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Wednesday, January 20, 2010


Most Asian markets fall as concern builds that China will cool economy
Share markets across the Asian-Pacific region mostly closed lower Wednesday because of concern that China will take steps to cool its economy. Japan's Nikkei 225 and Taiwan's Taiex shed 0.3%, while Australia's S&P/ASX 200 inched up 0.1%. China's Shanghai Composite plunged 2.9%, Hong Kong's Hang Seng Index gave up 1.8% and South Korea's Kospi Composite added 0.2%. Shares in the Philippines and New Zealand ended flat. The Wall Street Journal (20 Jan.)

*Dead Ted must be rolling over in his grave!
Brown's win puts spin on financial regulatory revamp
Massachusetts voters elected Republican Scott Brown to the Senate, adding pressure on Democrats to approve legislation to overhaul financial regulation. On Tuesday, U.S. President Barack Obama met with Senate banking committee Chairman Christopher Dodd, D-Conn., to discuss the bill's future. Brown's win likely means Democrats will have to offer Republicans more concessions on the legislation. Reuters (20 Jan.)

*What a sell off.
CMBS sales likely will stay below $15 billion in 2010, analysts say
Analysts at JPMorgan Chase and Barclays Capital said sales of mortgage-backed securities likely will total less than $15 billion and possibly as little as $10 billion this year as borrowers deal with deteriorating property values. Data compiled by JPMorgan show that the commercial mortgage-backed bond market slid from $237 billion in debt sold in 2007 to $12 billion in 2008 and $1.4 billion in 2009. Bloomberg (1/19)

*And now that housing prices have stabilized (LAUGH LAUGH LAUGH OUT LOUD) we should start all over again.
Underwriters discuss possible revival of "private-label" MBS
Two years ago, investor appetite for "private-label" mortgage-backed securities was ruined by surging defaults, causing the market to come to a halt. Some Wall Street underwriters are discussing the possibility of reviving the securitization market. Bryan Whalen of Trust Company of the West said the first offering could launch in the first quarter and total as much as $500 million. The Wall Street Journal (1/20)

*At least they are doing some things right like, extorting much needed cash from these scheisters.
Treasury drives hard bargain with some banks on TARP warrants
The Treasury Department persuaded some major financial institutions, including Goldman Sachs and Morgan Stanley, to exceed market estimates with their repurchase of warrants issued in exchange for funds received through the Troubled Asset Relief Program. The government has received $2.9 billion from 31 warrant repurchases, according to a report from the Treasury. Third-party, internal and market estimates placed the value of those warrants at $2.2 billion to $2.7 billion, according to the report. The Wall Street Journal (1/20)

Sweden proposes that EU follow U.S. lead on bank fee
Anders Borg, finance minister for Sweden, said he proposed that the EU levy a fee on banks similar to the one proposed by U.S. President Barack Obama. "The financial system should pay for the actual cost it incurs to society and the taxpayers in the form of implicit state guarantees for systemically important banks," Borg wrote in a letter to Elena Salgado, finance minister for Spain. Meanwhile, U.K. Prime Minister Gordon Brown promoted the idea of a global bank levy as part of an effort to ensure financial institutions cover the implicit government guarantee of the industry. Financial Times (tiered subscription model) (19 Jan.)

*Good luck. The same is being said here in the US. There is only one problem: private enterprise has no enterprise. With credit lines to business and consumers decimated, there will be no recovery except from the massive sucking sound of the american taxpayers tax bill from all the government stimulus that will not be sustainable anymore now than it was then. We are about to tax and increase fees ourselves right into the poor house. Debtors prison anyone?
Bank of Canada says businesses must drive growth after stimulus ends
Fiscal stimulus in Canada, including historically low interest rates, is coming to an end, and businesses must be ready to shoulder the burden of driving economic growth, Bank of Canada Governor Mark Carney said. The central bank left its benchmark interest rate at 0.25%. Sometime next year, depending on the outlook for inflation, the private sector "should become the sole driver" of growth, Carney said. The Globe and Mail (Toronto) (20 Jan.)

Analysis: U.S. is increasingly locked into long-term unemployment
There seems to be little hope of escape from a truly jobless recovery, given the dismal rate of job creation in the U.S., according to The Economist. The population grew by almost 30 million between December 1999 and December 2009, but at the end of that period, only 400,000 more Americans had jobs. "Without job growth, household indebtedness will linger as a problem, depressing spending and hiring," according to The Economist. "Joblessness is a trap the American labour force may not soon escape." The Economist (14 Jan.)

Bernanke asks GAO to audit Fed's actions on AIG bailout
Responding to charges that the Federal Reserve tried to hide details of the U.S. government's bailout of American International Group, Fed Chairman Ben Bernanke asked the Government Accountability Office to audit the central bank's actions. Bernanke promised in a letter to congressional auditors that the Fed would make available "all records and personnel necessary" to conduct the audit. Meanwhile, a House committee that had subpoenaed material related to AIG's bailout received 250,000 pages of documents from the Federal Reserve Bank of New York. Bloomberg (20 Jan.)

MetLife deal for AIG unit could redeem $9 billion U.S. investment
MetLife is negotiating to buy a life insurance subsidiary of American International Group in a deal that could go toward recovering the U.S. government's $9 billion stake in AIG, sources said. MetLife is discussing a $14 billion to $15 billion deal to buy American Life Insurance and is likely to be the successful bidder, the sources said. AIG made a commitment to pay the first $9 billion it receives from the sale to the Federal Reserve Bank of New York to redeem the government's preferred shares. The New York Times (19 Jan.)

*this will help the housing market alright. Face facts: FHA, GNMA, Fannie Mae are all insolvent and not one damn thing is going to stop this decline except to restructure all of this debt.
FHA aims to increase down payment, insurance fee on mortgages
To bolster its increasingly shaky financial condition, the U.S. Federal Housing Administration plans to require a bigger down payment from some borrowers, increase the fee for mortgage insurance and restrict the amount sellers can contribute to closing costs. For many buyers, the down payment would continue to be as little as 3.5%, but borrowers with a low credit score would be required to pay at least 10%. The insurance premium paid at closing would rise from 1.75% to 2.25% of the loan value. The Washington Post (20 Jan.)

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