2008 December 26 | money blog

26 12 2008

Bloggers Under Attack - Part 2

Posted by: admin in mortgage industry

I wrote a year ago about the site, Mortgage Lender Implode-O-Meter, being sued by a mortgage company for damages allegedly tied to the company’s listing on the site’s imploded lender list. The claims were fanciful, with the lender claiming that their bank accounts had been drained by institutional warehouse lenders and other sorts of malarky that made the suit look exactly as it was: an attempt to simply shut-up the good folks at Implode by a brute force legal battle where they figured to have the upper-hand in capital to silence the critics.

The good news for all of us? The community around Implode donated to the tune of $20,000 (subsidizing about half the legal costs incurred) and the site and it’s owners had good legal representation that settled the case out of court. The critics lost - they could not silence the new newsmakers and their reportage simply because it made them look bad.

But the battle was far from over, as more bloggers have been sued for critical remarks and coverage of the seedy underbelly that was the mortgage industry. Companies have been sending threatening letters, making menacing phone calls, and dragging these individuals to court at an alarming rate to silence them and protect their company name.

The folks at Implode have soldiered on and in the meantime have become the de facto number 1 news source about the mortgage industry. And because of this they remain under attack.

In October Implode was sued again for an expose that uncovered a scheme that used FHA downpayment assistance, affiliation with Indian Reservations and some creative financing to provide a seller-funded downpayment grant program that seemed to run outside the law - at least according to Forbes and other sources. I’m not an expert on the matter but the article itself seemed well-researched and documented to me and you can judge for yourself at: What the SFDPA Administrators Don’t Want You To Know: Part 1, The Penobscot Indian Tribe Down Payment Grant Program

Once again the owners of the company under the spotlight reacted with threats and eventual legal action against Implode. You can read about the full suit here.

This is sending us all who write and comment on the industry down the dangerous path of simply being bludgeoned to silence by those that would rather bury the bodies and move on, without dealing with the consequences of the greed and malfeasance that permeated the industry over the last decade. It cannot be tolerated or appeased and all of those who responsibly seek to uncover the truths of the past must be protected and supported against those who wish to silence them.

While the site isn’t actively fundraising for this battle, I urge you to support Implode and the people there who have become the preeminent information source on the industry meltdown in their goal to uncover and bright to light the ridiculous systems and schemes that were set up to generate millions of dollars during the boom from unsuspecting (or suspecting) participants. Please give whatever you can. Free speech is our most basic right, and ensuring that the industry is reformed is the only way to keep another housing-fueled meltdown from bringing this country to its knees again.

Source [blownmortgage]

26 12 2008

Morgan Stanley plunges 25%, Goldman 10%; other financials stable

Posted by: admin in Stocks Money News

Filed under: Major movement, Exxon Mobil (XOM), Citigroup Inc. (C), Bank of America (BAC), MasterCard Inc’A’ (MA), Goldman Sachs Group (GS), Morgan Stanley (MS), Wells Fargo (WFC)

Morgan Stanley (NYSE: MS) shares had plunged by about 25% about an hour ago, while Goldman Sachs (NYSE: GS) shares had dropped about 11%. By now, the declines have moderated with MS down “only” 15% and GS down about 8%.

Other financials, such as Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC) and Citigroup (NYSE: C) aren’t displaying such declines. BAC is down less than 2%, WFC up 0.75% and C is up half a percent.

With no news on either company, it isn’t clear why the two investment banks, recently turned commercial banks, are plunging.

CNBC’s David Faber said one of the reasons Goldman could be down today is a “rumor the firm was involved with the ‘Short Volkswagen’ trade, which has blown up on a massive short squeeze.” Volkswagen (OTC: VLKAY) briefly took over the lead from Exxon Mobil (NYSE: XOM) as the largest market cap firm in the world after the recent spike in share price.

While this may explain Goldman’s stock price decline, it doesn’t Morgan’s, which has been in the news regarding the settlement of Visa (NYSE: V) and MasterCard (NYSE: MA) with Discover (NYSE: DFS). Morgan claims it deserves a piece of the settlement.

Still, this news can’t have caused the stock to plunge. Something else might be in the works.

Update 12:45 pm: Seems the speculation regarding being on the wrong side of a Volkswagen trade applies to Morgan Stanley too. While Morgan’s spokesperson denied any exposure to VW, Goldman declined to comment. Societe Generale, the French bank, saw its shares also hit on a similar speculation regarding a bad bet on VW shares.

Morgan Stanley plunges 25%, Goldman 10%; other financials stable originally appeared on BloggingStocks on Tue, 28 Oct 2008 11:26:00 EST. Please see our terms for use of feeds.

26 12 2008

Making Credit Rating Agencies Credible

Posted by: admin in mortgage industry

The Securities and Exchange Commission (SEC) is getting tough on credit rating agencies. A series of measures announced on Wednesday, December 3, would impose additional requirements on the credit reporting agencies in an effort to increase transparency and accountability. Consumers, investors and lenders may even end up getting more meaningful ratings.

These comprehensive rules touch every aspect of the credit rating process - from conflicts of interest, to publication of ratings methodologies to disclosure of ratings track records,” explains SEC Chariman Christopher Cox.

The proposed rules are the result of an extensive examination of the three major credit ratings agencies recently concluded by the SEC. The examination, which lasted 10 months, revealed significant weaknesses in ratings practices.

“One of the significant weaknesses in the credit rating process has been that while the credit rating agencies often relied on other to verify the quality of assets underlying structured products - and thus their ratings were vulnerable to reliance on incorrect information - there was frequently inadequate explanation of the limitations of the ratings of these products,” Chairman Cox said. “Just as significantly, conflicts of interest ingrained into the business models of credit rating agencies were amplified as structured products were specifically designed to achieve high ratings for certain tranches and as credit rating agencies sought to gain business and market share by assisting in this process.”

This is the second set of reforms proposed by the SEC since June 2007 when Congress granted the Commision the authority to Register and oversee credit rating agencies. The Credit Rating Reform Act ended nearly a century of self-policing by the credit rating agencies who act as financial gatekeepers determining who can borrow funds and at what cost (interest rate). Some would also say that credit ratings have become a means of assessing a person’s or an organization’s trustworthiness and moral character.

Credit scoring cannot help but provide a moral context for making credit decisions. To be creditworthy is to be trusworthy,” says credit evaluation and financial identity researcher Josh Lauer, assistant professor of communication at the University of New Hampshire. “At a fundamental level, credit evaluation is an effort to determine whether a given person can be trusted.”

According to Chairman Cox, ten credit rating agencies have registered with the SEC since the Act passed in 2007. This represents an increase of 43 percent in the number of nationally recognized statistical rating organizations. Despite the increase in competition, three firms - Fitch Ratings, Standard & Poor’s and Moody’s - continue to dominate the 45 billion-a-year credit rating industry, according to the Associated Press (AP).

The public has 45 days from the date the proposed amendments are published in the Federal Register to submit comments to the SEC. The AP reports that some critics are already sayign the proposed rules do not go far enough while spokespersons for the three major credit rating agencies have already expressed their support for the measures.

A Fact Sheet containing additional details on the proposed rules can be found on the SEC website at www.sec.gov.

Source [blownmortgage]

26 12 2008

Can GM CEO Rick Wagoner’s lobbying help land federal bailout?

Posted by: admin in Stocks Money News

Filed under: General Motors (GM), Politics, Financial Crisis

General Motors Co. (NYSE: GM) Chief Executive Rick Wagoner, the longest serving head of an automaker, is personally lobbying members of Congress to back a federal bailout of the struggling automaker, which wants to merge with its much weaker rival Chrysler LLC.

Bloomberg News, which broke the story, reported that Wagoner’s “involvement includes attending meetings, such as one with Treasury Department officials last week in Washington.” You can bet that Michigan’s powerful senior member of Congress, John Dingell, is attending many of the same meetings as Wagoner. GM no doubt is employing an army of lobbyists — both Republicans and Democrats — to press its case. The company, which for now may be the largest, has little choice.

GM and Chrysler would need between $10 billion and $12 billion to integrate their operations, according to a Citigroup note cited by Bloomberg. Combining the two fading industrial behemoths would be a logistical nightmare. Imagine trying to combine disparate systems for everything from personnel to purchasing to accounting. Let’s not forget the byzantine IT systems at both companies as well.

Economically, it’s hard to justify bailing out GM. Decades of incompetent management at the Big Three resulted in the industry drowning in billions of debt. The problem with telling the industry “no” is political. Dingell is a 1,000-pound gorilla in Congress. The auto industry continues to have considerable clout in Washington as well. Their argument is simple: if Wall Street fatcats can get a federal bailout, why not us?

The problem with rescuing Wall Street is that lots of struggling industries are going to pass the hat in Congress. What about the airlines? The retail sector? Pharmaceuticals? When does it end?

Can GM CEO Rick Wagoner’s lobbying help land federal bailout? originally appeared on BloggingStocks on Tue, 28 Oct 2008 13:12:00 EST. Please see our terms for use of feeds.

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26 12 2008

The New York Times (NYT) ready to sell Boston Red Sox stake

Posted by: admin in Stocks Money News

Filed under: New York Times’A’ (NYT)

Things are bad at The New York Times (NYSE:NYT). Advertising revenue at the company’s newspapers fell 21% in November. Even online sales were down. Since the internet is supposed to be the lifeboat of the industry, signs could not have been more troubling.

The media company has $400 million in debt due next year. It would like to mortgage its headquarters building, but the real estate market in New York City is not exactly robust.

The one asset NYT has that is worth some real cash is its piece of the Boston Red Sox and the television business built around the team. Why the firm did not sell it sooner is a mystery. It is hardly “core” to being a newspaper company.

According to The Wall Street Journal, the The New York Times Company owns 17.5% of New England Sports Ventures, which owns the team and its stadium.. The paper notes that “Barclays Capital estimates the Times Co.’s investment is worth about $166 million; analysts and sports bankers recently told Reuters the Times Co. could raise at least $200 million if it sold its stake.”

The same analysis shows that the Boston Globe is worth a tiny $20 million. Two years ago, the number was put at over $500 million, but the paper is hemorrhaging money now.

The management at The New York Times could not have made worse mistakes and now the company’s main asset, its flagship paper, is at risk of being sold in a liquidation. Why would the company keep assets like a baseball team and the second-rate internet company which it owns, About.com. Why would it hold onto small regional newspapers around the country?

The New York Times is running out of options. And, executives at the firm will be remembered as the people who destroyed it by acting too slowly in auctioning off pieces it should not have owned in the first place. Now many of those assets are worth close to nothing. Even a baseball team probably losses some of its value in a deep recession.

Douglas A. McIntyre is an editor at 24/7 Wall St.

The New York Times (NYT) ready to sell Boston Red Sox stake originally appeared on BloggingStocks on Thu, 25 Dec 2008 04:05:00 EST. Please see our terms for use of feeds.

Continue reading Money losers of 2008: Jessica Simpson, the minx with the jinx

26 12 2008

Money losers of 2008: Jessica Simpson, the minx with the jinx

Posted by: admin in Stocks Money News

Filed under: Consumer experience, Marketing and advertising, Comic Relief

This post is part of our feature on Money Losers of 2008. See all 20.

It’s hard to dispute the fact that 2008 has been a lousy year for singer/actress, Jessica Simpson. She entered the year with her new beau, Tony Romo of the Dallas Cowboys, and was immediately blamed for his troubling performance on the field. The release of her feature movie, Blonde Ambition, went straight to DVD without even blinking. Her debut into the country music realm has all but fallen flat. The kindest professional critique of her maiden country album, Do You Know, referred to that effort as “solid yet simple.” The reviews go steeply downward from there.

In defense of the minx with the jinx, I think Jessica Simpson has been mistreated a bit. I mean, blaming her for the flat performance of Romo’s Cowboys just isn’t fair. But then again, we Packer fans know that those Cowboys are just loaded with handy excuses. It’s just a powerful shame that they had to make Jessica Simpson one. Perhaps it’s due to the shock of no longer finding Brett Favre at Lambeau Field.

As far as Jessica Simpson’s acting career, I thought we had settled that issue with The Dukes of Hazard. As a matter of fact, I thought we settled it with her Pizza Hut commercial. You know, that’s the commercial where they made her come out and say “Hi, Yaw” as if it was something she would normally say. Worst of all, they used the cut where her telltale neck tick makes her whole head jerk to the side. I suppose I need to reissue my “Jessica is not an actress” memo to Hollywood.

Money losers of 2008: Jessica Simpson, the minx with the jinx originally appeared on BloggingStocks on Thu, 25 Dec 2008 17:40:00 EST. Please see our terms for use of feeds.