Daily Archives: September 4, 2012

Madrid will inject six billion euros in public funds to help banks

French newspaper LeMonde translated in English:

One day after the green light to the injection of 4.5 billion euros in Bankia , theSpain continues its momentum. It will inject 6 billion euros in public funds to helpthe banking sector “in the coming days” , said a spokesman for the Ministry of Economy, Tuesday, Sept. 4. Financing of public fund (Fondo de Reestructuraciónordenada Bancaria , FROB) will be done through “cash or debt service” .

The increase of € 6 billion was certainly included in a decree adopted by the government in February, but had hitherto not been started. “Until now, there was no need to do . This is done now because it is now necessary “ , said the spokesman, refusing, however, to establish a direct link with the rescue of Bankia.

CFTC Ignored Warnings of Libor-Gaming – 15 Years Ago

When the Chicago Mercantile Exchange launched its Eurodollar futures contract in 1981, it devised a nearly foolproof way to calculate the London interbank offered rate.

The CME would select 20 banks at random from a much larger pool and survey those banks for their perception of interest rates. It would discard a subset of the highest and lowest and average the responses that remained.  At a randomly selected time within the next 90 minutes, the CME would conduct a second survey with a fresh random set of banks. Finally, it would publish the average of the results of the two surveys without revealing the identities of the banks that participated.

This is in sharp contrast to the now-infamous procedure of the British Bankers’ Association which uses a smaller sample of the same banks every day and displays their rates for the world to see.

In September 1996, the CME applied to the U.S. Commodity Futures Trading Commission for permission to switch from its own, sensible Libor calculation to the BBA’s.  Presumably, the CME worried that a rival exchange would steal market share by starting a contract tied to BBA Libor, which was and is the standard floating rate index for swaps, loans and notes.

On Nov. 18, 1996, I filed a public comment letter with the CFTC objecting to the CME’s plan.  Here are some excerpts from that letter

Read on.

Pension Plan Sues Citigroup for $9 Billion

Courthouse News Service.

MANHATTAN (CN) – Citigroup used misrepresentations to sell billions of dollars of euro notes, whose value plummeted during the financial crisis, a United Kingdom-based pension company claims in a federal class action.
     Rentokil-Initial Pension Scheme sued Citigroup and four of its top officers – Sanford Weill, Charles Prince, Robert Rubin and Vikram Pandit – on behalf everyone who bought euro notes from Citigroup between Oct. 12, 2005 and Feb. 25, 2009.
     Citigroup peddled the euro notes with prospectuses that underestimated the bank’s exposure to toxic mortgage-backed securities, and falsely claimed to be “well capitalized,” the pension fund claims.
     The lawsuit does not allege securities fraud.
     It seeks damages under the United Kingdom’s Financial Services and Markets Act 2000, or FSMA.


Million-dollar-plus foreclosures are rare, but are on the rise, according to RealtyTrac, a California company that follows the foreclosure market.

Read on.

Foreclosures rise on million dollar homes

Foreclosures on million dollar homes in New Jersey and across the nation seem to be on the rise as more well-to-do families default on expensive mortgages, according to The Record out of New Jersey.

The publication cites RealtyTrac data, which shows foreclosures on loans valued above $1 million making up less than 2% of all foreclosures nationwide.

Still, foreclosures on these types of properties have doubled since 2007, the California-based real estate research firm said.

In Bergen County, N.J., there have been 70 foreclosures on million-dollar-plus properties since January 2010, according to The Record.

Click here to read the full article.

Credit union mortgage lending doubles in California

California credit unions took advantage of the Home Affordable Refinance Program and originated twice as many home loans in second quarter than the previous three months.

These smaller lenders wrote a collective $9.6 billion in mortgages, up from $4.6 billion at the beginning of the year. Like larger banks, credit unions were able to pick up some business from an expanded HARP, which allowed more underwater borrowers to refinance theirFannie Mae and Freddie Mac loans.

Many of the largest banks tied off new HARP to just the loans they service, and some borrowers exhausted with poorly managed government programs in the past even bypassed the largest banks for their more approachable credit unions.

“Credit unions are the good guys in all of the problems in housing. That was a big part of the inflow. The larger banks are just too big and bureaucratic,” said Diana Dykstra, CEO of the California and Nevada Credit Union Leagues.

Read on.

Partial list for speakers for Tuesday Democratic National Convention

Here is the partial list for speakers for Tuesday Democratic National Convention :

5:00 p.m.

Chairwoman of the Democratic National Committee Representative Debbie Wasserman Schultz, D-Fla.

Chief Executive Officer of the Democratic National Convention Committee Stephen J. Kerrigan 

Parliamentarian of the 2012 Democratic National Committee Convention Steny Hoyer

Treasurer of the Democratic National Committee Representative Andrew Tobias, D-Md.

Secretary of the Democratic National Committee Alice Germond

6:00 p.m.

Representative Barbara Lee, D-Calif.

Lieutenant General Claudia Kennedy

Mayor of Newark, New Jersey Cory Booker

North Carolina Gov. Bev Perdue

International President of the Service Employees International Union (SEIU) Mary Kay Henry

Ryan Case, American Voices

Representative Charles Gonzalez. D-Texas

Representative Nydia M. Velázquez, D-N.Y.

Illinois Gov. Pat Quinn

Cincinnati, Ohio Firefighter Doug Stern

Candidate for the US Senate and Former Virginia Gov. Tim Kaine

7:00 p.m.

Mayor of Charlotte, North Carolina Anthony Foxx

Democratic Majority Leader Senator Harry Reid, D-Nev.

Ken Salazar

Candidate for the US House of Representatives, Massachusetts Joe Kennedy III

Former Representative Robert Wexler, D-Fla.

8:00 p.m.

Mayor of Minneapolis, Minnesota R.T. Rybak

Representative Jared Polis, D-Colo.

President of the National Abortion Rights Action League – Pro-Choice America (NARAL)  Nancy Keenan

Nate Davis, American Voices

Candidate for the US House of Representatives, Illinois Tammy Duckworth

Rhode Island Gov. Lincoln Chafee

Representative James E. Clyburn, D-S.C.

Stacey Lihn, American Voices

Representative Xavier Becerra, D-Calif.

9:00 p.m.

Former Ohio Gov. Ted Strickland

Secretary of Health and Human Services Kathleen Sebelius

Mayor of Chicago, Illinois Rahm Emanuel

Actor/Producer Kal Penn

Brother of Mrs. Obama and Sister of President Obama Craig Robinson and Maya Soetoro-ng

Women’s equality leader and namesake of the Lilly Ledbetter Fair Pay Act Lilly Ledbetter

Massachusetts Gov. Deval Patrick

10:00 p.m.

Maryland Gov. Martin O’Malley

Candidate for the US House of Representatives, Texas Joaquin Castro

Mayor of San Antonio, Texas Julián Castro

First Lady Michelle Obama


Read more: http://www.foxnews.com/politics/2012/09/04/list-democratic-convention-speakers-for-tuesday-1914588855/#ixzz25WqTSHmG

U.S. Companies Brace for an Exit From the Euro by Greece

Even as Greece desperately tries to avoid defaulting on its debt, American companies are preparing for what was once unthinkable: that Greece could soon be forced to leave the euro zone.
Bank of America Merrill Lynch has looked into filling trucks with cash and sending them over the Greek border so clients can continue to pay local employees and suppliers in the event money is unavailable. Ford has configured its computer systems so they will be able to immediately handle a new Greek currency.
No one knows just how broad the shock waves from a Greek exit would be, but big American banks and consulting firms have also been doing a brisk business advising their corporate clients on how to prepare for a splintering of the euro zone.

Read on.

Not a Surprise. Hedge Fund Bulls Push U.S. Gasoline to Labor Day Record

Hedge funds raised bullish bets ongasoline to more than a three-month high, helping push prices at the pump to record levels for the U.S. Labor Day holiday, as Hurricane Isaac roared toward the Gulf of Mexico and a deadly blast closed Venezuela’s largest refinery.
Money managers increased net-long positions, or wagers on rising prices, by 3 percent in the seven days ended Aug. 28, according to the Commodity Futures Trading Commission’s Commitments of Traders report on Aug. 31. They were the highest since the week ended May 1.

Read on.