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St.
Louis alderman seeks hearing over stolen money from parks department - (www.stltoday.com) Nearly
half a million dollars was stolen in the scams by two officials over eight
years. A St. Louis alderman is seeking committee hearings to investigate
how two St. Louis parks officials
were able to scheme and steal nearly half a million dollars in city funds over eight years without detection. The
officials — Thomas “Dan” Stritzel, the chief park ranger, and Joseph Vacca, the
deputy parks commissioner — pleaded guilty last month in federal court of a
scheme that involved the complicity of at least two companies doing business
with the city. The companies overcharged the city for services and passed the
money back to a sham company controlled by Vacca and Stritzel, avoiding
detection by city audits. City officials representing Mayor Francis Slay said
there was nothing they could do to prevent the thefts because they involved the
department’s senior officials and the complicity of bona fide vendors. But they
said on Tuesday they are working to put into place additional safeguards. Now,
Ward 21 Alderman Antonio French has called for an aldermanic committee, the
Parks and Environmental Matters Committee, to hold hearings to investigate the
“circumstances and failures that led to Stritzel and Vacca’s indictment.”
Fannie
Mae, Freddie Mac to go after more strategic defaulters - (www.latimes.com) Anyone
thinking of skating on mortgages owned by eitherFannie Mae or Freddie Mac may want to think again. As a result of
new government reports, the two companies say they are going to do a better job
of going after so-called strategic defaulters. Fannie and Freddie can pursue
judgments against borrowers who walk away from their loans even though they
have the ability to make their payments. That's called a strategic default, and
many borrowers are taking that step — typically throwing in the towel because
their homes are no longer worth as much as they owe. But when their homes are
sold at foreclosure and the proceeds are not enough to cover their outstanding
loan balances, it creates a deficiency for which many defaulters either don't
realize they are liable or don't care. To date, the two government-sponsored
enterprises, which are now highly profitable after five years of running in the
red, haven't done a particularly good job at pursuing deficiency judgments,
according to scathing reports from the Office of the Inspector General at the
Federal Housing Finance Agency.
3
days after Fla AG Pam Bondi says she's considering investigating Donald Trump,
Trump gives her campaign $25k - (www.stopforeclosurefraud.com) Last
month, Attorney General Pam Bondi was supposedly thinking about going after Donald Trump for running a get-rich seminar that some
Floridians said fleeced them out of thousands of dollars. New York's A.G. had
already filed suit, saying that Trump's seminars — conducted there and in
Florida — were little more than a "bait and switch" meant to separate
customers from their money. So on Sept. 14, the Sentinel quoted a spokeswoman
for Bondi who said that Florida's attorney general was studying the New York
lawsuit to see whether she wanted to take action here as well. Three days
later, on Sept. 17, Trump's foundation cut a $25,000 check to a committee
associated with Bondi's campaign. It was one of the largest checks that the
"And Justice for All" committee has received. And it looks awfully
fishy. Think about it. A prosecutor says she's trying to decide whether to sue someone
— and that someone suddenly gives her campaign war chest $25,000?
J.P.
Morgan Offers to Front Benefits if Government Doesn't Pay - (www.online.wsj.com) As
if conjuring up the spirit of his bank’s founder, James Dimon is planning to
take the place of the U.S. government if it goes into default—at least as far
as his clients’ federal benefits go. At a meeting of the Institute of
International Finance on Saturday, Mr. Dimon, the chief executive of J.P. Morgan Chase & Co., said he expects a deal to
be reached between the White House and Congress that will raise the debt
ceiling before the borrowing capacity is otherwise forecast to be exhausted on
Oct. 17. But in the event that the government runs out of cash to make a
$12 billion Social Security payment due on Oct. 23, J.P. Morgan has a plan. Mr.
Dimon said his bank would fund the $6 billion to $8 billion in government
benefits that the bank processes each week for its clients, even if the
government doesn’t actually pay those obligations. “We have a huge amount of
clients who get direct deposit from the government, like veterans and welfare
checks and Social Security, and what we want to do is to take care of our
clients [by making] sure they don’t run out money,” Mr. Dimon said, speaking
after he’d mentioned the plan in the panel discussion. “So you’re basically
advancing the money into their account.”
The student loan bubble is
starting to burst - (www.cnbc.com) The
largest bank in the United States will stop making student loans in a few
weeks. JPMorgan Chase has
sent a memorandum to colleges notifying them that the bank will stop making new
student loans in October, according to Reuters. The official reason is quite bland. "We
just don't see this as a market that we can significantly grow," Thasunda
Duckett tells Reuters. Duckett is the chief executive for auto and student
loans at Chase, which means she's basically delivering the news that a large
part of her business is getting closed down. The move is eerily reminiscent of
the subprime shutdown that happened in 2007. Each time a bank shuttered its
subprime unit, the news was presented in much the same way that JPMorgan is
spinning the end of its student lending.
TOP STORIES:
Inside Puerto Rico's looming
debt threat - (www.cnbc.com) Representatives of the government of Puerto
Rico talked to investors Tuesday afternoon, as the U.S. commonwealth tried to
assuage market concerns about its ability to repay its massive debt load. The
governor of Puerto Rico told investors, "We will do everything to honor
all our commitments." The comment was the beginning of what was
expected to be an up to three-hour presentation, with 75 PowerPoint slides, all
designed to calm investor worries. The island has more than $70 billion in
debt, much of which has fallen in value as investor concerns have grown. As
part of the presentation, the government announced its budget deficit for
fiscal year 2014 is expected to be $820 million, down from a preliminary
estimate of $1.29 billion in 2013, and $2.38 billion in 2012.
Obamacare
deductibles a dose of sticker shock - (www.chicagotribune.com) Adam Weldzius, a nurse practitioner, considers
himself better informed than most when it comes to the inner workings of health
insurance. But even he wasn't prepared for the pocketbook hit he'll face next
year under President Barack Obama's health care overhaul. If the 33-year-old
single father wants the same level of coverage next year as what he has now
with the same insurer and the same network of doctors and hospitals, his
monthly premium of $233 will more than double. If he wants to keep his monthly
payments in check, the Carpentersville resident is looking at an annual
deductible for himself and his 7-year-old daughter of $12,700, a more than
threefold increase from $3,500 today.
Obama
sold voters bill of goods on health care - (www.sfgate.com)
As a candidate for president, Barack Obamasold his signature universal
health care plan with the promise that it would "cut the cost of a typical
family's premium by up to $2,500 a year." Now that the Affordable
Care Act exchanges are open for business, voters are finding that the biggest
problem with Obamacare isn't that some Web sites crashed last week but that the
Obama promise of big savings for the average family was too good to
be true. Now that the exchanges are open for business, people who already
have individual coverage have something new to not like: sticker shock. The
Affordable Care Act isn't affordable after all. Last week, I began hearing
from readers whose individual policy premiums are going up, not down. A local
architect sent me a notice he received from Kaiser informing him that his
individual coverage will increase by $199.95 per month, or 78.9 percent. When
he added his two sons, the percentage increase was even greater. A
freelance journalist told me she made $98,000 last year. But she and her
retired husband, both 51, wouldn't pay $7,200 in premiums for high-deductible
coverage. It's cheaper to pay the fine, she said. Besides, she added,
"we're healthy."
Coal
Slump Leaves Australia Port Half-Used, Lenders at Risk - (www.bloomberg.com) Australia & New Zealand
Banking Group Ltd. (ANZ) and Westpac Banking Corp. are among
lenders risking losses on $3 billion of loans backing a coal port in Australia that
will be twice its required size. Wiggins Island Coal Export Terminal Pty,
the group comprising the unfinished project’s owners, including Glencore Xstrata Plc and Wesfarmers Ltd., in 2011 borrowed the debt
from 19 banks, according to data compiled by Bloomberg. When the port in the
state of Queensland begins shipping in early 2015, only about half of its 27
million metric tons of initial annual export capacity will be used after a
slump in coal demand,
forecaster Wood Mackenzie Ltd. estimates. “There will be more capacity than mines
available to utilize it,” Daniel Morgan, a Sydney-based analyst at UBS AG said
in a phone interview. “It may result in the banking syndicate having to
renegotiate the terms or the price, or taking a write-down on their position.”
Time
to take bets on Frexit and the French franc? - (www.telegraph.co.uk) We have a minor earthquake in France. A party
committed to withdrawal from the euro, the restoration of French franc, and the
complete destruction of monetary union has just defeated the establishment in
the Brignoles run-off election. It is threatening Frexit as well, which rather
alters the political chemistry of Britain's EU referendum. Marine Le Pen's
Front National won 54pc of the vote. It was a bad defeat for the Gaulliste UMP,
a party at risk of disintegration unless it can find a leader in short order. President
Hollande's Socialists were knocked out in the first round, due to mass
defection to the Front National by the working-class Socialist base. The
Socialists thought the Front worked to their advantage by splitting the Right.
They have at last woken up to the enormous political danger.
Why
Obamacare Could Worsen Uninsured By Encouraging "Cost-Benefit"
Opt-Outs - (www.voiceofsandiego.org) Recently
I got a notice that Health Net was terminating my family’s medical insurance
effective Jan. 1. They offered new “Covered California insurance plans”
compliant with the Affordable Care Act to replace my existing coverage. Five
tiers of service were outlined: Platinum, Gold, Silver, Bronze and
Catastrophic. The Silver plan most closely matched our previous coverage. To
calculate the cost of this new plan, a Premium Rate Guide was provided. It is a
multi-page chart listing rates for each age and different tables for Los
Angeles, San Diego, Riverside, Orange and San Bernardino county residents. A
quick analysis reveals San Diego County was the second most costly, about 10
percent higher than the lowest among them. By adding up the cost for each
person on the plan, I determined the new family plan would be $10,523 per year,
without a subsidy because our annual household income comes to more than
$80,000. The cost of the Obamacare plan is an astounding 58 percent higher than
the existing plan’s cost of $6,828. A $4,000 deductible means that only after
paying $14,523 will the health care plan provide financial benefit.
After sudden plunge, gold traders cry
conspiracy - (www.cnbc.com) Gold dropped $25 in two minutes Friday morning
following what appeared to be a single massive sell order, and professional
traders are now pronouncing the sale a deliberate attempt to manipulate the
market. At 8:42 a.m. ET Friday morning, a firm appeared to sell 5,000 gold
futures contracts "at the market," meaning at whatever price was
available. The massive order was more than the market could take at once and
led the CME to automatically halt trading for 10 seconds. Eric Hunsader of
Nanex told CNBC.com on Friday that 2,700 contracts were sold, which triggered
the halt, and that the remaining 2,300 were sold once the market resumed
trading.
Asmussen
rejects Athens' call for ECB to roll over Greek bonds - (www.reuters.com) The
European Central Bank cannot roll over Greek bonds as this goes against a ban
on financing governments, a senior ECB policymaker said on Monday, dashing
Athens' hopes it will help plug a funding gap next year through such a move. Athens
will be financed by bailout loans until the second half of 2014, when it hopes
to tap bond markets again. It then faces a funding gap of nearly 11 billion
euros for 2014-15, the International Monetary Fund and Athens estimate. Finance
Minister Yannis Stournaras said on Monday that Greece planned
to roll over debt next year to narrow the funding shortfall. He said that euro
zone central banks had promised to roll over Greek bonds and that if they did
not they should make up the difference by other means.
Shutdown costs family $10,000 and dream house - (www.cnbc.com) Tom and Casey Maloy are living every
homebuyer's bad dream: Though they were able to sell their too-small house in
Baton Rouge, La., the government shutdown has shut them and their five kids out
of a great deal on a move-up house. "We get the phone call that, hey,
you're approved, but the government is shut down, and your government
backed-USDA loan cannot be processed, so you have to wait," Tom said. The
Maloys had planned to use a Department of Agriculture rural development home
loan, a 30-year fixed product requiring no down payment. The program, designed
to help families just like the Maloys, is now on hold because of the shutdown.
No loans are being processed. "I'm pretty stressed out, unsure of where
our country is heading and how to provide day to day for our children if we
can't finish our loan now, because we do have to be out of this house in a week
for the new owners to move in," Casey said. "They've given us an
extra week, so it's kind of stressful."
$57B
of FHA Loans Big Banks May Have to Eat - (www.americanbanker.com) The
nation's four largest banks are holding $57 billion of seriously delinquent
loans that they've been slow to move into foreclosure over concerns that the
Federal Housing Administration, the government mortgage insurer, will refuse to
cover the losses and hit them with damages, according to industry sources. The
banks — Bank of America (BAC), Citigroup (NYSE:C), JPMorgan Chase (JPM), and
Wells Fargo (WFC) — have assured investors in the footnotes of quarterly
filings that the loans are government-insured and therefore pose no threat to
their bottom lines, even if they end up in foreclosure. What's more, the banks
have used these supposedly iron-clad government guarantees as a pretext for
continuing to classify the loans as performing and for holding no reserves
against them.
TOP STORIES:
Mainstream
Media Finally Catches on to Disability Fraud: 60 Minutes Reports on
"Disability USA" - (Mish at globaleconomicanalysis.blogspot.com)
At long last, mainstream media is giving play to widespread disability
fraud running rampant in the US. Steve Kroft on 60 Minutes reports on
the alarming state of the federal disability program, which has exploded in
size in the last six years and could become the first federal benefits program
to run out of money. The video is about 14 minutes long. Kroft interviews
senator Tom Coburn of Oklahoma. Kroft also attempts to interview a couple of
law firms that make the most off of putting people on disability for a fee. One
firm has a perfect track record, where every disability case was approved. Coburn
selected cases at random and found 25% of the cases were fraudulent and another
20% were "highly questionable". The "system is being gamed
pretty big right now", said Coburn. "You need look no further than
disability lawyers trolling for new clients." The 60 Minute report names
the firms, and they are under investigation. None of them would talk to 60
Minutes, citing legal advice.
Health
insurance shoppers suffer sticker shock - (www.sfgate.com)
Shelly Ross of San Francisco was
looking forward to the opening of the new health insurance marketplaces under
the Affordable Care Act because she was hoping to get a better deal. But
now that she's seen her options, Ross is disappointed. Turns out she earns
slightly too much money to qualify for federal financial aid to help her buy
coverage in the state's exchange, called Covered California. And because
policies have to be upgraded to comply with the new law, her rates are going up
nearly 10 percent. "Every plan is going to cost more than what I pay
now. And what I pay now is ridiculous," said Ross, 47, who owns a
cat-sitting business called Tales of the Kitty and pays more than $400 a month
for her insurance. "It's a great thing for some people, but it's certainly
not helping me." Ross is among the millions of Americans who buy
coverage on their own, but must find new coverage because the health law has
rendered their current policies outdated. But Ross, like many others, is not
finding the plans sold through the Affordable Care Act to be
particularly affordable.
JPMorgan’s
Dimon Posts First Loss on $7.2 Billion Legal Cost - (www.bloomberg.com) JPMorgan Chase & Co. reported
its first loss under Chief Executive Officer Jamie Dimon after
taking a $7.2 billion charge to cover the cost of mounting litigation and
regulatory probes. The third-quarter loss was $380 million, or 17 cents a
share, compared with a profit of $5.71 billion, or $1.40, a year earlier, the
New York-based company said today in a statement. The last time the bank failed
to report a profit was the second quarter of 2004, when William Harrison was
CEO. “Over the last few weeks the environment has become highly charged and
very volatile,” Chief Financial Officer Marianne Lake said
on a conference call. “Things have been very fluid and the situation escalated
to the point where we are facing very large premiums and penalties, the level
of which have gone far beyond what we reasonably expected.”
Massachusetts
Weighs Puerto Rico Debt Impact on Mutual Funds - (www.bloomberg.com) Massachusetts’ chief securities regulator will
open an inquiry into the impact of Puerto Rican debt on the state’s mutual fund
investors. The investigation is meant to determine the extent of investors’
risk tied to the island’s weakening municipal debt obligations, Massachusetts
Secretary of the Commonwealth William F. Galvin said today in a statement. “Puerto
Rico is currently on the verge of insolvency and many of its
obligations are at or near junk rating,” according to the statement. “The risks
associated with its municipal debt obligation are disproportionally high.” Interest
on debt issued by Puerto Rican governments is typically tax-free across the
U.S., and yields on some issues topped 10 percent in recent weeks amid doubt
about whether investors will be repaid. The bonds’ high yields and tax-exempt
status make them popular with retail investors, according to the statement.
IMF
sours on BRICs and doubts eurozone recovery claims - (www.telegraph.co.uk) The
International Monetary Fund has thrown in the towel on emerging markets. After
years of talking up the BRICS club of Brazil, Russia, India, China, and South
Africa, it now admits that these countries have either exhausted their catch-up
growth models, or run into the time-honoured problems of supply bottlenecks and
bad government. The IMF was caught off guard by the ferocity of the emerging
market rout when the Fed began to talk tough in May, threatening to turn down
the spigot of dollar liquidity that has fuelled the booms -- and masked the
woes -- in Asia, Latin America, and Africa. In what amounts to a mea culpa, the
IMF hinted that it had for long been blind to festering problems in the BRICS
and mini-BRICs.
Biggest
Confidence Drop Since 2008 - (www.businessinsider.com) U.S.
economic confidence plunged more in the past week than in any week since the
collapse of Lehman Brothers on September 15, 2008 -- the catalyst for the
financial crisis and U.S. recession. Gallup's Economic Confidence Index fell nine points in late February and early March 2013 as Congress and President Barack Obama
failed to reach an agreement to avoid automatic federal spending cuts as part of
sequestration. Economic confidence fell eight points during the week ending
Feb. 20, 2011, as Congress and the president reached an agreement on the
federal budget at the last minute, avoiding a government shutdown.
Amid
slimdown, Arkansas prisoners get paid while guards do without - (www.foxnews.com) Some
employees at an Arkansas federal prison are unsure when the next time they’ll
receive a paycheck amid the government slimdown, but the inmates are continuing
to get paid for jobs like landscaping, WMCTV.com reported. The report said that the inmates are still receiving checks because their
funds come out of a trust fund that is not affected by the problems in
Washington. About 600 workers at the federal prison in Forrest City are
impacted by the slimdown, the report said. “The inmates who have committed the
crimes in this country and are incarcerated by violating the laws of common
society, they’re not affected by the shutdown, but the employees that we trust
to keep our communities safe are,” Jeff Roberts, a prison employee who goes to
work every day and does not get paid, told the station.
USDA
Buyers Stuck in Limbo as Shutdown Hurts Housing - (www.bloomberg.com) Jacob
Smith, a 25-year-old Florida firefighter, wasn’t paying much attention
to the U.S. government shutdown until it threw his move to a new three-bedroom
home near Daytona Beach into limbo. Smith was ready to complete the purchase
Oct. 1, the day the closure began. Now he has to wait until the Department of
Agriculture reopens its mortgage business. For now, Smith’s landlord is
allowing him to stay in his one-bedroom rental, crammed with boxes and
furniture meant for the larger property. His builder, Adams Homes of Gulf
Breeze, Florida, said it has about 10 other customers on the east coast of the
state with purchases also on hold. “It’s
pretty ridiculous,” Smith said. “It seems rare that what you see on the news is
directly affecting you. Hopefully it will end soon.” USDA loans account for
about 132,000 mortgages a year in areas designated by the agency as rural,
according to the Mortgage Bankers Association. While they make up just 1.4
percent of the U.S. mortgage market, the product is one of the few available
that allow zero-down payment loans and are an early warning of how the
government’s first partial closing in 17 years could put a drag on the wider
housing market.
Montana
Towns Struggle With Oil Boom Cost as Dollars Flee - (www.bloomberg.com) Tractor-trailer
trucks carrying oil, water and sand to drilling sites are lined up at one of
two stoplights in Fairview,
Montana, as the mayor tries to figure out how to squeeze more people into his
town. The prairie community straddles the state line with North Dakota and
needs a new water tank, improvements to its sewage treatment plant and curbs
and gutters. The price tag: $14.4 million -- five times the city’s $2.7 million
budget. “A town of 1,100 people just doesn’t run down to the bank and write a
check for that kind of money,” said Mayor Bryan Cummins. “Our town has eight
times the traffic traveling through it as it did five years ago.” Fairview is
one of a half-dozen bucolic farming towns in eastern Montana transformed over the past 18 months into
bedroom communities for workers toiling in the Bakken oil patch. Unlike North Dakota cities
that reap tax money from oil production to help keep pace with double-digit
growth, Montana municipalities get next to nothing. The towns’ new reality
illustrates the tradeoffs that come with the energy boom and how the drilling
that showered riches on its neighbor poses challenges in Montana.
