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American Soveriegn Wealth Fund

Brad Stetser at rge monitor has a great write up on the question of central bank interventions that MG suggested was relevent in comments.

The explanation is a narrative and has many links. However, it needs to be read over there, as I do not know how to break it into parts. The size and scope of new world banks interventions in the US dilemma is well developed for a short article. It is also his area of particular knowledge.

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Bonus pay rewards WAMU execs for 2007 performance

Washington Mutual files amended executive 2008 bonus package with the SEC.

For the 2008 Bonus Plan the Committee selected the following performance measures and relative weights:
· The Company’s 2008 net operating profit, weighted at 30%, calculated as operating profit before income taxes and excluding the effects of (i) loan loss provisions other than related to our credit card business and (ii) expenses related to foreclosed real estate assets;

· The Company’s 2008 noninterest expense, weighted at 25%, calculated to exclude expenses related to (i) business resizing or restructuring and (ii) foreclosed real estate assets;

· The Company’s 2008 depositor and other retail banking fees, weighted at 25%; and

· The Company’s 2008 customer loyalty performance, weighted at 20%, based upon a proprietary rating system designed by the Company and an outside vendor.

In evaluating Company financial performance, the Committee may adjust results to eliminate the effects of charges for restructurings, discontinued operations, extraordinary items and items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment or a business or related to a change in accounting principle.

Wamu bond rating hits BBB, and bonuses EXCLUDE expenses from performance disaster. I wish I could do that!!! Sammy, help!

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Good news for borrowers

Salon notes the WSJ article on smart customer planning for borrowing.

Wall Street Journal’s Robin Sidel explains that home equity credit lenders are stuck in a tough place when homeowners start defaulting.
While banks can foreclose on a first-lien mortgage, lenders often have little recourse when trying to collect a delinquent home-equity loan, especially if another bank holds the primary mortgage. Banks holding home-equity loans generally can only seize the collateral — a house — after the mortgage is paid off.
When another bank holds the mortgage and the mortgage payments are current, the home-equity lender is effectively powerless to collect the debt.
But here’s the best part:
Unfortunately for home-equity lenders, many borrowers understand that pecking order, concluding there are few repercussions if they stop making payments on their home-equity loan. “Lenders are seeing people go delinquent on home equity who by all rights wouldn’t be expected to go delinquent,” said Dan Balkin of Wholesale Access, a Maryland research and consulting firm that specializes in the mortgage industry.
Lesson to would-be homeowners. Keep your mortgage lenders and home equity lenders separate! Lesson to banking industry: maybe all this slicing and dicing of real estate finance into separate bits wasn’t so smart.
(Meta-econo-blogging note. Sometimes, after skimming the Wall Street Journal and The Financial Times, I turn to the econoblogosphere to see what I missed. Sometimes, as was the case this morning, I find that the econobloggers are all highlighting the same story that caught my eye. The Big Picture and Calculated Risk also chime in.)

Update: This is not advice of any kind.

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Limited tricks, monolines, municipal bonds…

William Polley wonders out loud as well:

The WSJ Real Time Economics Blog opens a post with this:

“Back in 2003, when the Federal Reserve cut interest rates to 1%, the world worried that the Fed was running out of ammunition and would soon have to turn to unconventional tools.

Now, in 2008, it’s worth asking if the Fed could run out of unconventional ammunition. Tuesday’s offer to lend $200 billion of its Treasury holdings to primary dealers in return for mortgage-backed securities both guaranteed by the government-sponsored enterprises (Fannie Mae and Freddie Mac) and not (private-label MBS) means it will have eventually sold or pledged half of its Treasurys, limiting how many more of these tricks it can pull off.”

My first thought when I heard about this innovative move the Fed was that it would take the pressure off for a few days–maybe a week or two. And what then?

And Reader fatbear (any relation, cousin?) sends this link to Bloomberg: Carlyle Capital Fails to Reach Accord; Lenders to Seize Assets.

We also will be seeing municipal problems in Cleveland and Detroit to name a few, although as save the rusbelt points out these cities have been ignored to some degree.

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OCC links

The Office of Currency Control has a website to explore.

National bank subsidiaries monitored by OCC tend to be mortgage companies. The link is to the long list of matching trade names to the correct national bank, and in which state the subsidiary operates.

The Securities Exchange Commission has a listing of proposed rule changes by the OCC in 2008 at the link.

A generic regulation search engine is at this link.

OCC Watch is not current, but other sites will be researched.

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OCC watch

This site dedicated to OCC watching offers a little background for us in the changes being made with banking rules.

In January, 2004 the OCC issued two related and sweeping rules, one preempting nearly all state and local consumer laws (the “preemption rule”) [69 Fed. Reg. 1904 (2004)] and the other restricting nearly all enforcement powers of state regulators and attorneys general (the “visitorial powers rule.”) [69 Fed. Reg. 1895 (2004)] over national banks, and incredibly, their state-licensed operating subsidiaries, which are not banks.

The issuance of the OCC rules has sparked a bi-partisan storm of protest from state legislatures, state financial regulators and state attorneys general. The attorneys general particularly criticized the OCC’outrageous characterization that the “National Bank Act protect[s] national banks from potential state hostility…” Calling the states “hostile” does not advance any legitimate argument. See the OCC Watch Coalition Partner Links page for more information.

Even the normally complacent House Financial Services Committee has weighed in. In addition to holding OCC oversight hearings, it has passed a bi-partisan budget resolution on a vote of 34-28 stating that the OCC action “may represent an unprecedented expansion of Federal preemption authority” and “comes without congressional authorization, and without a corresponding increase in budget resources for the agency.” The committee also pointed out that without a budget increase, the OCC cannot really expect its modest staff of 40 consumer complaint specialists and approximately 100 examiners to both continue their own work and also take over much of the work of an estimated 700 state consumer enforcers and examiners. “In the area of abusive mortgage lending practices alone, State bank supervisory agencies initiated 20,332 investigations in 2003 in response to consumer complaints, which resulted in 4,035 enforcement actions”.

Two points to be made:
1. The size of the department makes regulation moot given the responsibilities.
2. The national bank is not subject to state regulations, but also the state subsidiaries of that bank.

Since the trend is not new but was accelerated since after 2000, would state regulation have been able to help with the bank situation? Is the lack of staff with huge increases in responsibility another way to lessen regulatory effectiveness? Was that the intent? And how does that square with the press release by the OCC here?

Step by step information to be had….there are two lists compare. Perhaps a call to each state AG could obtain more information. If you call in CA, make sure to mention cactus’s problem.

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Student loans

The Project on Student Debt at The Institute of College Access and Success (ticas.org) reports:

The current credit crunch has students and parents concerned about whether they will be able to get the loans they need to cover college costs. The good news is that federal student loans are and will remain widely available to students and families at all income levels. These loans come with government-guaranteed benefits: affordable, fixed interest rates; substantial borrower protections; and new repayment and forgiveness options. However, the small percentage of undergraduates who use private, non-federal loans are likely to face stricter credit standards and possibly higher prices. Students and parents should only consider private loans as a last resort because of their high risks and costs.

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Admiral Fallon retires early

An admiral takes on the White House:

By Gareth Porter WASHINGTON – A new article on CENTCOM commander Admiral William Fallon confirms that his public statements last autumn ruling out war against Iran were not coordinated with the White House and landed him in trouble more than once with President George W Bush and Vice President Dick Cheney.

In an admiring article on Fallon in Esquire, former Pentagon official Thomas P M Barnett writes that Fallon angered the White House by “brazenly challenging” Bush on his aggressive threat of war against Tehran. Barnett also cites “well-placed observers” as saying Bush may soon replace Fallon with a “more pliable” commander. Barnett’s account, which quotes conversations with Fallon during the CENTCOM commander’s trips to the Middle East, shows that Fallon privately justified his statements contradicting the Bushpolicy of keeping the “option” of an unprovoked attack on Iran “on the table” as necessary to calm the fears of Egypt and other friendly Arab regimes of a US-Iran war.

The article mentions military reluctance with Clinton to start a fight as well, so Porter is not blatantly partisan. Does anyone have another interpretation of Admiral Fallon’s early departure, given that General Patreaus might be in line for a promotion? How many military leaders need to retire early?

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Karl Rove swears….

Think Progress carries this report on Rove in Iowa. The links, which provide much better context, did not port to here, so go have a look should you desire.

Karl Rove, former senior aide to President Bush, spoke to a hostile crowd at the University of Iowa yesterday evening. Students and local citizens protested his appearance at the university and “staged a mock trial” for Rove inside the student union before the speech.

During the lecture, Rove lashed out at hostile questioners, telling one man his comment showed “a simple, stupid mind” and chastised what he said were “stupid statements” from the audience. Rove also said that former Amb. Joseph Wilson “lied” about his 2002 trip to Niger and accused an audience member of “perpetuating libel” on the U.S. military for asking about the real number of deaths in the Iraq war:

I know that Karl has not had time to come by this week to Angry Bear to read our comment policy, so he is to be forgiven this time round. (Besides, he received $40,000 to say those things, so maybe he has no incentive. Sigh).

Update: Noni sends this link to watch the event:

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