Monday December 8 Housing and Economic stories

TOP STORIES:

Crude Oil Falls 24% This Week -- How Low Will It Go? (CHK) - (www.streetinsider.com) Crude oil has fallen another 4% today (Friday), pushing as low as $40.85. With today's continued move lower, the price of a barrel of crude oil has declined by about 24% in December, which has had only 5 trading days so far. This month's sharp slide in prices have left oil & gas related stocks in the gutter, which, in turn, have dragged down prices in the entire energy complex. Among numerous once-high-flyers now in the doldrums, one name is sticking out today as it has seen unusually high ...

Another Friday, Another Bank Failure: First Georgia Community Bank closed -- 23rd failure in '08 - (www.marketwatch.com) First Georgia Community Bank was closed by regulators Friday, the 23rd bank failure of the year and the fourth in the Atlanta area amid the ongoing financial crisis. The four branches of Jackson, Ga.-based First Georgia will re-open Saturday as United Bank, which has assumed First Georgia's deposits, the Federal Deposit Insurance Corporation said in a statement. As of Nov. 7, First Georgia had $237.5 million in assets and $197.4 million in deposits, the FDIC said. The FDIC estimated the closure will cost its Deposit Insurance Fund $72.2 million. In November, state regulators closed Community Bank of Loganville, while Integrity Bancshares Inc. and Alpha Bank & Trust, both in Alpharetta, Ga., have also been closed.

Activist moves homeless into foreclosures - (msnbc.msn.com) Man executes bailout plan of his own on Miami's empty streets. Max Rameau delivers his sales pitch like a pro. "All tile floor!" he says during a recent showing. "And the living room, wow! It has great blinds." But in nearly every other respect, he is unlike any real estate agent you've ever met. He is unshaven, drives a beat-up car and wears grungy cut-off sweat pants. He also breaks into the homes he shows. And his clients don't have a dime for a down payment. Rameau is an activist who has been executing a bailout plan of his own around Miami's empty streets: He is helping homeless people illegally move into foreclosed homes. "We're matching homeless people with people-less homes," he said with a grin. "I think everyone deserves a home," said Rameau, who said he takes no money from his work with the homeless. "Homeless people across the country are squatting in empty homes. The question is: Is this going to be done out of desperation or with direction?"

Former Treasury Undersecretary Proposes 100 Year Treasuries - (Mish at globaleconomicanalysis.blogspot.com) Those not thrilled with the prospect of getting 3% for 30 years on the long bond can now entertain the possibility of getting 3% for 100 years. Peter Fisher Says Treasury Should Consider 100-Year Debt. BlackRock Inc.’s Peter Fisher said the U.S. Treasury should consider selling 100-year bonds to ease the federal government’s borrowing costs as it faces a budget deficit expected to top $1 trillion. If you issued a 100-year bond and had principal and interest pay down smoothly over the last 50 years, you create a great borrowing device for the Treasury that would let us move this hump of borrowing over the generational retirement that’s coming up,” Fisher, managing director and co-head of fixed income at BlackRock in New York, said in a Bloomberg Radio interview.

Jesse Jackson plans rallies to support automakers - (www.freep.com) The Rev. Jesse Jackson says he will organize rallies in several cities to urge Congress to grant aid to the struggling U.S. automakers. At a press conference today with minority auto suppliers and dealers in Detroit, Jackson said, "It's time to go back to the streets for some action." The civil rights leader and former presidential hopeful says the issue is not about "the Big Three execs, it's the big 4 million jobs." Jackson spoke while the leaders of General Motors, Ford and Chrysler are in Washington for their second day of hearings to request up to $34 billion in emergency funding to stay in business.

China Won't "Dare" Invest in US Financial Firms - (www.bloomberg.com) China’s sovereign wealth fund said it wouldn’t “dare” invest in foreign financial firms after losing $6 billion on stakes in Morgan Stanley and Blackstone Group LP. “I don’t dare to invest in financial institutions now,” Lou Jiwei, chairman of China Investment Corp., said today at a conference in Hong Kong. “The policies of the developed nations on these institutions are not clear. Until they are clear, I don’t dare to invest in them. What if they go bust? I will lose everything.”

Wall Streetwalkers: The Sleazy Lehman Brothers Subsidiary - (www.villagevoice.com) Lehman Brothers CEO Dick Fuld told Congress on October 6 that the Wall Street investment bank was destroyed by a "financial tsunami"—a natural disaster, an act of God. In other words, it wasn't his fault. But the truth is that Lehman's fall in the subprime-mortgage crisis was a man-made disaster. The white-shoe firm was not just deeply involved in the murky subprime-mortgage market; Lehman and the other dominant Wall Street investment banks, experts tell the Voice, actually created the demand for the mortgages that they would then package and swap for enormous returns. Addicted to the profits that such securities brought in, Lehman was desperate for the risky mortgages they required. "Sure, there were sleazy brokers out there who were fooling people, but you have to understand—to use a drug analogy—they are like the 'corner boys,' " says Irv Ackelsberg, a Philadelphia lawyer who specializes in representing homeowners in foreclosure cases. "You have to look at the cartel at the top. The brokers were basically creating loans that had been ordered by Wall Street." Put another way, Lehman and other top financial firms "primed the pump and controlled production," says Kevin Byers, an Atlanta forensic accountant who has spent years tracing the evolution of the subprime market. "Lehman was very early in getting this deal machine into place," he says. "With one hand, they loaned the money to the mortgage lender to allow them to originate loans to home buyers. With the other hand, they ostensibly bought the loans originated with their line of credit, and resold them as securities to investors." The scheme worked like this: Homeowners signed mortgages with loan companies. Lehman bought those mortgages and bundled them into "tranches," which they then sold to investors—often large pension funds and other financial institutions. Jay Weiser, an associate professor of law and real estate at Baruch College, says the system was set up to assure the owners of the mortgage-backed securities that they would get a steady return. "Since everyone at the top was paid for how many mortgage-backed securities they put out each year, they had every incentive to look the other way and overstate the quality of the loans they were making," he says.

Federal judge rules Citibank must stand trial - (www.poconorecord.com) A six-year-old private civil suit alleging a conspiracy to sell Poconos homes at fraudulently inflated values could go to trial next spring, following a federal judge's rejection of a bank's motion to dismiss them as a defendant. U.S. District Judge Christopher Conner ruled Oct. 24 — for the second time this year — that Chase Manhattan Mortgage Corp. and branch manager William K. Spaner must stand trial on allegations that Chase conspired with Tannersville developer Gene Percudani to fraudulently sell homes in excess of market value through inflated appraisals. Nearly 100 sets of homeowners charge that Percudani, his construction and brokerage companies, Chase, and former home appraiser Dominick Stranieri violated the federal Racketeer Influenced and Corrupt Organizations Act (RICO) and state consumer protection law. The suit was filed following a 2001 series of stories in the Pocono Record detailing the sales practices.



OTHER STORIES:

Detroit Finds Some Sympathy in House After Jobs Report - (www.nytimes.com) The Detroit automakers’ bid for federal aid was received more favorably by some lawmakers following the news that another 533,000 Americans lost their jobs.
Foreclosures soar 76% to record 1.35 million - (money.cnn.com)
Consumer credit drops $3.6B in October - (money.cnn.com)
Taxpayers will get a return on the bailout - (money.cnn.com)
Oil at 4-year low Gasoline down again - (money.cnn.com)
Taxpayers: Furious over homeowner bailouts - (money.cnn.com)
Let House Prices Fall - (www.cbsnews.com)
Stabilize House Prices By Cutting Them Drastically - (blogs.wsj.com)
To truly revitalize housing we must allow prices to fall - (optionarmageddon.ml-implode.com)
Mortgage fraud incidents up 45% in second quarter - (money.cnn.com)
Corporate Debt Protection Costs Climb Amid Depression Concern - (www.bloomberg.com)
The American Crisis and the Case for an Inflationary Depression - (www.seekingalpha.com)
Deflation: Bargains abound, which could be a problem - (www.usatoday.com)
Auto Sales Plunge To Lowest Level Since 1982 - (Mish at globaleconomicanalysis.blogspot.com)
Preemptive Housing-Bubble-Bursting - (www.cjr.org)
The Housing Bubble and the Boomer Generation - (www.newgeography.com)
Manhattan Awash in Open Office Space - (www.nytimes.com)

Citigroup Said to Cut Most of Asia Real Estate Team After Slump - (www.bloomberg.com)
Fed rushing headlong into liquidity trap - (www.monthlyreview.org)
Investor Sues to Block Mortgage Modifications - (news.yahoo.com)
Understanding Deleveraging and Credit Cards - (optionarmageddon.ml-implode.com)
Paulson Bucks Paulson as His Hedge Funds Score $1 Billion Gain - (www.bloomberg.com)
With Change in Season, House Prices Fall Together - (www.marketwatch.com)
Oahu house, condo sales plummet - (www.starbulletin.com)
Hawaii Real Estate: Back to 1981? - (Charles Hugh Smith)
Real estate a tough sell in troubled economy - (www.sfgate.com)
Financial troubles, unhappiness linked, but not directly - (www.idahostatesman.com)
Doris Dungey, Prescient Finance Blogger, Dies at 47 - (www.nytimes.com)
Bond Trading Trends Warn of Deflation - (www.seekingalpha.com)
Bernanke-san Evokes Japan Comparison - (www.bloomberg.com)
Somali Pirates to acquire Citigroup - (optionarmageddon.ml-implode.com)

Monday August 25 Housing and Economic stories

Top Stories:

Columbian Bank and Trust of Kansas Shut by Regulators - (www.bloomberg.com) – Another Friday night take-over by the FDIC most likely to try and minimize news coverage. Columbian Bank and Trust Co. of Topeka, Kansas, was closed by U.S. regulators today, the ninth U.S. bank to collapse this year amid bad real-estate loans and writedowns stemming from a drop in home prices. The bank, with $752 million in assets and $622 million in total deposits, was shuttered by the Kansas state bank commissioner's office and the Federal Deposit Insurance Corp., the FDIC said today in a statement. The pace of bank closings is accelerating after financial companies reported more than $500 billion in writedowns and credit losses since the start of 2007. The FDIC's ``problem'' bank list grew by 18 percent in the first quarter from the preceding three-month period, to 90 banks with combined assets of $26.3 billion.

GM, Ford Seek Taxpayer Bailout - (globaleconomicanalysis.blogspot.com) Presidential candidate and presumptive Republican nominee Sen. John McCain today gave his support to the proposal. "Our auto companies are rising to the challenge building the next generation of American cars, but are doing so in times when credit conditions cripple the funding for the facilities and technologies to take the steps to the future," he said in an e- mailed statement. "We should fund it and take action that will assist Detroit and its suppliers in making it through this difficult time of transition," he said in the statement. My Comment: McCain is a fool and if Obama supports this mess he is too. GM and Ford are perpetually in a state of "transition", losing money on every car produced all along the way. There is no evidence that GM or Ford is rising to any challenge. Both overly relied on trucks, SUVs, and ridiculous concepts like the Hummer. Market share of both is collapsing, and rightfully so. Besides, GM is not really a manufacturing company at all, but rather a subprime lender that sells cars. The market for subprime has dried up so GM needs another "transition". GM had a miracle opportunity to dump GMAC and Rescap at absurd prices and failed to do so. GM executives are clearly incompetent. Yes, GM has some battery technology, but had GM focused on that instead of SUVs and subprime financing, it would be better positioned now. But the key issue is the marketplace and market competition is what should be leading the way, not taxpayer sponsored bailouts. "This is a horrible idea, another transfer of funds to failed ventures," said David Littmann, senior economist for the Mackinac Center for Public Policy in Midland, Michigan, which describes itself as a supporter of free-market ideals. "If this were a good idea, the market would price the debt accordingly and give them the money." "We've seen these kinds of bailouts for the financial companies, why not the automakers?" said Aaron Bragman, a Troy, Michigan-based auto analyst for Global Insight Inc. "The big problem is that a lot of people in Washington don't see a value in the U.S. auto industry because they have a foreign plant in their district that is doing just fine."

GM, Ford Seek $50 Billion From U.S., Double Request - (www.bloomberg.com) General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles. The U.S. automakers and the suppliers want Congress to appropriate $3.75 billion needed to back $25 billion in U.S. loans approved in last year's energy bill and add $25 billion in new loans over subsequent years, according to people familiar with the strategy. The industry is also seeking fewer restrictions on how the funding is used, the people said today.

Lehman, Treasury, Fed Have Lost Control Of The Game - (globaleconomicanalysis.blogspot.com)
Ten Financial Entities On The Brink - (globaleconomicanalysis.blogspot.com)

Fannie Doesn’t Want New York Subprime, Either - (www.housingwire.com) - Following in the footsteps of Freddie Mac (FRE: 2.81 -11.08%), Fannie Mae (FNM: 5.00 +3.09%) said earlier this week that it would no longer purchase subprime loans fitting New York State’s new definition for the credit class. The decision by bth GSEs to exit subprime loan purchases in New York comes on the heels of new legislation designed to protect borrowers from predatory lending practices. “Fannie Mae will not purchase or securitize any mortgage loan that meets the definition of a subprime home loan under New York law, regardless of whether any provision of the law is preemptedparticular mortgage or for a particular originator,” senior vice president Michael Quinn wrote in a seller bulletin dated Aug. 19.
Quinn suggested that New York’s new definition of subprime falls under what the GSE sees as “high-cost” or “high-risk” home loans, and said that Fannie has had a long-standing policy of not purchasing such loans for securitization or for its retained portfolio. See the full letter. One of HW’s sources didn’t buy Neiman’s bluster, however. “Fannie and Freddie didn’t purchase a lot of subprime, as he suggests, but it’s also true that the GSEs are the only game in town right now,” said the source, a bank executive. At least one subprime lender is still making loans in New York State, as far as we know: the Federal Housing Administration. Which makes for an interesting twist: a state government passes tight restrictions and new liabilities for lenders making “subprime loans” within the state, and the federal government then becomes the only lender willing to make such a loan.

San Diego foreclosures hit new record in July - (www.signonsandiego.com) Those waiting for signs that the housing slump is nearing an end were disappointed Thursday, as MDA DataQuick reported 2,004 San Diego County homes went into foreclosure in July, a 9 percent increase over June and a jump of nearly 213 percent over last year. The July foreclosure tally was a record high since DataQuick began monitoring mortgage failures in 1988. It marked the county's 40th consecutive month of year-over-year increases in both foreclosures and notices of default, the start of the foreclosure process.

Lots of Lousy Houses Are On The Market - (money.cnn.com) - Mold, maggots and piles of festering trash - no wonder home prices are in freefall. It’s not just the subprime mortgage crisis that’s to blame for plummeting home prices. A flood of squalid properties on the market is helping to exaggerate the post-bubble price declines. "Part of the reason home prices are declining is a fundamental deterioration in the housing stock," said Glenn Kelman, CEO of the online, discount broker Redfin. "During the boom, nine out of 10 houses for sale in many markets were in prime condition. Now, for every 10 houses, at least three are dogs." Most of these mutts are foreclosed properties that have been permitted to fall into disrepair by lenders overwhelmed with thousands of vacant homes. If these houses sell at all, they’re going for bargain basement prices that are hurting home values throughout the neighborhood. "I’ve never seen so many houses in this condition before," said Ray Anderson of Buyer’s Advantage Real Estate in Auburn Calif., near Sacramento. "And I’ve been in the business 20 years. I’ve seen bank-owned properties in the past. They were never like this."

That Student Loan, So Hard to Shake - (www.nytimes.com) Then there is Alan Collinge, who for years has described his struggle with tens of thousands of dollars in student loan debt to anyone who will listen. He has appeared on “60 Minutes” criticizing Sallie Mae, the nation’s largest student lender, and has been quoted in the pages of this and other newspapers attacking loan companies. Student lending is a big business, one that has been the subject of many complaints over the past two years after revelations of questionable ties between lenders and colleges’ financial aid officers. More recently, tight credit markets raised the possibility that some students might not be able to borrow to go to college in the fall. But much less attention has been paid to what happens to students after they borrow. Lenders who make loans guaranteed by the federal government can more easily take steps against borrowers — like garnishing wages and benefits — than they can with other kinds of unsecured consumer debts. And all student loans, federally guaranteed or not, are extremely hard to get rid of in bankruptcy proceedings, more so than credit card or other debt.

Hedge fund Ore Hill limits redemptions - (www.reuters.com) Hedge fund Ore Hill Partners, which specializes in credit strategies, has barred clients from redeeming their money from its flagship offering, imposing a freeze just as investors clamored for an exit, the company said on Friday. The firm, half owned by Man Group Plc (EMG.L: Quote, Profile, Research, Stock Buzz), the world's largest publicly traded hedge fund, put up a so-called gate provision on its roughly $1.2 billion Ore Hill International portfolio this week, limiting the amount of withdrawals after investors sought the return of roughly $300 million, said an investor who asked not to be identified. Heavy redemptions for September triggered an automatic gate, said Sophie Sophaon, a spokeswoman for the fund. Fund directors are considering what measures to take that will be in the best interest of all investors, she added.

Manhattan looks abroad for property saviours - (www.ft.com) Real estate developers in New York City are stepping up their appeals to foreign buyers to bolster a housing market that is beginning to reflect the sagging fortunes of Wall Street. Stratospheric housing prices in Manhattan, which until recently was one of the few markets in the US that had escaped the housing slump, have long been propped up by foreigners eager to live and invest there. The weak dollar has helped to encourage them still further in recent years. But financial workers - whose annual bonuses (or lack thereof) are an obsession for Manhattan's property brokers - are facing job cuts and an uncertain future. This has left the city's resourceful brokers working harder to lure foreign investors.

English Families Suffering Because They Believed Realtors - (www.businessweek.com) She turns her swollen face away. Twenty-four years old, King has been fighting the undertow of poverty for a year. Poverty has won. Her mistake lay in believing what banks and politicians in Great Britain have been advising for years. Conventional wisdom was to get a "foot on the property ladder" as quickly as possible. In other words, buy property, and do it early in life. And it was okay, they said, to take out a large amount of credit, because property values would continue to rise, just as they had nearly tripled in the preceding decade. In the past year, however, the trend has reversed. The decrease in property values began in the United States, and in the past few months the phenomenon has reached Spain, Ireland and Great Britain—countries where a building boom produced a housing bubble that is now bursting. After that bubble bursts, the next sound is often a quiet whimper at the kitchen table. With interest rates rising and the value of houses declining, the first to go bankrupt are those who had little capital to begin with and could only receive dubious credit. In the United States it's called "subprime": credit that's risky, second-rate and expensive. For years, banks bundled these credits together and then resold them, making first-rate profits. That bubble, too, has burst. Between March and June alone, 37,740 British homeowners had to turn their property back over to the banks. By the end of the year it's likely to be 75,000. More than a million people in Britain will have difficulties paying off their debt. After 15 years of economic boom, a word is on their lips again that the country thought it had struck from its vocabulary entirely: recession.


Other Stories:

U.S. Mint to Resume Distribution of American Eagle Gold Coins - (www.ml-implode.com) - The U.S. Mint said it will resume limited distribution of its 1-ounce American Eagle Gold coins a week after suspending sales be...
Here They Go Again - (www. wallstreetexaminer.com) - On July 15th I actually posted a glass half full item about subprime suggesting that most of the problems or bad eggs were in the pipeline. If you view the chart and article from June from Bankstocks.com in the post you will see that new delinquencies were fading or burning out on a comparative basis. Now comes new data from July that indicates that a cause of this fade were earlier workouts or restructurings with borrowers. But, now exposed further to the cold reality of even lower housing prices, those are once again falling into trouble. More color is provided here as well.

NY now least affordable market as CA prices fall more - (biz.yahoo.com)

Blogger Threatened By MLS For Exercising Freedom Of Speech - (www.knifecatchers.com)
More lenders stuck with houses - (www.chicagotribune.com)
As values drop, lenders cut house-equity loans - (www.signonsandiego.com)
How Much Will Foreign Banks Lose On US Mortgage Collapse? - (www.clusterstock.com)
Greenback Surges, Euro Shrivels - (www.counterpunch.org)
The Merits of Staying in Cash - (www.seekingalpha.com)
Wholesale Inflation Is Red-Hot! - (www.insidefutures.com)
Are You Ready For Higher Mortgage Rates? - (www.nuwireinvestor.com)
Looking for a bright spot in housing crisis - (www.dailycamera.com)
Forgetting Freddie - (and Fannie) - (www.marketwatch.com)
Speculation nation - (www.salon.com)

"The subprime turmoil: What’s old, what’s new, and what’s next" - (www.ml-implode.com) - "When you think you've read everything worth considering on a given topic, once in a while something comes along to prove you wr...
Freddie's Loss is Gold's Gain - (www.ml-implode.com)
Homebuilders mourn loss of free down payments - (www.ml-implode.com)
Mr. Mortgage: Fannie/Freddie Bailout - Who Gets Thrown Under the Bus? - (www.ml-implode.com)
Update2: Revised - Rescap/GMAC Bank Cuts Balloon Jumbos, Freezes Hiring and Will Eliminate Recruiters - (www.ml-implode.com)
SouthCoast lenders point to benefits and remaining questions in mortgage relief plan - (www.ml-implode.com)
Wells Fargo's Premiere Asset Services: No More SFDPA's, Thank You! - (www.ml-implode.com)
These homes for sale suck - (www.ml-implode.com)
Fannie Mae & Freddie Mac Failure: The Lies, the Cover Ups and the Making of a Disaster - (www.ml-implode.com)

Mexico's growth rate falls short of expectations - (www.latimes.com)
Olympics disappoint China business owners - (www.latimes.com)
Treasury wants GSEs shareholder-owned: source - (www.reuters.com)

U.S. Mint Suspends Sales of American Eagle Gold Coins - (www.bloomberg.com)
Fannie, Freddie and Lehman ensure August is anything but quiet - (www.cfo.com)
More houses return to lender, address unsold - (www.chicagotribune.com)

Inflating the next bubble - (www.ml-implode.com)
Tepper Bought $2.4 Billion of Energy Stocks Before Prices Fell - (www.bloomberg.com)
Bad data used to manipulate natural gas market - (www.chron.com)
Auction-rate securities probe expands to nearly 40 brokerages - (www.latimes.com)
U.S. and Global Economies Slipping in Unison - (www.nytimes.com)
Ex-BOE official says Fed rate cuts went too far - (www.reuters.com)
In the Ruins of the Housing Bust - (www.nytimes.com)
Fed Chairman Urges Broader Market Oversight - (www.nytimes.com)
Inflation Stings U.S. Workers - (online.wsj.com)
Finding the Mess Behind the Mess - (www.nytimes.com)
Bernanke Urges Broader Powers For Central Bank - (www.washingtonpost.com)

Driving Is Down, but Auto Insurance Rates Are Rising - (www.nytimes.com)
Buy American? Foreign companies are doing just that - (www.financialweek.com)
Buffett says economy's troubles will continue - (www.ap.com)
Uncertainty Over Fannie and Freddie - (www.nytimes.com)

Moody's ratings cut latest blow to Fannie, Freddie - (www.reuters.com)
U.S. hotel sales down 81% in first half - (www.chicagotribune.com)
What Will Mac ’n’ Mae Cost You and Me? - (www.nytimes.com)
A Mission Goes Off Course - (www.nytimes.com)