KeNo's Housing and Economic Portal: Wednesday January 4 Housing and Economic stories

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Slapped Wrists at WaMu - (www.nytimes.com) WHEN Washington Mutual collapsed in 2008, it was the largest bank failure in American history. So the $64.7 million settlement struck last week by federal banking regulators and three former WaMu executives seems like small potatoes indeed. Worse, most of the money didn’t even come from the former executives’ pockets. Instead, it came from directors’ and officers’ liability insurance policies paid for by the bank. The deal, agreed to by the Federal Deposit Insurance Corporation, requires that the men, among them Kerry Killinger, WaMu’s former chief executive, forgo claims for insurance coverage and some past compensation that they had requested from the bankruptcy court. To anyone familiar with WaMu’s Wild West lending practices — “The Power of Yes” was the bank’s motto — the agreement might seem like yet another example of the minimalist punishment meted out to major players in the credit boom and bust. Here are the particulars: Mr. Killinger paid $275,000 in cash. He also agreed to forfeit claims against his WaMu retirement accounts with a face amount of $7.5 million.

No One Says Who Took $586B in Fed Swaps - (www.bloomberg.com) For all the transparency forced on the Federal Reserve by Congress and the courts, one of the central bank’s emergency-lending programs remains so secretive that names of borrowers may be hidden from the Fed itself. As part of a currency-swap plan active from 2007 to 2010 and revived to fight the European debt crisis, the Fed lends dollars to other central banks, which auction them to local commercial banks. Lending peaked at $586 billion in December 2008. While the transactions with other central banks are all disclosed, the Fed doesn’t track where the dollars ultimately end up, and European officials don’t share borrowers’ identities outside the continent. The lack of openness may leave the U.S. government and public in the dark on the beneficiaries and potential risks from one of the Fed’s largest crisis-loan programs. The European Central Bank’s three-month dollar lending through the swap lines surged last week to $50.7 billion from $400 million after the Nov. 30 announcement that the Fed, in concert with the ECB and four other central banks, lowered the interest rate by a half percentage point.

Fed’s Once-Secret Data Released to Public - (www.bloomberg.com) Bloomberg News today released spreadsheets showing daily borrowing totals for 407 banks and companies that tapped Federal Reserve emergency programs during the 2007 to 2009 financial crisis. It’s the first time such data have been publicly available in this form. To download a zip file of the spreadsheets, go tohttp://bit.ly/Bloomberg-Fed-Data. For an explanation of the files, see the one labeled “1a Fed Data Roadmap.” The day-by-day, bank-by-bank numbers, culled from about 50,000 transactions the U.S. central bank made through seven facilities, formed the basis of a series of Bloomberg News articles this year about the largest financial bailout in history. “Scholars can now examine the data and continue the analysis of the Fed’s crisis management,” said Allan H. Meltzer, a professor of political economy at Carnegie Mellon University in Pittsburgh and the author of three books on the history of the U.S. central bank.

Analysis: Emerging borrowers face rollover risk, default threat - (www.reuters.com) Scarce dollar funding and a retrenchment in bank lending will force up premiums for emerging market countries and companies refinancing debt next year, adding to strains on public finances and potentially triggering a surge in corporate defaults. JPMorgan calculates that emerging sovereign debtors will need to find $63.6 billion to cover coupon and redemption payments in 2012 while corporates must raise $107 billion. Total issuance should be around $245 billion, the bank forecasts. Such volumes would not usually portend difficulty -- even this year, emerging bond issuance has been over $250 billion, not far off last year's record. But with markets still awaiting a solution to the euro zone's debt crisis, 2012 could be tough for entities that need to refinance debt or secure new money.

Analysis: Worries rise over risks of IMF lending to Europe - (www.reuters.com) The prospect of European heavyweight economies like Italy or Spain turning to the IMF for emergency rescue loans is worrying some nations that fear they could suffer losses on the funds they have extended to the IMF. Despite the International Monetary Fund's stable record - no borrower has ever defaulted on an IMF loan and no country has ever lost money lending to the IMF - there are concerns about the IMF's growing exposure to the euro zone. That exposure could take a quantum leap if Italy and Spain need bailouts, a level of assistance that would almost certainly dwarf the loans already approved for Greece, Ireland and Portugal in deals engineered with the European Union.