The President's Corner

Biggest Gain in Home Sales Since July 2003

2008-10-25T13:23:00.002-04:00

Written By Patrick Rucker
WASHINGTON (Reuters) - Sales of previously owned U.S. homes rose 5.5 percent last month, the biggest gain since July 2003, and the inventory of unsold homes fell, a hopeful sign for a housing market mired in a long slump.

The National Association of Realtors said on Friday that sales of existing homes rose to a 5.18 million-unit annual rate from the 4.91 million unit pace set in August. Economists had expected sales to rise to only a 4.93 million unit rate.

It was the first time the sales pace had risen above its year ago level in nearly three years, a sign the market could be stabilizing.

The surprisingly large jump in sales pushed the inventory of unsold homes down by 1.6 percent to 4.27 million, or a 9.9 months' supply at the current pace, the lowest since February.

"We're not out of the woods yet by any means when it comes to falling house prices and our fundamental problem of an oversupply of homes, but we're getting near to the bottom every day," said White House spokeswoman Dana Perino.

Home prices, however, showed no signs of escaping their long, deep slide and economists said the number of homes on the market would likely have to fall further before they do.
The median national home price declined 9 percent from a year ago to $191,600, the lowest level since April 2004.

"As the median price continues to decline, seeking out that new equilibrium level, demand is -- slowly and hesitantly -- moving back into the market," said Lindsey Piegza, an economic analyst at FTN Financial in New York.

A Reuters poll taken October 21-24 found economists expect prices to continue to fall through next year. The median forecast from the survey was for a 15 percent drop this year and a 6.4 percent fall in 2009. Economists expect prices to turn up in 2010, but by a meager 1 percent.

'VULTURE INVESTORS'

Rising U.S. mortgage defaults have sent credit markets into a tailspin, threatening economies worldwide. A majority of economists polled said finding a floor for house prices is an essential condition for ending the financial crisis.

In order for prices to recover, the glut of unsold homes needs to be whittled down further, analysts said.

"Most, if not all, the rise in sales is due to vulture investors buying cheap foreclosed homes, but all sales reduce inventory," said Ian Shepherdson, the chief U.S. economist at High Frequency Economics in Valhalla, New York.

"If this continues, people will stop expecting further price falls and activity will start to recover."
Lawrence Yun, the chief economist for the Realtors' trade group, also pointed to a rise in foreclosure and other 'distress' sales in regions hard-hit by the housing downturn.

"In some regions, the lower prices are seeing buyers return to the marketplace," he said. "This was a nice jump and hopefully this trend can continue because the first step to stabilizing the market is an increase in home sales."

Sales jumped 16.8 percent in the West, while rising 4.4 percent in the Midwest and 2.2 percent in the South. In the Northeast, sales fell 1.2 percent.

Sales of single-family homes, which represent the lion's share of the market, rose 6.2 percent. Sales of condominiums held steady.

"We're still struggling with falling home prices and we will for a while, but we're forming a bottom here," said Bob Walters, chief economist at Quicken Loans in Livonia, Michigan.

(Additional reporting by Pedro Nicolaci da DaCosta, Ellen Freilich and Nick Olivari in New York; Polling by Bangalore polling unit; Editing by Andrea Ricci)

T. Boone Pickens' Plan for Energy Stability and Independence for America

2008-10-25T12:26:00.001-04:00

Excellent Analysis of the Financial Markets and Economy by Arthur Levitt

2008-10-25T12:02:00.003-04:00

NAR: NAR: Home Sales Rise as Affordability Improves

2008-10-25T11:44:00.003-04:00

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains. “The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island,” he says. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers. “This is the first time since November 2005 that home sales have been above year-ago levels,” Gaylord says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun says there may still be market disruptions.

“The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac," Yun says. "Inventory remains high, and price declines are pressuring owners." Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street. "Removing the repayment feature on the [$7,500] first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory,” Yun says.

A Closer Look at the Numbers

Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.

National median existing-home price: $191,600 in September, for all housing types. That's down 9 percent from a year ago when the median was $210,500. “Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions," Yun says. "These are pulling the median price down because many are being sold at discounted prices. The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.

Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago.

By Region

Here's a breakdown across the country of existing-home in September:

West: sting-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.

Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.

South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.

Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/24/08

Treasury Aims to Disperse Rescue Funds Quickly

2008-10-25T11:40:00.002-04:00

Senior Treasury official Neel Kashkari, who is heading up the $700 billion financial rescue effort, told Congress Thursday that the Treasury is working hard to get the plan up and running.

Kashkari said the plan would include setting standards for changing mortgages to make them more affordable and giving loan guarantees to banks that need them.Kashkari told the Senate Banking Committee that "we are passionate about doing everything we can to avoid preventable foreclosures."

Kashkari has been openly supportive of the position taken by Sheila Bair, chairman of the Federal Deposit Insurance Corp., who has pushed for a program that forces banks and loan services to modify troubled borrowers’ loans.

Source: The Associated Press, Marcy Gordon (10/23/08)

This article is from Realtor Magazine Online Edition Dail Real Estate News for 10/24/08

2008-10-25T11:35:00.002-04:00

Both presidential candidates have announced plans to help voters deal with the challenging housing economy.

Here are their ideas as posted on their election Web sites:

Sen. John McCain:
*Direct assistance to homeowners. No taxpayer money should go to real estate speculators who made bad decisions about investments.
*Reform financial and lending systems to prevent a repeat.
*Require participating lenders to forgive part of subprime borrowers' loan principals and place them into new 30-year Federal Housing Administration loans.
*Give financing to municipal and civic groups trying to solve problems within their own communities.

Sen. Barack Obama
*Create a standardized disclosure plan that allows for full-disclosure of loan costs and provisions.
*Crack down on mortgage fraud.
*Give a mortgage credit to those who don’t itemize deductions.
*Create a fund to help homeowners who face foreclosure refinance.
*Allow bankruptcy courts to modify a homeowner's mortgage payments.

Source: The San Diego Union-Tribune, Lori Weisberg (10/19/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/23/08

Foreclosure Filings Slowed by New State Laws

2008-10-25T11:30:00.002-04:00

Foreclosure filing were reported on 765,558 U.S. properties during the third quarter, up more than 3 percent from the second quarter and up 71 percent from the third quarter of 2007, according to RealtyTrac, an online foreclosure market.

In September, foreclosures declined 12 percent compared to August, but that doesn’t appear to be necessarily good news. "Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac.

Compared with September 2007, foreclosures in September 2008 rose 21 percent.

States with the highest rates of foreclosure in September were Nevada, Florida, California, Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado.

Six states accounted for more than 60 percent of U.S. foreclosure activity in the third quarter with California alone accounting for 27 percent. Other states with the most foreclosures were Florida, Arizona, Ohio, Michigan and Nevada.

Source: RealtyTrac (10/23/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/23/08

Analysts: Many Are Underwater on Mortgages

2008-10-25T11:21:00.002-04:00

More than 12 million U.S. homeowners are underwater on their mortgages, owing more than their homes are worth.

"When you're underwater and you have some kind of hit to your income or some kind of unintended expense, that's when you default. And so now we've got this noxious mix of millions of people under water and quickly rising unemployment," says Mark Zandi, chief economist at Moody's Economy.com.

Zandi calculates that there will be another 14.6 million homeowners under water by September 2009. Zandi and other economists believe this housing crisis will prove to be much more costly for the U.S. taxpayer than the $700 billion the U.S. government has already promised to recapitalize banks and buy up distressed debt from financial institutions.

"The government is going to have to start filling this negative equity hole and that's just going to be a direct cost to taxpayers," Zandi said. "This is going to be the really costly part, I think, for taxpayers."

Source: Reuters News, Tom Brown (10/21/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/22/08

Baby Boomers Face Need to Save, Not Spend

2008-10-25T11:13:00.003-04:00

Baby Boomer homeowners are putting their homes up for sale and finding that there are fewer buyers, in part because younger generations can’t afford expensive property.

Many observers, including economist and author Harry S. Dent, say things are unlikely to get better until at least 2020 when the millennial generation, which is 79.4 million strong, will finish college and start buying homes.

Many boomers, who lost about $2 trillion of wealth in the recent economic meltdown, plus billions in home equity in the housing downturn, are facing life without much of a financial cushion.

Olivia Mitchell, a professor at the University of Pennsylvania’s Wharton (business) School, believes the recent market crash should have been a wake-up call for boomers. "The Baby Boomers are going to have to work longer and [spend] less," Mitchell says.

Source: The Wall Street Journal, Joe White (10/21/2008)

This article is from Realtor Magazine Online Edition Daily Real Estae News for 10/22/08

Mortgage Workouts Increase as Banks Ramp Up

2008-10-25T10:58:00.001-04:00

Banks, faced with rising foreclosures, government pressure and economic realities, are growing more willing to modify loans to keep borrowers out of foreclosure.

More than three million U.S. homeowners over the last 15 months have either received loan modifications or are involved in programs where that will be the result.

* About 2.26 million mortgages have been modified under the Hope Now program, an alliance of mortgage servicers, counselors and investors.

* An estimated 400,000 homeowners are expected to participate in a new Federal Housing Administration program that allows borrowers in trouble to refinance into a 30-year FHA loan.

* Nearly 400,000 borrowers whose loans came from Countrywide Financial will be refinanced through new owner Bank of America as part of an agreement resulting from a class action lawsuit.

Source: USA Today, Stephanie Armour (10/22/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/22/08

Banks Weigh Other Uses for Rescue Money

2008-10-25T10:55:00.002-04:00

Despite the fact that the $250 billion the government plans to invest in banks is intended to help them make new loans, J.P. Morgan Chase, BB&T, and Zions Bancorporation are among the financial institutions hoping to use the money to acquire other banks.

While some experts are worried such deals could further the trend of creating banks "too big to fail," others believe they could prevent the failure of numerous small banks and boost the economy.

U.S. Treasury Secretary Henry Paulson acknowledged that the money could be used to acquire smaller, weaker banks. "There will be some situations where it's best for the economy and for the banking system for there to be a consolidation," he says.

Source: Washington Post, Peter Whoriskey and Zachary Goldfarb (10/22/08).

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/22/08

2008-10-25T10:45:00.002-04:00

Well, we may as well be up front about it - we are either in or about to enter an economic recession. My forecast calls for the next two quarters to post zero or negative GDP growth. (Remember: the "official" definition of a recession is two consecutive quarters of negative growth.) Housing will need to lead us out of this recession. On that front, there have been some positive developments. Both the housing stimulus package passed earlier this summer and the $700+ billion rescue package (or bailout, if you prefer) will, eventually, help turn housing around.

Of course, recession is hardly good news for the housing market because few jobs are created and many are lost. Indeed, so far this year the economy has shed 760,000 payroll jobs. Fewer jobs holders means lower housing demand. But if a recession is accompanied by rising housing affordability then home sales can trend higher. Indeed, we see that happening now. NAR's housing affordability index rose to 123.3 in August of 2008; compare that with the 106.6 level registered a year ago.

But a prolonged deep recession - certainly a possibility in light of the most severely tested financial market stress since the Great Depression - can dampen consumer confidence and put up barriers to homebuying. Fortunately, the economic downturn appears manageable. Let's see why by reviewing some of the key economic trends to watch.

Consumer Spending

Consumer spending accounts for nearly 70 percent of economic activity. A normal healthy consumer spending growth figure is about 3 percent (in real terms above the inflation rate). In the first half of this year consumer spending grew at only one percent -- and is expected to record a mild contraction in the upcoming quarters. Aggregate personal income is also likely to have fallen because of fewer jobs. In addition, there has been a sizable decline in net wealth from falling stock prices and falling home values. The combined income and wealth effects will be such that consumer spending, at best, will add nothing to economic growth in 2009. Another government stimulus plan may temporarily raise consumer spending but will do nothing for a long-term sustained rise unless the overall economy recovers and begins to add jobs.

Business Spending

Business spending for equipment turned negative in the recent quarter, not surprising given that corporate profits have fallen for four straight quarters and weak sentiment regarding consumer spending prospects. Construction activity for commercial real estate, which had been growing solidly, will be weakening in light of the credit crunch and rising vacancy rates. One positive picture is on the current lean business inventory conditions. Unlike many past economic downturns when companies had to hold back production because of bloated inventory, the very thin inventory conditions will permit companies to ramp up production at the first sign of economic recovery.

Government Spending

Government spending can create jobs. Upgrading and expanding nation's infrastructure, hiring more teachers, or building jets and tanks can stimulate the economy over the short-term. But spending without additional tax revenue over the long run can result in higher interest rates. For the short-term at least through 2009, government spending is expected to rise 1 to 2 percent.

Net Exports

Net exports have been steadily improving in the past year. The U.S. continues to import more items, but the exports have been booming over the past five years, growing at near double-digit pace. The export growth in the second quarter was very impressive, clocking in at a 12.3 percent growth rate. Why the surge? The weak U.S. dollar has made U.S. products more competitive. Interestingly, the dollar has actually strengthened of late since the start of the global financial crisis. While foreign countries may blame the U.S. for the subprime loans and the credit market turmoil, they (as well as we) turn to and trust the dollar in times of crisis. The strengthening in the U.S. dollar this time around is a positive development because there is about a two-year lag time in impacting international trade flows from changes in currency. So the net exports continue to be a positive factor for the economy going into 2009. Also, oil prices, which are denominated in dollars, fall when the dollar strengthens. Given that REALTORS® traditionally are heavy drivers, lower oil prices are welcome.

The Bottom Line

Put it all together and what do we have? A recovering economy will help consumer and business spending to turn the corner and the economy to move in a self-sustaining pace. But it requires a catalyst to get things started. The tumbling housing market and the subprime mortgage defaults have caused financial markets to freeze and have pushed the economy to fall into a recession. But the rising home sales of late and a sustained momentum will bring the economy back into the fold. Rising home sales will also thin out housing inventory and begin stabilizing home prices. The credit market will start to unfreeze once home prices have hit bottom. Simply put, the economy will not recover without a housing market recovery.

Fortunately, policymakers and both Presidential candidates clearly recognize the need to get the housing market moving. The two housing stimulus bills (homebuyer tax credit and higher loan limits), $700 billion Treasury plan and the Federal Reserve's actions are designed to assure steady mortgage flow and help revive the housing sector. To push the "revival" along, additional stimulus - such as removing the repayment feature of the homebuyer tax credit and raising the loan limit higher - would be welcome. As housing recovers, the economy will expand and create jobs. America and its exceptional ingenuity always find a way to move past crises and back to economic prosperity.

Home Sales Skyrocket in Southern California

2008-10-25T10:40:00.001-04:00

Home sales in southern California rose 65 percent in September compared to the same month a year ago.

A total of 20,497 new and existing houses and condominiums sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino, and Orange counties. It was the largest increase MDA DataQuick has recorded in the 20 years it has been keeping records, the company said Monday.

The increase was fueled by foreclosures, which drove down prices, MDA DataQuick said, pushing the median price down 33 percent from a year earlier to $308,500. Sales so far this month appear to have been slowed by bad financial news, says Andrew LePage, an analyst with MDA DataQuick.

Source: Bloomberg, Daniel (10/20/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for October 21, 2008

Greenspan Comments Before Congress About Credit Tsunami

2008-10-25T10:32:00.000-04:00

The Number of Foreclosures Declines & Current Economic News

2008-10-25T10:27:00.001-04:00

The Wall Street Slump Earlier This Week

2008-10-25T10:25:00.000-04:00

The Market Wrap-up & Economic Activity for 10/21/08

2008-10-21T21:56:00.000-04:00

Is A Second Stimulus Package On The Way?

2008-10-21T21:53:00.000-04:00

Simon's Cat - Tell Me This Isn't So

2008-10-19T15:38:00.000-04:00

Sit Back, Relax and Soak It In - Ah! (Sonny Rollins plays My One and Only Love)

2008-10-19T15:31:00.004-04:00

Hmm... There's Some Truth To This...

2008-10-19T15:23:00.001-04:00

President Bush Talks About Upcoming International Conference Concerning Worldwide Economic Crisis

2008-10-19T08:46:00.001-04:00

Quote of the Week

2008-10-18T18:01:00.001-04:00

"The entrepreneur always searches for change, responds to it, and exploits it as an opportunity."

— Peter F. Drucker: was a writer and management consultant

Bush Says economy Will Eventually Bounce Back

2008-10-18T11:39:00.003-04:00

Written by TERENCE HUNT, AP White House Correspondent 10/18/08

President Bush on Saturday sought to reassure Americans about the cost and scope of the nation's financial bailout plan and said that in the long run "our economy will bounce back."
Bush, in his weekly radio address, acknowledged that people are concerned about their finances and, while he offered assurances about an eventual recovery, he did not say when that would happen.

Since Oct. 9, 2007, when the Dow topped 14,000, investors have lost $8.3 trillion from pension funds, college savings plans, 401(k)s and other investments.

"The federal government has responded to this crisis with systematic and aggressive measures to protect the financial security of the American people," Bush said. "These actions will take more time to have their full impact. But they are big enough and bold enough to work." Congress gave Bush a $700 billion plan to buy bad assets from banks and other institutions to shore up the financial industry.

Bush was to meet later Saturday at Camp David for talks on the economy with French President Nicolas Sarkozy and European Commission President Jose Manual Barroso, who were to stop in the United States on their way home from a summit in Canada.

In the Democrats' weekly radio address, Rep. Rahm Emanuel used the occasion for campaign criticism against John McCain, the Republican presidential nominee.

"On weekends like this, maybe you're like me and my neighbors, working around the house, trying to save a few bucks," said Emanuel, the chairman of the House Democratic Caucus. "My neighbors and yours are struggling in this economy. They're working as hard as they know how, but the economic policies that George Bush proposed and John McCain supports have left them working harder, paying more and making less."

White House press secretary Dana Perino said the Camp David meeting was not expected to produce any new policy decisions or the date or place for a planned meeting of leaders of major economic powers, the so-called G8. Instead, she said it would focus on efforts extending as far back as April on coordination for financial stability through measures such as bank disclosures, accounting rules at credit rating agencies, capital standards and asset valuation.

The bailout plan runs counter to Bush's oft-stated commitment to free enterprise and the president said he knew many Americans have reservations about the government's approach, particularly the Treasury's planned injection of up to $250 billion in U.S. banks in return for partial ownership stakes, something that hasn't been done since the Great Depression of the 1930s.

"As a strong believer in free markets, I would oppose such measures under ordinary circumstances," the president said. "But these are no ordinary circumstances. Had the government not acted, the hole in our financial system would have grown larger, families and businesses would have had an even tougher time getting loans and ultimately the government would have been forced to respond with even more drastic and costly measures later on."

Bush said the government's involvement was limited in scope and Washington will not exercise control over any private firm and federal officials will not have a seat on bank boards. He also said he believed that the final cost to taxpayers would be significantly less than the initial investment as the housing market recovers.

This article is from The Associated Press and appeared on Yahoo News on 10/18/08

Bernanke Says Recovery Will Take Time

2008-10-18T11:15:00.001-04:00

Reuters News Highlights for This Past Week

2008-10-18T11:09:00.000-04:00

Experts See Potential for Recession as Fears Persist

2008-10-18T10:38:00.002-04:00

Economists are concerned that despite all of the government's efforts to put an end to the credit crisis, the nation will be unable to avoid an economic recession.

Many companies and municipalities still do not have access to the credit markets, and the price of Treasuries and mortgage-backed securities fell on Oct. 14 due to investor worries about more borrowing by the government.

Additionally, HSH Associates reported a jump in the 30-year fixed mortgage rate to 6.6 percent from 6.06 percent last week, though experts say mortgage rates could decline once Fannie Mae and Freddie Mac begin purchasing more loans and reducing fees and once banks increase lending.

Click here to read the entire New London Day article.

Source: New London Day (CT) (10/15/08) Bajaj, Vikas. This article is a reprint that appears on NYSAR's online news page 10/16/08 at www.nysar.com/members

California Association of Realtors® Predicts Increased Home Sales in 2009

2008-10-18T10:29:00.002-04:00

The CALIFORNIA ASSOCIATION OF REALTORS® predicted Wednesday that the median price of a home in the state will fall 6 percent to $358,000 in 2009 as compared to the projected $381,000 median for 2008.

At the same time, the association anticipates that sales of existing single-family homes will rise 12.5 percent to 445,000 units, about the same percentage of increase as the state experienced this year compared to 2007.

"The worst is over, but we're still not out of the woods," said Leslie Appleton-Young, the association's chief economist.

Appleton-Young’s prediction calls for sales of distressed properties to decline in the latter half of 2009, slowing the fall of prices. "I would think by 2010 we would be up by mid-single digit (percentages)," the economist said.

Source: The Associated Press, Alex Veiga (10/15/2008)

This article is from Realtor® Magazine Online Edition Daily Real Estate News for 10/16/08

FDIC Cheif Says People, Not Banks Should Be Given Highest Priority Regarding Government's Actions

2008-10-18T10:19:00.004-04:00

Federal Deposit Insurance Corp. Chair Sheila Bair is criticizing the federal government for giving a much higher priority to bailing out banks than it is to helping average Americans in danger of losing their homes.

"Why there's been such a political focus on making sure we're not unduly helping borrowers, but then we're providing all this massive assistance at the institutional level, I don't understand it," Bair told the Wall Street Journal on Wednesday. "It's been a frustration for me."

Bair also told newspaper editors: "I support all the measures; I've been a part of all the measures that have been taken," Bair added. "But we're attacking it at the institution level as opposed to the borrower level, and it's the borrowers defaulting. That is what's causing the distress at the institution level. So why not tackle the borrower problem?

"Bair’s comments are likely to increase the dissension among architects and critics of the government’s response to the financial crisis.

Source: The Wall Street Journal, Damian Paletta (10/16/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/16/08

Senator Dodd Urges More Consumer Protection Legislation

2008-10-18T10:16:00.002-04:00

Despite opposition from the banking industry, Senate Banking Committee Chairman Chris Dodd (D-Conn.) is expected to add consumer protection provisions to an economic stimulus bill slated for consideration following the November election.

The initiatives would institute a 90-day moratorium on foreclosures, reform the bankruptcy process with regard to home loans, ban predatory lending, and introduce tougher credit card regulations. According to Dodd, "Any effort to talk about the American financial system without also addressing the American consumer is lopsided and not going to work."

This article is from NYSAR's Governmental Affairs Update for 10/17/08 and is originally based upon an article from American Banker (10/15/08) P. 3; Kaper, Stacy

New Stimulus Package Under Way On Capital Hill

2008-10-18T10:08:00.002-04:00

Capitol Hill legislators are busy hammering out another economic stimulus plan to help ordinary Americans. But their chances of gaining support from the president and lawmakers on both sides of the aisle is not certain.

The problem is that Democrats and Republicans have very different views of how a stimulus package should be structured, and the White House has signaled its opposition to some of the key ideas now being circulated.

Senate Majority Leader Harry Reid (D-Nev.) took the wraps off a $150 billion package similar to a stimulus proposal made by Democratic presidential nominee Sen. Barack Obama (D-Ill.) earlier in the week.

That proposal includes spending on infrastructure projects, providing energy assistance to low-income families, and a mandate for the federal government to be more aggressive in using its authority to push lenders to reduce foreclosures by renegotiating mortgage loans.

Republicans, by comparison, favor suspending the capital gains levy, lowering the corporate tax rate, and providing federal guarantees on interbank lending.

[Editor's note: The National Association of REALTORS® has called on Congress to pass a new stimulus bill during the lame-duck session of Congress later this year and to include four consumer-oriented housing provisions in the bill that would:

1. Make the temporary high-cost conforming loan limit of $729,750 permanent.

2. Eliminate the repayment requirement in the $7,500 homeownership tax credit and also expand eligibility for that tax credit to all buyers, not just first-timers.

3. Ensure the $700 billion in federal assistance to Wall Street gets filtered to lenders for new loan originations and refinancings, and not just be used to shore up investment banks' bottom lines.

4. Permanently keep banks out of real estate brokerage and management to ensure long-term protection of consumers.]

Source: Los Angeles Times, Jim Puzzanghera and Richard Simon (10/16/08)

This article is from Realtor Magazine Daily Real Estate News for 10/16/08

151 Mortgage Fraud Cases Opened in Last Year

2008-10-18T09:59:00.002-04:00

151 Mortgage Fraud Cases Opened in Last Year Federal prosecutors and investigators have opened 151 criminal mortgage fraud cases since October 2007, according to an examination of records by the Transactional Records Access Clearinghouse at Syracuse University. The group looked at data from the Justice Department.

Because this is the first time that the Justice Department has distinguished mortgage from other kinds of fraud investigations, it is difficult to tell whether this is a significant increase.

The FBI is handling about half of the cases. Most of the rest of the cases are under investigation by the Federal Deposit Insurance Corp.

Investigations are limited to 10 of the 89 judicial districts in California, Florida, Georgia, Mississippi, New York, Ohio, Pennsylvania and Vermont. Prosecutors’ offices in South Florida are handling 69 of the cases. Pittsburgh is second with 24 prosecutions.

Source: The Wall Street Journal, Lynnley Browning (10/15/2008)

This article is from Realtor Magazine Daily Real Estate News 10/17/08

Henry Paulsen Talks About Economic Rescue Plan

2008-10-15T17:02:00.001-04:00

NY Found Next-to-Last Concerning Business-Friendly Tax Policies

2008-10-15T12:56:00.004-04:00

In what will be no surprise to New Yorkers, the Tax Foundation’s 2009 Business Tax Climate index found that New York is next-to-last in a ranking of states with business-friendly tax policies, slipping two places from 2008.

According to the report, only neighboring New Jersey provided a more hostile tax environment than New York to businesses among the 50 states. California, Ohio and Rhode Island complete the list of the bottom five.

Meanwhile, Wyoming ranked first with South Dakota, Nevada, Alaska and Florida rounding out the top five. The report has been published every year since 2003 and ranks states based on the taxes that matter most to businesses and business investment: corporate tax, individual income tax, sales tax, unemployment tax and property tax.

This article is from NYSAR's Governmental Affairs Update for 10/10/08 .

President Bush Explains Government's "Passive" Investment In Banks

2008-10-15T12:46:00.001-04:00

Magic Trick With Improv

2008-10-15T12:39:00.000-04:00

Bank Bailouts and Impending Recession

2008-10-15T12:13:00.002-04:00

Government Takes $250 Billion Stake in Banks

2008-10-15T11:54:00.003-04:00

The U.S. Treasury announced plans today to purchase up to $250 billion in preferred stock from the nation's top banks. The move is part of a plan that President Bush says will help prevent recession and preserve the free market.

"Government owning a stake in any private U.S. company is objectionable to most Americans – me included," Treasury Secretary Henry Paulson said in a statement. "Yet the alternative of leaving businesses and consumers without access to financing is totally unacceptable. When financing isn't available, consumers and businesses shrink their spending, which leads to businesses cutting jobs and even closing up shop."

Nine major financial institutions have already agreed to the voluntary plan. Combined, these institutions will receive $125 billion in capital from the government. The banks are:

Goldman Sachs Group Inc.
Morgan Stanley
J.P. Morgan Chase & Co.
Bank of America Corp.
Citigroup Inc.
Wells Fargo & Co.
Bank of New York Mellon
State Street Corp.

As part of the voluntary program, the government will buy stock "on attractive terms that protect the taxpayer," according to a joint statement by the Treasury, Federal Reserve, and FDIC.

The shares be non-voting, unless the matter directly affects the government's rights as a shareholder. Banks that agree to be part of the program will accept restrictions on executive compensation while the government is holding the stock.

Paulson said taxpayers should expect a "reasonable return" from the stock and said the government will also receive warrants to buy additional stock from institutions participating in the program.

"The actions today are aimed at restoring confidence in our institutions and markets and repairing their capacity to meet the credit needs of American households and businesses," Federal Reserve Chairman Ben Bernanke said in a statement.

Source: U.S. Treasury, Wall Street Journal

Chief Economist's Commentary as of 10/13/08

2008-10-15T11:41:00.003-04:00

2009 Economic Outlook
By Lawrence Yun, NAR Chief Economist

The U.S. economy has entered a recession and will contract for the next three quarters, and the recovery, from the second half of 2009, will be tepid. The unemployment rate will peak at 6.7 percent by midyear next year before steadily heading down. However, existing home sales will be rising despite challenging economic times.

The most important factor driving home sales is affordability. With home prices falling in many parts of the country and mortgage rates still near historic lows, affordability conditions have markedly improved. Even with rising unemployment, nearly 93 percent of households will have jobs. This 93 percent of working households (rather than 95 percent during good economic times) respond to incentives. Added measures, from the first-time homebuyer tax credit to a larger number of mortgage loans qualifying to be purchased by Fannie and Freddie and through the FHA program, will further bring homebuyers to the marketplace.

Back in the previous recession, the economy shed nearly 2 million net jobs from 2001 to 2003. All the while, existing home sales rose from 5.2 million to 6.2 million just as jobs were being cut. New home sales likewise rose from 900,000 to 1.1 million. Mortgage rates were falling and housing affordability was rising during these years. The 2 million job cuts were painful, but the economy still had 130 million job holders.

An early indication that buyers are responding to incentives was the solid jump in the pending home sales in August to the highest level in over a year. The biggest increases were in areas with rising affordability from sharp reductions in home prices in California, Nevada, and Florida. The expansion will broaden to other markets where home prices have markedly fallen, including Rhode Island, Virginia, and Minnesota. Existing home sales, therefore, will likely breakout from the narrow trading range of 4.8 to 5 million of the past 12 months to 5.2 million by the year end and to 5.4 million in 2009. Even with the improvement, the next year's sales level will still be well below the 7.1 million peak sales achieved with rampant speculative buying in 2005.

New home sales will be a different story. There is an overhang of inventory and homebuilders are being forced to cut back sharply. New housing starts have fallen by about 60 percent from peak activity three years back. Because of the cutback in new home construction, the inventory of vacant new homes on the market has fallen to 408,000 as of August from nearly 600,000 just two years ago. The total inventory - new and existing combined - still remains elevated, so further reduction in building by builders will be welcomed. Because of low housing starts, new home sales will continue to tread at soft levels -under 500,000 in 2009 (far below the 1.2 million peak sales in 2005).

On the economic front, recession in itself is not a positive for the housing market because there are fewer job holders. But if a recession is accompanied by rising housing affordability, then home sales can trend higher - as is now. A prolonged deep recession, however - certainly a possibility in light of the most severely tested financial market stress since the Great Depression - can dampen consumer confidence and put up barriers to home buying. Fortunately, the economic downturn appears manageable. Let's explore why by reviewing each of the key economic data points and their projections.

Consumer Spending
Consumer spending accounts for nearly 70 percent of economic activity. Normal, healthy growth is about 3 percent (in real terms above the inflation rate). It grew at only one percent in the first half of this year and is expected to record a mild contraction in the upcoming quarters.

Aggregate personal income is likely to have fallen because of fewer jobs. In addition, there has been a sizable decline in net wealth from falling stock prices and falling home values. The combined income and wealth effects will be such that consumer spending, at best, will add nothing to economic growth in 2009. Another government stimulus plan may temporarily raise consumer spending but will do nothing for a long term sustained rise unless the overall economy recovers and begin adding jobs.

Business Spending
Business spending for equipment turned negative in the recent quarter, not surprising given that corporate profits have fallen for four straight quarters and weak sentiment regarding consumer spending prospects. Construction activity for commercial real estate, which had been growing solidly, will be weakening in light of the credit crunch and rising vacancy rates. One positive picture is on the current lean business inventory conditions. Unlike many past economic downturns when companies had to hold back production because of bloated inventory, the very thin inventory conditions permit companies to ramp up production at the first sign of economic recovery.

Government Spending
Government spending can create jobs. Upgrading and expanding nation's infrastructure, hiring more teachers, or building jets and tanks can stimulate the economy over the short-term. But spending without additional tax revenue over the long run can result in higher interest rates. For the short-term at least through 2009, government spending is expected to rise 1 to 2 percent.

Net Exports
Net exports have been steadily improving in the past year. The U.S. continues to import more items, but the exports have been booming over the past five years, growing at near double-digit pace. The export growth in the second quarter was very impressive, clocking in at a 12.3 growth rate. The weak U.S. dollar has made U.S. products more competitive. However, the dollar has strengthened of late since the start of the global financial crisis. Foreign countries blame the U.S. for the subprime loans and the credit market turmoil, yet people turn to and trust the dollar in times of the crisis. Foreign countries, initially delighted in seeing the U.S. fall, are now in a panic as their stock markets have started crashing even more sharply than the U.S market. Fair or not, the U.S. economic problem has caused a global economic mess. The strengthening of the U.S. dollar this time around should be viewed positively because there is about a two-year lag time in impacting international trade flows from changes in currency. So the net exports continue to be a positive factor for the economy going into 2009. Also oil prices, which are denominated in dollars, fall when the dollar strengthens. Given that REALTORS® are heavy drivers, lower oil prices are welcome.

The Bottom Line
Put it all together and what do we have? A recovering economy will help consumer and business spending to turn the corner and the economy to move to a self-sustaining pace. But it requires a catalyst to get things started. The tumbling housing market and subprime mortgage defaults have caused financial markets to freeze and have pushed the economy into a recession. However, recent rising home sales and some sustained momentum will bring the economy back into the fold. Rising home sales will also thin out the housing inventory and begin stabilizing home prices. The credit market will start to unfreeze once home prices have passed bottom. Simply, the economy will not recover without a housing market recovery.

Fortunately, policymakers and both Presidential candidates clearly recognize the need to get the housing market moving. The two housing stimulus bills (homebuyer tax credit and higher loan limits), $700 billion Treasury plan and the Federal Reserve's actions are designed to assure steady mortgage flow and help revive the housing sector. With it, the economy will expand and create jobs. America and its exceptional ingenuity always find a way to move past crises and back to economic prosperity.

This article is from The Nation Association of Realtors Research Update for October 2008.

The Proposed Plan to Inject Cash Into Banks

2008-10-12T21:15:00.000-04:00

Charlie Rose Interview With Paul Volker-Part 1

2008-10-10T23:35:00.002-04:00

This is the singularly best interview I have seen so far this year. It is very insightful, informative and while it is provided herein on this blog in 6 parts, it is well worth it. Please take the time to listen to this incredible and very timely interview. (This was taped and aired on Charlie Rose on 10/9/08).

Charlie Rose Interview With Paul Volker-Part 2

2008-10-10T23:30:00.002-04:00

Charlie Rose Interview With Paul Volker-Part 3

2008-10-10T23:27:00.001-04:00

Charlie Rose Interview With Paul Volker-Part 4

2008-10-10T23:24:00.003-04:00

Charlie Rose Interview With Paul Volker-Part 5

2008-10-10T23:23:00.001-04:00

Charlie Rose Interview With Paul Volker-Part 6

2008-10-10T23:19:00.001-04:00

Interesting Perspective and Comments Made About Economic Crisis

2008-10-10T23:03:00.003-04:00

This short interview outlines a few things that have not been widely discussed concerning the economic crisis. It is worthy of note what Mark Bloomfield says in this interview. Please watch.

G7 Agree to 'Aggressive Action Plan' to Fight Global Economic Crisis, But Lacking Any Specific Course of Action

2008-10-10T22:43:00.005-04:00

By David J. Lynch, USA TODAY

WASHINGTON — The G7 group of nations agreed Friday on what U.S. Treasury Secretary Henry Paulson called "an aggressive action plan" to combat a worsening global financial crisis.

The five-point, single-page document gave evidence of a shared approach on the part of several of the world's major economic powers, but the meeting ended with no specific new anti-crisis measures.

"Never has it been more essential to find collective solutions to ensure stable and efficient financial markets and restore the health of the world economy," Paulson told reporters.
That was evident on Wall Street Friday, where the Dow Jones industrial average plummeted more than 700 points at the opening bell before recovering to end the day down 128 points at 8451. The past month, the Dow has lost 25% of its value as markets grew increasingly worried about policymakers' grasp on the crisis.

In their highly anticipated meeting, the G7 finance ministers agreed to coordinate their individual responses to the financial upheaval that has roiled markets around the world, saying the gravity of the situation demanded "urgent and exceptional action."

But the joint communique released at the end of Friday's semi-annual meeting of finance ministers from the six nations contained no specific new commitments.

"It doesn't sound like any fresh initiatives…The market was hoping for some sort of bolder, coordinated initiatives," said Marc Chandler, senior vice president at Brown Brothers Harriman in New York.

In the days leading to today's meeting, hopes built in financial markets for specific measures that would address a crisis of confidence in the markets. Among them: provisions to guarantee lending between banks.

But Paulson said demands for "precisely the same policies" from countries with different legal systems, banking industry structures and regulatory systems was "naive."

Asked if today's statement would be enough to calm skittish financial markets, he said: "I think we'll have some volatility for a while," adding "This is about confidence. We need to restore confidence…And there is every reason for people around the world to be confident."

Paulson says U.S. planning to Buy Financial Equity Stakes In Banks For First Time Since 1930s

2008-10-10T22:36:00.002-04:00

By David Lawder, Writer for Reuters News

WASHINGTON (Reuters) - The United States is developing plans to buy equity stakes in financial institutions, providing another weapon in its war against financial market turmoil, U.S. Treasury Secretary Henry Paulson said on Friday.

Providing the first confirmation of the plan after a meeting of Group of Seven finance chiefs, Paulson said the equity purchases would be made alongside purchases of distressed assets as a way to recapitalize U.S. banks and other institutions reeling from soured mortgages and illiquid securities.

The Treasury will use authority granted by Congress in last week's $700 billion financial rescue legislation to buy largely non-voting common or preferred shares. Paulson said the two-pronged approach would more effectively recapitalize banks.

"We can use the taxpayers' money more effectively and more efficiently, have it go farther and get more for their dollars and more protection if we develop a standardized program for making and encouraging equity participation," he said.

Disclosure of the plan comes as the Treasury is considering a number of other major steps to deal with a worsening crisis of confidence that has frozen credit markets and halted interbank lending.

The Treasury may also push for a global backstop of interbank lending and possibly an unlimited guarantee on bank deposits, according to sources familiar with the discussions. A Treasury spokeswoman said the Bush administration is reviewing a British proposal to guarantee interbank lending.

The direct capital injections would help banks overcome the bad debts weighing down their balance sheets and boost their capacity to lend, complementing the bailout bill's objective of removing illiquid assets.

Oil plunges to 13-month Low on Global Slowdown

2008-10-10T16:29:00.003-04:00

By STEVENSON JACOBS, AP Business Writer

The stunning collapse in oil markets accelerated Friday, with a barrel plunging below $78 as investors grow more pessimistic about a mushrooming global economic crisis.

A barrel of oil hasn't been this cheap in 13 months — a rare silver lining for consumers amid a rapidly imploding financial landscape.

Crude's steep losses came as Wall Street headed for its worst weekly drop ever. The Dow Jones industrial average fell as much as 700 points earlier in the day but swung in and out of positive territory as investors grappled with whether the market has finally hit a bottom.

"There's so much fear out there and that's really gripping the oil market. People are just afraid to hold a position so they're closing out and selling off," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.

Light, sweet crude for November delivery fell $8.63 to settle at $77.99 a barrel on the New York Mercantile Exchange. It was the lowest settlement price for a front-month crude contract since Sept. 10, 2007.

Crude has now lost 47 percent of its value since hitting a record $147.27 on July 11 as a deepening credit crisis sparked by the subprime mortgage fiasco wreaks havoc around the globe and drives down energy demand.

Investors have shrugged off an array of market-stabilizing efforts by world governments, including a $700 billion U.S. financial rescue plan, several bank bailouts and a coordinated interest rate cut by the Federal Reserve and central banks around the globe.

Underscoring Americans' waning appetite for fuel, a gallon of regular gasoline dropped 5.3 cents overnight to a new national average of $3.35 a gallon, according to auto club AAA, the Oil Price Information Service and Wright Express.

Prices dipped below $3 a gallon on average in Kansas, Missouri and Oklahoma. If crude keeps falling, the rest of country should see sub-$3 gasoline in the next few weeks if not sooner, experts say.

Oil market traders got more proof that energy demand is falling away across the globe.

The International Energy Agency on Friday cut its global oil demand forecasts for this year and 2009, pointing to the worsening economic conditions and the tight credit supply.

The Paris-based energy watchdog cut its forecast for oil demand this year by 240,000 barrels per day, and slashed its 2009 forecast by 440,000 barrels per day. The IEA now expects global oil demand to total 86.5 million barrels per day this year and 87.2 million barrels per day next year.

"The fundamental game for oil has changed. In the last decade, oil went up because of strong global economic growth. That story for the near term is over, so everybody has to re-evaluate," said Phil Flynn, energy analyst at Alaron Trading Corp. in Chicago.

OPEC signaled it may tighten output to put a floor under falling prices, but it didn't seem to matter.

The Organization of the Petroleum Exporting Countries said Thursday it will hold a special meeting Nov. 18 to discuss how the economic crisis is affecting oil prices. The head of Libya's national oil company, Shukri Ghanem, called on oil producing nations to cut output.

Many doubt that an OPEC cut would reverse the extreme downward momentum on oil. OPEC's decision last month to cut production by 520,000 barrels a day did little to stop the losses.

Flynn said another output cut "may actually accelerate the slide."

"What's driving this market right now is fear of demand destruction and lack of credit," he said. "If you can't borrow money to buy crude, then demand falls more and so do prices."

US Stock Market Extends Loss Streak For Week

2008-10-10T16:24:00.001-04:00

Benanke Says Economic Activity Will Be Subdued For Remainder of 2008 & 2009

2008-10-10T16:21:00.001-04:00

Bush Says Financial Rescue Plan Aggresive Enough To Work

2008-10-10T16:12:00.005-04:00

By TERENCE HUNT, AP White House Correspondent 10/10/08

President Bush said Friday that the government's financial rescue plan was aggressive enough and big enough to work, but would take time to fully kick in. "We can solve this crisis and we will," he said in brief remarks from the White House Rose Garden.

Bush spoke as leaders of the world's top economies gathered in Washington amid frozen credit markets, panic selling in stock markets and a looming global recession.

The president noted that major Western countries were working together in an attempt to stabilize markets and end the spreading panic, including coordinated cuts in interest rates.

"Through these efforts, the world is sending an unmistakable signal. We're in this together and we'll come through this together," Bush said.

Finance ministers and central bankers from the Group of Seven — the United States, Japan, Britain, Germany, France Italy and Canada — were here for a weekend meeting. Bush plans to meet with the leaders on Saturday.

Bush said he understood how Americans could be concerned about their economic future. "That anxiety can feed anxiety and that can make it hard to see all that's being done to solve the problem," he said.

But despite a relentless sell-off that has seen the Dow Jones industrials plunge 20 percent in the past seven trading days, Bush said, "We are a prosperous nation with immense resources and a wide range of tools at our disposal."

The president said the new $700 billion rescue plan that he signed into law a week ago authorizes the Treasury Department to use a variety of measures to rebuild their balance sheets including "purchasing equity of financial institutions."

It was the first time the president has mentioned suggestions that the government buy shares of banks, although it has been mentioned by other administration officials.

Since the bailout package was signed into law, the conversation about how it will be used has shifted from taxpayers buying troubled mortgages to taxpayers buying troubled banks. Or at least pieces of them.

Such a move would amount to a partial nationalization of the U.S. banking industry, a move once considered unthinkable.

The government is authorized under the law to buy "troubled assets."

Those assets include mortgages, but according to the law, they may also include "any other financial instrument" that is "necessary to promote financial market stability ... ."

It is the government's position that this authority extends to bank stocks.

"The plan we are executing is aggressive. It is the right plan. It will take time to have its full impact. It is flexible enough to adapt as the situation changes. And it is big enough to work," Bush said.

He also noted that the Federal Reserve has injected hundreds of billions into the system and with other central banks has made interest-rate cuts that should help thaw frozen credit markets and enable loans to flow again.

Government insurance on bank and credit union deposit accounts has been raised to $250,000 and the Treasury is offering insurance for the first time for money-market funds, he added.
"The federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy," Bush said.

While he sought to reassure Americans that the government is doing all it can, Bush also acknowledged mounting worry among people about their retirement and investment accounts.
Bush said his administration had launched initiatives that "have helped more than 2 million Americans stay in their homes."

He also noted "rigorous enforcement" steps taken by the Securities and Exchange Commission to make sure that some investors don't "take advantage of the crisis to illegally manipulate the stock market."

Stock market volatility continued, with the Dow Jones industrials falling nearly 700 points soon after trading began, regaining all of that deficit to show an advance and then turning lower again.

"Over the past few days," Bush said, "we have witnessed a startling drop in the stock market, much of it driven by uncertainty and fear. This has been a deeply unsettling period for the American people."

NYC Mayor Bloomberg Preparing for Third-Term Despite Term Limits

2008-10-10T16:05:00.003-04:00

NYC Mayor Bloomberg preparing for third-term despite term limitsNew York City Mayor Michael Bloomberg announced this past week that he plans to seek a third term as mayor.

The mayor will propose revisions to the city’s term limits law, which caps the number of terms for NYC officials to two terms. Bloomberg argued that the financial crisis in New York warrants an exception to the current regulations.

The City Council, which would benefit from the term limit extension, must pass Bloomberg’s legislative proposal in order to make the plan a reality.

According to a recent Marist College poll, city voters are evenly split on whether the current two-term limit should be changed to let Bloomberg run for a third term next year (46% in favor/44% opposed/10% unsure).

The poll interestingly found that Bloomberg would easily defeat any of the three Democratic challengers including City Council Speaker Christine Quinn, Rep. Anthony Weiner and City Comptroller William Thompson.

This article is from NYSAR Government Affiars Update for October.

Treasury Rushes to Set Up Rescue Program

2008-10-10T15:58:00.003-04:00

The Treasury Department plans to hire five to 10 asset management firms that will set up a process to buy up to $700 billion of distressed mortgages and mortgage-related assets from financial firms.

One firm will be selected by Friday to provide custodial services such as tracking cash and assets. The asset management firms will be named next week.

Federal Reserve Chairman Ben Bernanke has said the government won't pay "fire sale" prices for the distressed assets, which would be less likely to achieve the bailout plan's objective of bolstering the financial sector.

Only companies with $100 billion in bonds and other fixed-income assets under management are eligible to apply to be asset managers, the department said, though future contracts will be opened to small businesses. Among those expected to bid are: Legg Mason Inc., Blackrock Inc. and bond manager Pacific Investment Management Co., or PIMCO.

Some anaylsts are concerned that the short timetable will result in the government overpaying for services. "We can't criticize them for rushing when we're telling them it's an emergency," said Steven Schooner, a law professor at George Washington University, but "there's no question when you rush, the contracts tend to be less well-drafted ... and lead to less disciplined cost control."

Source: The Associated Press, Christopher S. Rugaber (10/07/08)

This article is from Realtor Magazine Online Edition for 10/10/08

Bank of America Will Modify Troubled Loans

2008-10-10T15:54:00.002-04:00

Bank of America on Monday said it is launching a "home retention program" on Dec. 1 to modify troubled mortgages for nearly 400,000 customers of Countrywide Financial Corp. Bank of America acquired Countrywide on July 1.

The program, which can reduce up to $8.4 billion in interest payments and principal, was developed in partnership with state Attorneys General to help borrowers that financed their homes with subprime loans or adjustable rate mortgages.

The goal is to "help as many Countrywide customers as possible stay in their homes," says Barbara Desoer, president, Bank of America Mortgage, Home Equity and Insurance Services.

The centerpiece of the program is a proactive loan modification process to provide relief to borrowers who are seriously delinquent or are likely to become seriously delinquent as a result of rate resets or payment recasts.

For more information, visit Bank of America's Web site.

Source: Bank of America

This article is from Realtor Magazine Online Edition for 10/6/08

Fed, Cantral Banks Around the World Cut Key Interest Rates

2008-10-10T15:49:00.003-04:00

In an unusual coordinated move, the Federal Reserve and other major central banks from around the world slashed interest rates Wednesday to keep an escalating financial crisis from becoming a global economic meltdown.

The Fed cut its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England reduced its rate by half a point to 4.5 percent, and the European Central Bank sliced its rate by half a point to 3.75 percent.

The central banks of China, Canada, Sweden, and Switzerland also cut rates. The Bank of Japan said it strongly supported the actions.

"The recent intensification of the financial crisis has augmented the downside risks to growth," the Fed said in explaining the coordinated action, the latest in a series of bold moves intended to spur lending and revive the global economy.

The Fed's action will reduce borrowing costs almost immediately for U.S. bank customers whose home equity and other floating-rate loans are tied to the prime interest rate. Bank of America, Wells Fargo, and other banks cut their prime rate by half a point to 4.5 percent after the Fed announcement.

White House spokesman Tony Fratto welcomed the cooperation among the Fed and other countries' central banks to battle the crisis. "It's important and helpful that central banks are working in a coordinated way to deal with stress in the financial system," Fratto said.
Source: Associated Press, Jeannine Aversa (10/8/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/8/08.

John Weidman - Recipient of the Otsego-Delaware Board of Realtors® President's Award

2008-10-10T14:42:00.007-04:00

John Weidman, Licensed Real Estate Salesperson for Benson Agency Real Estate, located in Oneonta, is the latest Realtor® to receive the President's Award from the Otsego-Delaware Board of Realtors®.

It was awarded to John on Tuesday October 7, 2008 at the Board's quarterly meeting - this time held at the Delhi College Golf Course Restaurant in Delhi, NY.

The President's Award is given to selected Realtor® members of the Otsego-Delaware Board of Realtors® who exemplify superior ethics, practices, and outstanding service to the buying and selling public - the essence of what a Realtor® is all about!

When presented with the award John commented that his buyer/seller clients and customers are the best. One of the many reasons he received this award is because John's customers and clients feel he's the best!

John represents the best qualities of a Realtor® - ethical, professional, knowledgeable, as well as caring for the needs and lives of the people he serves. It is an honor for the Otsego-Delaware Board of Realtors® to present John with this award.

Well done John!

McCain Mortgage Buyout Proposal Rouses Critics

2008-10-10T14:42:00.003-04:00

Presidential contender Sen. John McCain stepped into a political hornet’s nest Tuesday night when he proposed that the U.S. Treasury department "buy up the bad home-loan mortgages in America and renegotiate at the new value of those homes at the diminished value of those homes."

In subsequent explanations, McCain’s economic adviser Douglas Holtz-Eakin said McCain is proposing that the government would buy mortgages from banks and investors at the original value of loan, no matter how inflated that it now appears to be, and then give the home owner a new mortgage at current value at a more affordable interest rate. “Obviously, the taxpayer is on the hook for the difference,” Holtz-Eakin said.

Barack Obama’s top economic advisor Austan Goolsbee was among those highly critical of the idea. "This proposal, if enacted, would be a massive government subsidy from taxpayers to the most irresponsible banks, including the ones that committed fraud," Goolsbee said, adding, "This proposal would give the taxpayer all the risk, with no gain."

Source: BusinessWeek.com, Jane Sasseen (10/09/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/10/08.

Seller Financing Becomes Popular Alternative

2008-10-10T14:33:00.003-04:00

As credit and borrowing standards tighten, seller financing is becoming more common.

For those selling small business, the ability to offer it is particularly important.

"Sellers really have to be prepared to take back more of the financing or to take a second position behind the banks to make them come together ... because of the financial situation of the world today," says Wally Kocemba of the BizDealer Team at Calhoun Companies, a business brokerage firm in Minneapolis.

While considered riskier than bank financing, seller financing -- which is sometimes combined with bank financing -- can offer owners a better price and a faster transaction.

“I believe sellers are going to have to understand that if they want to obtain the price that they’re looking for, they may have to consider seller financing as an integral part of the transaction," says Dean Bachelor, chairman and founder of the Platinum Group, a private-equity firm in Eden Prairie. "If they believe in the business and believe in the future of the business, that's less of a problem.”

Source: Minneapolis Star-Tribune, Todd Nelson (09/29/08).
This article is from Realtor Magazine Online Edition Daily Real Estate News 10/7/08.

Rescue Bill Not Perfect, But Still Best Solution

2008-10-10T14:17:00.002-04:00

Rescue Bill Not Perfect, But Still Best Solution

On Friday, the U.S. House of Representatives joined the Senate in passing the Emergency Economic Stabilization Act of 2008 — and President Bush quickly signed the bill into law.

In a letter to members of the NATIONAL ASSOCIATION OF REALTORS®, NAR President Dick Gaylord thanks everyone who voiced support for the revised bill. A failure to act, he said, "Would have pushed consumers into more dire circumstances."

Gaylord acknowledged that many REALTORS® were torn over whether or not to support the bill. "We realize this bill is not perfect," he said. "However, we believe the additions made by the Senate, including raising the FDIC insurance limit and several other measures that will benefit and protect taxpayers, make it a more favorable solution than the previous proposal."

NAR will continue to work with Congress and the Bush Administration to make sure the measures included in this bill are implemented quickly, "with the needs of Main Street placed front and center," Gaylord said. Real estate experts say the bill will give the market a much-needed boost, but that substantial recovery of credit markets will probably take time.

"The market should regain some confidence, and since markets are built mainly on confidence, that’s no small thing," says Gary Keller, head of national residential real estate franchisor Keller Williams in Austin, Texas. "In fact it’s a huge thing and it’s imperative for the market to move forward. But beyond that, we have to wait and see."

"It should give calmness to the financial markets by showing that we will in fact work through this crisis," said Kenneth Riggs, head of commercial real estate analysis firm Real Estate Research Corp., Chicago. "That said, I don’t see the fundamental, or the mechanics, of capital changing right away. That won’t happen until we see how this package will actually operate."

To read more on what Keller and Riggs have to say about the legislation and the future of the real estate market, visit REALTOR® Magazine's blog, Speaking of Real Estate (REALTOR.org/speakingofrealestate).

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/6/08

The National Debt Clock

2008-10-04T16:04:00.002-04:00

The Outstanding Public Debt as of 04 Oct 2008 at 08:04:01 PM GMT is:

10,154,667,862,448.11

The estimated population of the United States is 304,847,872so each citizen's share of this debt is $33,310.61.

The National Debt has continued to increase an average of$3.08 billion per day since September 28, 2007!

You can view this information at http://www.brillig.com/debt_clock/

Bailout Mania: The Staggering Number & Costs for the Bailouts

2008-10-04T15:34:00.013-04:00

Bailouts & Cost to Taxpayers

(Source: Reuters)

Financial bailout package approved this week = $700 billion or more

Bear Stearns financing =$29 billion

Fannie Mae and Freddie Mac nationalization =$200 billion

AIG loan and nationalization =$85 billion

Federal Housing Administration housing rescue bill =$300 billion

Mortgage community grants =$4 billion

JPMorgan Chase repayments = $87 billion

Loans to banks via Fed's Term Auction Facility = $200 billion+

Loans from Depression-era Exchange Stabilization Fund = $50 billion

Purchases of mortgage securities by Fannie Mae and Freddie Mac = $144 billion

POSSIBLE TOTAL = $1.8 trillion+

NUMBER OF HOUSEHOLDS PER U.S. CENSUS = 105,480,101

POSSIBLE COST PER HOUSEHOLD = $17,064+

(The information above is taken from an article titled "Bailout Bill Loops In Green Tech, IRS Snooping" posted by Declan McCullagh and appeared on CNET.com 10/3/08 10:07 PDT.)

****By the way, $1 trillion would be enough money to buy about a 1,000 boxes of Girl Scout cookies for every person in the United States - just to put things in perspective!!!

A Great Story About Family LIfe, Love, Grief and More Love.

2008-10-04T11:51:00.001-04:00

According To Critics The Bailout Offers Little Help For Homeowners

2008-10-04T10:50:00.005-04:00

By Christopher Solomon, MSN Real Estate

The financial rescue plan approved by Congress and signed into law by President Bush aims to prop up Wall Street but may not do much for Main Street.

The historic $700 billion bailout of the American financial services industry signed into law Friday provides few solid assurances of help to struggling U.S. homeowners, housing observers and advocates agreed.

"We feel that this bill does nothing for homeowners," says Kathleen Day, spokeswoman for the Center for Responsible Lending, a nonprofit research and advocacy group. "This is what homeowners will get out of this bill: higher taxes and a continued erosion of home values because this bill does nothing to address the root cause of this problem, which is falling home prices, and they're being caused by the unprecedented tidal wave of foreclosures.

"It's a bailout for Wall Street." Bill Apgar, senior scholar at the Joint Center for Housing Studies at Harvard University, mostly agrees. "Other than trying to stave off the worst recession in 50 years, there's no help for homeowners" here.

Vague language

After the initial bill failed, a new version of the rescue package, with several additions, was passed by the Senate Wednesday and was approved by the House Friday morning.

The law directs the Treasury Department to "maximize assistance for homeowners." But Brenda Muñiz, legislative director of the Association of Community Organizations for Reform Now, or Acorn, was disappointed by the vagueness of such language.

"I think more could have been spelled out in terms of forcing the hand of these financial institutions" to make them assist homeowners, Muñiz says. Treasury Secretary Henry Paulson might be able to use the bill to facilitate loan modifications for homeowners who are in financial straits, she says, "but it also allows for a very passive response. (It) doesn't really have a lot of teeth to it."

Trying to make lenders voluntarily help homeowners with loan modifications won't work, for several reasons, Day says. Those reasons are as varied as the fact that the troubled mortgages are bundled in securities and owned by many different entities to the fact that there are about 6.5 million loans that need modification, Day says. "They don't have the manpower to modify these loans," she says.

A bright spot?

Muñiz says she saw a potential bright spot in an overlooked, one-sentence provision in the 451-page law that permits the Treasury Department to provide credit guarantees and enhancements on entire loans. It reads, "In addition, the Secretary may use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures."

According to an article published Friday in American Banker, this means, at least in theory, that the Treasury could guarantee certain types of loans in exchange for lenders first making loan modifications.

A tool like this won't solve the underlying problem, says Acorn's Muñiz, but she's anxious to see how far the Treasury will go to help homeowners. "Again, the question is, will the Treasury use all the tools at its disposal?" she asks.

No bankruptcy reform

One of the biggest concerns of observers and homeowner advocates was about a provision that was left on the cutting-room floor. "We wanted a change to the bankruptcy laws," Day says. Today, when a person faces foreclosure "a judge can modify a mortgage on a vacation home, a luxury home, a yacht – but they cannot modify the mortgage on a primary residence." That's ridiculous, she says.

Language to modify this was cut as the bill changed over the past week, Muñiz says. "That would've been one big provision that would've provided some real relief."

Apgar, of the Joint Center for Housing Studies, points out that many of the “no” votes on the Republican side were because the bill was already festooned with $110 billion in tax breaks. Asking the bill to do even more, right now, would have invited another defeat.

"Congress is in triage mode," he says. "I think we move through this and live to advocate another day for additional things that need to happen."

"Don't Worry, This Is Good for You"

2008-10-04T10:15:00.002-04:00

Bush Speaks To Nation About Historic $700 Billion Bailout Bill He Signed Into Law!

2008-10-03T16:33:00.002-04:00

House Passes Historic Bailout Bill

2008-10-03T16:28:00.002-04:00

Q2 Mortgage Delinquency and Foreclosures Rates: A Mix of Good & Bad News

2008-10-03T11:53:00.002-04:00

Written by George Ratiu, Research Economist

There was good news and bad news on the home mortgage delinquency and foreclosure front earlier this month. Data for the second quarter of 2008 from the National Delinquency Survey by the Mortgage Bankers Association shows an increase in delinquency and foreclosure rates. On the positive side, however, the figures also point to some marked improvements. Delinquency rates for subprime, FHA and VA loans dropped from last quarter. Foreclosure inventory rates for FHA loans also declined on a quarterly basis. Furthermore, the data also recorded decreases in foreclosure rates for several states.

Delinquencies
The overall delinquency rate increased from 6.35 to 6.41 percent. However, the increase was driven by a jump in prime loan delinquencies - an increase of 22 basis points, up from 3.71 percent to 3.93 percent.

However, seasonally adjusted delinquency rates provided some positive highlights. The delinquency rates for all other loans dropped. Rates for subprime loans decreased 12 basis points (from 18.79 to 18.67 percent). The decline follows a 148 basis point increase reported in the first quarter. Declines were also noted for loans guaranteed through the two major government mortgage programs. Delinquency rates fell 40 basis points for VA loans (from 7.22 percent to 6.82 percent), while the rates for FHA loans declined from 12.72 to 12.63 percent.
Still, on a year-over-year basis, delinquency rates increased across the board. Seasonally adjusted delinquency rates moved up 120 basis points for prime loans, 385 basis points for subprime loans, five basis points for FHA loans, and 67 basis points for VA loans from the second quarter of 2007.

Foreclosures
Nationally, the rate of foreclosures started was up 20 basis points compared with that reported in the first quarter of 2008. In the second quarter of this year, the foreclosure starts rate increased from 0.54 percent to 0.67 percent for prime loans from a year ago. Foreclosures on subprime loans rose from 4.06 percent to 4.70 percent and from 0.50 percent to 0.65 percent for VA loans. FHA loans also posted an increase of 16 basis points in foreclosure starts -- from 0.87 percent to 1.03 percent. That increase follows a decline posted in the first quarter rate.
The foreclosure inventory rate also increased nationally for all loans, from 2.47 percent in the first quarter of 2008 to 2.75 percent in the second quarter of 2008. On a year-over-year basis, the foreclosure inventory rate increased 135 basis points (from 1.40 percent in the first quarter of 2008). The foreclosure inventory rate rose for all loans except FHA loans. The foreclosure inventory rate rose 20 basis points for prime loans, 107 basis points for subprime loans, and nine basis points for VA loans. Foreclosure inventory rates for FHA loans actually experienced a 16 basis point drop.

Mixed Regional Results
There were differences in delinquency and foreclosure rates by state. While delinquency rates rose across the country from the first quarter to the second quarter of 2008, not all states experienced the same pattern.

The top five states with the highest quarter-over-quarter increase in delinquency rates were Delaware (104 basis points), Mississippi (103 basis points), Massachusetts (100 basis points), Maryland (96 basis points), and Indiana (92 basis points). On the flip side, the states with the smallest change in delinquency rates were South Dakota (20 basis points), North Dakota (27 basis points), Wyoming (32 basis points), Colorado (33 basis points), and Oregon (34 basis points).

In terms of foreclosure rates, the national numbers masked surprising quarter-over-quarter regional changes. The rate of foreclosure starts dropped in 12 states from the first to the second quarter of 2008. Massachusetts recorded the largest decline-33 basis points - followed by Maryland (a 9 basis point decline) and Mississippi (7 basis point decline). The other states with declines in foreclosure starts were Nebraska, Arkansas, Texas, South Dakota, Missouri, Colorado, Montana, Michigan, and Louisiana.

Meanwhile, foreclosure inventory rates also dropped in 17 states over the first two quarters of 2008. Wyoming posted the greatest drop-24 basis points - followed by Massachusetts (declining 21 basis points), and Mississippi (a decline of 20 basis points). Foreclosure inventory rates also declined in Alabama, Arkansas, Indiana, Iowa, Kansas, Louisiana, Michigan, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, and Texas.

These positive changes were nonetheless offset by foreclosure rate increases in states like Florida, Nevada, Arizona, California and New Jersey. These states experienced significant increases from the first to the second quarter of 2008, both in terms of foreclosure starts and foreclosure inventory rates. Florida posted the highest figures, with a 139 basis point jump in foreclosure inventory and a 35 basis point increase in foreclosure starts. The changes were similar in the other four states-Nevada (80 basis point change in inventory, 31 basis point change in starts), Arizona (68 basis point change in inventory, 29 basis point change in starts), California (73 basis point change in inventory, 23 basis point change in starts) and New Jersey (39 basis point change in inventory, 14 basis point change in starts).

Impact of Fannie/Freddie Takeover
Events in the capital markets during September have clearly overshadowed the mortgage delinquency and foreclosure report, which came out prior to the news about the federal government takeover of Fannie Mae and Freddie Mac. The obvious question arising from these events centers on the impact that this move will have upon the mortgage industry and the performance of existing and future loans.

While there are still a large number of details left to be resolved, much depends on the government's degree of involvement in Fannie and Freddie. Assuming that the Treasury and the Federal Housing Financed Agency (FHFA) increase liquidity in the two enterprises, we can expect mortgage rates to decline in the short run. FHFA can accomplish this through its authority to purchase a larger amount of mortgages, including the newly conforming jumbo loans (up to $625,000). In the long run, the performance of the mortgage market will likely be conditioned by the restructuring of Fannie and Freddie and the recovery of the housing market.

This "In Focus" article is from the September Edition of Real Estate Insights - A National Association of Realtors publication published monthly.

Home Sold On Ebay for $1.75

2008-10-02T07:16:00.002-04:00

This article was written by The Associated Press and posted on Yahoo News Wednesday October 1, 2008 6:03pm.

SAGINAW, Mich. - 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.

"I am going to try and sell it," she told the newspaper. "I don't have any plans to move to Saginaw."

Smith said she hasn't seen the property or visited Saginaw, which has been hard-hit by economic troubles in recent years.

There's a notice on the door of the home saying a foreclosure hearing is pending, the newspaper said. She must pay about $850 in back taxes and yard cleanup costs.
The Saginaw News said it could not reach the seller, Southern Investments LLC, for comment.

The story and photo herein are both from the Associated Press

Ironman Trailer Remix

2008-10-01T23:51:00.007-04:00

Ironman, one of the best action and comic-book based movies of the last few years, was just released on DVD. Here's a great remix of the trailer showing a few highlights. Buy it, rent it, and enjoy. Don't forget the popcorn. It's really a guy flick, but chicks might like it too!

The Beatles Sing About Our Current Economic Woes

2008-10-01T23:25:00.002-04:00

Enjoy this timeless tune which has new meaning given our current situation.

Debate About Merits of Bailout Plan - Part 2

2008-10-01T23:13:00.001-04:00

Debate About Merits of Bailout - Part 1

2008-10-01T22:59:00.005-04:00

This video is 2 days old and dated; however, it is an excellent discussion of the whole debate highlighting the good and bad points of a government bailout. It also features Lawrence Yun, the Chief Economist of The National Association of Realtors (rated the 5th most reliable Economist by USA Today).

Bailout Passes Senate, House Foes Soften

2008-10-01T22:48:00.003-04:00

By JULIE HIRSCHFELD DAVIS and CHARLES BABINGTON, Associated Press Writers

WASHINGTON - After one spectacular failure, the $700 billion financial industry bailout found a second life Wednesday, winning lopsided passage in the Senate and gaining ground in the House, where Republicans opposition softened.

Senators loaded the economic rescue bill with tax breaks and other sweeteners before passing it by a wide margin, 74-25, a month before the presidential and congressional elections.
In the House, leaders were working feverishly to convert enough opponents of the bill to push it through by Friday, just days after lawmakers there stunningly rejected an earlier version and sent markets plunging around the globe.

The measure didn't cause the same uproar in the Senate, where both parties' presidential candidates, Republican John McCain and Democrat Barack Obama, made rare appearances to cast "aye" votes.

In the final vote, 40 Democrats, 33 Republicans and independent Sen. Joe Lieberman of Connecticut voted "yes." Nine Democrats, 15 Republicans and independent Sen. Bernie Sanders of Vermont voted "no."

The rescue package lets the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions. If successful, advocates say, that would allow frozen credit to begin flowing again and prevent a deep recession.

Even as the Senate voted, House leaders were hunting for the 12 votes they would need to turn around Monday's 228-205 defeat. They were especially targeting the 133 Republicans who voted "no."

Their opposition appeared to be easing after the Senate added $110 billion in tax breaks for businesses and the middle class, plus a provision to raise, from $100,000 to $250,000, the cap on federal deposit insurance.

They were also cheering a decision Tuesday by the Securities and Exchange Commission to ease rules that force companies to devalue assets on their balance sheets to reflect the price they can get on the market.

There were worries, though, that the tax breaks would cause some conservative-leaning Democrats who voted for the rescue Monday to abandon it because it would swell the federal deficit.

"I'm concerned about that," said Rep. Steny Hoyer, D-Md., the majority leader.
As revised by the Senate, the package extends several tax breaks popular with businesses. It would keep the alternative minimum tax from hitting 20 million middle-income Americans and provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.

It doesn't designate a way to pay for many of the tax cuts, though, angering the House's band of conservative "Blue Dog" Democrats.

Leaders in both parties, as well as private economic chiefs everywhere, said Congress must quickly approve some version of the bailout measure to start loans flowing and stave off a potential national economic disaster.

"This is what we need to do right now to prevent the possibility of a crisis turning into a catastrophe," Obama said on the Senate floor. In Missouri, before flying to Washington to vote, McCain said, "If we fail to act, the gears of our economy will grind to a halt."

Critics on the right and left assailed the rescue plan, which has been panned by their constituents as a giveaway for Wall Street, and has little obvious direct benefit for ordinary Americans.
Sen. Jim DeMint, R-S.C., a leading conservative, said the step was "leading us into the pit of socialism."

Sen. Bernie Sanders of Vermont, an independent who's a self-described socialist, said the rescue was fundamentally unfair.

"The masters of the universe, those brilliant Wall Street insiders who have made more money than the average American can even dream of, have brought our financial system to the brink of collapse," Sanders said, and are demanding that the middle class "pick up the pieces that they broke."

Still, proponents argued that the financial sector's woes were already being felt by ordinary people in the form of unaffordable credit and underperforming retirement savings and without the bailout would soon translate into even more economic pain for working Americans, including more job losses.

"There will be no balloons or bunting or parades," when the rescue becomes law, said Sen. Chris Dodd, D-Conn., the Banking Committee chairman. But lawmakers will have "the knowledge that at one of our nation's moments of maximum economic peril, we acted — not for the benefit of a particular few, but for all Americans."

The Senate specializes in high-stakes legislating by enticement, and the long list of sweeteners it added was designed to attract votes from various constituencies.

Tax cuts new and old are favorites for most House Republicans, the main target of intense lobbying to gain support for the measure. Help for rural schools was aimed mainly at lawmakers in the West, while disaster aid was a top priority for lawmakers from across the Midwest and South.

Another addition, to extend the deductibility of state and local taxes for people in states without income taxes, helps Florida and Texas, among others.

Increasing the deposit insurance cap was a bid to reassure individuals and small businesses that their money would be safe in the event their banks collapsed. It was particularly geared toward small banks that fear customers will pull their money and park it in larger institutions seen as less likely to fold.

The FDIC would be allowed to borrow unlimited money from the Treasury Department through the end of next year as a way to cover the increased insurance limit. If used, it would be the first time the agency has tapped Treasury for a loan since the early 1990s.

Raising the limit — along with the SEC's decision to ease accounting rules on valuing assets — helped House Republicans claim credit for some substantive changes.

And with constituent feedback changing dramatically since Monday's shocking House defeat and the corresponding market plunge, lawmakers' comfort level with the package increased markedly.

Wall Street Worries Prior to Senate Re-Vote of Bailout Plan

2008-10-01T22:46:00.000-04:00

I Dedicate This Song to Our Leaders in Washington

2008-09-30T17:34:00.004-04:00

This song says it all - "Staying Alive". That's what we are doing until we get out of this multi-dimensional economic mess we're in. The lyrics go on to say "I'm going nowhere, somebody help me, somebody help me yeah!"

The Real Reason The Bailout Plan Failed to Pass In Congress

2008-09-30T17:23:00.002-04:00

An array of forces lined up against bailout
By JIM KUHNHENN – 21 hours ago

WASHINGTON (AP) — In the end, the financial markets didn't stand a chance against voter antipathy, partisanship and election year politics.

The defeat of the extraordinary $700 billion financial rescue package represented a perfect collision of the forces of modern politics — a fast-moving Internet campaign, vulnerable incumbents, a weakened and unpopular president, and a roiling presidential campaign — all working against the so-called Titans of the Universe.

Polls showed widespread public opposition to the plan — the biggest federal intervention in financial markets since the Depression — and many Republicans saw such an enormous set-aside of taxpayer money as an unnecessary intrusion into free markets. Of the 19 most-endangered House incumbents, 13 voted no.

"This is one of those scenarios where nobody really wanted to do it," said House Republican Whip Roy Blunt of Missouri, who played a leading role in the final negotiations.

Such a roaring confluence of opposition could only have been overcome with strong party discipline and presidential power. But a weakened and unpopular President Bush and lawmakers forced to weigh the vote against their political careers conspired against success.

Outside Congress, however, furious pressure built up against the bill in e-mail campaigns and on Internet Web sites. The Club for Growth, a conservative free-market oriented group, warned lawmakers that it would count a vote in favor of the legislation against lawmakers seeking the group's support. Club for Growth is viewed with apprehension by many Republicans because it has been known to support challengers running against GOP incumbents.

Longtime conservative activist Richard Viguerie warned that lawmakers who voted for the rescue package would be targeted for defeat. "Republicans and Democrats alike who support this monstrosity will face the wrath of the voters if they stand side-by-side with predatory politicians and bureaucrats and their greedy friends who got us in this mess," he said.

The opposition on the House floor came from an unlikely coalition of conservatives and liberals. The progressive grassroots group MoveOn.org aired an ad blaming the financial crisis on John McCain and his allies.

All those forces worked against powerful special interests. The U.S. Chamber of Commerce and a diverse group of industry lobbying organizations ranging from the National Association of Realtors to the American Hotel and Lodging Association pressed Congress to back the bill, pointedly noting that they too would consider this a key vote when ranking members.

The vote also represented an extraordinary rejection of Bush, who personally called wavering lawmakers and delivered a last-ditch public appeal Monday morning, as well as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke.

"Despite days of negotiating, this is still the same bailout bill, written by a Wall Street guy with a Wall Street solution to a problem created on Wall Street," said Rep. Mike Rogers, R-Mich. "This bill was still a blank check to Henry Paulson."

The vote also did nothing for the presidential contenders, Democrat Barack Obama and Republican John McCain. Both stepped into the fray last week and boasted of exercising leadership in the negotiations. Not only did a majority of McCain's Republican colleagues vote against it, so did all his fellow Arizona lawmakers. Obama was unable to sway many House liberals, including a majority of the Congressional Black Caucus.

House Republican leader John Boehner of Ohio, in a crowded Capitol corridor after the vote, accused House Speaker Nancy Pelosi of delivering a partisan pre-vote speech that caused some Republicans to refuse to back the proposal.

Blunt said the speech could have cost the bill about 12 Republican votes. He did not identify those lawmakers.

Pelosi earlier had delivered a tough attack on Bush economic policies and a "right-wing ideology of anything goes, no supervision, no discipline, no regulation" of financial markets — a pointed critique not much different than what she has been saying for days.

But Boehner said Pelosi's speech "poisoned our conference, caused a number of members that we thought we could get, to go south."

House Banking Committee Chairman Barney Frank, D-Mass., known for his quick, often acerbic wit, said the GOP leaders' complaints meant that some Republicans "decided to punish the country" because their feelings were hurt.

"Give me the names of those 12 people and I'll go talk uncharacteristically nice to them," he said.
Associated Press writers Andrew Taylor and Tom Raum contributed to this article.

The Bailout Failed -So, What's Next??

2008-09-29T22:26:00.003-04:00

U.S.News & World Report
Bailout, Take II: What the Feds Do Next
Monday September 29, 6:07 pm ET
By Rick Newman

OK, so that didn't work.

After a bunch of all-nighters in Washington and some premature back-slapping, we're right back where we were a couple of weeks ago, after Lehman Brothers declared bankruptcy and the government lent AIG $85 billion. There's no one-size-fits-all bailout plan, after all. That $700 billion in taxpayer money remains under lock and key. Glum investors are now the ones bailing out, fleeing stocks and bonds and seeking safer ground.

But there are still some levers the government can pull. Working through the mess just won't be as orderly or predictable as it would if there were a single plan and a big pot of money. Here's what's likely to happen next:

Another try at a big bailout plan. A lot of those constituents who have been calling Congress to complain about rescuing fat cats are going to rethink their indignation as they watch the stock markets--and their own portfolios--sink. Lawmakers who voted against the bailout plan are going to have to explain why they're letting the markets collapse. The more uncomfortable voters get, the more likely Congress will be to pass some kind of sweeping relief plan. This is far from over.

More piecemeal bailouts. Before the big $700 billion bailout plan even existed, the Fed and the Treasury Department were already patching leaks in the financial system--one trouble spot at a time. The idea behind an umbrella bailout plan was to overhaul the whole system, establishing public standards and treating every ailing company more or less the same, before a bunch of leaks became a gusher. That would have eliminated the guesswork over whether a struggling company meets the criteria for a rescue--like AIG--or falls short, like Lehman Brothers.

Now we're back to guessing. The feds still have the wherewithal to lend money, buy bad assets, or take other measures to keep ailing companies afloat. What they don't have is a single plan that applies to all companies and the authority to soak up vast amounts of bad assets. So those weekend meetings at the New York Fed, with supplicant CEOs pleading for help, are likely to continue.

More failed companies. Duke University finance Prof. Campbell Harvey predicts there could be 750 to 1,000 bank failures over the next six months because of billions in bad assets stemming from the housing meltdown. Scarce credit also threatens other types of companies that are already struggling and desperately need capital, such as the Detroit automakers and some of the airlines. The government will be able to deal with some of those companies one at a time, but without a comprehensive plan, others will fall through the cracks.

Manic markets. Investors were hoping that a big bailout plan would offer some predictability about how the government will deal with struggling companies. Their crystal ball is once again very dark. That means wild swings in stock prices as big investors try to get out of the market ahead of bad news, and get back in if it looks like the feds will ride to the rescue. One of the most volatile sectors is likely to be regional bank stocks as investors worry that banks like Sovereign Bancorp and National City might be the next to fail.

Patchwork regulation. There's already a system in place for dealing with failed banks--led by the FDIC--but that may not be enough to handle the damage that's unfolding. Even without a big bailout bill, Congress may have to set up a new agency to deal with dozens or hundreds of bank failures, one similar to the Resolution Trust Corp. formed in the late 1980s. We could see a whole slew of lesser regulations, too, like restrictions on certain lending practices and higher federal coverage limits on bank deposits.

Continued government intervention. The Federal Reserve continues to pump huge sums of money into the global banking system in a desperate effort to prompt banks to loosen their grip on loans to companies, consumers, and one another. For now, that seems to be having little effect as banks absorb the startling news from Washington and hunker down. That may lead the Fed to pump out even more money and take other important steps, like cutting interest rates. Sooner or later, that will probably help loosen things up. Until then, however, it's apparently up to the markets to fix themselves. Plan accordingly.

The Joker Gives His Opinion on the Bailout Plan - Brilliant!

2008-09-29T21:35:00.001-04:00

Here's a Take On The Failed Bailout Vote

2008-09-29T21:28:00.001-04:00

Good (But Too Short) Video About How The Financial Crisis Evolved

2008-09-29T21:18:00.001-04:00

Do We Have A Deal?

2008-09-28T08:44:00.003-04:00

Hmm... I hope we have a deal. I hope it makes sense and I hope it works. The American taxpayer will have to live with this for a very long time - and so will our children!

First Presidential Piano Duel

2008-09-27T11:02:00.001-04:00

Good Comic Relief! Enjoy!

Full Video of 1st Presidential Debate of 2008

2008-09-27T11:00:00.001-04:00

Candidates Face-Off Over Economic Recovery Plan During First Presidential Debate

2008-09-27T10:36:00.003-04:00

Bailout Plan Deal Back on Track??

2008-09-27T10:33:00.000-04:00

Michael Bloomberg Speaks About the Possible Future Effects of the Current Economic Crisis

2008-09-27T09:58:00.004-04:00

Part 2 of the interview with Bloomberg posted on this blog. This is an excellent corollary to the previous posted interview. Enjoy!

Michael Bloomberg Speaks Out On Origins of Housing & Economic Crisis- Part 1

2008-09-27T09:49:00.003-04:00

This is a very good synopsis of why we are where we are concerning the housing and financial crisis. Well worth watching...

A Major Milestone of the Week

2008-09-27T09:27:00.000-04:00

Wrap-Up of the Week's News and Stock Market Activity

2008-09-27T09:17:00.002-04:00

Batman vs. Jaws

2008-09-27T09:11:00.002-04:00

Oh my! I can't believe this was the Batman of my childhood. It's a far cry from Christian Bale in Batman Begins and The Dark Knight.

WaMU Assets Seized by Government Regulators and Sold to JPMorgan.

2008-09-27T08:20:00.004-04:00

This represents the largest bank failure in U.S. history. Over the previous 9 days WaMu customers withdrew $16.7 billion which caused the bank to fail. Most of the deposits withdrawn were over the FDIC limit of $100,000.

Washington Mutual (WaMu) is the the 13th U.S. bank to fail this year and the ninth to fail since July. WaMu had combined assets of $307 billion and total deposits of $188 billion.

WaMu collapsed as its credit rated plummeted to junk and its stock price tumbled. WaMU stocks declined 95% during the past year. With losses in the amount of $19 billion based upon bad mortgage loans, Washington Mutual puts itself up for sale last week. On September 8th, Kerry Killinger, the long time CEO was replaced with Alan Fishman. Fishman was given a $7.5 million signing bonus and a $1 million salary - not bad for working just a few weeks!

After a few days of bidding on WaMU, JP Morgan Chase & Co. emerged as the buyer with the best offer for a price of $1.9 billion. JP Morgan will not acquire WaMu's liabilities as a result of the sale. JP Morgan is in a very good position as a result of the sale by becoming the biggest U.S. bank, as measured by deposits.

The FDIC brought about the purchase of WaMu by JP Morgan and fortunately did not have to bare the costs of the takeover of the bank's assets. The FDIC noted that this was a major victory.

The failure of WaMU is the latest of what is becoming a long line of failures and bailouts experienced of late with the likes of Lehman Brothers, IndyMac, Bear Stearns (also absorbed by JP Morgan Chase), American International Group (AIG), Merrill Lynch, Fannie Mae, and Freddie Mac.

-Written by Ross Gill

Jetman - The Ultimate Extreme Sport

2008-09-26T13:21:00.001-04:00

Bailout Agreement Now Stalled

2008-09-26T11:14:00.000-04:00

Quote of the Week

2008-09-26T10:43:00.001-04:00

"Emphasize the error, not the person committing it."

— Terri Lonier: Authority on entrepreneurship

Lawmakers Reach Bailout Agreement

2008-09-25T14:10:00.000-04:00

President Bush Speaks to Nation of Looming and Dire Economic Crisis

2008-09-24T22:32:00.007-04:00

President Bush on Wednesday evening told Americans and lawmakers that failure to pass the proposed $700 billion financial rescue plan will risk erasing retirement savings, cause increasing home foreclosures and job losses. He said: "Our entire economy is in danger".

In his 12-minute prime-time speech the President said: "Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold". In the last few days President Bush has received a lot of input and feedback from lawmakers about the proposed bailout plan. The stakes are high and the President has had to agree to many changes to the plan brought forth by both conservative and liberal lawmakers. However, President Bush says he draws the line at regulations that would hurt economic growth.

The President urged that the tough-sell and very expensive bailout must be enacted ASAP. He said during his speech: "Ultimately, our country could experience a long and painful recession." "Fellow citizens, we must not let this happen."

Last week the White House and Congress agreed to the bailout. Since that time, there has been widespread criticism of lawmakers for lack of foresight concerning the housing crisis, handling of the economy, as well as the bailout plan itself. Many find the price tag very difficult to digest while others oppose the magnitude of government intervention in the private-sector economy.

Conservative lawmakers find it very difficult to agree to taxpayer money being used to help save businesses that got them in trouble in the first place. Many Democrats have come out in the last few days expressing their distaste for CEOs of failed companies who could be inadvertantly rewarded with generous income, bonus and severance packages.

President Bush stated: "With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all." "These are not normal circumstances."

Here is a link to a transcript of the President's speech: http://www.iht.com/articles/2008/09/25/business/24textbush.php?pass=true

NAR President and Chief Economist Speak Out About Current Crisis

2008-09-24T22:24:00.002-04:00

Star Wars Vs. Star Trek

2008-09-24T22:20:00.001-04:00

If you are like me and like both Star Trek and Star Wars, here's the ultimate encounter: