Monday December 22 Housing and Economic stories

TOP STORIES:

Does Madoff Have $1 Billion Stashed Overseas? – (www.cnbc.com) There is a rumor among Madoff investors that he has $1 billion stashed in an overseas bank account. Sorkin, Madoff's lawyer, would not comment on this. Fairfield Greenwich, one of the big feeder funds, is planning a lawsuit against Bernard Madoff, the New York money manager accused of running what prosecutors say was a $50 billion Ponzi scheme. In the lawsuit, Fairfield is expected to say it was a victim of fraud and that Bernard L. Madoff Investment Securities didn't do enough due diligence when it marketed Madoff's investment business to clients. Fairfield did its own due diligence, hiring auditors and checking trade confirmations. Madoff had produced the confirmations but Fairfield claims it went to third parties to make sure trades took place and found out they did. That could mean that this scandal is much bigger than previously thought. Part of the defense of the feeder funds will be the extent of the involvement the Securities and Exchange Commission had with Madoff's investment activity that goes beyond what the SEC stated on Friday.

Fannie Mae Renters to Stay Despite Foreclosures - (www.nytimes.com) In a move that provides relief to thousands of renters who face eviction but draws the federal government even deeper into the housing market, the loan giant Fannie Mae said Sunday that it would sign new leases with renters living in foreclosed properties owned by the company. Skip to next paragraphIt is the first nationwide effort to provide widespread relief to renters ensnared by the unfolding mortgage crisis, and it will effectively transform Fannie Mae — a government-controlled mortgage finance company — into a national landlord. It may also increase pressure on private lenders to establish similar programs and on lawmakers to pass renter relief. “There are renters all around the country who have been holding up their end of the bargain and paying their rent faithfully, but the landlord got into trouble, and so the renter is now unfairly facing eviction,” said John Taylor, president of the National Community Reinvestment Coalition, a consumer advocacy group. “It’s really good news that Fannie Mae is doing this. Now the question is whether private sector will follow suit.”

Madoff losses ripple into Boston, shut foundation - (www.reuters.com) The alleged $50 billion fraud by former Nasdaq Chairman Bernard Madoff has rippled deep into Boston's wealthy elite, forcing a charitable foundation to close and triggering losses by prominent philanthropists. The Robert I. Lappin Charitable Foundation, which financed trips for Jewish youth to Israel, said the money that supported its programs was invested with Madoff, a 70-year-old Wall Street trader arrested on Thursday. "The money needed to fund the programs of the Lappin Foundation is gone," the Salem, Massachusetts-based foundation said on its website, adding all staff had been let go. "It is with a heavy heart that I make this announcement," Robert I. Lappin, the foundation's trustee, said in a statement. The Boston Globe reported on Saturday that other clients of Madoff included philanthropists Carl and Ruth Shapiro, big donors to the Museum of Fine Arts, Brandeis University and the Beth Israel Deaconess Medical Center. The Shapiro family foundation lost almost half its money, or about $145 million, to Madoff, the newspaper said. Other clients included Avram and Carol Goldberg, a previous owner of the Stop&Shop supermarket chain, and Stephen Fine, president of privately held Biltrite Corp.

Rules tightened for SBA's Community Express loan - (www.latimes.com) Smart move as we have heard the historical default rates of these loans. The Small Business Administration has tightened the rules on a popular loan program, which will make it tougher for some start-ups and small ventures to get the loans they need. New lending caps and other restrictions come at a particularly dicey time for small businesses because the recession and uncertain financial markets continue to pinch off access to vital capital. The restrictions in the Community Express Pilot Loan program mean two major small-business lenders active in the Los Angeles area each must stop at 100 such loans a month nationwide. This year, before the restrictions, lenders were making as many as 500 a month. The Small Business Administration said it imposed the caps because the pilot loan program it oversees threatened to bump up against a limit authorized by Congress. At Innovative Bank of Oakland, demand for Community Express loans has as much as doubled to 20 applications a day from small firms looking for cash to help them survive the recession.

Overtime pay, rest breaks become bargaining chips in state budget crisis - (www.latimes.com) GOP lawmakers and business groups say changes in workplace rules are needed to keep employers in California, generating tax revenue. But Democrats and labor groups refuse to go along. For decades, California employers have griped about state laws governing overtime pay and lunch breaks, contending that they raise costs and darken the business climate. Now, their concerns have become a Republican bargaining chip in tough negotiations between the governor and lawmakers over how to fix a $14.8-billion hole in the state budget for the current fiscal year that threatens to shut down government by spring. Major business groups took their concerns to Gov. Arnold Schwarzenegger, and last month he included them in his plan for addressing the budget crisis. "Workplace reforms," Schwarzenegger said, are "needed to help keep jobs in California." Giving California employers incentives to boost payrolls and not flee to lower-cost states would generate more tax revenue and help balance the state budget, he predicted. But Sacramento Democrats, who control both the Senate and Assembly, flatly reject the proposal, which has been pushed unsuccessfully by the GOP since the early 1990s. "We're not interested in rolling back hard-fought gains for workers in California," said Senate President Pro Tem Darrell Steinberg (D-Sacramento). At issue are two very different views about how to calculate overtime pay and how strictly to enforce rules that require workers to take unpaid lunch and rest breaks.

Credit card reforms ‘to cost banks billions’ - (www.ft.com) The US banking industry could lose billions of dollars in annual interest payments, according to a study that warns of credit card lenders raising prices after a regulatory overhaul. The Federal Reserve board will meet this week to finalise changes to rules governing the $970bn credit card business. Widely hailed by consumer groups as urgently needed reforms to protect borrowers, the changes could lead to the banking industry losing more than $10bn in annual interest payments, says a study by the law firm Morrison & Foerster. This could prompt credit card lenders to raise prices and tighten lending standards, reducing the availability of credit for US consumers. The proposed rules, which are expected to pass with only minor changes when the Fed meets on Thursday, will impose strict disclosure standards on credit card lenders and prohibit common pricing practices that have drawn fire for exposing borrowers to unforeseen costs. Consumer groups and lawmakers have welcomed efforts to shield borrowers from lending practices such as raising interest rates on existing balances and applying payments to lower interest balances first. The proposed rules would also require lenders to give borrowers more time to pay their bills and more notice of changes to interest rates for future borrowing. The result might be that credit cards could become more expensive for all borrowers. By restricting credit card lenders’ ability to re-price loans for risky borrowers, lenders have warned that the new regulations are likely to prompt credit card issuers to raise interest rates, cut credit lines and reduce promotional offers to make up for lost revenue.

Shipping charter rates soar - (www.ft.com) One of the world’s key shipping markets has begun to recover from a slump, with a revival in Chinese demand for iron ore and coal pushing some average charter prices up almost threefold in the past week. The revival in prices, after a disastrous six months for the industry in which charter rates fell nearly 99 per cent for the largest vessels, could encourage shipowners to bring mothballed vessels back into service. One participant said yesterday that some owners were able to charge enough to cover the costs of operating Capesize ships, the largest dry bulk carriers. Average rates for these ships, which move coal and iron ore, have nearly tripled over the past week. However, smaller ships have yet to show the same recovery as Capesize vessels. Average spot rates, or the cost of carrying a single cargo immediately, finished the week at $8,261 a day for Capesizes, according to figures from Pareto Dry Cargo, an Oslo shipbroker. The previous week’s average was $2,763, one of the lowest yet seen. Pareto reported a long-term charter of a Capesize ship at $17,500 a day for a year, more than the daily basic operating costs of such a ship. Long-term charter rates are, unusually, higher than those in the spot market because of expectations that the spot market will recover.

Policymakers to prop up US housing market – (www.ft.com) Move to cut mortgage costs could start soon. An intensified effort to exploit government control of Fannie Mae and Freddie Mac to drive down US mortgage costs and cushion a decline in house prices could start soon. This might begin in the final weeks of the Bush presidency and is likely to continue under Barack Obama’sadministration.

Iraqi journalist throws shoes at Bush - (www.ft.com) During a farewell visit to Baghdad on Sunday, President George W. Bush defended a war that has taken far more time, money and lives than anticipated, saying the conflict “has not been easy” but was necessary for US security, Iraqi stability and “world peace”. But in a sign of lingering anger against the US military presence, an Iraqi journalist shouted: “This is a goodbye kiss from the Iraqi people, dog,” and hurled his shoes at the US president during a news conference with prime minister Nouri al-Maliki.





OTHER STORIES:

Business confidence plummets - (www.marketwatch.com) Tankan survey of corporate sentiment sinks at fastest rate since 1974 OPEC oil embargo. View of coming months even gloomier.
British automakers may get bailout, too - (www.marketwatch.com) Deutsche Bank bets on customer growth - (www.marketwatch.com)Siemens reported settling U.S. case - (www.marketwatch.com)U.K. home asking prices down 2.3% - (www.marketwatch.com)

Japan's Nomura says it has a $306 million exposure to Wall Street investor's Ponzi scheme - (www.latimes.com) Nomura Holdings said Monday it has 27.5 billion yen ($306 million) in exposure to a recently uncovered Ponzi scheme set up by a Wall Street money manager. Japan's largest securities company is the latest victim to come forward to say it had been duped by Bernard Madoff. The once well-respected investor who served as chairman of the Nasdaq Stock Market was arrested Thursday in what prosecutors say was a $50 billion plan to defraud investors. Nomura said in a statement any losses from the exposure were likely to be limited compared to its capital base
The 17th Floor, Where Wealth Went to Vanish - (www.nytimes.com) Bernard L. Madoff is the only person so far to be arrested in the fraud case at his investment firm in Manhattan. Investigators are trying to piece together what Bernard L. Madoff did with the billions entrusted to his investment firm.
Fleeing Investors Put a Strain on Funds - (www.nytimes.com) Many investors are fleeing hedge funds and using the cash to cover losses on their other investments, leaving money managers struggling to cope with the rush.
A Palm Beach Enclave, Stunned by an Inside Job - (www.nytimes.com) At the exclusive Palm Beach Country Club, trust extended to a fellow member turns to angst after the collapse of Bernard L. Madoff’s suspected $50 billion Ponzi scheme.

MediaNews Sees Bad Timing on Newspapers, Not Bad Bets - (www.nytimes.com) Dean Singleton gambled his company on California — where the crash in housing has hit newspapers especially hard — just as the bottom was about to fall out for newspapers.
After Its Big Cuts, Detroit Makes Lots of Small Ones - (www.nytimes.com) As sales continue to plummet, the Big Three automakers are scrutinizing every budget line for potential savings to save cash.
Goldman Is Expected to Report an End to a Profitable Run - (www.nytimes.com) One of Wall Street’s top firms is expected to post a loss this week, and some wonder if it can ever recapture its former glory.
Japan’s Manufacturing Numbers Drop Sharply - (www.nytimes.com) A key measure of business sentiment released on Monday foreshadowed more bad news ahead for the Japanese economy.

Room for opportunity in commercial real estate slump - (www.latimes.com) Rising vacancies spur lower rents for tenants and discounted prices for investors who can get financing.
L.A., Long Beach ports push projects despite rocky economy - (www.latimes.com) The expansion would cut pollution, create jobs and prepare the complex for a shipping rebound, officials say. >>

Madoff Victims’ ‘Tragedy’ Said to Have Escaped Scrutiny by SEC - (www.bloomberg.com)
Citadel joins rush to lock up funds - (www.ft.com)
List of potential victims grows in NY fraud case - (finance.yahoo.com)
Japan’s Tankan Confidence Plunges Most in 34 Years - (www.bloomberg.com)
Geneva banks lost more than $4 billon to Madoff: report - (www.reuters.com)
BoJ chief says Japan economy to contract - (www.ft.com)
Trichet warns on fiscal indiscipline - (www.ft.com)
China to increase supply of money to boost economy - (finance.yahoo.com)
Report: Saudi's Prince Alwaleed lost $4B this year – (finance.yahoo.com)

Friday July 11 Housing and Economic stories

Top Stories:

Cincinnati Police Order: Park Cars For 30 Minutes Of Each Hour To Save Gas - (Mish at globaleconomicanalysis.blogspot.com) Hamilton County Sheriff Simon Leis said today there is a “very strong possibility” he will eliminate security at the courthouse and other secure buildings and shut down entire floors at the Queensgate jail in order to comply with budget cuts. “It’s a sad day,” said Leis. “In my 37 years in county government, I’ve never seen the county in such financial straits as this.” He also said layoffs are likely and patrol deputies will be told to park their cars for 30 minutes of each hour to save gas. His department is being asked to trim $903,668 - the second largest dollar amount. It already cut its budget 10 percent coming into 2008, partly by closing 40 beds in its detention center. The department that would lose the most money is the sheriff's office at $2.2 million.

McCain's Economic Adviser Says "Recession Is Mental" - (Mish at globaleconomicanalysis.blogspot.com) - Phil Gramm, McCain's economic advisor talks about a "Mental Recession". "You've heard of mental depression; this is a mental recession," Gramm said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet." "We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said. "We've never been more dominant; we've never had more natural advantages than we have today," he said. "We have benefited greatly" from the globalization of the economy in the last 30 years.

US Govt Considers Fannie/Freddie Takeover With No Debt Guaranty! - (mrmortgage.ml-implode.com) - Most assume that if the agencies fail, the Gov’t would backstop their $5 trillion in guarantees, which is why the agency market has held together fairly well through all of this. However, this may not be the case. As you know in recent days, Agency spreads have widened considerably on speculation that Fannie and Freddie are in serious trouble and would not be able back up said guarantees. Now it is questionable whether the Gov’t would back the paper in the event of a take-over. This could spell big trouble for the agency debt world. Most think that the Gov’t currently backs agency paper but that is not the case. The Treasury backs $2.25 billion a piece for Fannie and Freddie. That is less than 1/10th of 1% of the total outstanding guarantees. Agency security investors should be savvy enough to know that the mortgage backed debt issued by the agencies are backed by the full faith and credit of the agencies and very little is backed by the Gov’t. Why should there be a bailout of investors in the agency arena on taxpayers dollars? You mean to tell me they didn’t know the risks in investing in real estate backed assets?

Fannie, Freddie `Insolvent' After Losses, Poole Says - (www.bloomberg.com) - Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said. Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,'' Poole, 71, who left the Fed in March, said in the interview yesterday.

Fannie, Freddie shares plunge again - (www.marketwatch.com)

Fannie and Freddie Waterfalls Are Too Big to Bail - (Mish at globaleconomicanalysis.blogspot.com) - It's been a wild ride for Fannie and Freddie recently. Yesterday, James Lockhart, director of the Office of Federal Housing Enterprise, said the GSEs are "well capitalized".William Poole, former Fed governor disagrees. Poole Says "Fannie, Freddie Insolvent". The market agrees with Poole as share prices have continued to plunge and Fannie Mae Pays Record Yield Spreads on Sale of Two-Year Notes vs. two-year treasuries. Today Paulson Says Financial Institutions Must Be Allowed To Fail. I would like clarification from Paulson as to what "fail" means. What it should mean is Fannie and Freddie go bankrupt, the government gets out of the GSE sponsorship business, and home prices fall to their natural level. What I suspect Paulson means is We're All Homeowners Now, Nationalization of Fannie, Freddie Unavoidable. In this scenario, the share price of Fannie and Freddie will drop to zero yet taxpayers will foot the bill to keep Fannie and Freddie in business.

Indymac Gets An FDIC Haircut - (www.ml-implode.com) - According to a source that has proved credible in the past, we were told a meeting will be held at IndyMac HQ tomorrow announcing the FDIC will put them into conservatorship.
According to this source, $190 million was pulled in yesterday's run, and $100 million today.

Rangel Rents Apartments at Bargain Rates - (www.nytimes.com) – Yes, the showy politician from Harlem is milking those from his district and the rest of the country. While aggressive evictions are reducing the number of rent-stabilized apartments in New York, Representative Charles B. Rangel is enjoying four of them, including three adjacent units on the 16th floor overlooking Upper Manhattan in a building owned by one of New York’s premier real estate developers. Mr. Rangel, who has a net worth of $566,000 to $1.2 million, according to Congressional disclosure records, paid a total rent of $3,894 monthly in 2007 for the four apartments at Lenox Terrace, a 1,700-unit luxury development of six towers, with doormen, that is described in real estate publications as Harlem’s most prestigious address. The current market-rate rent for similar apartments in Mr. Rangel’s building would total $7,465 to $8,125 a month, according to the Web site of the owner, the Olnick Organization.

3,200 Martial Arts Studios Went Out Of Business In May - (Mish at globaleconomicanalysis.blogspot.com) - 3,200++ Martial Arts Studios went out of business in the month of May alone. In the history of Martial Arts in the United States - nothing like this has ever happened. In one month about 20% of all studios closed their door. Most will never reopen! Most should never been in business to start with. Starbucks is closing 600 locations this year because people cannot afford to pay $3 for a cup of coffee. How do studio owners - especially those with 90% kids expect parents to pay $100 per month plus testing fee's? Now they have the added expense of $4 a gallon gas. This is a no brainier for parents: Cut out the kids Karate and Dance lessons.

Monica Lewinsky: I Am Voting Republican, The Democrats Left A Bad Taste In My Mouth - (dotnetsamplechapters.blogspot.com) Sorry, just a joke of the day J



Other Stories:

Steve Forbes On The Economy - (Mish at globaleconomicanalysis.blogspot.com)
Paulson: Financial Institutions Must Be Allowed To Fail - (Mish at globaleconomicanalysis.blogspot.com) – Funny, but Paulson wasn’t saying his for Bear Stearns or Countrywide. Maybe the Fed can no longer afford to bail these banks out or they are expecting a failure too large (Fannie, Freddie)?
U.S. stock mostly lower on Fannie, Freddie woes - (www.marketwatch.com)

The price of the Fed’s lifeline is yet to be determined - (www.economist.com)
Prices Drive Gas Use to Five-Year Low - (online.wsj.com)
U.S. Foreclosures Rose 53% in June, Bank Seizures Almost Triple - (www.bloomberg.com)
Initial jobless claims fall 58,000 to lowest since April - (www.marketwatch.com)
Commuters spend less on food, movies and clothes because of gasoline costs, survey finds - (www.latimes.com)
Developer offers free gas to home buyers - (www.ajc.com)

Fannie, Freddie Bailout Concern Triggers Increase in Bond Risk - (www.bloomberg.com)
How Fair Value Rewards Deadbeats - (www.cfo.com)
Devaney's Funds Wiped Out After United Capital Gets Margin Call - (www.bloomberg.com)
Fannie, Freddie stock, bond investors face off - (www.reuters.com)
J.P. Morgan Chase CEO says bankers caused their own downfal - (www.financialweek.com)
The Future of Securitization - (online.wsj.com)
S&P 500 May Lose Another 12% Before Bear Market Ends - (www.bloomberg.com)
Hedge Fund Manager Describes Rock Bottom - (www.nytimes.com)

U.S. Mulls Future of Fannie, Freddie - (online.wsj.com)
Fannie, Freddie plunge on rescue report - (money.cnn.com)
Wachovia Names Treasury's Steel Chief, Posts Loss - (www.bloomberg.com)
Fannie, Freddie `Insolvent' After Losses, Poole Says - (www.bloomberg.com)
Stingy credit markets test US casino projects - (www.chicagotribune.com)

Trichet steps up inflation warnings - (www.ft.com)
Japan's Wholesale Inflation Rises to a 27-Year High - (www.bloomberg.com)
Berlin set to curb excessive executive payments - (www.ft.com)
U.K. House Prices Fall Annual 6.1%, Most Since 1993 - (www.bloomberg.com)
China's Aluminum Producers Agree to Cut Output by 10% - (www.bloomberg.com)

Granddad, Tell How Capitalism Committed Suicide: Mark Gilbert - (www.bloomberg.com)
Saying They Were Tricked, Borrowers Fight Back With Lawsuits - (biz.yahoo.com/law)
Foreign Investors Pile Up More Pieces of Americana - (www.nytimes.com)
NASA satellites show offshore wind potential - (news.cnet.com)

Confessions of a Former Inflationist - (Mish at globaleconomicanalysis.blogspot.com)IndyMac: One More Lie For the Road - (mrmortgage.ml-implode.com)Housing pain to linger longer - (seattletimes.nwsource.com)Pending House Resales Decline More Than Forecast - (www.bloomberg.com)Fannie, Freddie Downgraded by Derivatives Traders - (www.bloomberg.com)Fannie, Freddie Default Risk Rises Sharply - (www.clusterstock.com)Fannie, Freddie Nationalization Inevitable - (www.clusterstock.com)Paulson: Many foreclosures can't be prevented - (www.sfgate.com)Paulson's Cherrypicked Housing Stats Give False Hope - (www.clusterstock.com)Bernanke, Financial Regulation and Financial Stability - (www.federalreserve.gov)Fed Sees Turmoil Persisting Deep Into Next Year - (www.nytimes.com)Federal regulators prepare to tighten mortgage rules - (www.latimes.com)Bridging The Gap Between Pay, Inflation - (www.npr.org)

Are Investors Overreacting on Fannie, Freddie? - (www.ml-implode.com) - "While MBS markets firmed following Office of Federal Housing Enterprise Oversight director James Lockhart’s insistence earlier ...
Home Prices Off More than 20 Percent Nationally - (www.ml-implode.com) - "A new housing price index suggested earlier this week that housing prices have fallen by 20.1 percent nationally between May 20...
Congress Tries To Put Out Housing Fire - (www.ml-implode.com) - "Congress is working on a mortgage rescue plan that includes $300 billion in new loans intended to provide homeowners with more ...
Mortgage Rates Sit Tight - (www.ml-implode.com) - "Mortgage rates moved little this week, according to Freddie Mac (FRE: 8.01, -21.93%) on Thursday morning, with the 30-year fixe...
Think positive! - (www.ml-implode.com) - "Even the most casual observer can plainly see where the roots of many of today's economic problems lie simply by examining two ...
ML IMPLODE-O-METER Goes Hollywood - (www.ml-implode.com)
Foreclosures Surge 53 Percent in June - (www.ml-implode.com)
New CA Foreclosure Law Endorses Mortgage Modifications - (www.ml-implode.com)
Who Should You Believe? - (www.ml-implode.com)
Ethics Complaints Filed Over Obama Mortgage Rate - (www.ml-implode.com)
Delinquencies For Tacoma's Columbia Bank Jump Nearly 30% - (www.ml-implode.com)
Why This Housing Bust Is Worst Ever: The American Dream Ends - (www.ml-implode.com)
Centex/Prospect Deal For CTX Mortgage Falls Thru - (www.ml-implode.com)

Tuesday July 8 Housing and Economic stories

Top Stories:

IndyMac halts new loans under agreement with regulators - (www.marketwatch.com) IndyMac deemed under-capitalized by regulators. Lender can't raise new capital now; halts new loans and cuts 3,800 staff. IndyMac Bancorp said late Monday that regulators have told the lender it isn't "well capitalized" after failing to raise new capital. The company said it has agreed to a new business plan with regulators which includes halting new mortgages to shrink its balance sheet and improve capital ratios. It will also cut 3,800 jobs, bringing staff levels to roughly 3,400. IndyMac is also barred from accepting new brokered deposits unless it gets a waiver from the Federal Deposit Insurance Corp., a bank regulator that insures deposits. But the company said it's not certain a waiver will be granted. Second-quarter losses may be larger than the first-quarter, the company also warned.
IndyMac shares slumped 30% to 50 cents during after-hours trading on Monday. "Insured financial institutions don't fail in the U.S., they go through an orderly unwinding process under the guidance of regulators, and I think that's what we're seeing with IndyMac," Fred Cannon, an analyst at Keefe, Bruyette & Woods, said in an interview on Monday. "We do not expect IndyMac will be the last financial institution to go through this."

IndyMac stops new loans, to cut work force by half - (news.yahoo.com/s/ap) Mortgage lender IndyMac Bancorp Inc., struggling to raise capital to stay in business, said Monday it has stopped accepting new loan submissions in its main mortgage lending divisions and plans to slash 3,800 jobs, or more than half of its work force. The move comes as the lender works with U.S. banking regulators, who have determined the company is no longer well capitalized and have asked it to submit a new business plan designed to improve its financial footing, IndyMac Chairman and Chief Executive Michael W. Perry said in a letter to shareholders."In light of the current environment and related deterioration of our financial position since last quarter, we have been working closely with our federal banking regulators with respect to the actions that they and we must take to meet our mutual goal of keeping IndyMac safe and sound through this crisis period," Perry wrote. bIn the letter, Perry said the Pasadena, Calif.-based holding company for IndyMac Bank has not succeeded in raising additional capital and does not expect to succeed until the housing and mortgage markets are more stable.

IndyMac: Significant Seizure Chatter - Is This the End? Finally! - (www.ml-implode.com) - Note: At this point in time this story is RUMOR as is has not been made official by IndyMac or regulators. I am reporting it from what I have been personally told by people familiar with the matter. And I am not short this stock or trying to start rumors to drive down the price. How much further can it drop! Its at 67 cents. Just remember that when stories like this have come out in the past, there is a flurry of positive spin and in the end, 99.9% are true. My sources put Gov’t officials at IndyMac this weekend doing the deed. I am being told an announcement will come tomorrow first thing, that IndyMac is no more and at least their wholesale operation is gone effective immediately. Apparently wholesale operations will get pink slips, no new loans will be locked and all existing loans in the pipe must be closed by the end of July.

S&L Redux: Men in Black at IndyMac? - (optionarmageddon.ml-implode.com) - The FDIC is certainly looking very closely at the bank’s books after a mini bank-run last week. At $16.5 billion, IndyMac’s insured deposit base is far larger than the combined total of other failed banks rescued by the FDIC so far this year. And the FDIC’s total liquid assets were only $51 billion at year end, of which only $4.2 billion was cash. (for details, see the balance sheet on page 63 of their 2007 annual report). As banks drop like flies this year and next, its likely the FDIC will quickly run out of funds to pay depositor losses. The RTC may get an encore… IndyMac’s insured deposits grew 91%(!) in the year ending March 31st. As their equity has been hit by massive losses, and as “other” sources of financing have dried up, IndyMac has plugged the holes with new consumer deposits. They are attracting these deposits despite their questionable financial condition by offering interest rates among the highest in the nation. [Incidentally, much of the increase in IndyMac's deposits are of the controversial "brokered" variety. These have more than tripled over the last year to $6.9 billion.] Take a look at that list of banks offering the highest CD rates. Many are effectively insolvent, surviving only because they can sell risk-free U.S. government obligations. What is a federally insured deposit, after all, but an obligation of the U.S. government?

Courts May Begin Enforcing Truth-in-Lending Act (TILA) - (bigpicture.typepad.com) - "This story seemed to have slipped by without much comment from anywhere else. There are potentially major ramifications for the...

Freddie Mac, Fannie Mae shares slump - (www.marketwatch.com) - Shares of Freddie Mac (FRE: 11.41, -3.09, -21.3%) and Fannie Mae (FNM:15.37, -3.41, -18.2%) slumped 22% and 15% respectively during afternoon trading on Monday. The Wall Street Journal reported late last week that investors are concerned Freddie is having trouble raising fresh capital to strengthen a weakened balance sheet.

Speculative fever - (www.marketwatch.com) - Congressional moves target loopholes in futures trading, in hopes of curbing prices for oil and food. But does that address the underlying problem?Of course, Congress is not addressing the underlying problem of the inflation. Inflation (true definition) is the continuing rise in the general price level attributed to an increase in the volume of money and credit relative to available goods and services. As long as the Fed keeps interest rates below true inflation measures (3-4%) and continues to create money out of thin air, and credit, we will likely see prices rise.
OPEC chief cites Fed, ethanol - (www.marketwatch.com) - Yes, OPEC is smarter than our Congress. The price of petroleum will continue to rise because of ethanol, the weak dollar and political tensions, the oil cartel's president was quoted as saying Sunday. "We have to follow the evolution of the dollar, because a 1% fall in the dollar means $4 more on the price of oil." Of course the US Fed

Could get worse before better - (www.marketwatch.com) S.F. central-bank head Yellen diverts wind from the market's sails, averring that the economy could be edging toward next rough patch.

Arson Surges for Foreclosed Houses - (www.bloomberg.com) The house had been abandoned after the owner defaulted on a $240,000 home loan from GreenPoint Mortgage Funding, a Novato, California lender that shut down in August, 2007. The fire was one of four suspicious blazes in foreclosed properties that month in the southern Massachusetts city. All are under investigation.

Withholding debt payments as a revoluntionary act? - (www.reenactmentof1776.com) Hmmm, new website proposing revolutionary action probably because he is loaded on debt. From the site: “The lower/middle class owns all of the debt. We own the banks. The Revolution can be accomplished simply by not paying this debt. If the lower/ middle class decided individually and collectively that they were not going to make any mortgage, credit card and auto loan payments then we would bring the banking system to its knees within a short period of time. That would have a seriously negative effect on Wall Street and world markets. We then would simply ask our President, Vice President, our Congress and our Senators if they would please resign and go away. If they do not chose to resign then we sit back and wait and not pay the bills. It’s simple. It’s easy. It’s peaceful. It’s non-violent. It’s something anyone can do. It doesn’t cost anything. It requires no effort. It’s something we already know how to do. You can even barbecue and revolt at the same time.”

Make Toy Cars, Not Cars - (paul.kedrosky.com) It's currently better to be a toy car maker than a real car maker: Mattel's market cap just surpassed that of GM. The maker of Hot Wheels and Matchbox now has a market cap of $6.22B versus the $5.76b cap of the maker of non-toy cars GM.
Mattel Eclipses GM in Value on Toy-Car Gains: Chart of the Day - (www.bloomberg.com)


Other Stories:

Foreclosed houses that just go to pot - (www.chicagotribune.com)
Foreclosures To Rise Whoever Wins White House - (www.huffingtonpost.com)
Failure to learn real estate lessons of 1920s - (www.tampabay.com)
Tenant Tips when Landlord in Distress - (PDF - shra.org)
St. Louis Fed Economist: Let Mortgage Mess Resolve Itself - (www.ml-implode.com) - "As Congress returns from a July 4th recess to again consider a sweeping housing and mortgage reform package that would establis...
Radian Reshuffles Mortgage Insurance Execs, Looks to Regain Momentum - (www.ml-implode.com) - "In a clear effort to signal to investors that it is committed to its mortgage insurance business, Radian Group Inc. (RDN: 1.50,...
Wolfgang Munchau: Maybe the Economists Are to Blame After All - (www.ml-implode.com)
Retail “Doom” While We’re At It - (www.ml-implode.com)
Bitter lessons learned from refinancing - (www.latimes.com)
Mortgage Brokers as Naysayers - (www.nytimes.com)
It's the Condos, Stupid. - (www.berkeleydailyplanet.com)
European Banks May Need EU90 Billion - (www.bloomberg.com)
Banks narrow house equity withdrawals - (www.ocregister.com)
Donating Banks' REO Property to Local Non-Profits - (patrick.net)
Las Vegas Home Prices See Their Largest Year-Over-Year Decline - (www.ml-implode.com)
The Credit Crisis Is Going to Get Worse - (www.ml-implode.com)
Running the world is hard, ruining it, less so - (www.ml-implode.com)
Rock’s hedge fund falters after hard year - (www.ml-implode.com)
Foreclosures to rise, whomever wins White House - (www.ml-implode.com)
Not Declining? Wanna Make A Bet? - (www.ml-implode.com)

Accerleration in Foreclosure, Prices and Job Losses - (www.ml-implode.com)
Bradford & Bingley counts cost of private equity pull-out - (www.ml-implode.com)
The Economy? Words Fail Me. - (www.washingtonpost.com)
Blows to housing market will pound economy too - (www.economist.com)
The buck doesn't stop here; it just keeps falling - (news.yahoo.com)
Defaulted loans mean bigger profits from fees - (www.youtube.com)

Oil falls below $141 as dollar gains strength - (www.ap.com)
Bernanke's Emerging-Market Disciples May Need to Follow Volcker - (www.bloomberg.com)
Economic forces play out both ways - (www.chicagotribune.com)
Foreclosures to rise whoever wins White House - (www.signonsandiego.com)
Las Vegas property market hits a losing streak - (www.reuters.com)

World M&A down $850B vs last year - (www.philly.com)
Commodities Regulator Under Fire - (online.wsj.com)
Banks narrow home equity withdrawals - (www.ocregister.com)
Blackrock, Nuveen Sell New Preferred Haunted by Failed Auctions - (www.bloomberg.com)

Auto Makers Fight Steel Prices - (online.wsj.com)
Detroit Three a shadow of former selves - (www.ft.com)
Sales of RVs careen off the road - (www.latimes.com)
Auto sector's woes could spur deals – Renault CEO - (www.signonsandiego.com)
Despite rocketing prices, outlook is bleak for oil majors - (news.yahoo.com/s/afp)
MBIA is paying for its errors - (www.chicagotribune.com)

Inflation, Oil and... Politics Conspire Against Indian Stocks - (online.wsj.com)
U.K. Factory Production Weakens to Eight-Month Low - (www.bloomberg.com)
Beijing Sets Focus on Inflation Fight and Exports - (online.wsj.com)
Confusion over UK rules on shorting - (www.ft.com)

Tuesday May 13 Housing and Economic stories

Top Stories:

California Dreaming:
· Brentwood: California's poster child for housing bust - (www.scrippsnews.com) Hundreds of families have lost their homes to foreclosure since the beginning of last year, and in a sign of more to come, at least 1 out of every 16 households has received default notices. For the neighbors left behind, the dreams of the pretty, tight-knit community that lured many there in the first place have dissolved. In new neighborhoods, "Foreclosure," "For sale" and "For rent" signs dot the streets, weeds sprout and newspapers pile up at empty homes as new residents cycle in and out. In projects halted by the downturn, handfuls of houses stand alone amid acres of dirt. Promised parks and community centers remain unfinished or fenced in.

· California Screaming - (money.cnn.com) - "We thought we'd be able to sell pretty quickly because this is a sought-after area," says Stuart Manley, a Ladera Ranch resident who had hoped to unload his townhouse for about $469,000. "But shortly after we went on the market, it was foreclosure, foreclosure, foreclosure." "The natural progression was that renters move up to ownership of a condo, then up to a house and then up to a mansion," says Manley, who owns a wireless services company. In the southern O.C., where home prices were appreciating at double-digit percentages each year, you could hope to squeeze a lifetime of social mobility into just a few years. Get a loan with a low teaser rate on the first house, sell at a profit and use your new equity and another round of easy credit to get a grander house. Patti Arnold, who handles house closings as an Orange County escrow officer, says many of those loans had minuscule initial payments, allowing borrowers to put off paying back principal. "Everyone just kept moving," recalls Ladera resident Darlene Kelly, speaking on the front porch of the foreclosed home where her husband, a broker, is hosting an open house.

· California man losing nine homes in mortgage mess - (www.reuters.com)

Media to blame for slump, say estate agents - (www.ml-implode.com)
New Fannie Mae Program May Benefit 150,000 Homeowners - (www.ml-implode.com)
Tax Assessors Nightmare - (www.ml-implode.com) - The Atlanta Journal Constitution is writing Tax assessors boggled by housing dip. For less than the price of a decent used car, you can buy a home in Atlanta today. Actually, real estate agents list a dozen choices for $10,000 or less. Step up in price to $20,000 and your choices expand 10 fold. The prices seem absurd but they are part of a real estate market suffering with rampant foreclosures, mortgage fraud, abandoned investor properties, a collapsing mortgage industry and other ills. The market is unlike anything seen in metro Atlanta in years and it has local tax assessors and appraisers as confused as anyone. What is the value of a lot if no one can get a loan to buy it? How should you value a home that sits on the market for a year with no offers? When a neighborhood has several foreclosures, short sales and abandoned properties, do they set the market?
Regulators under fire for ignoring red flags - (www.ml-implode.com) – let’s start with the senators and congressman from both parties for showboating now, but missing all the easy signs previously.
Rubenstein Says `Enormous' Bank Losses Unrecognized - (www.bloomberg.com)
Congressman mail '50 to 1' against bailout - (latimesblogs.latimes.com) – Another congressman received 100 to 1 letters against bailout, yet Feinstein and other clowns are bailing out lenders.
Feinstein Ignores Voters; Pushes Bailout for Banks - (patrick.net)
Lenders deserve to suffer, Buffett says - (www.seattlepi.nwsource.com)
Fannie Mae hiding foreclosures - (www.morgan-florida.org)
MBIA Posts Loss of $2.4 Billion as Mortgage, CDO Slump Deepens - (www.bloomberg.com)
The Financial Crisis: An Interview with George Soros - (www.nybooks.com)
Workers who depend on tips feel economy's slump - (www.chron.com)


Other Stories:

IndyMac Reports Loss, Doesn't See Profit in 2008 - (www.ml-implode.com) "-- IndyMac Bancorp Inc., the second- biggest independent U.S. mortgage company, reported a first- quarter loss, omitted some di...
Is "walking away" a myth? - (www.ml-implode.com)
Is A Rescue Possible? - (www.ml-implode.com)

Subprime fraud at highest levels - (blog.cleveland.com)
Will the Mortgage Industry Pay for Its Crimes? - (www.alternet.org)
Bank failures: How bad will it be? - (www.bankrate.com)
Unwise to buy a house in Australia at current prices - (www.bubblepedia.net.au)
After Peloton Partners' demise the WSJ provides an autopsy - (www.ml-implode.com)
The Biggest Housing Losers - (www.ml-implode.com)
The value of houseownership has been oversold - (www.thedailypage.com)
April home sales in L.A. down 43% - (www.latimes.com)
April retail sales barely budged: SpendingPulse - (www.reuters.com)
When Should the Fed Crash the Party? - (www.nytimes.com)
Housing dreams clash with reality - (www.canada.com)

How Saving Hurts House Prices - (www.fool.co.uk)
Mortgage structure is why market is down - (www.idahostatesman.com)
New York watchdog wants derivative controls - (www.ft.com)
Peloton Flew High, Fell Fast - (online.wsj.com)
Price cuts spur area home sales - (www.azcentral.com)
House Panel to Hold Energy-Speculation Hearings - (online.wsj.com)
Rebounds by Hedge-Fund Stars Prove 'It's a Mulligan Industry' - (online.wsj.com)
The Economy Goes To Hell - (www.mediachannel.org)
Mortgage crisis seeps to prime loans - (www.usatoday.com)
Bank of England warns of stagflation - (www.telegraph.co.uk)
You and your puny salary - (www.sfgate.com)

FedEx Warning Hits Stock - (www.thestreet.com)
Toyota says new US auto plant delayed - (www.chicagotribune.com)
HSBC Sets Aside $3.2 Billion for More Bad U.S. Loans - (www.bloomberg.com)
PMI Group swings to hefty 1Q loss on defaults - (www.ap.com)
Dot-org domain name fees to rise by 10% - (www.azcentral.com)
Greenberg attacks AIG chiefs - (www.ft.com)
Renault and Nissan to launch low-cost car - (www.ft.com)

China's Inflation Accelerates; Bank Reserve Requirement Rises - (www.bloomberg.com)
Mounting signs of economic slowdown - (www.ft.com)
China faces 7.3 million tonne LPG shortfall in 2010: report - (news.yahoo.com)

Trouble in LI Paradise - (www.nypost.com)
The Last Bite - (www.newyorker.com) , Bee Wilson
The Oil Nonbubble - (www.nytimes.com)