Saturday June 26 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

hiring and firing of census workers multiple times to pad the employment report - (video.foxnews.com) The video shows three levels of supervisors promoting or ignoring the padding of hours by census employees. Whistleblower claims Census Bureau is using temporary layoffs to pump up employment numbers

Fury Turns Into Protests - (www.cnbc.com) Anger over the oil leak in the Gulf of Mexico is spilling into streets as protests are organized at BP’s offices and gas stations around the country. A multi-group protest made up of environmental groups is planned for Friday in Washington D.C., for example, while a week of demonstrations in several cities was kicked off yesterday by a new campaign, Seize BP. Besides the organized demonstrations, anti-BP Facebook accounts have popped up online. And in New York City, some one or several people have splattered what looks like brown paint on the logo of three different BP gas stations. BP's inadequate response has left the public frustrated, said Allison Fisher, the energy organizer at Public Citizen, one of the groups organizing Friday's protest in Washington. “They’re looking for ways to express that.” Friday’s protest organized by eight groups—Center for Biological Diversity, Chesapeake Climate Action Network, Energy Action Coalition, Friends of the Earth, Greenpeace, Hip Hop Caucus, Public Citizen and 350.org—will take place in front of BP’s headquarters.

Hungary Risks Greek-Style Debt Crisis: Official - (www.cnbc.com) A Hungarian official was not exaggerating when he said on Thursday that the country had a slim chance of avoiding a Greek-style debt crisis, the prime minister's spokesman said on Friday. Party vice chairman Lajos Kosa was cited as saying by business news website napi.hu that the new government had found public finances in a much worse shape than previously expected and there was a slim chance of avoiding a Greek-style scenario. When asked about those comments, Prime Minister Viktor Orban's spokesman Peter Szijjarto told a news conference: "It was (Socialist) Prime Minister Ferenc Gyurcsany who spoke about a default. Moreover, he proudly said that Hungary was close to default, he said that a year and a half ago...and then he was proud that he could only save Hungary from default by taking the IMF loan." "From this aspect I do not think this (Kosa's comments) are exaggerated at all." Szijjarto earlier in the day told television that Hungary's new government plans to take steps to improve public finances and wants deep reforms and tax cuts to boost competitiveness after it reveals the "true" state of the 2010 budget. At the press conference when he was asked whether it was conceivable that tax cuts and economic stimulus measures would have to be delayed due to higher deficit numbers he said: "No."

Universities are offering doctorates but few jobs - (www.latimes.com) Graduates frustrated by the lack of tenure-track positions available amid budget cuts are looking off campus. Many find work that wouldn't have cost them years in school or put them deep in debt. As they walk in hooded robes to the strains of "Pomp and Circumstance," many students getting their doctorates this spring dream of heading to another university to begin their careers as tenure-track professors. But when Elena Stover finished her doctorate in September, she headed to the poker tables. Frustrated with the limited opportunities and grueling lifestyle of academia, Stover, 29, decided to eschew a career in cognitive neuroscience for one playing online poker. She got the idea from a UCLA career counselor, who was trying to help her find employment. "The job market is abysmal, especially within the academic system," said Stover, who spent six years getting her doctorate at UCLA. It has never been easy to find a tenure-track teaching job. But this year, dwindling endowments and shrinking state budgets — especially in California — have made that goal more elusive than ever. Now, many graduates with doctoral degrees are finding themselves looking for jobs outside universities — jobs they probably could have gotten without five to six years of intense schooling and tens of thousands of dollars of education debt.

States Shrink ‘Unaffordable’ Benefits to Bridge $1 Trillion Gap - (www.bloomberg.com) Janet and Mark Hartmann, a New Jersey couple with 68 years of government jobs between them, may retire ahead of plan because the state is $102 billion short of funds needed to pay all the benefits it owes. New Jersey and 20 other states are urging early retirements, cutting benefits and demanding employees contribute more in the face of what the Pew Center on the States says is a $1 trillion gap between available assets and what’s owed workers. Declining tax revenue has left governments unable to make up the $724 billion of market losses suffered by the 100 largest state retirement plans in the two years that ended last June, according to the U.S. Census Bureau. Some states have skipped payments to retirement accounts or borrowed to make them, endangering their credit ratings. “This, in my opinion, is the public issue of this decade,” New Jersey Governor Chris Christie said at the Manhattan Institute for Policy Research on May 25. “Things that used to be sacred cows, that used to be the third rail, no longer are. They’ve been replaced by the unaffordability, absolute unaffordability.”

Loan Selloff Forcing Borrowers to Boost Rates: Credit Markets - (www.bloomberg.com) Calpine Corp., the largest U.S. generator of natural-gas-fueled electricity, and at least five more borrowers are being forced to boost interest rates on proposed loans after the market’s worst month since 2008. The margin Calpine offered to pay over lending benchmarks for a $1.3 billion loan increased by as much as 2 percentage points to 5.5 percentage points, while the remaining companies had to raise rates from 0.75 percentage point to 4.5 percentage points, according to people familiar with the talks who declined to be identified because the terms weren’t set. For Houston- based Calpine, that’s an extra $26 million a year in interest. Prices of high-yield, high-risk loans fell 3.89 percent during last month as measured by the S&P/LSTA U.S. Leveraged Loan 100 Index as investors fled all but the safest government securities amid growing concern that rising budget deficits in Europe will cause the global economy to slow. The selloff created bargains among existing debt, reducing the attractiveness of new loans.

OTHER STORIES:

Payrolls Jump, but Much of Hiring from Census - (www.cnbc.com)

BP Aims to Stop 90% of Oil Spill Flow with Cap - (www.cnbc.com)

Slideshow: Anti-BP Protests - (www.cnbc.com)

Europe Bank Shares Fall on SocGen Derivative Worries - (www.cnbc.com)

Euro May Rise to $1.60 Due to Austerity: Economist - (www.cnbc.com)

BP Puts Containment Cap on Gushing Gulf Well Pipe - (www.cnbc.com)

BP Works to Stem Another Torrent: Its CEO - (www.cnbc.com)

Angry US Voters Will Shift to the Right: Über Bear - (www.cnbc.com)

Payrolls in U.S. Increase in May Less Than Forecast - (www.bloomberg.com)

A Jobless Rate Still Unaffected by New Hiring - (www.nytimes.com)

G-20 Central Banks Delay Exit on Euro Debt Woes - (www.bloomberg.com)

Fisher Says Not Time to Tighten, Yet May Be ‘Getting Closer’ - (www.bloomberg.com)

Daniel K. Tarullo, a Star Regulator at the Fed - (www.nytimes.com)

Fed should raise rates to 1 percent: Hoenig - (www.reuters.com)

Jump in Spanish yields raises fresh fears - (www.ft.com)

Gold Sales to Europe Jump on Crisis, Perth Mint Says - (www.bloomberg.com)

EU-Backed Rating Company Faces ‘Uphill Struggle’ With Investors - (www.bloomberg.com)

Hungary Economy Is in Grave Economic Situation, Szijjarto Says - (www.bloomberg.com)

Failure Highlights Woes Facing Spanish Banking - (www.nytimes.com)

China Agricultural Bank Record IPO Hangs on Customers - (www.bloomberg.com)

Friday June 25 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Buffett Expects ‘Terrible Problem’ for Municipal Debt - (www.bloomberg.com) Warren Buffett, whose Berkshire Hathaway Inc. has been trimming its investment in municipal debt, predicted a “terrible problem” for the bonds in coming years. “There will be a terrible problem and then the question becomes will the federal government help,” Buffett, 79, said today at a hearing of the U.S. Financial Crisis Inquiry Commission in New York. “I don’t know how I would rate them myself. It’s a bet on how the federal government will act over time.” Berkshire’s investment portfolio included municipal bonds valued at less than $3.9 billion as of March 31, down from more than $4.7 billion at the end of 2008. The company had a maximum of $16 billion at risk in derivatives tied to such debt, according to the company’s annual report for 2009.

Calif. jobless claims at record high - (www.economy.freedomblogging.com) Hmm, why do government unemployment numbers and jobs created keep improving if the number of people collecting unemployment keeps rising??? Is there any rigging of numbers by government taking place? Unemployment claims in California hit 768,709 in April, a modern-day record and the highest during this recession, state Employment Development Department officials report. The number comes after the U.S. Senate went into its Memorial Day recess without acting on a bill that would allow at least the more recently unemployed to continue to get extended jobless benefits. Just two years ago in April — a year into California's recession — the unemployed filed 254,123 claims for benefits, EDD stats show. This April, that number more than tripled as the state remained at a record 12.6% unemployment rate, third highest in the country.

Federal Housing Finance Agency demands Fannie and Freddie drive the poor into debt - (www.fhfa.gov) Government agencies continue to be the cause, not solution, to countries housing issues by continuing to push people further into debt. The Federal Housing Finance Agency (FHFA) has sent to the Federal Register a proposed rule implementing provisions of the Housing and Economic Recovery Act of 2008 (HERA) that establish a duty for Fannie Mae and Freddie Mac (the Enterprises) to serve very low-, low- and moderate-income families in three specified underserved markets -- manufactured housing, affordable housing preservation, and rural markets. The proposed rule, implementing HERA’s pre-conservatorship provisions, would require the Enterprises to take actions to increase the liquidity of mortgage investments and improve the distribution of investment capital available for mortgage financing for underserved markets while adhering to the requirements of conservatorship. As described in the proposed rule, while the Enterprises remain in conservatorship, they are expected to continue to fulfill their core statutory purposes, which include their support for affordable housing. FHFA’s approach to implementing the duty to serve provisions of HERA, consistent with the requirements of conservatorship, is to limit the proposed rule to existing core business activities at the Enterprises and to require that they not engage in new lines of business as a result of the duty to serve proposed rule.

U.S. gov't still supporting ponzi scheme that will drag house prices lower - (www.thepanicnews.com) Zellman is one of a handful of people to predict the housing bubble before it burst. I place great value in her opinions about real estate. Zellman told the audience that “Public policy is delaying the pig in the python”, meaning that government stimulus money has enabled banks to create a shadow inventory of foreclosures (the pig) that are being held on their books as worth more than they actually are. Thus the process of working the foreclosures through the nation’s financial system (the python) has been drastically slowed because the banks don’t want to mark their housing assets down to realistic values. If banks were to “mark to market” the actual value of their inventory, many would be exposed for what they are, ‘zombie banks’ as Nouriel Roubini calls them. So, instead, they currently value their assets at whatever they want, or what some analysts call “mark to make believe”. CNBC real estate journalist, Diana Olick, attended the conference and wrote this article, “Housing expert: Forecloseurs are ‘Pigs with lipstick’”, in which she talks about Zellman’s opinion of the continuing real estate problems. Zellman makes a number of points about the amount of inventory on hand and the log jam of upcoming foreclosures which will most certainly drive prices further downward. But one of the most interesting points in the article for me was this observation by Olick: She [Zellman] also raised an interesting policy question, which we brought up on the blog yesterday. What exactly is so wrong with renting? The Administration, she notes, is pushing the limits of the FHA for low-income borrowers, touting historically positive affordability. But Zelman counters that while we may be 6 percent undervalued as a nation, even markets that have overshot affordability are not moving because there’s a lot more to consider now, like supply, values, mortgage availability and jobs.

Latest Lie about Strategic Default: Borrowers Are Emotional Fools - (www.irvinehousingblog.com) Home debtors can wait, many know it's not too late and they're walking away. The ones that stay watch their souls slide away one payment at a time. Paying on a hopeless mortgage checking Zillow Zestimates and NAr press releases for good news about their home's value. Those are the debtors who will look back in anger -- anger at the lies they were fed, the manipulations from realtors, lenders, and now our own government. How would you feel after a decade of being underwater? Lenders are frightened about strategic default because it threatens to wipe out the remaining illusions about the value of the worthless loans on their balance sheets. If every underwater homeowner did what was in their best financial interest, our banks would be undeniably insolvent; therefore, lenders are coordinating a public relations campaign to appeal to false morality and now lenders are trying to stereotype strategic defaulters as hysterical fools. There is so much about the manipulation of borrowers by lenders I find offensive. This one I find particularly offensive because lenders are trying to make the correct and rational decision of hopeless debtors look like the incorrect and irrational decision of overemotional lunatics.

OTHER STORIES:

U.S. to Push for Bank Rules in Other Large Economies - (www.nytimes.com)

Covered Bond Sales Surge; Transocean Tumbles: Credit Markets - (www.bloomberg.com)

China's shift away from cheap labor hard on all - (news.yahoo.com)

China told property risk is worse than U.S. - (www.cnn.com)

Answers on Credit Ratings Are Long Overdue - (www.nytimes.com)

Push for Europe-Wide Oversight of Credit Raters - (www.nytimes.com)

Veteran traders blast U.S. market structure at SEC - (www.reuters.com)

Consumers Felt a Chill in May - (www.online.wsj.com)

U.S. MBA Mortgage Applications Index Increased 0.9% Last Week - (www.bloomberg.com)

Foreclosures shifting to affluent ZIP codes - (www.sfgate.com)

Bank price on some houses: 'Unrealistic' - (www.mortgage.freedomblogging.com)

Next Up -- 5 Years of Financial Hell - (www.safehaven.com)

Euro Bailout Plan is all about Rescuing Banks and Rich Greeks - (www.Mish)

Clarke and Dawe: Lending merry-go-round - (www.youtube.com)

Is Massive Refinancing During Bubble Years a Ticking Bomb? - (www.realestatechannel.com)

Review of 'Life Would Be Perfect If I Lived in That House' - (online.wsj.com)

Thursday June 24 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

NY Nearly Goes Broke Again, Delays Paying Bills - (www.cnbc.com) New York state delayed paying $2.5 billion of bills as a short-term way of staying solvent but its cash crunch could get even worse in August and September, Budget Director Robert Megna said on Tuesday. "Had we not done that, I think we would have been close to broke," Megna told reporters in Albany. This is the third time since December the cash-poor state has withheld funds. This time, the state's general fund, which counts everything but federal aid and some specific revenues, ran in the red by about $500 million to $600 million, Megna told reporters. The state was able, however, to borrow from other funds, including the short-term investment fund. About $1.5 billion of the withheld funds must be paid to schools in June. The rest of the total could be paid in July. "The next big bottleneck is in August and September," Megna said, adding that tax revenues have recently improved slightly, which is a slight bright spot. Democratic Governor David Paterson's $135 billion budget has not been enacted by the legislature though it was due on April 1.

US likely to stand with Israel on raid - (www.abcnews.com) I’m told there won’t be any daylight between the US and Israel in the aftermath of the incident on the flotilla yesterday, which resulted in the deaths of 10 activists. Regardless of the details of the flotilla incident, sources say President Obama is focused on what he sees as the longer term issue here: a successful Mideast peace process. “The president has always said that it will be much easier for Israel to make peace if it feels secure,” a senior administration official tells ABC News. The suggestion is that US condemnation of Israel would further isolate that country, and make further peace negotiations between the Israelis and Palestinians even more difficult. The senior administration official says that President Obama spoke to Israeli Prime Minister Benjamin Netanyahu three times on Monday. Mr. Obama pushed the notion that last night – as the United Nations Security Council met to issue a statement about the incident – was the moment when the US had maximum leverage, that the longer the statement was being debated the worse it would ultimately be for Israel.

Pelosi ducks Israeli blockade question - (www.thinkprogress.org) Today, House Speaker Nancy Pelosi (D-CA) held a conference call with bloggers, where she received questions — including from ThinkProgress — about Israel’s raid of the flotilla carrying humanitarian aid and activists bound for Gaza. Pelosi refused to speak directly about whether Israel’s blockade is causing a humanitarian crisis in Gaza, saying that the focus should instead be on solving Middle East peace through a two-state solution:

Placing the Blame as Students Are Buried in Debt - (yahoo.finance.com) Like many middle-class families, Cortney Munna and her mother began the college selection process with a grim determination. They would do whatever they could to get Cortney into the best possible college, and they maintained a blind faith that the investment would be worth it. Today, however, Ms. Munna, a 26-year-old graduate of New York University, has nearly $100,000 in student loan debt from her four years in college, and affording the full monthly payments would be a struggle. For much of the time since her 2005 graduation, she's been enrolled in night school, which allows her to defer loan payments. This is not a long-term solution, because the interest on the loans continues to pile up. So in an eerie echo of the mortgage crisis, tens of thousands of people like Ms. Munna are facing a reckoning. They and their families made borrowing decisions based more on emotion than reason, much as subprime borrowers assumed the value of their houses would always go up.

Building industry wants the U.S. Treasury Dept to guarantee builders' loans - (www.hadd.com) - Legislation introduced yesterday by Reps. Brad Miller (D-N.C.) and original co-sponsors Carolyn Maloney (D-N.Y.) and Joe Baca (D-Calif.) would help alleviate the severe lack of credit for acquisition, development and construction (AD&C) financing that threatens to end the budding housing recovery before it has time to take root, according to the National Association of Home Builders (NAHB). “We applaud these lawmakers for taking the lead to address the housing production credit crisis that is jeopardizing the housing and economic recovery now under way,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. H.R. 5409, the Residential Construction Lending Act, would create a new residential construction loan guarantee program within the Department of Treasury to provide loans to builders with viable construction projects. Designed to unfreeze credit for small home building firms, the measure would expand the flow of credit to residential builders on competitive terms. Under intense pressure from their bank examiners to reduce their exposure to development and construction loans to builders and curtail their outstanding portfolios of real estate loans, many lenders are refusing to make loans for viable new housing projects and cutting off the funding for performing loans, or calling them. This is causing unnecessary foreclosures and losses on these loans. Performing loans are also being reappraised, reducing the value of the collateral and forcing borrowers to come up with large amounts of cash to keep their loans current.

NY Owners Bet on Raising the Rent, and Lost - (www.nytimes.com) The first signs of financial turmoil came at Riverton Houses in Harlem. Then came Stuyvesant Town and Peter Cooper Village on Manhattan’s East Side. Now a third complex built by Metropolitan Life in the 1940s for veterans and middle-class families has run into financial distress after being purchased by speculators during the recent real estate boom. The owners of the sprawling Parkmerced apartment complex in San Francisco announced this week that they would default on their $550 million mortgage, which comes due in October. A partnership of Laurence Gluck of Stellar Management and the Rockpoint Group, which had already lost Riverton Houses in Harlem in March to foreclosure, put out a statement on Wednesday that placed their problems at the 3,221-unit Parkmerced in the context of the current economic downturn. “The landscape has changed dramatically,” P. J. Johnston, a spokesman for the owners, said in an interview. “The economy has taken a major hit. Many properties are facing default.” But just like Riverton and Stuyvesant Town, the owners of Parkmerced sought to take advantage of a roaring market to replace rent-regulated residents with tenants able to pay far higher rates. The owners in all three cases invested substantial sums in upgrading the aging buildings and renovating some apartments. But ultimately they failed to increase revenue enough to cover the debt payments on the properties, which were heavily leveraged. The recession did not help. “It’s pretty interesting that they have all ended up in the same place,” said Andrew Florio, an analyst at Real Capital Analytics, a research firm. “People assumed they could boost revenues by kicking people out and raising rents.”

OTHER STORIES:

21 year supply in Vegas high-rise condo market - (www.lvrj.com)

IMF Economist Argues House Prices Still Have Far To Fall - (blogs.wsj.com)

New House Sales Set to Plunge in Former Bubble Markets - (www.bloomberg.com)

Home Loan Demand Falls For 4th Week as Credit Expires - (www.cnbc.com)

Homeowners Stop Paying, Stop Worrying - (www.cnbc.com)

Oil Closes in on Florida as BP Tries Risky Cap Move - (www.cnbc.com)

Greece Unveils Privatizations, to Sell Rail, Water Stakes - (www.cnbc.com)

Iran to Change 45 Billion Euros for Dollars, Gold: Report - (www.cnbc.com)

Want to Get out of Debt? Copy Canada: Jim O'Neill - (www.cnbc.com)

Top Central Banks Not Planning Shift Out of Euro - (www.cnbc.com)

Google Sets "Late Fall" Release for Chrome - (www.cnbc.com)

Stop Paying The Mortgage, Live Free For Years - (www.nytimes.com)

The Property Tax: Unsung Hero - (taxvox.taxpolicycenter.org)

CA's Prop 13 means tax burden falls on houseowners, not businesses - (www.freedomblogging.com)

Ponzi scheme cases on rise in Bay Area - (www.contracostatimes.com)

Go Ponzi, Young Debtor! How to Manage Your Finances The California Way - (www.irvinehousingblog.com)

Arizona commercial real estate brokers: Some lenders ignore crisis - (www.azcentral.com)

Commercial property owners facing declining rents - (www.heraldtribune.com)

Soldier in Iraq Loses House Over $800 Debt - (www.motherjones.com)

Australian real estate agents accused of price inflation scam - (www.abc.net.au)

Racing China: The Australia Housing Bubble - (www.newgeography.com)

Deflation now, inflation later? - (www.biztimes.com)

Lent, spent and guaranteed: The merger of state and corporate powers - (www.theautomaticearth)

What Your 401k Really Costs You - (www.usnews.com)

Student Loan Debt Means Slavery, Bankruptcy Not An Option - (www.nytimes.com)

Wednesday June 23 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Bundesbank Attacks ECB Bond-Buying Plan - (online.wsj.com) The European Central Bank's intervention in European debt markets is exacerbating tensions with Germany's Bundesbank, where officials worry that the bond buying program is being used for a stealth bailout of euro-zone banks holding Greek debt, according to people familiar with the matter. Senior Bundesbank officials have questioned the ECB's rationale for intervening in the Greek bond market instead of focusing its support on other vulnerable countries, such as Portugal and Spain, that unlike Greece still depend on debt markets to fund their budgets, according to the people. Greece received a financial rescue from other European countries and the International Monetary Fund of up to €110 billion ($135 billion) last month, ending its reliance on capital markets for funding until at least 2012. Since the European Central Bank began purchasing government bonds three weeks ago, it has spent about €25 billion on Greek debt, according to a senior Bundesbank official who declined to be named. An ECB spokeswoman declined to comment. The ECB said Monday that a total of about €35 billion in euro-zone bond purchases settled through Friday. It doesn't provide a country breakdown, but market participants say the ECB has also purchased bonds issued by Portugal, Spain, Italy and Ireland.

Gulf oil leak sets off 'unbelievable array' of legal issues - (www.usatoday.com) Fishermen and property owners along the Gulf Coast have filed hundreds of lawsuits since April against oil company BP and its contractors amid a legal landscape that has changed dramatically since the Exxon Valdez tanker spill sullied Alaska's Prince William Sound 21 years ago. The Valdez spill prompted Congress to pass the 1990 Oil Pollution Act — intended to give fishers and others harmed by such spills a quicker route for settling their claims — and nearly two decades of litigation over that spill also has redefined centuries-old maritime law on the issue. Now, as hundreds of spill victims test those laws, attorneys say many questions remain about how far the protections will go and how long it will take to compensate the fishers, landholders and beachside cities that have suffered from the spill. "There are an unbelievable array of issues in this case," said Stanford law professor Jeffrey Fisher, who argued the Exxon Valdez case for the commercial fishermen and other Alaska businesses before the Supreme Court. "One of the most painful things about the Exxon case was that it took us 20 years to get the case finished and get the money in the pockets of the victims. One can't help but wonder if the same thing is going to happen here."

Owners Stop Paying Mortgage ... and Stop Fretting About It - (www.nytimes.com) For Alex Pemberton and Susan Reboyras, foreclosure is becoming a way of life — something they did not want but are in no hurry to get out of. Foreclosure has allowed them to stabilize the family business. Go to Outback occasionally for a steak. Take their gas-guzzling airboat out for the weekend. Visit the Hard Rock Casino. “Instead of the house dragging us down, it’s become a life raft,” said Mr. Pemberton, who stopped paying the mortgage on their house here last summer. “It’s really been a blessing.” A growing number of the people whose homes are in foreclosure are refusing to slink away in shame. They are fashioning a sort of homemade mortgage modification, one that brings their payments all the way down to zero. They use the money they save to get back on their feet or just get by. This type of modification does not beg for a lender’s permission but is delivered as an ultimatum: Force me out if you can. Any moral qualms are overshadowed by a conviction that the banks created the crisis by snookering homeowners with loans that got them in over their heads.

States join the fight against proposed limits to credit card fees - (www.washingtonpost.com) State governments have become an unlikely ally of the banking industry in a fight against putting limits on the fees that credit and debit card issuers can charge to retailers. Treasurers from at least eight states are considering sending a letter to lawmakers this week over concerns that proposed limits on the fees card issuers charge for processing purchases could endanger state programs that use prepaid cards to dispense crucial benefits such as unemployment insurance. The limits are included in an amendment to the overhaul of financial regulations that passed the Senate last month. Nebraska's state treasurer, Shane Osborn (R), was the first to voice his worries to Congress last week. "The cost savings achieved as a result of moving from check to electronic distribution of benefits are significant to states and their taxpayers," Osborn wrote. The "amendment will drastically alter this equation." The amendment, sponsored by Sen. Richard J. Durbin, passed with bipartisan support in the Senate but was not in the bill passed by the House in December. Lawmakers must reconcile the two versions before sending the legislation to President Obama, and the fees -- known as interchange or "swipe" fees -- have become the focus of intense lobbying.

Fading Summer Jobs - (www.nytimes.com) This year is shaping up to be even worse than last for the millions of high school and college students looking for summer jobs. State and local governments, traditionally among the biggest seasonal employers, are knee-deep in budget woes, and the stimulus money that helped cushion some government job programs last summer is running out. Private employers are also reluctant to hire until the economy shows more solid signs of recovery. So expect fewer lifeguards on duty at public beaches this summer in California, fewer workers at some Massachusetts state parks and camping grounds and taller grass outside state buildings in Kentucky. Students seeking summer jobs, generally 16 to 24 years old, are at the end of the job line, behind the jobless baby boomers who are competing with new college graduates who, in turn, are trying to elbow out undergraduates and high school students.

OTHER STORIES:

Bank Credit-Default Swaps Surge After ECB Raises Funding Alert - (www.bloomberg.com)

Hedge Funds Post Biggest Monthly Losses Since Lehman Aftershock - (www.bloomberg.com)

Answers on Credit Ratings Long Overdue - (www.nytimes.com)

Asia-Pacific Bond Sales, Loans Drop on Euro Debt Woes - (www.bloomberg.com)

Canada G-7’s First to Lift Rate After World Recession - (www.bloomberg.com)

China’s Manufacturing Expands at Slower Pace as Growth Cools - (www.bloomberg.com)

Salgado’s ‘Nightmares’ Over as Spain Tackles Banks, Labor Rules - (www.bloomberg.com)

E.C.B. Says Banks at Risk From Slower Growth - (www.nytimes.com)

China Car-Sales Growth Slows on ‘Diminishing Wealth’ - (www.bloomberg.com)

Manufacturing in U.S. Expands Faster Than Forecast - (www.bloomberg.com)

Construction Spending in U.S. Rose in April by Most Since 2000 - (www.bloomberg.com)

GLOBAL ECONOMY-European factory growth slows; China cools - (www.reuters.com)

A.I.G. Rejects Lower Bid From Prudential for Sale of Asia Unit - (www.nytimes.com)

Summer of Full Flights and High Fares - (www.nytimes.com)

Google ditches Windows on security concerns - (www.ft.com)

BP Oil Spill Threatens Wider Coastline as Storm Season Starts - (www.bloomberg.com)

BP Needs ‘Lottery Win’ to Seal Oil Leak at First Try - (www.bloomberg.com)

Undersea Oil Adrift in Gulf May Create Oxygen ‘Dead Zones’ - (www.bloomberg.com)

Tuesday June 22 Housing and Economic stories

KeNosHousingPortal.blogspot.com

TOP STORIES:

Lessons of hard times in Vallejo, CA - (www.latimes.com) First came the break-in at the combination electronics repair shop and real estate agency. Then came the burglar bars on the store's plate-glass window. But Jimmy Mozaffar, owner of Data Days, sounds less angry with the criminals than he does with the crime-stoppers here in hard-knock Vallejo, the largest city in California history to file for bankruptcy. The thieves made off with laptops, but it was the pared-down Police Department — which has lost a third of its officers — that stole Mozaffar's peace of mind. When Mozaffar called the department to report the burglary last fall, a recording directed him to a website. "Nobody came out," he said. "They said they'd deal with it." Since filing for Chapter 9 bankruptcy protection two years ago, this scrappy Bay Area bedroom community has come to symbolize the fiscal troubles — now faced by many cities — that helped push it to the brink: unrestrained spending, out-of-control pension costs and a burst housing bubble.

Bank fails and goes about its business - (www.latimes.com) They arrived one day in November as Santa Ana winds pounded downtown Redlands. The dozen or so men and women walked into the red-brick headquarters of 1st Centennial Bank on State Street, then marched up the stairs to the executive offices. Jeff Blake, a senior vice president of the bank, knew this couldn't be good. The tellers downstairs might have thought the visitors were part of the parade of potential buyers who had been kicking the tires on the troubled bank for months now. Blake knew better. They were bank examiners, showing up unannounced. "You're talking a lot of black suits," he recalled. "They're starting to line the coffin." Two months later, 1st Centennial was seized by regulators and turned over to new owners, costing the Federal Deposit Insurance Corp. $163 million. It was one of 140 banks that failed last year, sticking the FDIC with a record bill of $38.2 billion. When times were good at 1st Centennial, locals shared in the bounty. The construction loan division ordered in catered lunches for its employees from Cuca's Restaurant down the street. Roofers, electricians and drywall hangers became familiar faces as they stopped in to draw down loans. Tellers would keep their windows open five minutes past closing time if a business needed to make a deposit to meet payroll. Yet when it all came crashing down, the pain was muted, the repercussions muffled. Federal regulators moved in so swiftly and efficiently that hardly anyone noticed until it was over. The new owners cleaned out the management ranks, but tellers and new-account specialists — the public face of the institution — stayed on. There was no run on the bank. Only a handful of uninsured depositors lost money. Ruined lives and public disgrace were staples of the classic 1930s narrative of a bank failure. In the new century, the shame and suffering have been obscured by bigger forces, subsumed in abstractions: the global credit squeeze, the liquidity crisis. Tom Vessey, fired as chief executive five months before 1st Centennial failed, pointed out to those who asked that the bank's board never accused him of any wrongdoing. He continued to allow his Italianate mansion to be used for fundraisers, showing off his garage filled with Route 66 memorabilia and awards won by his half-Arabian show horse, Ring O Fyre…. Regulators first noted this risk at 1st Centennial in 2004, when the bank's rapid expansion began, according to an audit by the FDIC inspector general's office. But regulators concluded that 1st Centennial had sufficient capital and the management skill to handle the risk. In fact, 1st Centennial got the equivalent of A's and Bs on its 2004 FDIC report card, and similar grades the next year from state regulators. (The FDIC and the California Department of Financial Institutions took turns conducting the bank's annual exams.) The top marks, including the highest possible grade for the bank's management, continued in 2006 and 2007.

San Francisco gets a taste of the commercial real estate bust - (www.mybudget360.com) Most over valued region in San Francisco gets a taste of the commercial real estate bust. $3 trillion in loans starting to implode at a faster rate. Why commercial real estate will plunge FDIC insured banks into closure. Bought for $415,000 per apartment unit. The commercial real estate bust is in full swing. This $3 trillion mortgage market is standing to push hundreds of banks into failure and adding additional strain to the embattled FDIC. Commercial real estate (CRE) is a good indicator of where things are heading economically because it is a reflection of what revenues are being brought in by certain properties. For example, a strip mall owner will lease out space to clients that ideally will earn more money each month to cover their rents. That is typically how CRE deals went down. But for the past decade people invested in CRE with the implied notion that they could always sell the underlying CRE for a higher price irrespective of the actual revenue stream the real estate could produce. For CRE this is sin number one.

New $3bn Foreclosure Prevention Program Added to Wall Street Reform Bill - (www.housingwire.com) The Senate passed the Restoring American Financial Stability Act last week, approving a new program that would reduce mortgage payments for the unemployed. The program would provide $3bn from the Troubled Asset Relief Program (TARP) to lend up to $50,000 to unemployed homeowners, who could reasonably resume making payments again within two years. The program was modeled after the Homeowners’ Emergency Mortgage Assistance Program (HEMAP) in Pennsylvania. The Senate passed the bill last week but transplanted its own language into the one passed by the House of Representatives. The status of the reform is still “resolving differences.” But, lawmakers hope to have it in front of President Obama to sign by the July 4, 2010 recess. HEMAP has provided $236m to the unemployed to help with foreclosure relief. Rep. Chaka Fattah (D-PA) introduced HEMAP in Pennsylvania in 1983 and introduced it to the new federal bill before the Senate passed it. Fattah originally tried to introduce the bill to Congress in 2003, then again in 2007. “American’s need help, 8% of all mortgage holders are currently at risk of losing their homes and that is unacceptable,” Fattah said.

Mortgage Bankers Tap Industry Veteran to Lead Lobbying Efforts - (www.housingwire.com) The Mortgage Bankers Association (MBA) named Bill Killmer senior vice president of legislative and political affairs, effective July 5, 2010. "MBA is very fortunate to have someone with Bill's expertise leading MBA's legislative and political affairs efforts," said MBA president and CEO John Courson in a statement. "Bill's detailed knowledge of the issues facing our industry, coupled with his political and legislative experience, will be a tremendous asset to MBA and our members." Killmer will manage MBA's legislative and political affairs group and take responsibility for the development and implementation of legislative and political strategy. He will also serve as MBA's chief lobbyist. MBA's legislative affairs team, which oversees federal, state and local legislative and lobbying activities, will report to Killmer in his new role. MBA's political affairs team, which coordinates the group's grassroots efforts, will also report to Killmer.

OTHER STORIES:

The Cult of Subprime Central Bankers - (www.huffingtonpost.com)

Sydney property market - a cold wind is blowing - (www.curtisassociates.com.au)

Thousands more in S.F. seek property tax breaks - (www.sfgate.com)

Fun Stock Map Showing Market Values As Areas - (www.finviz.com)

Questions To Ask Those Who Believe That Economic Recovery Is Real - (www.theeconomiccollapseblog.com)

Economist says inflation coming due to gov't printing money -- gets cut off - (www.dvorak.org)

Is Australian Housing Market Set to Topple? - (www.moneymorning.com.au)

Perfect for the do-it-yourselfer - (www.patrick.net)

How real estate became the new volunteer slavery - (www.theroot.com)

California "Millionaires": Debtors Who Service Over $1,000,000 - (www.irvinehousingblog.com)

Mortgage Rates Fall to 4.8%, House Buyers Still Scarce - (blogs.wsj.com)

The Root of the Housing Bubble Remains Unchanged - (Charles Hugh Smith at www.oftwominds.com)

The Hard Truth About Residential Real Estate - (www.zerohedge.com)

Easy Money, Hard Truths - (www.nytimes.com)