KeNo's Housing and Economic Portal: Monday April 2 Housing and Economic stories

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TOP STORIES:

Bank of America: Too Crooked to Fail - (www.rollingstone.com) The bank has defrauded everyone from investors and insurers to homeowners and the unemployed. So why does the government keep bailing it out? At least Bank of America got its name right. The ultimate Too Big to Fail bank really is America, a hypergluttonous ward of the state whose limitless fraud and criminal conspiracies we'll all be paying for until the end of time. Did you hear about the plot to rig global interest rates? The $137 million fine for bilking needy schools and cities? The ingenious plan to suck multiple fees out of the unemployment checks of jobless workers? Take your eyes off them for 10 seconds and guaranteed, they'll be into some shit again: This bank is like the world's worst-behaved teenager, taking your car and running over kittens and fire hydrants on the way to Vegas for the weekend, maxing out your credit cards in the three days you spend at your aunt's funeral. They're out of control, yet they'll never do time or go out of business, because the government remains creepily committed to their survival, like overindulgent parents who refuse to believe their 40-year-old live-at-home son could possibly be responsible for those dead hookers in the backyard. It's been four years since the government, in the name of preventing a depression, saved this megabank from ruin by pumping $45 billion of taxpayer money into its arm. Since then, the Obama administration has looked the other way as the bank committed an astonishing variety of crimes – some elaborate and brilliant in their conception, some so crude that they'd be beneath your average street thug. Bank of America has systematically ripped off almost everyone with whom it has a significant business relationship, cheating investors, insurers, depositors, homeowners, shareholders, pensioners and taxpayers.

You've Got To Read This Explosive Letter About A Coverup At The CBO - (www.businessinsider.com) "I was repeatedly pressured... to not write nor discuss issues in the banking sector and mortgage markets that might suggest weakness." The WSJ broke a big story today about an inquiry into shady behavior at the Credit Budget Office. At the heart of the story is former CBO economist Lan T. Pham, who says she was fired for sharing her pessimistic outlook for banking and housing sectors in 2010. Pham made this explosive claim in a letter to Sen. Charles Grassley (embedded below). Here's an excerpt:

I was repeatedly pressured by the CBO Assistant Director, Deborah Lucas, in charge of the Financial Analysis Division to not write nor discuss issues in the banking sector and mortgage markets that might suggest weakness in these sectors and their consequences on the economy and households.

- Statements could not be made attributing the decline in property tax revenues to foreclosures and the decline in home prices, which runs counter to common sense and the findings by the U.S. Senate Joint Economic Committee of the U.S. Congress.

- Foreclosures had no impact on home prices (negative externalties, spillover effects). This runs counter to common sense, and a prominent national home price index by Corelogic in the CBO's key database subscription showing clearly the distressed homes component of the index worsens home price declines.

- The decline in home prices had no impact on household wealth, which runs counter to common sense and the fact that the home is a significant asset or source of 'wealth' for most households. According to the Federal Reserve, about $7 trillion in home equity evaporated in the housing collapse.

- The emerging foreclosure fraud problems in September 2010 were due to media "sensationalism", "the kind of event of the moment where we should be adding skepticism, not just repeating the hype in the press" and discussing it "lacks judgment about what is important'.

Gas prices spike, and American motorists rumble with anger, frustration - (www.washingtonpost.com) Long before the coming of the internal combustion engine, Route 11 was a pioneer track known as the Great Wagon Road. Eventually the interstate highway stole the long-distance traffic, and Route 11 became a byway, with a few holdover filling stations that look as if they didn’t get the memo. The old Pure station here has a single island with three pumps. From a cave-like chamber in the back of the office emerges Tim Vaught, 51, a leathery fellow who has pumped gas for decades. Vaught keeps an eye on the High Point Truckstop across the street. The High Point raised its price for unleaded regular to $3.75 early Monaday afternoon. Vaught held at $3.69 for a few hours and then cranked it up to $3.75. “I can’t stay down long,” he says. Even a difference of six cents could create a stampede on his business and drain his 10,000-gallon tank dry.

Italy Said to Pay Morgan Stanley $3.4 Billion – (www.bloomberg.com) When Morgan Stanley (MS) said in January it had cut its “net exposure” to Italy by $3.4 billion, it didn’t tell investors that the nation paid that entire amount to the bank to exit a bet on interest rates. Italy, the second-most indebted nation in the European Union, paid the money to unwind derivative contracts from the 1990s that had backfired, said a person with direct knowledge of the Treasury’s payment. It was cheaper for Italy to cancel the transactions rather than to renew, said the person, who declined to be identified because the terms were private. The cost, equal to half the amount to be raised by Italy’s sales tax increase this year, underscores the risk derivatives countries use to reduce borrowing costs and guard against swings in interest rates and currencies can sour and generate losses for taxpayers. Italy, with record debt of $2.5 trillion, has lost more than $31 billion on its derivatives at current market values, according to data compiled by the Bloomberg Brief Risk newsletter from regulatory filings.

Analysis: Tapping oil from the SPR may be trickier than ever - (www.reuters.com) The U.S. Strategic Petroleum Reserve is not quite as strategic as it used to be. As President Barack Obama moves closer to an unprecedented second release of the U.S. emergency oil stockpile in a bid to bring down near-record fuel prices, experts say dramatic logistical upheavals in the U.S. oil market over the past year may now make such a move slower and more complicated. Moving to tap the four giant Gulf Coast salt caverns that hold 700 million barrels of government-owned crude would still almost certainly knock global oil futures lower, delivering some relief at the pump for motorists and helping Obama in the November election if he can prevent gasoline from rising above $4 a gallon nationwide.