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White House Plans To Step Up Pressure On Lenders To Help Homeowners

2009-11-29T01:52:41Z

WASHINGTON (AP/HuffPost)-- The Obama administration, battling a foreclosure crisis that shows no signs of relenting, will step up pressure on mortgage companies to do more to help people remain in their homes, officials said Saturday.

The administration will announce its expanded program on Monday, Treasury spokeswoman Meg Reilly said.

"We are taking additional steps to enhance servicer transparency and accountability," Reilly said. She said the goal was to increase the rate that troubled home loans were converted into new loans with lower monthly payments.

So far, the program's numbers have been lackluster. When the administration rolled out the program, called Making Home Affordable, it hoped to save 3-4 million homeowners from foreclosure. The New York Times interviews a former Fannie Mae official who says that currently, the program will be lucky if it can save 1.5 million Americans from foreclosure.

According to Realtytrac, 2,631,158 foreclosure filings were reported in the first three fiscal quarters of 2009. Realtytrac expects that nationwide, 3.2-3.4 million properties will go into foreclosure in 2009, up from 2.3 million in 2008. About 10 percent of residential households nationwide, or about five million, were behind by at least one mortgage payment in the third quarter. Almost 4.5 percent of residential properties were in some form of foreclosure.

The New York Times reports on the program:

Last month, an oversight panel created by Congress reported that fewer than 2,000 of the 500,000 loan modifications then in progress had become permanent under Making Home Affordable. When the Treasury releases new numbers next month, it is expected to report a disappointingly small number of permanent loan modifications, with estimates in the tens of thousands out of the more than 650,000 borrowers now in the program.

More unsatisfactory data is likely to intensify pressures on the Obama administration to mount a more muscular effort to stem foreclosures beyond the Treasury's campaign this week. Populist anger has been fanned by a growing perception that the Treasury has lavished generous bailouts on Wall Street institutions while neglecting ordinary homeowners -- this, in the midst of double-digit unemployment, which is daily sending more households into delinquency.

Industry officials said the new effort would include increased pressure on mortgage companies to accelerate loan modifications by highlighting firms that are lagging in that area.

The Treasury is also expected to announce that it will wait until the loan modifications are permanent before paying cash incentives to mortgage companies that lower loan payments.

Under the $75 billion Treasury program, companies that agree to lower payments for troubled borrowers collect $1,000 initially from the government for each loan, followed by $1,000 annually for up to three years.

The government support, which is provided from the $700 billion financial bailout program, is aimed at providing cash incentives for mortgage providers to accept smaller mortgage payments rather than foreclosing on homes.

The program has come under heavy criticism for failing to do enough to attack a tidal wave of foreclosures. Analysts said the foreclosure crisis is likely to persist well into next year as high unemployment pushes more people out of their homes.

Rising foreclosures depress home prices and threaten the sustainability of the fledgling economic recovery.

The Congressional Oversight Panel, a committee that monitors spending under Treasury's bailout program, concluded in a report last month that foreclosures are now threatening families who took out conventional, fixed-rate mortgages and put down payments of 10 to 20 percent on homes that would have been within their means in a normal market.

Treasury's program, known as the Home Affordable Modification Program, "is targeted at the housing crisis as it existed six months ago, rather than as it exists right now," the report said.

Scott Talbott, senior vice president of government affairs for the Financial Services Roundtable, said the industry supported many of the changes Treasury was proposing.

But he said the foreclosure problem, which began with heavy defaults on subprime mortgages, was expanding to more traditional types of mortgages because of unemployment which has now hit a 26-year high of 10.2 percent.

"The subprime problem has regrettably morphed into an unemployment problem," Talbott said. He said there was no government program to help the unemployed who are in danger of losing their homes but "many private lenders are modifying loans for the unemployed on their own."

Treasury's Reilly said the expanded program would, among other steps, make more aid available to struggling borrowers and expand the number of organizations providing help.

___

Associated Press writer Jim Kuhnhenn contributed to this report.

Economist Predicts Just 2% Growth In 2010

2009-11-29T00:04:18Z

A Robust economic recovery in 2010 is certainly on most investors' wish lists as this year draws to a close. A return to prosperity would not only mean an end to our long financial nightmare, but it would also buttress a rebounding stock market, one of 2009's few bright spots.
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The news out of Dubai late last week, however -- that its investment company is struggling to meet repayments on some of its $59 billion in debt -- reminds us that we are far from finished with a ferocious deleveraging process...

Johann Hari: Dubai Has Always Been Bankrupt -- Morally and Environmentally

2009-11-28T22:02:43Z

Dubai is finally financially bankrupt – but it has been morally bankrupt all along. The idea that Dubai is an oasis of freedom on the Arabian peninsular is one of the great lies of our time. Yes, it has Starbucks and Dunkin' Donuts and the Gucci styles, but beneath these accouterments, there is a dictatorship built by slaves.

If you go there with your eyes open – as I did earlier this year – the truth is hidden in plain view. The tour books and the bragging Emiratis will tell you the city was built by Sheikh Mohammed, the country's hereditary ruler.

It is untrue. The people who really built the city can be seen in long chain-gangs by the side of the road, or toiling all day at the top of the tallest buildings in the world, in heat that Westerners are told not to stay in for more than 10 minutes. They were conned into coming, and trapped into staying.

In their home country – Bangladesh or the Philippines or India – these workers are told they can earn a fortune in Dubai if they pay a large upfront fee. When they arrive, their passports are taken from them, and they are told their wages are a tenth of the rate they were promised.

They end up working in extremely dangerous conditions for years, just to pay back their initial debt. They are ringed-off in filthy tent-cities outside Dubai, where they sleep in weeping heat, next to open sewage. They have no way to go home. And if they try to strike for better conditions, they are beaten by the police.

I met so many men in this position I stopped counting, just as the embassies were told to stop counting how many workers die in these conditions every year after they figured it topped more than 1,000 among the Indians alone.

Human Rights Watch calls this system "slavery." Yet the Westerners who have flocked to Dubai brag that they "love" the city, because they don't have to pay any taxes, and they have domestic slaves to do all the hard work. They train themselves not to see the pain.

But Dubai's bankruptcy does not end there: it is ecologically bust. This is a city built in the burning desert, where everything shrivels up and blows away if it is not kept artificially cold all the time. That's why it has the highest per capita carbon emissions on earth – some 250 percent higher even than America's. The city has to ship in desalinated water – which is more costly than oil. When it runs out of cash, it will run out of water.

Today Dubai will be bailed out by the United Arab Emirates, the oil-rich country of which it is only one state. But the oil will not last forever. More importantly, there is no Bank of Morality that could provide a bailout for this sinister mirage in the desert.

To read Johann's full report from Dubai, click here.

Johann hari is a writer for the Independent. To read more of his articles, click here.

Ben Bernanke: No One Can Regulate Wall Street Better Than The Fed

2009-11-28T19:25:29Z

For many Americans, the financial crisis, and the recession it spawned, have been devastating -- jobs, homes, savings lost. Understandably, many people are calling for change. Yet change needs to be about creating a system that works better, not just differently. As a nation, our challenge is to design a system of financial oversight that will embody the lessons of the past two years and provide a robust framework for preventing future crises and the economic damage they cause.

Abu Dhabi Won't Bail Out Dubai

2009-11-28T15:36:21Z

ABU DHABI (Reuters) - Abu Dhabi, wealthy capital of the United Arab Emirates, will "pick and choose" how to assist debt-laden neighbor Dubai, a senior official said on Saturday, after fears of a Dubai default sent global markets reeling.

Black Friday Sales: U.S. Retailers Report Strong Crowds

2009-11-28T14:37:30Z

The nation's shoppers took advantage of deals on toys and TVs with some renewed vigor in stores and online on Black Friday after a year of concentrating their spending on basic necessities.

Though the first numbers won't be available until Saturday, early reports indicated bigger crowds than last year, with people buying more and even throwing in some items for themselves.

It was an encouraging sign for retailers, which have suffered through a year of sales declines, and perhaps also for the broader economy, which could use a kickstart from consumer spending.

In Chicago, Dan Montgomery and his wife carted bulging Macy's bags, proclaiming the department stores had "killer deals." Their favorite buy? A set of two skillets for $19.99, marked down from $100.

Still, mall operators said more shoppers were sticking to making purchases in cash and debit cards instead of credit. "I like cash because when you're out of cash, you're out of cash. And you don't have the hangover in January," Montgomery said.

Worries about jobs clearly were on shoppers' minds. Most people buying for themselves were picking up practical things that were deeply discounted such as pillows, pajamas and coffee makers, according to stores and analysts.

"With the layoff there have been a few cutbacks, but with the great sales they're offering this year, I think it's, overall, going to be a great Christmas for my two granddaughters," said Ernest Bell of Marietta, Ga., who was laid off in April from his job as an information technology support representative and was at the local Walmart on Friday.

The nation's retailers ushered in the traditional start of the holiday shopping season with expanded hours and deep discounts in hopes of getting people to spend.

Online, Walmart.com, Amazon.com and other online retailers also grabbed for a piece of the action, pushing deals on Thursday and even earlier in the week. Several large retailers, including Walmart and many Old Navy locations, even opened on Thanksgiving.

Those stores now have to figure out how to keep people coming back through Dec. 25.

Though there were isolated reports of squabbles, the pre-dawn crowds were generally calm. Stores took extra precautions to control the throngs after a Walmart worker on Long Island was trampled to death last year on Black Friday.

Analysts monitoring the malls said shoppers were less frenetic, having researched deals before going shopping. Extended hours also gave shoppers more time to grab deals both online and in stores than a year ago. Most Walmart stores were open on Thanksgiving to prevent the mad dash of shoppers for its Friday 5 a.m. specials.

ShopLocal, a subsidiary of publisher Gannett Co., on Friday said traffic was up 27 percent at top retailers' online sites featuring their Black Friday ads.

Stores were encouraged that shoppers appeared to be a little freer with their spending. Best Buy, Sears Holdings Corp. and Mall of America, as well as mall operators Taubman Centers and Simon Property Group, offered signs people were buying more than last year.

An average of about 1,000 people were in line for midnight openings at Toys R Us stores, CEO Gerald Storch said. After setting aside 100 Zhu Zhu Pets hamsters for each location, Toys R Us came back with several shipments of the hot toy for several of its stores Friday.

Even luxury stores, which generally aren't the big attractions for Black Friday, had brisk traffic, according to analysts.

More than 5,000 people were at Macy's Herald Square store in New York early Friday, slightly more than last year, Macy's CEO Terry J. Lundgren said. Among the most popular items were Tommy Hilfiger $99 bomber jackets, marked down from $450.

Dondrae May, a manager at a Best Buy in Framingham, Mass., said shoppers started lining up at 4 p.m. Thursday – 13 hours before opening. He said shoppers were filling their baskets with more items than a year ago, when they were shellshocked after the financial meltdown. The biggest draws were laptops, TVs and GPS systems, he said.

The chain had sold out of all of its early morning specials within two hours of the 5 a.m. opening, spokesman Scott Morris said.

While Black Friday is not a bellwether for the season, analysts are studying Friday's receipts to better understand the mindset of shoppers like Laura Frankito, a nurse who found herself at Kohl's outside Cleveland buying a Snuggie blanket-robe for her aunt and Tony Hawk T-shirts for her nephew.

She's only giving money to her two children, and she pointed out her newfound practicality by saying she wouldn't get a $12.99 canine version of the Snuggie for her sister's dog.

"There would have been a year when I would have gotten that," she said.

___

Associated Press Writer Lisa Cornwell in Cincinnati, AP Writer Kate Brumback in Atlanta and AP Retail Writers Betsy Vereckey and Mae Anderson in New York City, Ashley Heher in Chicago, Emily Fredrix in Cleveland, and Vinnee Tong in San Francisco contributed to this report.

(This version CORRECTS to "Simon Property Group" instead of "Simon Properties.")

Recession Sends Older Americans To Food Pantries

2009-11-28T14:21:46Z

ALBANY, N.Y. — Older Americans who were raised on stories of the Great Depression and acquired lifelong habits of thrift now find themselves crowding soup kitchens and food pantries in greater numbers for the first time after seeing retirement funds, second jobs and nest eggs wiped out by recession.

"What we see in line is lots of gray hair, lots of walkers," said Marti Forman, CEO of The Cooperative Feeding Program in Fort Lauderdale, Fla.

The help is crucial for many fixed-income seniors, who can't always keep up with rising food prices.

"It's a lifeline. It just means that you can function," said Ronald Shewchuk of Ithaca, N.Y. "Otherwise we would have to sell our house. I don't know what we would do. Go to an old age home."

The number of seniors living alone who seek help from food pantries in the U.S. increased 81 percent to 408,000 in 2008, compared to 225,000 in 2006, according to the U.S. Department of Agriculture. Overall, 4.7 million households used American food pantries in 2008, compared to about 3.7 million in 2006.

"Seniors thought they were OK, but they're not OK," said Virginia Skinner, director of Development at The Association of Arizona Food Banks in Phoenix, citing the downturn in the area's housing market.

Catholic Charities USA, which has 170 agencies across the country helping the needy, issued a 2009 third-quarter report that found a 54 percent increase in requests for food and services from seniors nationwide compared to the same period last year.

Despite the increased need, it can be difficult for some older people to come forward and seek help.

"They're of a generation that feels they took care of themselves, and now in these desperate straits they don't want to acknowledge it," said Catholic Charities spokesman Roger Conner. "With seniors and retirees – people that were planning for that period of their life – they are often very proud and very private, and they want no one to know of the difficulties they might be experiencing."

Shewchuk, a 72-year-old retired technician, said he's been struggling to pay his bills and keep up with rising food costs. He said he and his wife Helen, 75, never needed charity before and used to volunteer at their local soup kitchen. This year, they started using it five days a week and getting assistance from food banks and the state. They have no children.

"We just have Social Security and a small pension, and we just can't make it with the mortgage payments and the gas and electric and so forth," Shewchuk said. "It's just draining our resources."

At St. Mary's Food Bank in Phoenix, 64-year-old Sherry Whittemore was collecting her monthly box of canned juice, pasta, beans and vegetables. She began coming to the food bank in January after losing her customer relations job at a Fry's Electronics store.

"I thought I would be able to get a job soon, but that's just unrealistic," Whittemore said.

Even with a temporary job helping people with vocational training and unemployment payments, she has had to tap into about $14,000 in savings.

Hubert Scheid, 76, drives a Lexus and owns a two-bedroom condo in Fort Lauderdale, Fla., but says he has depleted his savings and works part time as a security guard to pay for rent, food and medication.

Even then, it's still not enough. But he makes too much money to qualify for most assistance. For the Thanksgiving holidays, he expected to get a food box and turkey from The Pantry of Broward.

"I owned a Porsche. I had all the trimmings, the way you want to live when you're young and successful," Scheid said. "I went from rags to riches and from riches back to rags. You can't get help because you have it too good, but you don't have it good enough."

Older people also have the added disappointment of no cost-of-living increase in Social Security checks this year.

"Seniors were hit with the decline in the stock market," said Mark Dunlea, executive director of the Hunger Action Network of New York State. "It's unsettling when you lose a lot of your investment."

The New York City Coalition Against Hunger released a report on the city's soup kitchens and food pantries that found that 68 percent of responding agencies were seeing an increase in senior citizens. Hunger Solutions Minnesota said this month that food-shelf visits from older people increased 26 percent in the first half of this year, compared to the same period in 2008.

Anthony Butler, executive director of St. John's Bread and Life, a Brooklyn food pantry and soup kitchen, said some of the newest needy were volunteers, comfortable in their retirement. Now they're clients.

"People thought they would get by. They were surprised they would have to use a place like ours," he said. "We get a lot of that."

In Phoenix, Whittemore started volunteering at St. Mary's as a way to give back for the food she was receiving and also because she thought her situation would be short-term. Though people are respectful, she can't help feeling self-conscious.

"I'd like to be on that end," Whittemore said, pointing to a group of volunteers handing out Thanksgiving turkeys, "instead of this end."

___

Associated Press Writers Terry Tang in Phoenix and Kelli Kennedy in Fort Lauderdale, Fla., contributed to this report.

Michael Martin: Jamie Dimon's World

2009-11-28T06:29:19Z

I spoke with business journalist Duff McDonald on the release of his new biography on Jamie Dimon, Last Man Standing. That day, the blogosphere was awash with conjecture about Dimon becoming Secretary of the Treasury. "I don't think so. Jamie Dimon does not have the temperament to be Secretary Treasury."

McDonald added, "To be the Secretary of the Treasury, you need to be political and have patience. McDonald said. "He doesn't suffer fools or have patience for those who waste time. He might go nuts."

If McDonald is correct, it would be a big loss for the US because we need person with practical experience, but also someone who will make well thought out decisions without pandering to the White House and Wall Street, or worse, worry what other people are going to think about him. Dimon is staying put for now.

Even if he was interested, the timing for a corporate Wall St. leader such as Dimon to make the move to the Hill, would probably be political suicide for the Obama Administration at this point. The President's approval rating is slipping, for now at least, and although they change faster than foreign exchange rates, he won't want to further hurt midterm elections.

Dimon is on record as being no fan of the anti-corporate populism that was in overdrive before the Presidential Election in March 2008. Dimon said "I'm a Democrat. Democrats are the worst" - meaning the presidential candidates were playing to their audience or pandering.

Dimon had a passion of Economics from his days in undergrad, sending Milton Friedman his paper on Friedman's Capitalism and Freedom and getting a handwritten letter back from the esteemed Economist. After getting his MBA at Harvard Business School in 1982, he joined Sanford Weil in what would be the beginning of one of the most successful, if not the most inflammable, duo's in the history of corporate America.

No one can doubt that Weil was the visionary, however it's my contention that without Dimon, Weil's ascension might not have been what is was before the Citigroup collapse. Although McDonald disagrees with me on this, my opinion is that Weil was very aware of Dimon's ability and kept him deliberately at arm's length, knowing he'd get the younger Dimon to work harder for the attention and the esteem.

He got it, as the book's title suggests, and Weil's firing of Dimon and removing him from the succession plan led to a catastrophic loss of capital that rivals that of the AOL / Time Warner marriage. Weil has since admitted he blew that trade, but he is also quoted as saying "My real mistake, though, was that I repeatedly missed the chance in our early years together to curtail his aggressive behavior and mentor him into becoming a team player."

Dimon thinks like a trader. He understands things like Mathematical Expectation and it's in his thinking process. "...it's more important to do 10 things and get eight of them right, than to do five and get them all right." It's ok to be wrong, but you can't stay wrong.

Wall St. needs successful traders who have a history of keeping losses small running Wall Street firms, not lawyers and investment bankers. And although intelligence, academic achievement, and professional designations matter, emotional intelligence in handing other people's money is at the top of the list. That ability was sorely absent in recent years.

McDonald has substantial investigative chops in this regard. In the book he delineates how many Wall St. CEO's - who had parts of their balance sheets levered 100 to 1 - were walking around their offices like Fonzi at Arnold's Drive-In thinking "things aren't that bad. We'll be ok." Maybe if I bump the squawk box, the music will change? These guys were clueless.

Dimon and his advisors held fast. When Warren Buffett sold long-term Put options on the S&P 500, a bullish trade, "he refused to post any collateral against the positions," according to McDonald, "the banks would just have to take his word, and they did -- except Dimon." JPMorgan Chase lost the business. The last investors who demanded "no collateral" were John Meriwether and Myron Scholes of LTCM. (Both Meriwether and Scholes have blown up at least twice).

To that point, it seems Buffett is conflicted: Dimon made the prudent decision that Buffett allegedly lives for, yet Buffett made the reckless trade and rewarded another firm for mandating collateral. The sub-prime morass is largely due to excessive leverage. With no collateral posted, your leverage is "undefined" mathematically.

Dimon has his loyal army of decision makers who although don't have cake-walk with Dimon given his drive, have his ear and as they've earned his trust. One such advisor is Bill Winters. In the summer of 2004, Winters suggested that their firm blow out of an $8 billion SIV (structured investment vehicle) that they'd acquired through the Bank One deal. "We sold it to someone who thought the best way to manage the risk was to take on twice as much of it. Scale is the answer every time except in the tail." Someone has been reading their Nassim Taleb...

JPMorgan Chase had the fortified Balance Sheet due to Dimon's years with Weil and his understanding of disaster scenarios. "You don't run a business hoping your don't have a recession." Dimon and his team spent countless hours strategizing work-arounds for bear markets according to McDonald, such as 10% unemployment or a 10% move in currency exchange rates for example.

In the end, Dimon has a clear sense of self. When asked about his priorities in life, he said, "My family, humanity, my country, and the world. Way down here is JP Morgan."

Steve Parker: Our automotive radio shows this weekend

2009-11-28T04:17:51Z

Join us LIVE Saturday at 11am Pacific/2pm Eastern (NEW TIME!) and Sunday at 5pm Pacific/8pm Eastern on www.TalkRadioOne.com for our exclusive LIVE motoring and motorsports talk shows!

Steve Parker's The Car Nut Show
NEW TIME! Join us LIVE every Saturday at 11am Pacific/2pm Eastern

Some major car news this week: Toyota has admitted a major mechanical problem with its 3.8 million recalled Toyota and Lexus vehicles, after denying it just a week ago. And the "acceleration incidents" are not because of the wrong-sized floor mats; it's the gas pedals and maybe the ECUs in all the vehicles, too. And this week Toyota also announced a 110,000 unit recall of their Tundra pickup. Also, the Euro company which was negotiating with GM to buy Saab has backed out of the deal ... and there was plenty more, too. Let's discuss! The call-in number is: 213-341-4353.
Toyota's Camry, America's best-selling car, may have deep-seated throttle problems

Steve Parker's World Racing Roundup
Sunday starting at 5pm

This morning I had my first drive in the Chevrolet Volt extended-range hybrid and I'll have my first report on this critical car for GM. Thanksgiving night I went to the Turkey Night Grand Prix at Irwindale Speedway and we'll have a full report on the great competition there. This week is NASCAR's "Champion's Week" and for the first time ever it's being held in Las Vegas ... and fans can pay to attend and see their favorite drivers reap their rewards. Plus plenty from racing's 'silly season'. The call-in number is: 213-341-4353. Join in!
Jeff Gordon finished third in NASCAR point standings this season

Podcasts of both shows are available one hour after the live shows conclude. That's our NEW TIME this Saturday at 11am Pacific/2pm eastern and Sunday at 5pm Pacific/8pm Eastern time every week on www.TalkRadioOne.com!

Early Reports On Black Friday Sales Show Signs Of Life

2009-11-28T04:03:59Z