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STORIES:
Commercial Mortgages Show How Bad It Got - (www.nytimes.com) Just five years ago, the
commercial real estate market was thriving. The delinquency rate on mortgage
loans was at a record low, and the volume of new mortgages being sold to
investors was at a record high. Now the first of the mortgages that were
securitized in 2007 have started to come due, and it is becoming clear just how
bad many of the loans were. The time when investors were most eager to buy
turns out to have been the worst time to do so. Commercial mortgages — unlike
residential ones — are seldom issued for periods of longer than 10 years, and
often for as little as five. Many require no principal repayments during that
period but call for the entire amount to be repaid in a balloon payment at the
end of the loan. So it can be at maturity when the bad news arrives. “Only 28
percent of the loans from 2007 due to mature in 2012 managed to pay off in
full,” said Manus Clancy, the senior managing director at Trepp L.L.C., which
monitors the commercial mortgage market.
Countrywide used VIP program to sway Congress: report - (www.reuters.com) Old news, but main street
press is finally catching on to this. Ironic that Dodd is one of the VIP
politicians benefiting from this. Of course Dodd is one of the authors/sponsors
of Dodd-Frank bill.
A VIP
mortgage program run by now-defunct Countrywide Financial Corp was used to
influence lawmakers with the aim of killing legislation that could hurt the
company's profits, a congressional report released on Thursday said. The report
from the House of Representatives' Oversight and Government Reform Committee
provided new details about the program, which offered discount loans to
"VIPs," and it named dozens of congressional staffers that benefited.
The company, which was once the biggest U.S. mortgage lender, granted hundreds
of loans between 1991 and 2008 through the VIP program, the report said.
Spain Crisis Forces $7B in Cuts on Hospitals - (www.bloomberg.com) For some cancer patients,
Spain’s debt crisis means living on borrowed medicine. Virgen de la Luz
hospital in the rural province of Cuenca turned away two women with lung and
breast cancer in May after Roche Holding AG (ROG) stopped
supplying tumor fighter Herceptin, according to documents obtained by Bloomberg
News. The women got the drug after a 24-hour wait thanks to a hastily-brokered
deal to borrow it from another clinic. To rescue Cuenca and the rest of Spain’s
health system, which sank into debt alongside the regional governments that
operate it, the state arranged an infusion of guaranteed loans and demanded 7
billion euros ($8.8 billion) in cost cuts. Yet doctors and patients warn the
prescription for cutbacks may cause more pain than the budgetary malaise it was
meant to cure.
Dynegy Inc files for bankruptcy; will merge with unit - (www.reuters.com) Power producer Dynegy Inc (DYN.N), the parent company of Dynegy
Holdings, filed for bankruptcy protection on Friday morning as part of its
settlement agreement with creditors and said it will merge with its unit. Last
month, a bankruptcy court approved the company's settlement with creditors
under which Dynegy and Dynegy Holdings would be combined, with creditors
holding a 99 percent equity stake in the combined company. The settlement
resolved a dispute among creditors over whether Dynegy had acted properly last
September in taking $1.25 billion of coal-powered plant assets from Dynegy
Holdings.
Why Central Bankers Can't Arrest Slowdown - (www.cnbc.com) The rate cuts from three major economies on
Thursday may have dominated headlines, but it did little to inspire confidence
in global stock markets, which fell as investors took the move to mean the
world economy remains in trouble. For many market
watchers, it’s becoming apparent that there’s little global policymakers can do
to arrest what some describe as a global “synchronized slowdown.” The European
Central Bank and the People’s Bank of China both
slashed interest rates, the former to a record low, amid signs that
economies in these regions are still weakening. The Bank of England, whose
rates are already at an all-time low 0.5 percent, said it would buy 50 billion
pounds ($78 billion) of assets with newly printed money to help the economy out
of recession.
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