Yet more proof of Plunge Protection Team

Discussion in 'Trading' started by The Kin, Mar 14, 2008.


    Mortgage reforms outlined
    Paulson lays out proposals; foreclosures climb higher

    By Mary Umberger and Becky Yerak | Tribune reporters
    March 14, 2008

    With foreclosures escalating at a record pace nationally, and several Chicago-area counties showing significant increases, Treasury Secretary Henry Paulson on Thursday pointed a finger at the players he said contributed to the housing and credit mess and outlined reforms intended to stave off future excesses.

    The plan, formulated by a group of financial regulators that includes Federal Reserve Chairman Ben Bernanke, calls for nationwide licensing for mortgage brokers, new rules for credit-ratings agencies and firmer disclosure requirements for banks and Wall Street firms, all of whom have been widely criticized for lax standards that set up housing and the credit markets for a fall.

    Outlining a six-part set of general policy recommendations from the President's Working Group on Financial Markets, Paulson said, "Today's recommendations put us on a path toward more transparent, better-functioning and better-managed markets."

    Paulson's comments came the day new data showed that the number of homes in some stage of foreclosure jumped 60 percent in February from a year earlier. RealtyTrac, a foreclosure-data firm, said one in every 557 U.S. households received a foreclosure filing in the month.

    RealtyTrac CEO James J. Saccacio said the leap suggested "we still have not reached the peak of foreclosure activity in this cycle."

    Nevada, California and Florida continued to lead the way. Nevada's filings were more than three times the national average, with one in every 165 households receiving a foreclosure filing.

    Illinois finished 12th, with filings for one in every 587 households, RealtyTrac reported. February foreclosure activity here was 32 percent higher than a year earlier, the company said. Will County leads the state in per household filings at 309, the company said.

    "Most of the time we are able to help keep them in housing," said Kris White, executive director of the Will County Center for Community Concerns, a HUD-certified counseling agency. "Unfortunately, are we able to keep them in that house that's in trouble? No. But our goal is to keep them from becoming homeless."

    While saying "this report is not about finding excuses and scapegoats," Paulson strongly criticized mortgage originators for a "dramatic weakening of underwriting standards" that led to the subprime collapse.

    Those defaults spread through the credit markets, severely limiting lending and leading to huge write-downs of mortgage losses by financial institutions.

    "Mortgage brokers will be held to strong national licensing and enforcement standards," Paulson said. "There will be stricter safeguards against fraud, and full and clear disclosure to borrowers about home-loan terms, including long-term affordability."

    Housing counselor Elizabeth Caton said this is overdue. She has been working with Rafeek and Donna Zayed, whose home on the Northwest Side recently went into foreclosure after they fell behind on their payments in October.

    When the couple, whose income is $3,900 a month, refinanced, they said their broker misstated their income as $6,600 a month -- pushing their payment to $2,810 from $1,790.

    The Zayeds are working with Caton, a counselor for the Northwest Side Housing Center, to try to get their monthly payments lowered.

    "I've contacted the attorney general's office to have them contact [the lender] to see what they can do," Caton said, noting that the 10.25 percent rate is among the highest she has seen.

    Paul Leuken, president of the Illinois Association of Mortgage Professionals, a trade group consisting primarily of mortgage brokers, said it was unfair to single out one group of loan originators.

    "I think nationwide licensing is a good idea," Leuken said. "But where people are falling short is pinning it on one group.

    "Much of the blame also goes to the consumer for thinking housing would always go up, up, up. The perfect storm happened, housing values stalled and now we're in this mess."

    Paulson, in releasing the report, also criticized investors in subprime loans, many of whom "bought products they didn't fully understand or bought based solely on credit ratings."

    The President's Working Group on Financial Markets was formed after the 1987 stock market crash to monitor markets. Specific recommendations from the group are still to come.



    U.S. Stocks Gain After S&P Predicts End to Subprime Writedowns

    By Eric Martin

    March 13 (Bloomberg) ...

    Lending Regulation

    Treasury Secretary Henry Paulson, Fed Chairman Ben S. Bernanke and other U.S. regulators proposed greater scrutiny of lending in a report on lessons from the mortgage crisis.

    ``Regulators have a role to play in every change,'' Paulson said in excerpts of a speech on a report by the President's Working Group on Financial Markets. ``They will issue new rules and seek regulatory authorities as needed, evaluate progress, provide guidance and enforce laws, to ensure that implementation follows recommendation.''

    The number of Americans collecting unemployment benefits rose to a 2 1/2-year high, a sign the slowing economy is restraining hiring. The number of people continuing to receive jobless benefits rose to 2.835 million in the week ended March 1, the highest since September 2005, from 2.828 million the prior week, the Labor Department said.

    In a separate report, the government said prices of goods imported into the U.S. rose less than forecast in February. The 0.2 percent increase in the import price index followed a revised 1.6 percent gain the prior month.

    The Russell 2000 Index, a benchmark for companies with a median market value 22 times smaller than the S&P 500, climbed 1.9 percent. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, rose 0.7 percent to 13,266.85. Based on its advance, the value of stocks increased by $109 billion.

    To contact the reporter on this story: Eric Martin in New York at
    Last Updated: March 13, 2008 17:03 EDT

    Press Release
    Release Date: March 14, 2008

    For immediate release

    The Federal Reserve is monitoring market developments closely and will continue to provide liquidity as necessary to promote the orderly functioning of the financial system. The Board voted unanimously to approve the arrangement announced by JPMorgan Chase and Bear Stearns this morning.

    2008 Monetary Policy Releases

    Last update: March 14, 2008


    INFLATION SEEMS TO have entered the digital age. Yesterday, three critical inflation indicators hit alarming milestones — and they were all ones and zeros...
  3. I see the Fed Naysayers have been made speechless.
  4. "Having the luxury of hindsight, its now obvious that all the
    de-regulation of previously regulated industries (financial & other)
    that took place from 1980-1988, has been the cause of the majority of bubbles and failures in our economy."