But it makes sense if one understands the attitude of privilege and the insatiable nature of greed.

Caroline Baum: You Can't Fix a Burst Bubble With More Hot Air - (www.irvinehousingblog.com) It's almost six years since the air started to leak, then gush, out of the U.S. housing market, and the best one can say is that residential real estate is bouncing along the bottom. Almost every housing indicator, from starts to sales to prices, has been flat-lining for three years. Various government initiatives, including a first-time-homebuyer tax credit, gave home sales a temporary boost in 2009 and 2010. But just as water seeks its own level, home prices are still seeking theirs. We are now into the liquidation phase of the housing bust. Lenders will spend the next three to five years cleaning up their mess. During this period, high priced areas will slowly deflate while low prices areas will bounce along right were they are. Areas will less distress will begin to recover first, but even these markets will be held back by the substitution effect in nearby lower cost markets. Prime areas will not see rapid or sustained appreciation while nearby subprime areas are still clearing out the REO and shadow inventory.

UC Berkeley looking to avoid 2nd clash with protesters - (www.sfgate.com) Mocked and criticized, UC Berkeley administrators are softening their defense of the violent response by campus police against protesters, and say they hope to avoid similar aggression this week at a planned student walkout. At the same time, campus police say they are investigating their response and considering whether pepper spray and tear gas might be used in future protests. "We're extremely disturbed by the images on the video and will work very hard to not repeat the violence on Tuesday," said Claire Holmes, associate vice chancellor of public affairs, who sits on the school's crisis management team formed last year to improve their handling of protests.