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STORIES:
San Jose Retirement at 50 Threatens Solvency: Muni Credit -
(www.bloomberg.com) Police officers and
firefighters in San Jose, California, can retire at age 50
with 90 percent of their pay. The deal has left Silicon Valley’s capital so
short of cash that a library and community center has stood unused since its
completion two years ago. The predicament of the 10th-biggest U.S. city
reflects the painful choices that rising public-worker pension and health costs
are inflicting on municipalities. In San Jose, the burden has become a $2.7
billion unfunded liability, costing the city its AAA bond rating. Next month,
voters will decide on a measure that would trim the city’s payments for its two
pensions. “Our police officers and
firefighters will probably make more money in retirement than they did while
they were working,” Mayor Chuck Reed, 63, said in an interview last week in his
City Hall office. “We’re seeing the impacts of that on our ability to provide
services.” From California to Rhode
Island, local governments are trying to curb retirement costs that
are straining budgets almost three years after the end of the longest recession
since the 1930s.
States scaling back worker pensions to save money - (finance.yahoo.com) Neil Carpenter took a pay cut
when he accepted a job as a Louisiana state accountant more than 12 years ago,
but he figured he would make up for the loss with aretirement check that
would guarantee long-term financial security for him and his family. Now the
41-year-old finds his life plan teetering as Republican Gov. Bobby Jindal seeks
to restructure the pension system for rank-and-file workers, potentially
requiring higher employee contributions and delaying the retirement plans of
employees like Carpenter. "Do you really want to breach a contract with
the employees who have committed a long part of their lives to the state of
Louisiana?" Carpenter asked state lawmakers recently. For years, state
governments lured workers with the promise of lucrative pensions that provide
nearly the pay that employees earned on the job. But after years of budget
crunches, nearly every state has revamped public retirement benefits in an
effort to shrink the long-term obligations that are billions of dollars short
of what is needed to cover benefits.
Freddie, Fannie Departures Escalate - (online.wsj.com) Concerns are growing about
departures at mortgage-finance giants Fannie Mae and Freddie Mac, a situation
that some executives argue is making it difficult to manage the companies and
their $5 trillion mortgage business. The latest sign came Monday when Freddie
said that Anthony Renzi—the executive who oversees the single-family mortgage
business, by far the company's largest and most complex division—would leave
this month to take another job in the industry. Mr. Renzi, who has spent two
years at Freddie, joins a growing list of industry veterans who have departed
over the past year. The chief executives of both Fannie and Freddie have said
they plan to leave this year. In the past two years, dozens of senior managers,
many with long tenures, have left. Worries over compensation and low morale are
playing a role in prompting Fannie and Freddie employees to look elsewhere.
Freddie last month revamped the way it pays its employees amid concerns that
Congress might sharply cut pay for rank-and-file workers at the companies,
after scrapping bonuses for senior executives.
Illinois Faces 25% Cost Increase to Borrow $1.8 Billion - (www.bloomberg.com) Illinois plans to sell $1.8 billion of
general-obligation debt tomorrow as its relative borrowing costs may increase
by almost a quarter.
The
tax-exempt deal for the state, rated lowest by Moody’s Investors Service,
includes a 10-year segment that underwriter Jefferies & Co. plans to offer
to investors at 1.85 percentage points above benchmark AAA securities,
according to a person familiar with the sale. Illinois’s last
general-obligation sale was on March 13 for $575 million, with 10-year
securities priced to yield 1.51 percentage points above benchmark tax-exempts,
according to data compiled by Bloomberg. That’s 0.34 percentage points below
tomorrow’s tentative pricing plan, or a difference of 22.5 percent. The state
has the lowest-funded pension in the U.S., with assets equal to 45.5 percent of
projected obligations, Bloomberg data show. Its backlog of unpaid bills to
vendors and Medicaid obligations is more than $9 billion.
Realtor
fights restraining order from Antioch house - (www.contracostatimes.com) The paths of several
strangers recently collided at the doorstep of a four-bedroom home on
Thistlewood Court. In a bizarre tale centered on the slumping housing market, a
real estate broker discovered in February that strangers were living in the
1,826-square-foot southeast Antioch home she was trying to sell for the owner. Meanwhile,
the home's inhabitants say they may have been duped into a fraudulent lease
agreement for the home, and filed a temporary restraining order against the
Realtor. The latest episode of the Thistlewood saga played out in a Pittsburg
courtroom this week, as Contra Costa Commissioner Lowell Richards dismissed the
restraining order against Realtor Melissa Case by Anthony Loquiao and Gayalea
Risley. Richards said Thursday that Case "was on thin ice" as far as
the actions she had taken as a broker, saying it's the owner's responsibility
to deal with issues related to the occupancy of the property. Loquiao and
Risley say they paid a hefty deposit and signed a one-year lease agreement with
another Realtor for the home in October, and now believe they say they may have
been duped.
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