Linking ≠ endorsement. Enjoy and share:
- New Jersey sues Standard & Poor’s for fraud
TRENTON, N.J. — New Jersey is suing Standard & Poor’s, making it at least the 19th state to claim in court that the bond-rating company defrauded the public by not disclosing its personal financial interest in the securities it ranked.
At issue in New Jersey are the ratings S&P, one of three firms that rates the bulk of public bonds and securities, assigned before the 2008 financial crisis to complicated investments known as structured finance securities. The state says S&P told investors the products were solid investments even though it knew, or should have known, the residential-mortgage investment pools would prove vulnerable if housing values fell and homeowners had trouble making mortgage payments.
Instead, says the state, S&P bowed to pressure from investment banks because it wanted the banks’ lucrative fees.
The state says the company’s fees for analyzing structured finance securities are three to four times more than its fees for rating corporate bonds. It says industry publications have estimated that up to 40% of S&P’s $12.7 billion in revenue in 2006 was derived from fees from structured finance ratings.
“It was allowing its desire for revenue and market share to influence and undermine the integrity of the analytical models that it used to evaluate the risk of and to issue ratings on structured finance securities,” the lawsuit states.
- Fannie and Freddie take steps toward a unified securitization platform | Inman News
The Federal Housing Finance Agency announced the completion of some steps today to unify the mortgage securitization platforms of the government-sponsored entities Fannie Mae and Freddie Mac into one system. The organizations’ regulator has filed paperwork to establish a limited liability company in Delaware, Common Securitization Solutions LLC, and signed a three-year lease on commercial office space in Bethesda, Md., that will house the firm.
- IMF Document Excerpts: Disagreements Revealed – Real Time Economics – WSJ
Brazil’s executive director Paulo Nogueira Batista in a prepared statement to the board for the May 9, 2010 meeting:
“The risks of the program are immense…As it stands, the programs risks substituting private for official financing. In other and starker words, it may be seen not as a rescue of Greece, which will have to undergo a wrenching adjustment, but as a bailout of Greece’s private debt holders, mainly European financial institutions.”
“Our decision to go along with this problematic and risk-laden program should not be taken to mean that we will support it in the future. Going forward, we will consult with our authorities and other chairs to make sure that the fund is not led along the path of endorsing a program that may prove to be ill conceived and ultimately unsustainable.”
“The exceptionally high risks of the program were recognized by staff itself, in particular in its assessment of debt sustainability.”
“Several chairs (Argentina, Brazil, India, Russia, and Switzerland) lamented that the program has a missing element: it should have included debt restructuring and Private Sector Involvement (PSI) to avoid, according to the Brazilian ED, ‘a bailout of Greece’s private sector bondholders, mainly European financial institutions.’
- BBC News – Akira Amari: Abenomics may take 10 years to work
Japan’s aggressive policies aimed at reviving its economy may take 10 years to have a full impact, Akira Amari, Japan’s minister in charge of economic revitalisation, has told the BBC.
Known as Abenomics, these include easing monetary policy, boosting stimulus and reforming key sectors.
It has already worked somewhat. Let’s give it time and hope that the announced sale-tax increase won’t do what it did last time, which was severely dampen growth. As our readers know, we don’t agree with the sales-tax increase at this point in Japan’s recovery. To us, it is counter-productive to the other aspects of Abe’s plan.
- EconoSpeak: CBO’s Projections of Spending Did Not Rise as Suggested by Niall Ferguson
… much of the blame for the worsening projection had to do with the decision to make the Bush tax cuts permanent.
It makes perfect sense.
Tax increases at the wrong time are bad and tax decreases at the wrong time are bad in this mixed economy. If the Bush tax cuts for the rich had never been enacted, the US wouldn’t be having a discussion about cutting Medicare and Social Security, etc. The economy would be stronger.
Of course tax cuts and increases are far from the only governmental policies that hugely impact the economy when done at the wrong time or in the wrong way.
Blanket deregulation rather than careful reevaluation literally set up the Great Recession. That was done on both Republican and Democratic watches. Bill Clinton even admitted that he had been duped into bad deregulation of the financial system, which when coupled with the mistakes of George W. Bush’s administration allowing ever greater leverage and a lack of careful supervision, caused the Great Recession. The blanket-deregulation, anti-government trend really got rolling under Ronald Reagan though.
It wasn’t good Risk Management in our eyes. It caused great instability and finally the collapse of 2007-8 we’re still not out of.
- The poorest cities in America – Yahoo Homes
In the annual American Community Survey, the U.S. Census Bureau releases statistics on the population. Age, race, location, income — these and more are outlined in the report, and the 2012 survey, released this month, gave insight into the country’s wealth distribution.
1. Lumberton, N.C.
• Population: 135,517
• Income: $28,293
- New National Report Shows Commercial Real Estate Recovering But Still Not Up to… — WASHINGTON, Oct. 7, 2013 /PRNewswire-USNewswire/ —
… gains and planned projects face a difficult economic road as current changes in fiscal policy and decreases in federal spending threaten the current projections of increased GDP growth and job creation through 2015,” said Dr. Fuller. “These advances and increased projects are paramount to continued growth in the country, as the U.S. economy cannot achieve sustained expansion in the absence of the development industry’s full recovery.”
- Syracuse land bank becomes a landlord of seized properties | syracuse.com
SYRACUSE, N.Y. – The new Syracuse land bank is scheduled to take possession of its first 23 properties this week, a milestone that will increase the new organization’s visibility as a property manager, landlord and – officials hope – an agent of neighborhood revitalization.
The land bank’s acquisition of tax-delinquent homes, apartment buildings and other properties may also put it in the uncomfortable position of having to evict tenants if they can’t pay rent or their buildings are beyond repair.
But Katelyn Wright, the land bank’s executive director, said eviction will be the last option. The land bank is willing to rent to the tenants of buildings it seizes, and will also work with homeowners if they want to stay on as renters after their homes are taken, she said.