KeNo's Housing and Economic Portal: freddie mac

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Monday, May 4, 2009

Tuesday May 5 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Pelosi To Push for Pecora-style Investigation of Wall Street - (www.bloomberg.com) Pelosi should cut the crap and let Ron Paul provide the report and save everyone a lot of time and money. He was one of a few that has been writing about the crisis 5 years before it happened while Pelosi, Frank and the other showboaters were clueless. Why let people who caused the crisis or did not see the crisis coming investigate the crisis. Wall Street may be heading for the deepest investigation of its practices since a congressional panel’s probe of abuses following the 1929 stock market crash. House Speaker Nancy Pelosi plans to push for a comprehensive inquiry, saying that three-quarters of Americans want to know what led to the bankruptcy of Lehman Brothers Holdings Inc. and the collapse of Bear Stearns Cos. and Merrill Lynch & Co. She favors one patterned after Senate Banking Committee hearings led by Ferdinand Pecora starting in 1933, according to her spokesman, Nadeam Elshami. The Pecora review “was probably the single most important congressional investigation in the history of our country, except perhaps the Watergate hearings,” Donald Ritchie, associate historian for the U.S. Senate, said in an interview. Congress is reacting to an economic collapse that has generated $1.3 trillion in financial industry losses, $700 billion in U.S. taxpayer cash infusions and loans, and $37 trillion in destroyed world stock market value since 2007. The Pecora Commission generated public support for creating the Securities and Exchange Commission and laws that governed financial services for seven decades. Pelosi, a California Democrat, will speak about hearings this week to lawmakers, including Representative Barney Frank, chairman of the panel that writes banking law, Elshami said. “I think it’s useful to have it, but that should not be a reason to hold off on legislating,” Frank, a Massachusetts Democrat, said of Pelosi’s proposal after a speech in Washington yesterday. Rewriting Rules: President Barack Obama, Frank and other congressional leaders have made rewriting the rules governing Wall Street a top priority. Several lawmakers have proposed a commission or select committee to investigate the causes of the meltdown. Pelosi’s backing, expressed during an appearance in San Francisco last week, was the first show of support from the congressional leadership.

California Foreclosures Are Back—with a Vengeance - (www.cnbc.com) We knew it was coming, and now it's here...the return of California's foreclosure crisis. Okay, it wasn't exactly gone, but maybe just on hiatus thanks to a new state law that went into effect last fall. That law requires lenders to take additional steps to keep troubled borrowers in their homes. Then of course there were various bank and Fannie / Freddie moratoria on foreclosures. Today DataQuick reports "lenders filed a record number of mortgage default notices against California during the first three months of this year, the result of the recession and of lenders playing catch-up after a temporary lull in foreclosure activity." Default notices surged 80 percnet from 75,230 for the prior quarter to 135,431 notices in Q1 2009. That's also up 19 percent from the first quarter of 2008. This is a new all-time high for any quarter in DataQuick's statistics, which go back to 1992. Now you may say, well, these are default notices, not foreclosures, and we've got that great Making Homes Affordable adminstration plan all ready to help all these folks. I'm wondering just how they're going to handle these folks, let alone help them. According to DataQuick, the bulk of the loans were originated in late 2006, at the very height and most desperate frenzy of the housing boom, when lenders were trying to get everyone and their brother into a new loan. I wonder how many of those loans are now so far underwater, given the huge home price declines in California, that no modification is going to help.

Freddie Mac Executive Commits Suicide - (Mish at globaleconomicanalysis.blogspot.com) The New York Times is reporting Executive at Freddie Mac Is Found Dead. David B. Kellermann, the acting chief financial officer of the troubled mortgage giant Freddie Mac, was found dead Wednesday morning at his home in Northern Virginia, the police said. The executive apparently committed suicide by hanging himself, according to people with knowledge of the investigation. Mr. Kellermann, 41, had been Freddie Mac’s chief financial officer since September. He was named to the position when the federal government seized the company and ousted its top executives last fall. In recent weeks, according to neighbors and company officials, Mr. Kellermann had received a bonus of about $800,000. Such bonuses — which totaled $210 million for executives at Freddie Mac and its sibling company Fannie Mae — caused some controversy earlier this month, and some lawmakers called for them to be rescinded. According to neighbors, Mr. Kellermann hired a private security firm after reporters came to his house to ask about his bonus. The Associated Press reported that Mr. Kellermann and his wife had a daughter. Some neighbors told The A.P. that Mr. Kellermann had lost a noticeable amount of weight under the strain of the job, and some said they suggested to him he should quit to avoid the stress. Mr. Kellermann was also involved in recent tense conversations with the company’s federal regulator over its public disclosures. Freddie Mac executives wanted to emphasize to investors that the company was being run for the benefit of the government, rather than shareholders. The company’s regulator, the Federal Housing Finance Authority, had reportedly pushed to play down that language. Freddie Mac was (and still is) being run the same way nearly all public corporations are run: For the benefit of the top executives not the benefit of shareholders. There is no other explanation for executive pay, bonuses, stock options and other perks that all cause massive shareholder dilution over time. Countrywide CEO Angelo Mozilo took out $1 billion in stock options and pay while running the company into the ground. Now taxpayers have to clean up the mess. Greed is everywhere you look. I cannot begin to list it all.
Treasury Raises Offer to Chrysler Lenders - (www.cnbc.com) The U.S. Treasury has raised its offer to Chrysler lenders, sources said on Wednesday, as the embattled automaker races to cut its debt and labor costs and reach an alliance with Italy's Fiat SpA by the end of the month. Treasury has offered the lenders $1.5 billion of first-lien debt and a 5 percent equity stake in a restructured Chrysler in exchange for about $7 billion of debt they now hold, said the sources, who had direct knowledge of the talks. They spoke on condition of anonymity because of the confidential nature of the ongoing negotiations. The offer showed a quickening pace in the discussions with Chrysler facing an April 30 deadline to cement agreements with debtholders, unions and Fiat or face a bankruptcy that could result in its liquidation. Representatives from Treasury and Chrysler could not be reached immediately for comment.The Chrysler lending group on Monday had sought $4.5 billion of first-lien debt and a 40 percent stake in the restructured automaker, sources have said. That proposal was far above an initial offer from Treasury and quickly rejected by the Obama administration, which had proposed in early April that lenders write off all but $1 billion of the debt and receive no equity.

State revenue falls 4% - (money.cnn.com) Revenue of U.S. states fell 4% in the 2008 fourth quarter as sales tax collections had their biggest drop in 50 years, and 41 states were on track for revenue declines of more than triple that rate for the first quarter of 2009, according to a report released on Tuesday. States, which have been struggling with lower revenue as the recession hits everything from sales taxes to property taxes, are likely to suffer more this month with an expected sharp fall in collected income taxes, according to the report by the Rockefeller Institute of Government. Total tax revenue declined in 35 states, while six saw double-digit declines, according to the institute, which is the public policy research arm of the State University of New York. Initial data for the first quarter of 2009 showed 41 states reporting that overall tax collections were down 12.8% in January and February versus the same two months in 2008, the report said. "Preliminary data for the January-March quarter suggests that fiscal conditions deteriorated even further, and the second major tax source for states - the income tax - is likely to weaken dramatically in April," said Donald J. Boyd, senior fellow at the Rockefeller Institute and co-author of the study, in a statement. Sales tax collections, a major revenue generator for states, fell by 6.1% in the fourth quarter of 2008 from the year-earlier period. The decline was wide-spread, hitting 34 out of the 45 states with broad-based sales taxes, according to the report.

Lewis testified that U.S. urged silence on Merrill deal: report - (news.yahoo.com/s/nm) Bank of America Corp Chief Executive Kenneth Lewis testified under oath that U.S. Federal Reserve Chairman Ben Bernanke and then-Treasury Secretary Henry Paulson pressured the bank to not discuss its plan to buy Merrill Lynch & Co, the Wall Street Journal said. In a testimony before New York's attorney general Andrew Cuomo in February, Lewis told prosecutors that he believed Paulson and Bernanke were instructing him to keep silent about deepening financial difficulties at Merrill, which BofA acquired in January. Lewis testified that the government wanted him to remain silent while the two sides negotiated government funding to help BofA absorb Merrill and its losses, the paper said, citing transcripts of the testimony. A representative of Cuomo questioned Lewis about his failure to disclose Merrill's fourth-quarter losses, which eventually totaled $15.84 billion, according to the paper. Lewis said he was told by Bernanke and Paulson that the BofA-Merrill deal needed to be completed, otherwise it would "impose a big risk to the financial system" of the United States as a whole, according to the paper. A person in government familiar with Bernanke's conversations with Lewis told the paper that the Fed chairman did not offer the BofA chief advice on the question of disclosure, and suggested that Lewis consult his own counsel. Paulson repeatedly told Lewis that "the U.S. government was committed to ensuring that no systemically important financial institution would fail," the Journal cited the former Treasury Secretary's spokeswoman as saying.

OTHER STORIES:

GM employees may get shutdown details this week - (news.yahoo.com/s/ap)
US Moves Closer to Becoming A Major Shareholder In GM - (www.cnbc.com)
GM to Shut Most US Plants Up to 9 Weeks - (www.cnbc.com)
Toll Bros CEO: 80% of U.S. ‘On the Way Back’ - (www.cnbc.com)
'Time To Get Off This Ride,' Says Popular Strategist - (www.cnbc.com)
Credit-Card Reforms Being Pushed by Obama, Congress - (www.cnbc.com)
Banks Hinder Efforts to Offer Mortgage, Credit-Card Relief - (www.cnbc.com)
Wells Fargo CFO: Economy Has Encouraging Signs - (www.cnbc.com)

Detroit Councilman Walks Away From His Mortgage - (www.sacbee.com) A Crash This Way Cometh... - (www.321gold.com)Banks Realize: Lending is BAD business right now. - (www.marketwatch.com)TARP is Wide Open to Fraud - (www.nytimes.com)20 Criminal Tarp Probes - (money.cnn.com)Oil Falls to $45 - (finance.yahoo.com)Deflation Fears in Europe - (www.nytimes.com)US Leading Indicators Show Extended Recession - (www.bloomberg.com) Toyota's Japan Output Falls to 1978 Levels. 1978! - (www.marketwatch.com)

U.S. Existing Home Sales Dropped More Than Forecast - (www.bloomberg.com)
New jobless claims rise more than expected to 640K - (finance.yahoo.com)
U.S. Initial Jobless Claims Rose to 640,000 Last Week - (www.bloomberg.com)
Countries trying to cope with severe global slump - (news.yahoo.com/s/ap)
Global Economy Called Worst Since 1945 - (www.nytimes.com)
Rising Home Vacancies Give Bernanke Extra Time to Withdraw Cash - (www.bloomberg.com)
As Housing Market Dips, More in U.S. Are Staying Put - (www.nytimes.com)
UPS 1Q profit plunges more than 55 pct. - (finance.yahoo.com)
Regulators to Meet With Banks on Friday on ‘Stress’ Tests - (www.nytimes.com)
U.S. Weighs Revealing Each Bank’s Capital Needs After Tests - (www.bloomberg.com)
Treasury Is Said to Increase Its Offer to Chrysler Lenders - (www.nytimes.com)
Mortgage Bondholders Form Battle Lines Over Obama Housing Plan - (www.bloomberg.com)

Tuesday, July 22, 2008

Wednesday July 23 Housing and Economic stories

Top Stories:

Desperate times, desperate measures for condo associations - (www.dailybusinessrevue.com) Interesting as condo associations are trying to accelerate foreclosures. Facing a spike in delinquencies and the need to pay the bills, the Bentley’s condo association opted to take a hard line with lenders that took over units there — many from investors who went into foreclosure. In one instance, the condo association took legal action against a lender that it said was dragging out the foreclosure process to avoid paying maintenance fees. Condos like Bentley Bay are increasingly resorting to such desperate measures to collect enough money to keep their buildings operating. It’s also proof that even upscale condos in areas considered insulated to a market downturn are feeling the pinch. As more units go into foreclosure, communities — especially newly built or converted projects — are struggling with rising nonpayment of association fees. Beleaguered board members are ratcheting up legal pressure on lenders who’ve launched foreclosure action against units but are slow to take title to the properties — a move that helps lenders delay taking on responsibility for condo fees. Unit 212 at the Bentley was mired in a drawn-out foreclosure process, and fees were mounting. The cash-strapped condo association finally asked Miami-Dade Circuit Judge Daryl Trawick, who was overseeing the foreclosure case, to force U.S. Bank to take title to the unit or immediately start paying maintenance fees.

Mervyns may file for bankruptcy, sources say - (www.latimes.com) - The Hayward, Calif.-based retailer stopped providing its financial information to at least two credit-monitoring firms -- prompting some vendors to halt merchandise shipments and triggering speculation that the chain might file for bankruptcy. "I'm advising my clients to hold all shipments at this time due to a lack of communication from Mervyns management," said Bob Carbonell, chief credit officer at Bernard Sands, a credit monitoring company. "To the best of my knowledge, virtually all of my clients have stopped shipping goods." Mervyns declined to comment on its current troubles, first reported Monday by the Wall Street Journal, which quoted anonymous sources saying the chain could ultimately be forced to seek bankruptcy protection.

Ed McMahon sues hospital, two doctors, investment tycoon over neck injury – (ap.google.com) – I have lost all respect for Ed. Not that I had any previously, but at least his character was funny in the SNL skit. He lived way above his means for years and now is suing everyone for his problems. Previously, he accepted responsibility for his problems but has more recently changed his tune. He previously said: "If you spend more money than you make, you know what happens. You know, a couple of divorces thrown in, a few things like that. And, you know, things happen." Moe recently, Ed McMahon has sued a hospital, two doctors and an investment tycoon Friday over a neck injury he has said has left him unable to work, a circumstance he has blamed for his recent money woes. The lawsuit seeks an unspecified amount, claiming negligence, battery, elder abuse and intentional infliction of emotional distress. It was filed in Los Angeles Superior Court against Cedars-Sinai Medical Center, two doctors, and the owner of a home where he says he fell in March 2007.

Freddie Mac May Slow Mortgage Buys to Prop Up Capital - (www.bloomberg.com) - Freddie Mac, the second-largest U.S. mortgage-finance company, may cut purchases of home loans from banks and bonds backed by housing debt to shore up its capital amid record delinquencies. The government-sponsored company is also considering selling securities and reducing its dividend while it prepares to issue $5.5 billion of stock, McLean, Virginia-based Freddie Mac said in a July 18 filing with the U.S. Securities and Exchange Commission. JPMorgan Chase & Co. analyst Matthew Jozoff said in a report last week that growth in mortgage holdings of Freddie Mac and the larger Fannie Mae will be ``weak.'' ``This just means much less credit availability for mortgage borrowers,'' said Paul Colonna, who manages more than $100 billion as chief investment officer for fixed income at GE Asset Management in Stamford, Connecticut. ``They were teed up to be saviors of the mortgage crisis, but now they've got their own capital issues.''

Angelo's Many "Friends" - (www.portfolio.com) In January 2004, Richard Aldrich, a California state appeals court judge, decided to refinance his 8,200-square-foot house next to a Jack Nicklaus-designed golf course at the Sherwood Country Club in Westlake Village. He turned to a prominent Sherwood member: Countrywide Financial chief executive Angelo Mozilo. Aldrich’s application was assigned to a loan officer named Robert Feinberg; the judge was seeking a $1 million loan and a $900,000 line of credit. By email, Feinberg alerted Mozilo that the credit line was “above what guidelines allow.” Mozilo responded, “Go ahead and approve the loan, and close it as soon as possible. Don’t worry about this deal, it’s golden.” Countrywide further waived half a point, or $5,000 on the million-dollar loan. (Homebuyers can reduce their interest rates by paying points, which are equal to 1 percent of the value of a loan.) That wasn’t Aldrich’s only contact with Countrywide. At the time he refinanced, a class action lawsuit against Countrywide was pending before the appellate court, brought by borrowers contending that the company offered an inadequate payment to settle allegations that it charged excessive fees for credit reports. That August, Aldrich was part of a three-judge panel that unanimously rejected the borrowers’ appeal. According to a person familiar with the case, Aldrich did not disclose his relationship with Countrywide to the plaintiffs or offer to recuse himself. California’s judicial code of ethics states that judges cannot accept gifts or favors from donors “whose interests have come or are reasonably likely” to come before them, nor can they take out a loan at better terms than are available to other borrowers. Reached by phone, Aldrich denied receiving a below-market loan and hung up.

Bailout means poor states pay for rich states' mortgages - (www.tomahjournal.com) Yes, it’s a win-win situation for big-fat bankers and citizens of Manhattan, etc. When times are good, the investment bankers and lenders are making a good $200-500K a year. When things go south, they look to the rest of the country to bail them out. Another financial crisis, and another bailout that sends money from the Frost Belt to the Sun Belt. Twenty years ago, it was the savings & loan crisis. Today, it’s the mortgage meltdown. While both are long-term financial disasters triggered by faith-based deregulation, they are also stories of demographic and regional redistribution. If a mortgage bailout bill that’s winding through Congress becomes law, Wisconsin will, broadly speaking, bail out Las Vegas. The causes of the mortgage meltdown are clear: Lenders and borrowers made bad bets on whether real estate in several “hot” markets -- Las Vegas, Southern California, South Florida, exurban Atlanta, etc. -- would continue to rapidly escalate in price. The lending triggered an orgy of development -- too many subdivisions with too many houses that had too much square footage. Was it something these areas could sustain? Of course not. But the bailout legislation allows a Las Vegas family to stay in a $600,000 home it never should have bought, and it bails out the lending institution and its investors for a mortgage loan that never should have been made.

Sales of Southern California companies drop sharply - (www.latimes.com) - Sales of retail shops, restaurants, beauty salons and other small and medium-size businesses in Los Angeles County are down by almost a third in the first six months of the year compared with the same period last year, according to BizBen.com, a San Ramon, Calif.-based clearinghouse that lists small, private California businesses for sale and reports statewide sales data. The 30.2% decline, to 2,968 L.A. businesses sold in January through June, is more than double the statewide drop of 13.7% in the same period. Some 11,654 California businesses have sold this year. In Orange County, 1,274 businesses sold in the first six months, down 22.6% from the year-earlier period. San Bernardino County experienced an 11.9% drop, to 651, and Riverside County sales declined to 391, a 47.3% plunge, according to BizBen.com. (San Diego was a Southern California exception: Sales jumped by more than 50%, to 1,275.). Business brokers blame the sharp drops on the credit crunch. Banks began to tighten credit standards last summer for the government-backed loans that fuel the purchase of many small businesses.

Critical financial problems spreading – (www.ft.com) - The number of companies facing "critical problems" surged by more than a quarter between the first and second quarter of the year as tightening credit conditions continued to bite, according to Begbies Traynor, the corporate insolvency and restructuring specialist. Year-on-year comparisons in the company's Red Flag Alert survey show a near eightfold rise in financially troubled companies in the second quarter. The survey showed 4,258 companies facing winding-up petitions from creditors or county court judgments in excess of £5,000, compared with just 542 in the same period a year ago. Quarter-on-quarter, the number of companies facing critical problems increased by 29 per cent.

New Regulator in Rescue Plan Spurs Debate - (www.nytimes.com) When the Treasury secretary, Henry M. Paulson Jr., orchestrated a rescue effort for the nation’s two largest mortgage finance companies last week, most of the attention was focused on the infusion of cash and credit that the government would provide. But his plan also relies on the creation of a new regulatory agency to control the companies more tightly over the long term and to limit the risk they pose to the country’s financial system. Skip to next paragraphUnder the measure, Congress would lose some of its authority to oversee the companies, Fannie Mae and Freddie Mac, including the right to determine how much capital they must keep as a cushion against losses. That role would shift to the new regulator, which would be called the Federal Housing Finance Agency; the director of the agency would be appointed by the president and confirmed by the Senate.

Economy hobbles Calif. town - (www.usatoday.com) The mortgage crisis, the limping economy and a recent bankruptcy filing by Vallejo — the first municipality to do so since Desert Hot Springs, Calif., in 2001 — have hobbled this town of 120,000. Golovich's business is hurting. Jobs and phone calls from customers have dried up. He's cut his staff and fleet of trucks in half, to six employees and four vehicles. Golovich also could lose his home. When the interest rate on his $500,000 adjustable-rate mortgage rose to 10% from 7%, his monthly payment shot up to $4,000, and he could not afford it. Hoping to ward off foreclosure, he and counselors at the non-profit Vallejo Neighborhood Housing Services are working with his lender on a new payment plan.

Huge oil trading loss sinks energy trader SemGroup - (www.reuters.com) SemGroup LP declared bankruptcy on Tuesday after $3.2 billion in oil trading losses torpedoed the formerly 12th-largest private U.S. company. The Tulsa-based company racked up the massive losses as oil prices ran up record gains, undercutting short crude futures positions SemGroup bought to hedge against its 500,000 barrel-per-day trading business. To meet obligations, SemGroup plans to sell off oil and natural gas gathering, transportation, and storage assets worth an estimated $6.14 billion that were purchased in a whirlwind of acquisitions since it was founded in 2000.

More socialism and stupidity from the Republic of California:
Beer-tax debate isn't going stale – (www.insidebayarea.com) – Another method of raising taxes on CA residents. It is getting close to 70% for high income individuals and these taxes (called levies by these morons) will help put it over 80%. Also, notice the socialistic aspect to only tax big brewers and not the small guys. Beall proposed to raise the current 2-cents-per-can-or-bottle levy by 30 cents, but he has since scaled it back to 15 cents per can. Put differently, a six-pack would cost nearly a dollar more.
Additionally, the assemblyman now says the tax should apply only to brewers that produce more than 60,000 barrels annually, thus excluding small craft brewers. He estimates it would generate $500 million annually for programs
to curb alcoholism and underage drinking, causes to which Beall has devoted years of work. The money would be set aside in a "lockbox" and could not be spent for other purposes.

Public service employees get free gas - (www.sfgate.com) Even as gas prices go through the roof, hundreds of public employees who work for San Francisco and Oakland are commuting in city vehicles, complete with free fill-ups. Some are coming from as far away as the Central Valley. San Francisco city records show that no fewer than 246 workers, including police brass, airport employees and Muni managers, have take-home car privileges. A district attorney's investigator commutes in his city-issued 2004 Ford Taurus from Manteca in San Joaquin County - a round trip of about 150 miles - with the city picking up the gas tab. Still another investigator is averaging 133 miles a day commuting from Tracy, and another 88 miles from Antioch. One D.A.'s investigator, commuting some 70 miles round trip from his home north of Petaluma, rang up $1,900 in annual fuel costs when the city officials first tracked his mileage back in 2003. Today, the bill has more than doubled, to $4,000-plus a year.

Supes readying tax hikes for November ballot - (www.sfgate.com). Another socialistic tax in downtown SF. Downtown businesses, law firms and wealthy property owners in San Francisco could be forced to pay more in taxes - in some case tens of thousands of dollars more - under proposals being debated today at City Hall. But the measure could give a break to small businesses, exempting them from city payroll taxes if they pay employees a total of $250,000 or less each year. Board of Supervisors President Aaron Peskin wants voters to decide this fall whether the city should double its real estate transfer tax on properties valued at more than $5 million. Under the measure, someone selling a $5.1 million property, for example, would pay $76,500 in transfer taxes, or 1.5 percent of the sale price. Peskin also hopes to get a second measure on the November ballot that would force law, accounting and other firms to pay taxes on the compensation of the partners in their offices, something most limited-liability partnerships operating in the city do not do.

Other Stories:

After Massive Financials-Led Rally, WAMU Drops Bomb - (www.ml-implode.com) - After a mega-rally led by the financials that left the XLF up 8.4%, WAMU drops the bomb: WAMU 2Q Non-GAAP EPS ($3.34) vs ($1.05)...
MBA's Kempner Out; Courson To Step Up - (www.ml-implode.com) - On the heels of Option ARMegeddon's recent article about MBA's financial difficulties, we learn today that President and CEO Jon...
Wachovia Update: 10,750 Jobs Cut - (www.ml-implode.com) - Wachovia acknowledged it is "exiting the General Bank wholesale mortgage origination channel" in a press release today...
Dubious Assumptions in CBO's Fannie, Freddie $25 Billion Rescue Cost Estimate - (www.ml-implode.com) - "I am curious: what expertise does the CBO have in developing an independent view of the two GSE's exposures? The CBO was no dou...
Fannie, Freddie Pare Losses on CBO Bailout Report - (www.ml-implode.com) - "- Fannie Mae and Freddie Mac pared losses after the non-partisan Congressional Budget Office said there's a better than 50 perc...
When retail therapy fails - (www.ml-implode.com)
Phoenix Foreclosures: They’re Not Just For Outlying Areas Anymore - (www.ml-implode.com)
Option ARMageddon: Kempner doubling-down on MBA’s future? - (www.ml-implode.com)
Pimco's Gross: Fannie, Freddie Mortgages 'Excellent Video' - (www.ml-implode.com)
Regulators check Fannie, Freddie books - (www.ml-implode.com)
The FHA Delinquency Crisis: 1 in 6 Borrowers in Default - (www.ml-implode.com)
Wachovia Swings To 2Q Loss; Dividend Cut To 5 Cents/Share - (www.ml-implode.com)
Thousands with criminal records work unlicensed as loan originators - (www.ml-implode.com)
Update: Wachovia's Wholesale Shutdown Confirmed - (www.ml-implode.com)

Icelandic CDS costs surge again - (www.ft.com) - The cost of insuring Icelandic bank debt against default climbed to near-record levels on Monday, as traders again targeted the embattled island economy. Credit default swaps, contracts between two parties to insure debt against default, hit 1,000 basis points on the major Icelandic banks Glitnir and Kaupthing. This means traders were paying €1m per year to insure €10m of each bank's debt over five years, more than double the price two months ago. A year ago, they paid €30,000.
Troubled economy has Texans recalling banking collapse of the '80s – (www.dallasnews.com) The economy collapsed after years of growth. Can't-miss investments turned to dust. And banks, gorged on years of aggressive lending, careened toward the breach.
A portrait of today's U.S. economy? Time will tell. But with analysts predicting as many as 300 U.S. bank failures in the next few years, many Texans will recall another banking crash. In the state's 1980s collapse, an energy bust and a subsequent real-estate wreck leveled hundreds of Texas banks, including longtime pillars of the economy.

Replace the word "oil" with "housing" - (patrick.net)
GSEs: Toxic fudge - (www.economist.com)
All US Senator Email Addresses - (patrick.net)
Little foreclosure relief seen from housing bill - (msnbc.msn.com)
Nothing Sacrosanct About U.S. AAA Rating - (www.bloomberg.com)
America, Too Big to Fail . . . Probably - (www.city-journal.org)
Derivatives, banks, and bailouts - (www.guildinvestment.com)
Market still far from bottom - (www.marketwatch.com)
House equity continued to deteriorate - (calculatedrisk.blogspot.com)
California's median house price plummets in June - (www.latimes.com)
Southern California Half-Off Sale - (www.mybudget360.com)
San Diego County House Sales Fall - (realestate.signonsandiego.com)
The Meltdown Lowdown - (www.prospect.org)
The death-knell of Bernankeism - (www.prudentbear.com)
Global economy at point of maximum danger - (www.telegraph.co.uk)
Blame U.S. housing finance - (www.economist.com)
Fed seems focused on inflation over growth - (www.ft.com)
California foreclosures soar to 20-year high - (www.businessweek.com)
On Economy, Bush Faults 'Drunk' Wall Street - (online.wsj.com)

How free market ideology backfired - (www.marketwatch.com)
Job Market Idles Many Teens - (online.wsj.com)

Cost of Loan Bailout, if Needed, Could Be $25 Billion - (www.nytimes.com)
Problems at Loan Giants Push Mortgage Rates Higher - (www.nytimes.com)
Why the oil crunch may grow worse - (www.latimes.com)
Oil trading company files for bankruptcy - (www.ft.com)
Junk bond hiatus shows the depth of credit squeeze - (www.ft.com)

Former SEC head wants broader short-selling rules - (www.boston.com)
CLO managers under pressure - (www.ft.com)

Two Troubled Banks Each Post Billions in Losses - (www.nytimes.com)
Fannie, Freddie bailout may have $25 billion tag – (www.reuters.com)
U.S. combing books of mortgage finance companies - (www.iht.com)
Wachovia Has Record $8.9 Billion Loss, Cuts Dividend - (www.bloomberg.com)
U.S. Lawmakers Reach Deal on Fannie, Freddie Bill - (www.bloomberg.com)
Fannie, Freddie May Record More Losses, Ofheo Says - (www.bloomberg.com)
SunTrust Profit Declines as Borrowers Fall Behind - (www.bloomberg.com)
Losses Mount, and Airlines Plan Steeper Spending Cuts - (www.nytimes.com)

Food and Gas Prices Taking a Toll in Asia - (www.nytimes.com)
Italian Consumer Confidence Plunges to 15-Year Low - (www.bloomberg.com)
Global credit crisis takes hold in Japan - (www.telegraph.co.uk)

Friday, July 11, 2008

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

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