Saturday October 4 Housing and Economic stories

TOP STORIES:

Bank of America to Lehman: Where's Our Money? - (www.businessweek.com) The Lehman Brothers bankruptcy is quickly becoming one giant mess. Scores of hedge funds that had hundreds of millions in cash and other securities parked with Lehman's prime brokerage operation in London have had their accounts frozen. A number of these hedge funds have filed formal objections with the bankruptcy court, and at least one fund, New York's Bay Harbour Management, is mounting a legal challenge to the court's hastily approved sale of Lehman's brokerage arm to Barclays Capital. Now an even more troubling scenario is arising: legal disputes stemming from the estimated $1 trillion in derivatives transactions that Lehman had entered into on behalf of itself and some of its customers. Already, at least three lawsuits have been filed, alleging that nearly $600 million in collateral posted by some of Lehman's trading partners in derivatives transactions hasn't been returned and is in jeopardy of disappearing as the bankruptcy process unfolds.

Lehman Brothers's European creditors prepare for legal action - (business.timesonline.co.uk) The fallout from the collapse of Lehman Brothers in Europe continued apace yesterday as Deminor, the Brussels investor rights group, began a legal action aimed at recouping billions of dollars of losses for the bank’s creditors. Deminor said that Lehman vehicles had issued an estimated $34 billion (£19.3 billion) of bonds and other structured credit products across Europe in recent years, some of which had been sold on to retail investors. It said that it had been swamped by requests from creditors trying to recover assets and would be forming a representative group. It argued that the bonds were guaranteed by Lehman’s Wall Street parent, which is in Chapter 11 bankruptcy protection from its creditors. As well as taking legal action against any relevant Lehman entities in Belgium, the Netherlands and the US, Deminor said that it would pursue claims against intermediaries and other brokers who had sold on Lehman investments.

Reversal of fortune: House approves $700-billion bailout bill - (www.latimes.com) Four days after rejecting a similar plan, the House of Representatives approves the measure by a 263-171 vote. Bush quickly signs the bill into law.

Hidden in the Emergency Economic Stabilization Act of 2008 is a Provision That Totally Eliminates Reserves - (www.dailypaul.com) So, to summarize, by changing the effective date the following is now in effect. Banks don’t have to have cash on hand. The changes eliminated the requirement for banks to keep reserves of cash on hand to cover deposits, they abolished the Federal Reserve’s Earnings Participation Account, they granted the ability for the Fed to create their own rules for distributing their earnings, and they granted the ability to make payments to foreign banks. These things were not scheduled to go into effect for 3 more years. Unclear is why they needed these changes at all, the other is why they need them now. Okay, there it is, the conclusion. You can take my word for it and stop now and have some disgust at the whole thing, or you can continue on and get really mad about how convoluted and cryptic things in Washington are. Fair warning. Continue at your own risk. Still here? You really are brave. Actually you probably have no idea the mess you are in for. Don’t say I didn’t warn you. Okay, I gave you the conclusion, now here is how to get there. I’ll go fast now, try to keep up, it gets complicated.

Bailout bill loops in green tech, IRS snooping - (www.cnet.com) - Good rundown of what is in this monstrosity. IRS undercover operations: Privacy invasion? The bailout bill also gives the Internal Revenue Service new authority to conduct undercover operations. It would immunize the IRS from a passel of federal laws, including permitting IRS agents to run businesses for an extended sting operation, to open their own personal bank accounts with U.S. tax dollars, and so on. (Think IRS agents posing as accountants or tax preparers and saying, "I'm not sure if that deduction is entirely legal, but it'll save you $1,000. Want to take it?") That section had expired as of January 1, 2008, and would now be renewed. Starting with the so-called Anti-Drug Abuse Act in 1988, the IRS has possessed this authority temporarily, with occasional multiple-year lapses. A 1999 internal report said the IRS had 126 "trained undercover agents" working in field offices at the time. This is the first time that such undercover authority would be made permanent. Sens. Max Baucus (D) and Chuck Grassley (R) have been pushing to make it permanent for a while, claiming (PDF) in April that: "Undercover operations are an integral part of IRS efforts to detect and prove noncompliance. The temporary status of this provision creates uncertainty, as the IRS plans its undercover efforts from year to year." There's another section of the bailout bill worth noting. It lets the IRS give information from individual tax returns to any federal law enforcement agency investigating suspected "terrorist" activity, which can, in turn, share it with local and state police. Intelligence agencies such as the CIA and the National Security Agency can also receive that information. The information that can be shared includes "a taxpayer's identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, over-assessments, or tax payments, whether the taxpayer's return was, is being, or will be examined or subject to other investigation or processing, or any other data received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return."

Gov. Schwarzenegger Asks For Emergency $7B Loan from US Government : NPR - (www.npr.org) Good audio interview/story. California is running out of money and may not be able to pay salaries by end of October. Gov. Arnold Schwarzenegger is asking Congress for as much as $7 billion to fund daily operations in the state. Madeleine Brand talks to Zoe Lofgren, chairwoman of the California Congressional Delegation, about the bailout request.
Arnold wants your money! - (www.ml-implode.com)


NOTICE THE INK IS BARELY DRY AND WALL STREET IS ASKING FOR MORE, VARIOUS STATES ARE COUNTING ON HOPE, AND CONDITIONS SEEM TO BE WORSENING:
· After House OKs bailout, credit markets tighten on fears the plan isn't enough to help economy - (www.latimes.com) That didn’t take long for Wall Street and Economists to start asking for more. With credit still gummed-up and stocks at new lows, Wall Street says additional U.S. help may be needed
· Gov. hopes rescue will free up funds - (www.latimes.com) California needs $7 billion to pay salaries and bills.
· Bailout may ease state credit crunch - (www.latimes.com)
· U.S. Sheds 159,000 Jobs; 9th Straight Monthly Drop - (www.nytimes.com) - Government data showed the worst month of retrenchment in five years, enhancing fears that the downturn has entered a more painful stage.
· Jobs disappear at fastest rate in 5 years, more losses seen as US prepares for elections - (www.latimes.com)

Next: The Mother Of All Bank Runs? - (www.forbes.com) It's plain that the current financial crisis is worsening in spite of--or perhaps because of--the Treasury rescue plan. The strains in financial markets are becoming more, rather than less, severe in spite of the nuclear option of a $700 billion package: Interbank spreads are widening and are at a level never seen before; credit spreads are widening to new peaks; short-term Treasury yields are going back to near-zero levels as there is flight to safety; credit default swap (CDS) spreads for financial institutions are rising to extreme levels as the ban on shorting of financial stock has moved the pressures on financial firms to the CDS market; and stock markets around the world have reacted very negatively to this rescue package. Financial institutions in the U.S. and in advanced economies are going bust. In the U.S., the latest victims were Washington Mutual (nyse: WM - news - people ) (the largest U.S. savings and loan) and Wachovia (nyse: WB - news - people ) (the sixth largest U.S. bank). In the U.K., after Northern Rock (other-otc: NHRKF.PK - news - people ) and the acquisition of HBOS by Lloyds TSB (nyse: LYG - news - people ), you now have the bust and rescue of Bradford & Bingley; in Belgium you had Fortis (other-otc: FORSY.PK - news - people ) going bust and being rescued over the weekend; in Germany, Hypo Real Estate, a major financial institution near bust, has also needed rescue. So, this is not just a U.S. financial crisis. It is a global crisis hitting institutions in the U.K., the Euro-zone and other advanced economies (Iceland, Australia, New Zealand, Canada etc.).

Market Has "Already Cut" Funds Rate - (themessthatgreenspanmade.blogspot.com) - While the rate cut has not yet been formalized, an event that will have at least a temporary psychological impact on financial markets, the mechanics of a lower Fed funds rate have been in place since the middle of last month.

Office Space Is Emptying Out - (online.wsj.com) Businesses are dumping office space at the fastest pace since the months after the Sept. 11 attacks, increasing the financial stress on commercial-real-estate owners and their lenders, many of them already ailing financial institutions. Nationwide, rents on office properties -- including landlord concessions and discounts -- were flat in the third quarter, the worst result for office-property owners since late 2004 -- when commercial real estate began to emerge from a prolonged slump, according to Reis Inc., a New York real-estate research firm. Rent stagnation and increasing vacancies put "strain on borrowers to make payments on mortgages," said Sam Chandan,



OTHER STORIES:

Wachovia Update: Citi / Wells Fargo At Odds Over Bid - (www.ml-implode.com) - Earlier today, Reuters reported that Wachovia had rejected Citi's offer to purchase the banking assets in favor of a $15 billion...
Wells Fargo Absolutely Did Subprime, Stated, Interest Only, No Ratio Etc - (www.ml-implode.com) - The CEO of Wells was just on CNBC in a lengthy interview with Maria Bartaromo and he said “we never did stated income, low docum...
Citigroup Demands Wachovia, Wells Fargo Terminate Merger Deal - (www.ml-implode.com) - Citigroup Inc. demanded that Wells Fargo & Co. and Wachovia Corp. terminate a $15.1 billion takeover agreement announced today, ...
Failure To Comprehend - (www.ml-implode.com)
The Question That Should Be at the Heart of the Bailout Debate - (www.ml-implode.com)
Roubini: Financial and Corporate System is in Cardiac Arrest - (www.ml-implode.com)
BAILOUT BILL PASSES - (www.ml-implode.com)
INDEPENDENT TITLE AGENTS FILE LAWSUIT AGAINST OHIO DEPARTMENT OF INSURANCE DIRECTOR ALLEGING FAILURE TO ADEQUATELY PROTECT OHIO HOMEOWNERS - (www.ml-implode.com)
Debate Over The Mortgage Debacle In the United States - (www.ml-implode.com)
Job losses now at recession levels - (www.ml-implode.com)

Payrolls Drop 159k - (www.ml-implode.com)
Edge of the Abyss - (PAUL KRUGMAN at www.nytimes.com) There’s growing evidence that the financial crunch is spreading to Main Street, with small businesses having trouble raising money and seeing their credit lines cut. And leading indicators for both employment and industrial production have turned sharply worse, suggesting that even before Lehman’s fall, the economy, which has been sagging since last year, was falling off a cliff. How bad is it? Normally sober people are sounding apocalyptic. On Thursday, the bond trader and blogger John Jansen declared that current conditions are “the financial equivalent of the Reign of Terror during the French Revolution,” while Joel Prakken of Macroeconomic Advisers says that the economy seems to be on “the edge of the abyss.” And the people who should be steering us away from that abyss are out to lunch.

Paulson's Reasons for Delaying Day of Reckoning - (www.bloomberg.com)
China Could Be Dragged Down by Wall Street Crash - (www.bloomberg.com)

600,000 jobs lost - and counting - (money.cnn.com)
Economic, credit fears punish Wall Street - (www.reuters.com)

Why propping up banks will not rescue a debauched financial system - (www.telegraph.co.uk)

U.S. Stocks Drop as Recession Concern Outweighs Bailout Passage - (www.bloomberg.com)
Treasuries Gain for Sixth Week on Speculation Fed to Cut Rates - (www.bloomberg.com)
Decade-Worst Performance For Hedge Funds In September - (online.wsj.com)
Ainslie, Einhorn, Stock Hedge Funds Post Record Drops - (www.bloomberg.com)
Manhattan real estate: Pricey but headed for a fall - (money.cnn.com)
Corporate America caught in global credit undertow - (www.reuters.com)
Not Much Fun Now With the Fund of Funds - (online.wsj.com)
High-end home market feeling pain from market, credit messes - (www.dallasnews.com)
Trichet Poised for Rates `Volte Face' as Summit Nears - (www.bloomberg.com)

Friday October 3 Housing and Economic stories

TOP STORIES:

Video Unearthed Democrats in their own words Covering up the Fannie, Freddie Scam - (www.stockmarketimplode.com) - Shocking Video Unearthed of several idiots (Maxine Waters, D-CA, Gregory Meeks, D-NY) in their own words Covering up the Fannie Mae, Freddie Mac Scam that caused our Economic Crisis. Nothing is really shocking anymore. Blatant corruption and bald-faced lies have become the status quo. They are also praising Ex-CEO Franklin Raines and intimidating the regulators who rightfully show concern with Freddie and Fannie accounting practices.

VARIOUS STATE, MUNICIPALITY, AND SMALL BUSINESSES BEING HURT BY CREDIT CRUNCH:
· Small Businesses Feeling the Chill - (www.nytimes.com)
· Louisiana, Chicago Suffer as Bond Market Shut, Projects Delayed - (www.bloomberg.com)
· Dallas-Fort Worth businesses feeling credit squeeze - (www.dallasnews.com)
· Credit crunch puts California governments in a corner - (www.latimes.com)
· Credit freeze puts businesses on thin ice - (www.latimes.com)
· California starts to feel crunch of tightening credit - (www.signonsandiego.com)

AND CNBC CONTINUES TO BE A CHEERLEADER FOR THE ECONOMY INCLUDING CALLING INVESTORS PANICKY BONEHEADS:
· Is This Really the Market Bottom? - (www.cnbc.com)
· Five Ways to Play This Wild Market - (www.cnbc.com)
· Panicky Investors Making Some Bone-Headed Moves - (www.cnbc.com) There is no shortage of bone-headed moves that panicky investors are considering—requiring their financial advisers to make timely interventions.The financial distress caused by the stock market’s wild gyrations has investors itching to DO SOMETHING. But that’s precisely what most financial advisers are counseling against. And they believe they are mostly winning the battle against rash investments decisions. Still, there is no shortage of bone-headed moves that panicky investors are considering—requiring their advisers to make timely interventions. Even otherwise savvy business people are not immune. Earlier this week, Jeffrey Sprowles, a Philadelphia-based financial advisor, had to talk a client out of selling his Schwab money market account—in which high six-figures was deposited—to buy Treasurys. “After I noted that he would be giving up something in excess of $50,000 per year if we followed his course of action he backed off,” Sprowles recalled. For Investors Strangely, the sell order came even after Sprowles had just reviewed the client’s holdings and told him that nothing was at risk. “Although I did suggest that this kind of action was in a category of self-fulfilling prophecy [of feared losses] I successfully resisted the urge to suggest he watch “It’s A Wonderful Life,” added Sprowles. He put out another fire when another business owner, who had been pleased with double-digit returns on her international and large cap value stocks, abruptly instructed him to liquidate and move into a mixture of gold and commodities. So far no clients have gone off the reservation, Sprowles said. Still, TV commentary by ‘experts’ including CNBC’s Jim Cramer predicting the Dow declining below 9,000 is tough to resist,” he says. “If the market doesn’t recover, I may have a different story to tell” about more rash moves, he added. Marc Schindler, a fee-only financial adviser in Bellaire, Texas, says he lost one client recently when the client decided to redirect his investments into foreign currencies through CD and money market accounts offered by a Florida bank. Knight Kiplinger advises against dumping "good stocks." Watch video at left.

SEC Extends Short-Selling Ban as Bailout Unfolds - (www.cnbc.com) U.S. securities regulators late Wednesday, extended an emergency ban on short selling in more than 950 financial stocks to give Congress time to finish legislation to rescue the financial system. The Securities and Exchange Commission said the ban would expire three business days after a federal bailout bill was enacted, and would last no longer than Oct. 17. The SEC emergency rules are part of a series of government measures designed to restore confidence in battered markets and the ailing financial system, which has been rocked by bank failures and fears of economic recession.

Banks Push to Ease Accounting Rule - (online.wsj.com) A proposal contained in the Senate's revised financial-rescue bill reaffirms the SEC's authority to suspend "mark-to-market" accounting. The banking industry and a band of lawmakers have used the scramble to salvage the financial-markets rescue plan to give new life to an industry push to avoid billions in further write-downs with the stroke of a regulatory pen. A proposal contained in the revised financial-rescue bill the Senate considered Wednesday reaffirms the Securities and Exchange Commission's existing authority to suspend "mark-to-market" accounting. The language was meant to send a message to the agency to re-evaluate the issue. The practice, adopted in the aftermath of the savings-and-loan collapse in the 1980s, pegs the value of assets to their current market price, rather than the price paid for them. Banks have complained the strict application of mark-to-market rules has forced them to write down billions of dollars worth of mortgage-related securities, intensifying the squeeze in the credit markets. Critics of the proposed changes to the "mark to market" rules say gains created by easing the rules would be illusory and would delay resolving genuine doubts about the value of mortgage assets that has caused the recent crisis in confidence.

Auto Sales Slammed by Tightening Credit Market - (www.cnbc.com) Major automakers reported plunging U.S. sales for September on Wednesday—led by a 34 percent slide at Ford Motor—as an escalating credit emergency slammed a slumping industry and raised new doubts about when the world's largest auto market would hit bottom. "Consumers and businesses are in a very fragile place," Ford sales chief Jim Farley said. "An already weak economy compounded by very tight credit conditions has created an atmosphere of caution." Privately held Chrysler said on Wednesday its U.S. sales fell 33 percent in September to 107,349 vehicles because of a highly volatile economic environment and reduced fleet and lease volume. "The economy is going through a difficult restructuring, resulting in great uncertainty among consumers," Jim Press, Chrysler Vice Chairman and President, said in a statement.

Harvard Professor: Bankruptcy, not bailout, is the right answer - (www.cnn.com) The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk. Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared. This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle. Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government. The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company. Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable. In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

And of course, Cramer as cheerleader for Wall Street: Cramer: Economy Naysayers Are 'Dead Wrong' - (www.cnbc.com) Cramer’s in disbelief over the, well, nihilism he’s hearing from market pundits these days. Rate cuts don’t matter. Buying mortgages won’t work. It’s too late for a stimulus package. Listening to them, you’d think the world were going to end tomorrow and there was nothing we could do about it. But that’s not how Cramer sees it. In fact, “these people are dead wrong,” he said, adding that such talk was “economy-destroying analysis.” He believes we should be throwing everything we can at this problem: rate cuts, tax cuts, rescue plans, home loans, you name it. “We can’t print money fast enough,” he said. And Wednesday’s rally in financials is proof that this stuff works. We’ve been here before, though. The U.S. didn’t do enough to stop the Great Depression, and we could find ourselves there again if we take the same approach. Not only does Cramer think we have to do anything we can to avoid a similar fate, but it would be “heartless and punitive not to try.”

President Jackson's Veto Regarding Bank of United States; July 10, 1832 - (www.yale.edu) The bill " to modify and continue " the act entitled "An act to incorporate the subscribers to the Bank of the United States " was presented to me on the 4th July instant. Having considered it with that solemn regard to the principles of the Constitution which the day was calculated to inspire, and come to the conclusion that it ought not to become a law, I herewith return it to the Senate, in which it originated, with my objections. A bank of the United States is in many respects convenient for the Government and useful to the people. Entertaining this opinion, and deeply impressed with the belief that some of the powers and privileges possessed by the existing bank are unauthorized by the Constitution, subversive of the rights of the States, and dangerous to the liberties of the people, I felt it my duty at an early period of my Administration to call the attention of Congress to the practicability of organizing an institution combining all its advantages and obviating these objections. I sincerely regret that in the act before me I can perceive none of those modifications of the bank charter which are necessary, in my opinion, to make it compatible with justice, with sound policy, or with the Constitution of our country. The present corporate body, denominated the president, directors, and company of the Bank of the United States, will have existed at the time this act is intended to take effect twenty years. It enjoys an exclusive privilege of banking under the authority of the General Government, a monopoly of its favor and support, and, as a necessary consequence, almost a monopoly of the foreign and domestic exchange. The powers, privileges, and favors bestowed upon it in the original charter, by increasing the value of the stock far above its par value, operated as a gratuity of many millions to the stockholders. ……
Every monopoly and all exclusive privileges are granted at the expense of the public, which ought to receive a fair equivalent. The many millions which this act proposes to bestow on the stockholders of the existing bank must come directly or indirectly out of the earnings of the American people. It is due to them, therefore, if their Government sell monopolies and exclusive privileges, that they should at least exact for them as much as they are worth in open market. The value of the monopoly in this case may be correctly ascertained. The twenty-eight millions of stock would probably be at an advance of 50 per cent, and command in market at least $42,000,000, subject to the payment of the present bonus. The present value of the monopoly, therefore, is $17,000,000, and this the act proposes to sell for three millions, payable in fifteen annual installments of $200,000 each. It is not conceivable how the present stockholders can have any claim to the special favor of the Government. The present corporation has enjoyed its monopoly during the period stipulated in the original contract. If we must have such a corporation, why should not the Government sell out the whole stock and thus secure to the people the full market value of the privileges granted? Why should not Congress create and sell twenty-eight millions of stock, incorporating the purchasers with all the powers and privileges secured in this act and putting the premium upon the sales into the Treasury?

Bid of $1.75 on eBay gets abandoned Saginaw home - (www.housingwire.com) - With a winning bid of just $1.75, a Chicago woman has won an auction for an abandoned home in Saginaw. Joanne Smith, 30, recently was the top bidder for the home during an auction on eBay, The Saginaw News reported. Her bid was one of eight for the home.

Mortgage Apps Plummet in Latest Week - (www.thetruthaboutmortgage.com) Mortgage application volume plummeted 23 percent on a seasonally adjusted basis for the week ending September 26, the MBA reported today. On an unadjusted basis, the home loan application index was off 23.4 percent compared to the prior week and 28.4 percent compared to the same period a year earlier. The big fall was led by a whopping 34.7 percent slide in refinance applications (so much for that rally), a 14.1 percent drop in FHA lending, and a 9.7 percent slip in purchase apps.

Down Payment Assistance Officially Dead, For Now - (www.housingwire.com) - Nonprofit groups, including giants such as Sacramento-based Nehemiah Corp. of America, are now either out of business or looking to other lines of business while they continue to lobby Congress to reinstate the controversial FHA program. Efforts to pass a bill that would reinstate DPA stalled in a House committee, however, as concern over a historic financial bailout package pushed down payment program concerns to the back burner in the past few weeks


OTHER STORIES:

Jim Rogers Calls The Bailout What It Is - (bloomberg.com)
Why The Bailout Is A Scam - (www.dakotademocrat.com)
Senate trying same $700B bailout scam! Protest to your Senator now! - (www.nytimes.com)
Senator Contact Info - (senate.gov)
A much cheaper and safer bailout plan - (www.denninger.net)
Atlanta Fed's Lockhart Assumes Bailout Plan Is Dead - (blogs.wsj.com)
Quotes on Failed Wall Street Bailout Vote - (dadtalk.typepad.com)
Goldman Sachs seeks to buy $50B of bank assets - (www.marketwatch.com)
A Year of Heavy Bank Losses - (www.nytimes.com)
Estimate your FDIC Insurance - (www.fdic.gov)
Banking Crash Hits Europe - (www.telegraph.co.uk)

Foreclosure Alley – Inland Empire in Riverside County CA - (calculatedrisk.blogspot.com) For the past few years, the Inland Empire in Riverside County has been one of the fastest growing counties in the state - home to a major housing boom. But now the Inland Empire is pretty much the poster child for the foreclosure crisis. SoCal Connected tracked down some surreal sights associated with the crisis, including a guy who started a business turning abandoned, dead lawns green - with spray-paint
Why propping up banks will not rescue a debauched financial system - (www.telegraph.co.uk)
Senate to vote on $700B gift to Wall Street on Wed - (hosted.ap.org)
Donald Trump doesn't feel the panic - (rightwingliberal.wordpress.com)
Ford sales plunge 35% - (money.cnn.com)
Factories mired in recession levels, jobs weak - (www.reuters.com)
Paulson Rescue Proposal Is `Crazy,' Predecessor O'Neill Says - (www.bloomberg.com)
Banking crash hits Europe as ECB loses traction - (www.telegraph.co.uk)
U.S. Heading for Slump, With or Without Bailout - (www.bloomberg.com)
Home prices plunge record 16.3 percent in July - (www.reuters.com)
The Bailout Defeat: A Political Credibility Crisis - (news.yahoo.com)
House Prices in 20 U.S. Cities Declined 16.3% in July - (www.bloomberg.com)
Time to foam the runway as house prices plummet to earth - (www.marketwatch.com)
Housing bust may not bottom till 2010 - (www.reuters.com)
Credit Strains Worsen; U.S. Stocks Surge - (www.nytimes.com)

Paulson Funds Keep Soaring Despite Turmoil - (www.ml-implode.com) - ``Paulson & Co.’s $9 billion Advantage Plus fund is up 19.44% this year, a tidy follow-up to last year’s 158.75% return, accordi...
In Option-ARM World, Only Two Large Lenders Remain - (www.ml-implode.com) - ``Of all the large lenders that wrote Option ARM, or so- called Pick-A-Pay mortgages, only two notable names - Downey Financial ...
The Top Five Reasons The Bailout Interventions Are Making Things Worse - (www.ml-implode.com)
My letter to Chuck - (www.ml-implode.com)
ISM Implodes, GE Credit Default Swaps Soar, Ford Sales Plummet - (www.ml-implode.com)
Risk of Home Price Declines Intensifies in Q2 - (www.ml-implode.com)

Thornburg Mortgage Cuts Staff, Extends Exchange Offer - (www.thetruthaboutmortgage.com) This company seems to have 9 lives, and has been flirting with bankruptcy for several months. Thornburg announced yesterday it was cutting 29 positions in its sales and operations staff as it extended its exchange offer today for the eighth time. The majority of the job losses came from its headquarters in Santa Fe, New Mexico, though individuals throughout the country were affected as well. The company said it now employs roughly 156 professionals in its Santa Fe-based operations. The super jumbo mortgage lender is still working to complete its private placement of $1.35 billion in senior subordinated secured notes and warrants to satisfy its override agreement after receiving margin calls earlier this year.

More Leadership trouble at Mortgage Bankers Assoc. - (www.ml-implode.com)
Hope for Homeowners Program Launched - (www.ml-implode.com)
September's ISM Manufacturing Index "Screams Recession," Economists Say - (www.ml-implode.com)


Economic jitters sink Wall Street - (www.reuters.com)
Junk Bond Spreads Rise to Record on Default Concern - (www.bloomberg.com)
Treasuries Advance on Doubt U.S. Rescue Plan Prevents Recession - (www.bloomberg.com)
Oil Falls a Second Day on Stronger Dollar, Lower U.S. Fuel Use - (www.bloomberg.com)
How Risk Models Failed Wall St. and Washington - (www.washingtonpost.com)
Credit-Default Swaps Get Messier - (online.wsj.com)
Funds Try to Lose Ties to Lehman - (www.nytimes.com)
Millions held in hedge funds lockdown - (www.ft.com)
Mergers and Acquisitions `Frozen' Amid Credit Market Turmoil - (www.bloomberg.com)
Wachovia Limits Access to $9.3 Billion Fund for 900 Colleges - (www.bloomberg.com)
Home prices are forecast to slide for 2 more years - (www.signonsandiego.com)
Hedge fund blocks client withdrawals - (www.ft.com)
Sigma's Fall Could Worsen Market's Pain - (online.wsj.com)

SEC set to extend ban on short selling - (www.ft.com)
Big Deals Go Belly Up Amid Market Crisis - (biz.yahoo.com/law)
Financial Crisis: So much for tirades against American greed - (www.telegraph.co.uk)
U.K. House Prices Decline Most on Year Since 1991 - (www.bloomberg.com)
Latin America Economic Boom Threatened as Credit Freeze Deepens - (www.bloomberg.com)
Russian Oil Output Falls for Ninth Straight Month - (www.bloomberg.com)
Ambitions grow overseas to succeed Wall Street as global finance capital - (www.latimes.com)
Banks tighten squeeze on household credit - (www.ft.com)
U.S. weekly initial jobless claims rise 1,000 to 497,000 - (www.marketwatch.com)
Senate Approves Bailout - (www.washingtonpost.com)
Fed officials considering further rate cuts: report - (www.reuters.com)
Small Businesses Feeling the Chill - (www.nytimes.com)
Louisiana, Chicago Suffer as Bond Market Shut, Projects Delayed - (www.bloomberg.com)
Dallas-Fort Worth businesses feeling credit squeeze - (www.dallasnews.com)
Credit crunch puts California governments in a corner - (www.latimes.com)
Credit freeze puts businesses on thin ice - (www.latimes.com)
California starts to feel crunch of tightening credit - (www.signonsandiego.com)

More sellers are growing desperate as homebuying stalls locally - (www.seattletimes.com)
Goldman, Morgan Rewrite Playbooks - (online.wsj.com)
Momentum Gathers to Ease Mark-to-Market Accounting Rule - (online.wsj.com)
MBIA sues Countrywide Financial - (www.ft.com)
Turmoil Hits Newspaper Publishers - (online.wsj.com)
Economy forcing more car dealers to close - (www.sfgate.com)
36 Hours of Alarm and Action as Crisis Spiraled - (www.nytimes.com)
Hedge-Fund Guy Dips His Snout in Bailout Trough: Mark Gilbert - (www.bloomberg.com)

Thursday October 2 Housing and Economic stories

TOP STORIES:

SEC moves away from mark to market – (www.financialweek.com) Regulator tells banks they can rely on level 3 input; 'pick a number, any number' . U.S. securities regulators on Tuesday gave the financial industry a reprieve from marking hard-to-value assets down to fire sale prices, throwing a lifeline to an industry beset by strained credit markets and the latest round of bank failures. The U.S. stock market added to gains on the news, in hopes that regulators’ new interpretation of fair value, or mark-to-market, accounting rules, will slow or reverse the heavy flow of mortgage-related losses on banks’ balance sheets. In the new guidance, first reported by Reuters, the U.S. Securities and Exchange Commission reminded financial services firms that they don’t need to use fire sale prices when evaluating their hard to price assets.

FDIC and key politicians want to raise deposit insurance limit to $250,000 - (www.reuters.com) The chairman of the House Financial Services Committee has told lawmakers that a federal bank regulator will seek authority to increase the deposit insurance limit to a level above its current $100,000, said a source familiar with the chairman's thinking. Representative Barney Frank, a Massachusetts Democrat, has told lawmakers of his committee that Sheila Bair, chairman of the Federal Deposit Insurance Corporation, will soon request the authority to boost the level of insured deposits, the source said. Presidential nominees Barack Obama and John McCain both proposed an increase in federal deposit insurance to $250,000 from $100,000 as a way to broaden support for the bank asset bailout bill rejected on Monday by the U.S. House of Representatives.

Lehman Hedge-Fund Clients Left Cold as Assets Frozen - (www.bloomberg.com) Lehman Brothers Holdings Inc.'s bankruptcy probably means the end of hedge-fund manager Oak Group Inc. after 22 years in business. John James, who runs the Chicago-based firm with $25 million of assets, didn't buy Lehman stock or debt. Instead, his potentially fatal mistake was to rely on the bank's prime brokerage in London, a unit that provides loans, clears trades and handles administrative chores for hedge funds. He's one of dozens of investment managers whose Lehman prime-brokerage accounts were frozen when the company filed for protection from creditors on Sept. 15. ``We're probably going out of business and liquidate, game over,'' James, 59, said. ``We've lost 70 percent of our assets.''
The list of funds trapped in the Lehman morass keeps growing. London-based MKM Longboat Capital Advisors LLP said last week it will close its $1.5 billion Multi-Strategy fund in part because of assets stuck at Lehman, according to an investor letter. LibertyView Capital Management Inc. of Hoboken, New Jersey, owned by Lehman's Neuberger Berman unit, told investors on Sept. 26 it had suspended ``until further notice'' attempts to calculate the value of its funds. LibertyView was not included in the Sept. 29 sale of Neuberger to Bain Capital LLC and Hellman & Friedman LLC.

Pressure mounts in UK to guarantee savings - (www.ft.com) Gordon Brown, the UK prime minister, was facing growing pressure to extend the guarantees on British savers’ bank deposits after Ireland promised to underwrite the debts and savings accounts of its six largest lenders in a desperate bid to restore investor confidence in the ailing sector. The Irish government’s emergency move was agreed by ministers and bank executives at a late-night meeting on Monday amid concerns about a run on an Anglo-Irish bank and raised the stakes in the state intervention sweeping Europe’s banking sector. It enraged British and European officials and may fall foul of the European Commission’s rules on state aid by offering competitive advantages to some Irish banks. The guarantees make the six lenders more attractive to savers and investors. The European Commission said it was only contacted overnight about the scheme but was looking to see whether state aid was involved.

US credit crisis affects Fla.'s ability to borrow money; state can't issue bonds for schools - (www.chicagotribune.com) The nation's credit crunch has frozen Florida's ability to borrow money, but that isn't yet causing problems for the state, a top state money manager said Tuesday. Florida has been unable to borrow money for nearly three weeks, said Ben Watkins, director of the division of the state's Division of Bond Finance. As such, the state cannot issue bonds for schools, roads or programs to purchase environmentally sensitive land, Watkins said. Florida, which works on bonds months in advance, is not in a dire need for extra cash, he said. "It's not creating a problem for us currently," Watkins told Gov. Charlie Crist and members of the Florida Cabinet. "But if this goes on for an extended period of time we will be challenged to have access to the credit markets." Florida has more than $24 billion in debt. Each year, it borrows anywhere from $1 billion to $2 billion. Two-thirds of the money the state has borrowed has gone to pay for new buildings for schools, community colleges and universities. The money is paid back through various taxes like those on utility bills and money from selling items such as lottery tickets. The ongoing credit crisis could eventually affect other functions of state government.

Olivant suffers Lehman blow - (www.ft.com) Luqman Arnold's investment company, Olivant, has been hit by the collapse of Lehman Brothers (NYSE:LEH) as it emerged that its entire shareholding in UBS (NYSE:UBS) was held in accounts managed by the failed Wall Street bank. The investment company has been trying to recover its 2.78 per cent stake in UBS - worth about SFr1.4bn (£700m) at Tuesday's prices - since Lehman filed for bankruptcy last month.
However, in spite of intensive discussions with Lehman and PwC, the administrators for Lehman Brothers International (Europe), it has been unable to locate the shares.

Bush Approves Loans for Auto Makers - (online.wsj.com) Yes, the monkey from Texas is doing anything and everything to try and preserve some sort of legacy and goodwill around his name. President Bush on Tuesday signed into law a low-interest loan package to aid U.S. auto makers, but those struggling companies will still have to wait months to find out how and when they can tap the $25 billion designated to smooth their transition to building more fuel-efficient vehicles.The loan package was approved last year as a way to help auto makers and their suppliers meet fuel-economy standards set by the federal government. But the funding for the package wasn't passed by Congress until this year. One estimate put the total cost to auto makers at $100 billion to meet stricter efficiency standards that require vehicles to reach 35 miles per gallon by 2020.

Rep. Brad Sherman On Bailing Out Foreign Investors - (Mish’s globaleconomicanalysis.blogspot.com) It's very clear. The Bank of Shanghai can transfer all of its toxic assets to the Bank of Shanghai of Los Angeles which can then sell them the next day to the Treasury. I had a provision to say if it wasn't owned by an American entity even a subsidiary, but at least an entity in the US, the Treasury can't buy it. It was rejected. The bill is very clear. Assets now held in China and London can be sold to US entities on Monday and then sold to the Treasury on Tuesday. Paulson has made it clear he will recommend a veto of any bill that contained a clear provision that said if Americans did not own the asset on September 20th that it can't be sold to the Treasury.

Idiocracy - Presidental Speech - (www.youtube.com) Any parallels with the current congress? J
This is the movie scene where the president is making a speech and unvailing Joe A.K.A not sure to the world. He promisis that joe will fix all the world's problem and if he dosn't he will throw his ass back in Jail....

Bankruptcy, not bailout, is the right answer - (www.cnn.com) The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company. Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable

Congressional Most Endangered List - (Mish’s globaleconomicanalysis.blogspot.com) Two-thirds of Congress' most vulnerable members — Republicans and Democrats alike — chose to protect their seats on Election Day rather than follow their party leaders and vote for an unpopular economic bailout plan. Their votes helped doom the plan President Bush, congressional leaders and top economic officials said was critical. "We're all worried about losing our jobs," Rep. Paul Ryan, R-Wis., said, endorsing the bill and voting for it after leading a rebellion against an earlier version last week. "Most of us say, 'I want this thing to pass, but I want you to vote for it, not me,'" he said, speaking for colleagues who have tougher re-election fights than his own. The three vulnerable Republicans who voted "yes" were Reps. Christopher Shays of Connecticut, Mark Kirk of Illinois and Jon Porter of Nevada. The three vulnerable Democrats voting "yes" were Tim Mahoney of Florida, Paul E. Kanjorski of Pennsylvania and Jerry McNerney of California.

6.875%: LIBOR Tags All Time High - (bigpicture.typepad.com) - This will be bad for ARMs. The money markets have completely broken down, with no trading taking place at all. There is no market any more. Central banks are the only providers of cash to the market, no-one else is lending.'' -Christoph Rieger, a fixed- income strategist, Dresdner Kleinwort. The London interbank offered rate reached an all time high yesterday on the failure of the bailout plan, and the market sell off. For those of you new to the site, this interest rate is frequently used by banks to lend money to each other. When this spikes, it means that credit is very tight.

'We are approached by hedge funds considering fund liquidations on a weekly basis' - (business.timesonline.co.uk) Every week at least one British hedge fund is considering winding up its funds as catastrophic investment performance puts the sector under unprecedented pressure, an industry expert said yesterday. Andrew Shrimpton, the former head of hedge fund regulation at the Financial Services Authority who now runs Kinetic, a consultancy, said: “The credit crisis is definitely kicking in for the hedge fund industry now. We are being approached by hedge funds considering voluntary fund liquidations on a weekly basis.” His remarks came as CQS, one of London's best-known hedge funds, wrote to its investors to say that its flagship $4.25billion CQS Fund had fallen 9.42 per cent for the year to date. Michael Hintze, its chief executive and senior investment officer, told investors that senior management at CQS were meeting as often as three times a day to monitor the fund and take action over its exposures where necessary. The fund, which specialises in convertible arbitrage - or small price differentials between bonds and underlying equities - is down more than 11 per cent for the year.




OTHER STORIES:

Foreclosure Help Isn’t Helping - (www.ml-implode.com) - "Servicers appear to have reached the ‘low hanging fruit’ of subprime loans facing interest rate resets, while not developing ef...
Overnight-Lending Markets Still Flashing Red - (www.ml-implode.com) - If you only watch the stock market, where the Dow was recently up more than 250 points, you might get the mistaken impression ...
Congressional Neroes - Republicans and Democrats fiddle as the economy burns - (www.ml-implode.com) - Hey, WaPo -- The Washington Times called; they want their Wall Street-cowtowing editorial back- IF THE UNITED States does exp...
Uncle Sam Realty and Loans Inc. - (www.ml-implode.com) - "Sadly, recent events in Washington suggest that this optimism of some kind of meaningful rescue plan for Main Street may have b...
Stocks stage partial rebound after steep sell-off - (www.ml-implode.com)
They Just Don't Get It- - (www.ml-implode.com)
Case Shiller Index Falls 17.5% in July - (www.ml-implode.com)
The $55 trillion question - (www.ml-implode.com)
Private Mortgage Insurance Volume Continues Slide 3 - (www.ml-implode.com)
Main Street turns against Wall Street - (www.ml-implode.com)
Let Risk-Taking Financial Institutions Fail - (www.ml-implode.com)
Erratum to``Calculation of a capsizing rate of a ship in stochastic beam seas'' - (www.ml-implode.com)
Congressman Who Backed Bailout Aghast At Failure - (www.ml-implode.com)

Throw these 205 bailout bastards out of Congress - (patrick.net)
How Voter Fury Stopped The Bailout - (Mish at globaleconomicanalysis.blogspot.com)
Nebraska dairy farmer flies to Washington to oppose bailout plan - (www.omaha.com)
Bailout Itself Causes More Risk Than No Bailout - (tpmcafe.talkingpointsmemo.com)
What Can You Do To Help Solve The Credit Crisis? - (www.erica.biz)
Mainstream Media Censors Bailout Protests on Wall Street - (www.hubpages.com)
Treasury Accidentally Admits Bailout CEO Pay Restrictions Were Farce - (www.dailykos.com)
Asia stocks fall after US bailout halted - (news.bbc.co.uk)
Mortgage lending plunged by 95% in August In England - (www.news.sky.com)
McDonald's More Credit-Worthy than U.S. Government - (www.watchingamerica.com)
Goldman, Morgan Stanley Shares Drop as Bailout Fails - (www.bloomberg.com)
Wachovia's "Great Success" Became $122 Billion Burden - (www.bloomberg.com)
Citigroup to Acquire Banking Operations of Wachovia - (www.fdic.gov)
Crumbling Financial Giants Gave Generously To Sen. Dodd - (www.courant.com)
Investors ready to snap up distressed assets - (www.dallasnews.com)
Oil drops more than $10 as bailout plan fails - (www.marketwatch.com)
Lessons to be learned from American meltdown - (www.nzherald.co.nz)
Bush the arrogant - (www.latimes.com)
Falling Into Fall - (jameshowardkunstler.typepad.com)

Treasuries Plummet on Speculation Rescue Plan Will Be Salvaged - (www.bloomberg.com)
Sallie Mae Credit Swaps Jump to Record Amid Credit Turmoil - (www.bloomberg.com)
Gold, Silver Fall in N.Y. as Equities Rebound, Dollar Rallies - (www.bloomberg.com)
U.S. Stocks Surge on Speculation Bank-Rescue Plan Will Pass - (www.bloomberg.com)
Corporate Bonds Have Worst Month Since '80 as Lehman, WaMu Fail - (www.bloomberg.com)
FDIC to Ask for Authority to Raise Deposit-Insurance Limits - (www.bloomberg.com)
SEC, FASB Said to Issue Guidance on Fair-Value Accounting Rules - (www.bloomberg.com)
Libor Surges Most on Record After U.S. Congress Rejects Bailout - (www.bloomberg.com)
Municipal Bonds Headed for Worst Quarter in as Much as 14 Years - (www.bloomberg.com)
Hedge funds face worst year since 1990 - (www.ft.com)
What the death of the investment bank means for Wall Street - (www.economist.com)
The $55 trillion question - (www.fortune.com)
End of quarter has hedge funds bracing for redemptions - (www.financialweek.com)
Why the credit crunch is about more than Wall Street - (www.cnet.com)
Hedge Funds May See Key Employees Walk - (online.wsj.com)
Russian Stocks, Bonds Slump, Deepening Emerging Market Rout - (www.bloomberg.com)
With Wachovia Sale, the Banking Crisis Trickles Up - (www.nytimes.com)
Asian Borrowing Costs Rise as Bailout Failure Stalls Lending - (www.bloomberg.com)
Dexia to Get EU6.4 Billion Rescue; Miller, Richard Step Down - (www.bloomberg.com)
Crisis marks beginning of the end for Asia's export-fueled growth - (www.financialweek.com)
The financial crisis at break-neck speed - (www.telegraph.co.uk)
Japan faces fresh economic gloom - (news.yahoo.com/s/afp)
European Governments Rescue Another Failing Bank - (www.washingtonpost.com)
Australia Home-Lending Growth Slows to Weakest Pace in 22 Years - (www.bloomberg.com)
Senate Leaders Pledge Action to Revive Bailout Plan - (www.nytimes.com)
Home Prices in 20 U.S. Cities Declined 16.3% in July - (www.bloomberg.com)
Senate May Try to Revive Bank-Rescue Bill by Tomorrow - (www.bloomberg.com)
Lawmakers Grope for Resolution as They Attempt to Avoid Economic Calamity - (www.nytimes.com)
U.S. Heading for Deeper Economic Slump, With or Without Bailout - (www.bloomberg.com)
Consumer Confidence in U.S. Unexpectedly Increased - (www.bloomberg.com)
As risk grows, resources strained at Fed, FDIC - (www.latimes.com)
Loan costs soar as access tightens - (www.usatoday.com)
Gas shortage continues to plague Southeast - (www.ap.com)
Allied Capital slumps as Ciena Capital goes bust - (www.marketwatch.com)
Wachovia's Steel Ran Out of Time Amid Mortgage Losses - (www.bloomberg.com)
Congress decides it is worth risking depression - (www.ft.com)
Prudent Bear's David Tice Says Dow Average May Plunge to 5,000 - (www.bloomberg.com)
What Goes Before a Fall? On Wall Street, Reassurance - (www.nytimes.com)
Loose Money And the Roots Of the Crisis - (online.wsj.com)
The layman's finance crisis glossary - (news.bbc.co.uk)