KeNo's Housing and Economic Portal: Monday January 9 Housing and Economic stories

Sunday, January 8, 2012

Monday January 9 Housing and Economic stories

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Angelo Mozilo still free, but small timer goes to jail - (www.latimes.com) First, he preached the Gospel in South Los Angeles. Then he picked up a badge and gun as an LAPD officer working the Wilshire Division. From there, he moved to the FBI, serving as an undercover agent in Los Angeles, then in Tennessee. His life, he said, was "my American dream." But now Darin McAllister is in federal prison in eastern Kentucky, serving a four-year sentence as part of a Justice Department investigation into mortgage fraud. His life today, he says, is "my American nightmare." His path from Bible to badge to prison bars is in some part a result of the three-year national housing crisis. When real estate loans went bad, he came under scrutiny from his own employer, the FBI, for lying about his income. But it is also a casualty of McAllister's unbridled and ultimately unprincipled ambition to repeatedly reinvent himself and rise above his modest upbringing in the Chicago suburb of Skokie, Ill.

CIA murders own hired killer of ex-Afghan central banker? - (www.reuters.com) Remains of a San Diego man suspected of killing a former head of the Afghanistan central bank who fled to the United States as a political fugitive have been found, police said on Thursday. Bones identified as belonging to Ismael Raul Lopez, 28, were discovered by recreational divers offshore in the Pacific Ocean and later recovered by public safety personnel, San Diego police said in a statement. Lopez was suspected by police of killing self-employed cab driver Mir Najibullah Sadat Sahou, 68, in a robbery-homicide in late September. An arrest warrant had been issued in October. The announcement sheds more light on a mysterious case that some believe was a politically motivated assassination instead of the robbery-homicide police have described.

A first-ever default on municipal general obligation bonds - (www.nytimes.com) People who own what is considered the safest type of municipal bond may be in for a surprise. This safe debt, called a general-obligation bond, is said to be the next strongest thing to Treasuries because it is backed by a “full faith and credit” pledge. That means the government that issued it will pay it on time, no matter what. But now Jefferson County, Ala., has stopped paying such debt, breaking with convention and setting up a fundamental test of what full faith and credit truly means. “We all want to know, ‘What’s the truth here?’ ” said Richard A. Ciccarone, chief research officer at McDonnell Investment Management. “The way I learned it, full faith and credit was considered all the taxing power of a community, and that means there’s an infinite pledge. When you get into bankruptcy court, truth is something that can be revealed in a new way.”

New house sales near all-time low - (www.csmonitor.com) The Commerce Department says new-home sales rose 1.6 percent last month to a seasonally adjusted annual rate of 315,000. That’s less than half the 700,000 new homes that economists say should be sold to sustain a healthy housing market. It’s also below the 323,000 homes sold last year — the worst year for sales on records dating back to 1963. December would have to produce its best monthly sales total in four years for 2011 to finish ahead of last year’s total. New homes account for less than 10 percent of the housing market. But they have a big impact on the economy. Each new home built creates roughly three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders. Economists note that housing is a long way from fully recovering and that many people are opting to rent because they can’t afford to buy or don’t feel a home is a wise investment right now.

Bankers Still Fail To Disclose Their True Balance Sheets - (www.bloomberg.com) While bankers complain that regulatory uncertainty is hurting growth, their failure to provide balance-sheet transparency is creating uncertainty for the taxpayers who bailed them out. Europe’s sovereign-debt crisis already claimed MF Global Holdings Ltd., the brokerage run by Jon S. Corzine that collapsed on Oct. 31, and credit-default swap prices imply a more than 1-in-5 chance of default for Morgan Stanley, Goldman Sachs Group Inc. (GS) and Bank of America Corp. (BAC) in the next five years. That’s up from about 1-in-10 odds at the beginning of July, according to data provider CMA and a standard credit-swaps industry-pricing model. “European-related risks have overwhelmed whatever cost regulatory uncertainty has imposed on bank lending,” said John Lonski, chief economist at Moody’s Capital Markets Group in New York. “The lack of transparency means we don’t really know what the exposures of major U.S. financial institutions are,” and “we very much have to be concerned about the possible negative repercussions.”