Free Internet Press Newsletter - Sunday November 23 2008 - (813)

Sunday November 23 2008 edition
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Regulator Failed To Rein-In Banks' Risky Practices 2008-11-23 03:22:48 When Countrywide Financial felt pressured by federal agencies charged with overseeing it, executives at the giant mortgage lender simply switched regulators in the spring of 2007. The benefits were clear: Countrywide's new regulator, the Office of Thrift Supervision, promised more flexible oversight of issues related to the bank's mortgage lending. For OTS, which depends on fees paid by banks it regulates and competes with other regulators to land the largest financial firms, Countrywide was a lucrative catch. Yet OTS was not an effective regulator. This year, the government has seized three of the largest institutions regulated by OTS, including IndyMac Bancorp, Washington Mutual - the largest bank in U.S. history to go bust - and on Friday evening, Downey Savings and Loan Association. The total assets of the OTS thrifts to fail this year: $355.7 billion. Three others were forced to sell to avoid failure, including Countrywide. In the parade of regulators that missed signals or made decisions they came to regret on the road to the current financial crisis, the Office of Thrift Supervision stands out. OTS is responsible for regulating thrifts, also known as savings and loans, which focus on mortgage lending. As the banks under OTS supervision expanded high-risk lending, the agency failed to rein in their destructive excesses despite clear evidence of mounting problems, according to banking officials and a review of financial documents. Read The Full Story Editorial: The Price Of Our Good Name 2008-11-23 03:22:23 Intellpuke: This editorial appeared in the New York Times edition for Sunday, November 23, 2008. Americans have watched in horror as President Bush has trampled on the Bill of Rights and the balance of power. The list of abuses that President-elect Barack Obama must address is long: once again require the government to get warrants to eavesdrop on Americans; undo scores of executive orders and bill-signing statements that have undermined the powers of Congress; strip out the unnecessary invasions of privacy embedded in the Patriot Act; block new F.B.I. investigative guidelines straight out of J. Edgar Hoover’s playbook. Those are not the only disasters Mr. Obama will inherit. He will have to rescue a drowning economy, restore regulatory sanity to the financial markets and extricate the country from an unnecessary war in Iraq so it can focus on a necessary war in Afghanistan. Even with all those demands, there is one thing Mr. Obama must do quickly to begin to repair this nation’s image and restore its self-respect: announce a plan for closing Mr. Bush’s outlaw prison at Guantanamo Bay. The prison is the premier example of the disdain shown by Mr. Bush and Vice President Dick Cheney for the Constitution, federal law and international treaties. Most sensible governments cannot see past Guantanamo to even recall America’s long history as a defender of human rights and democratic values. Read The Full Story Bulgaria Arms Kurds In Northern Iraq 2008-11-23 03:21:55 Kurdish officials this fall took delivery of three planeloads of small arms and ammunition imported from Bulgaria, said  three  U.S. military officials, an acquisition that occurred outside the weapons procurement procedures of Iraq's central government. The large quantity of weapons and the timing of the shipment alarmed U.S. officials, who have grown concerned about the prospect of an armed confrontation between Iraqi Kurds and the government at a time when the Kurds are attempting to expand their control over parts of northern Iraq. The weapons arrived in the northern city of Sulaymaniyah in September on three C-130 cargo planes, according to the three officials, who spoke on the condition of anonymity because of the sensitivity of the information. Kurdish officials declined to answer questions about the shipments but released the following statement: "The  Kurdistan Regional Government continues to be on the forefront of the war on terrorism in Iraq. With that continued threat, nothing in the constitution prevents the KRG from obtaining defense materials for its regional defense." Iraq's ethnic Kurds maintain an autonomous region that comprises three of the country's 18 provinces. In recent months, the Shiite-led central government in Baghdad, which includes some Kurds in prominent positions, has accused Kurdish leaders of attempting to expand their territory by deploying their militia, known as pesh merga, to areas south of the autonomous region. Among other things, the Kurds and Iraq's government are at odds over control of the oil-rich city of Kirkuk, which lies outside the autonomous region, and over how Iraq's oil revenue ought to be distributed. Read The Full Story Mon Dieu! Throughout France, Cafe Owners Are Suffering 2008-11-23 03:21:15 Nathalie Guerin, 35, opened Le Festi’Val bar and cafe here two years ago full of high hopes, after working at this little Burgundy town’s main competition, the Café du Nord. But this summer, business started to droop, and in October, she said, “it’s been in free fall.” “Now there’s no one,” she said, standing in a somber room with a few sad holiday decorations, an idle pool table and one young man playing a video game. “People fear the future, and now with the banking crisis, they are even more afraid,” she said, her eyes reddening. “They buy a bottle at the supermarket and they drink it at home.” The plight of Ms. Guerin is being replicated all over France, as traditional cafes and bars suffer and even close, hit by changing attitudes, habits and now a poor economic climate. In 1960, France had 200,000 cafes, said Bernard Quartier, president of the National Federation of Cafes, Brasseries and Discotheques. Now it has fewer than 41,500, with an average of two closing every day. The number of bankruptcies filed by cafe bars in the first six months of 2008 rose by 56 percent over the same period a year ago, according to a study by Euler Hermes SFAC, a large credit insurance company. No reliable figures are available for the latter part of this year, when an economic slowdown here has been accelerated by the general financial crisis, a collapse in consumer confidence and the quick tightening of credit. Read The Full Story The Next Subprime Crisis Looms - FHA-Backed Loans 2008-11-22 13:09:31 The same people whose reckless practices triggered the global financial crisis are onto a similar scheme that could cost taxpayers tons more. As if they haven't done enough damage. Thousands of subprime mortgage lenders and brokers - many of them the very sorts of firms that helped create the current financial crisis - are going strong. Their new strategy: taking advantage of a long-standing federal program designed to encourage homeownership by insuring mortgages for buyers of modest means. You read that correctly. Some of the same people who propelled us toward the housing market calamity are now seeking to profit by exploiting billions in federally insured mortgages. Washington, meanwhile, has vastly expanded the availability of such taxpayer-backed loans as part of the emergency campaign to rescue the country's swooning economy. For generations, these loans, backed by the Federal Housing Administration, have offered working-class families a legitimate means to purchase their own homes. But now there's a severe danger that aggressive lenders and brokers schooled in the rash ways of the subprime industry will overwhelm the FHA with loans for people unlikely to make their payments. Exacerbating matters, FHA officials seem oblivious to what's happening - or incapable of stopping it. They're giving mortgage firms licenses to dole out 100-percent-insured loans despite lender records blotted by state sanctions, bankruptcy filings, civil lawsuits, and even criminal convictions. More Bad Debt As a result, the nation could soon suffer a fresh wave of defaults and foreclosures, with Washington obliged to respond with yet another gargantuan bailout. Inside Mortgage Finance, a research and newsletter firm in Bethesda, Md., estimates that over the next five years fresh loans backed by the FHA that go sour will cost taxpayers $100 billion or more. That's on top of the $700 billion financial-system rescue Congress has already approved. Gary E. Lacefield, a former federal mortgage investigator who now runs Risk Mitigation Group, a consultancy in Arlington, Texas, predicts: "Within the next 12 to 18 months, there is going to be FHA-insurance Armageddon." The resilient entrepreneurs who populate this dubious field are often obscure, but not puny. Jerry Cugno started Premier Mortgage Funding in Clearwater, on the Gulf Coast of Florida, in 2002. Over the next four years, it became one of the country's largest subprime lenders, with 750 branches and 5,000 brokers across the U.S. Cugno, now 59, took home millions of dollars and rewarded top salesmen with Caribbean cruises and shiny Hummers, according to court records and interviews with former employees. But along the way, Premier accumulated a dismal regulatory record. Five states - Florida, Georgia, North Carolina, Ohio, and Wisconsin - revoked its license for various abuses; four others disciplined the company for using unlicensed brokers or similar violations. The crash of the subprime market and a barrage of lawsuits prompted Premier to file for U.S. bankruptcy court protection in Tampa, Florida, in July 2007. Then, in March, a Premier unit in Cleveland, Ohio, and its manager pleaded guilty to felony charges related to fraudulent mortgage schemes. Read The Full Story German Economy Beginning To Suffer 2008-11-22 13:08:50 The number of indicators point to foul economic weather continues growing. A new index released on Friday points to increasingly empty order books. Experts predict that over 200,000 jobs are at risk. The more economic data comes in, the worse the coming recession appears likely to be. According to a key German economic climate index released on Friday, industry in Germany is facing a difficult road ahead. The index, which measures the economic health of producers in Germany as well as the amount of orders they are receiving, dropped unexpectedly sharply in November relative to its already low October level. It now stands at 36.2, much lower than the 40.5 level many had expected, according to a Reuters survey. Much of that drop comes as a result of a sharp falloff in exports, a branch that had much of the work in keeping the German economy humming in recent years. The news comes on the heels of Thursday's announcement that the Ifo global business sentiment index dropped to its lowest level in 20 years. The index fell from an October level of 73.4 to November's 60.0. Read The Full Story Jimmy Carter, Kofi Annan, Others Refused Entry To Zimbabwe 2008-11-22 13:08:02 Zimbabwe refused to let Kofi Annan and two eminent colleagues visit the impoverished African country for a humanitarian mission, the three said Saturday. The former U.N. secretary-general, ex-U.S. President Jimmy Carter and rights advocate Graca Machel had planned to assess the country's needs. They are members of The Elders group, formed by former South African President  Nelson Mandela, to foster peace and tackle world conflicts. Zimbabweans are suffering from disease and hunger while political crisis over a power-sharing government occupies its politicians. A current cholera outbreak has killed nearly 300 people in Zimbabwe, said the United Nations. The three were told Friday night by former South African President Thabo Mbeki, who is mediating the political crisis, that efforts to secure travel visas for the a two-day trip had failed. "We are very disappointed that the government of Zimbabwe would not permit us to come in, would not cooperate," former U.S. President Carter said at a news conference in Johannesburg. Read The Full Story Rich Countries Launch Great Land Grab To Safeguard Food Supply 2008-11-22 02:51:10 Rich governments and corporations are triggering alarm for the poor as they buy up the rights to millions of hectares of agricultural land in developing countries in an effort to secure their own long-term food supplies. The head of the United Nations Food and Agriculture Organization (FAO), Jacques Diouf, has warned that the controversial rise in land deals could create a form of "neo-colonialism", with poor states producing food for the rich at the expense of their own hungry people. Rising food prices have already set off a second "scramble for Africa". This week, the South Korean firm Daewoo Logistics announced plans to buy a 99-year lease on a million hectares in Madagascar. Its aim is to grow 5 million  tons of corn a year by 2023, and produce palm oil from a further lease of 120,000 hectares (296,000 acres), relying on a largely South African workforce. Production would be mainly earmarked for South Korea, which wants to lessen dependence on imports. "These deals can be purely commercial ventures on one level, but sitting behind it is often a food security imperative backed by a government," said Carl Atkin, a consultant at Bidwells Agribusiness, a Cambridge firm helping to arrange some of the big international land deals. Read The Full Story Acid Attacks And Rape: Growing Threat To Afghan Women Who Oppose Old Order 2008-11-22 02:50:17 Female members of Afghanistan parliament speak out as conditions worsen and Islamists gain respectability. They were walking to school in the southern Afghan city of Kandahar, a group of teenage girls discussing a test they had coming up, when two men on a motorcycle sprayed them with a strange liquid. Within seconds a painful tingling began, and there was an unusual smell as the skin of 16-year-old Atifa Biba began to burn. Her friend rushed over to help her, struggling to wipe the liquid away, when she too was showered with acid. She covered her face, crying out for help as they sprayed her again, trying to aim the acid into her face. The weapon was a water bottle containing battery acid; the result was at least one girl blinded and two others permanently disfigured. Their only crime was attending school. It was not an isolated incident. For women and girls across Afghanistan, conditions are worsening - and those women who dare to publicly oppose the traditional order now live in fear for their lives. The Afghan Parliament Member Shukria Barakzai receives regular death threats for speaking out on women's issues. Talking at her home in central Kabul, she closed the living room door as her three young daughters played in the hall. "You can't imagine what it feels like as a mother to leave the house each day and not know if you will come back again," she said, her eyes welling up as she spoke. Read The Full Story	Top Scientist Rails Against Bush Appointee Hirings 2008-11-23 03:22:35 The president of the nation's largest general science organization Friday sharply criticized recent cases of Bush administration political appointees gaining permanent federal jobs with responsibility for making or administering scientific policies, saying the result would be "to leave wreckage behind." "It's ludicrous to have people who do not have a scientific background, who are not trained and skilled in the ways of science, make decisions that involve resources, that involve facilities in the scientific infrastructure," said James McCarthy, a Harvard University oceanographer who is president of the American Association for the Advancement of Science. "You'd just like to think people have more respect for the institution of government than to leave wreckage behind with these appointments." His comments came as several new examples surfaced of political appointees gaining coveted, high-level civil service positions as the administration winds down. The White House has said repeatedly that all gained their new posts in an open, competitive process, but congressional Democrats and others questioned why political appointees had won out over qualified federal career employees. In one recent example, Todd Harding - a 30-year-old political appointee at the Energy Department - applied for and won a post this month at the National Oceanic and Atmospheric Administration. There, he told colleagues in a Nov. 12 e-mail, he will work on "space-based science using satellites for geostationary and meteorological data." Harding earned a bachelor's degree in government from Kentucky's Centre College, where he also chaired the Kentucky Federation of College Republicans. Read The Full Story Ringed By Foes, Pakistanis Fear The U.S., Too 2008-11-23 03:22:12 A redrawn map of South Asia has been making the rounds among Pakistani elites. It shows their country truncated, reduced to an elongated sliver of land with the big bulk of India to the east, and an enlarged Afghanistan to the west. That the map was first circulated as a theoretical exercise in some American neoconservative circles matters little here. It has fueled a belief among Pakistanis, including members of the armed forces, that what the United States really wants is the breakup of Pakistan, the only Muslim country with nuclear arms. “One of the biggest fears of the Pakistani military planners is the collaboration between India and Afghanistan to destroy Pakistan,” said a senior Pakistani government official involved in strategic planning, who insisted on anonymity as per diplomatic custom. “Some people feel the United States is colluding in this.” That notion may strike Americans as strange coming from an ally of 50 years but, as the incoming Obama administration tries to coax greater cooperation from Pakistan in the fight against militancy, it can hardly be ignored. This is a country where years of weak governance have left ample room for conspiracy theories of every kind. But like much such thinking anywhere, what is said frequently reveals the tender spots of a nation’s psyche. Educated Pakistanis sometimes say that they are paranoid, but add that they believe they have good reason. Read The Full Story Airstrike Kills Al-Qaeda-Linked Militant In Pakistan 2008-11-23 03:21:32 A British militant who was a liaison to al-Qaeda and was a main suspect in the plot to blow up trans-Atlantic airliners in 2006 was killed Saturday in a missile strike by an American aircraft in northern Pakistan, said senior Pakistani and American officials. The militant, Rashid Rauf, was among the five people killed in the attack by a remotely piloted aircraft in North Waziristan, close to the Afghan border, said the officials. He is perhaps the best-known of the figures killed in an American airstrike campaign there that has intensified since August and has caused increased strains between the United States and Pakistan. In August 2006, Rauf, a Briton of Pakistani descent, was detained in Pakistan, leading to the arrest of 25 suspects in Britain in connection with what prosecutors said was a plot to destroy seven airliners headed for the United States and Canada. This September, a British jury convicted three of eight defendants of conspiracy to commit murder, failing to reach verdicts on the more serious charge of using beverage bottles filled with liquid explosives to blow up the aircraft. But Rauf was not among those defendants. All terrorism charges against him in that case were dropped in December 2006. A year later, he slipped out of his handcuffs and ran from his guards after a court hearing in Islamabad, Pakistan, on a separate case in which he faced extradition to Britain. Read The Full Story Federal Regulators Seize California's Downey Savings, PFF Bank 2008-11-22 13:09:46 Federal regulators seized Downey Savings & Loan and PFF Bank & Trust late Friday, saying hundreds of millions of dollars in bad loans from the housing bubble had rendered the Southern California banking fixtures unsound. The banks' branches will continue operating as usual under the ownership of Minneapolis-based U.S. Bank, one of the country's largest banks, and no depositors will lose any money because of the failures, said regulators. Newport Beach-based Downey lost $547.7 million in the first nine months of 2008, largely because of risky "option ARM" mortgages - adjustable-rate loans that let borrowers pay so little each month that their loan balances rose. PFF, short for Pomona First Federal, specialized in loans to Inland Empire developers and home builders, running up $289.5 million in losses in the January-September period. Read The Full Story Editorial: Harmful Lending Practices 2008-11-22 13:09:11 Intellpuke: This editorial appeared in the New York Times edition for Saturday, November 22, 2008. One of the questions lurking beneath the surface of the national debate over the mortgage crisis, which has placed six million Americans at risk of losing their homes this year and next, is who is to blame. Clearly, reckless bankers, feckless regulators and greedy traders in the shadowy derivatives market must take a major share of responsibility for the current financial mess. But how much blame should be placed on the shoulders of the people who bought homes with mortgages they could not afford, or with complicated and confusing repayment schemes that threaten them with sharply higher interest rates and mushrooming monthly payments? Some measure of personal accountability is clearly warranted, but federal regulators could have done a great deal to avert this crisis by reining in lenders, rather than standing by while mortgage companies corralled millions of people into risky, high-cost loans they could never hope to repay. Bankers, brokers and appraisers all worked to inflate property values, and the resulting loans were repackaged and sold to Wall Street. Lawmakers, for their part, missed important chances to curtail some of these problems last year as the scale of the crisis was becoming apparent. The House and Senate both failed to pass important bills into law. The Congress that takes office in January must revisit and strengthen last year’s proposals. Read The Full Story In Russia, Politkovskaya Murder Trial Descends Into Farce 2008-11-22 13:08:36 Doubts are growing over the murder trial of Russian journalist Anna Politkovskaya. A court in Moscow has the task of uncovering the reasons behind the killing, but the public is barred from proceedings for spurious reasons. Anna Politkovskaya, a correspondent for the anti-Kremlin Novaya Gazeta, was shot five times and killed in a stairwell on October 7, 2006. Of all her work, it was the reports of human rights abuses in Chechnya that garnered the most respect, as well as many enemies. Now judges have shut the public out of the trial into her murder using a bogus claim. The presiding judge at the Moscow District Military Court, Yevgeny Zubov, announced Wednesday that proceedings would be held behind closed doors after a request from the jury. They feared the publicity would put them at risk of harassment or violence, said the court. But jurors have never expressed those fears, one of their number has claimed, adding they refused to sign a form asking for the trial to be held away from the press. Juror Yevgeny Kolesov told Moscow radio station Ekho Moskvy that a court official gave the jury a statement shortly before the trial and requested they sign it. It said the jury was too frightened to have press at the trial, he said. But no one signed the statement, he claimed. Read The Full Story Screen Actors Guild To Seek Strike 2008-11-22 13:07:08 The Screen Actors Guild said Saturday it will ask its members to authorize a strike after its first contract talks in four months with Hollywood studios failed despite the help of a federal mediator. The guild said it adjourned talks with the Alliance of Motion Picture and Television Producers shortly before 1 a.m. after two marathon sessions with federal mediator Juan Carlos Gonzalez. SAG, representing more than 120,000 actors in movies, television and other media, said in a statement that it will launch a "full-scale education campaign in support of a strike authorization." "We have already made difficult decisions and sacrifices in an attempt to reach agreement," the statement said. "Now it's time for SAG members to stand united and empower the national negotiating committee to bargain with the strength of a possible work stoppage behind them." The statement did not specify what led to the impasse, saying only that "management continues to insist on terms we cannot responsibly accept." A SAG spokeswoman said she would not comment further. A call to the movie producers group, known as the AMPTP, was not immediately returned. Read The Full Story Churches Vie To Attract Obamas 2008-11-22 02:50:57 There have been letters, discreet inquiries and bold appeals. Some are using their connections; others are just seeking a foot in the door. It's part of the spirited competition among Washington churches to land the most sought-after Christians in town: the Obama family. Methodist, Baptist, United Church of Christ, Presbyterian, Episcopal - all have been courting the Obamas to be regulars in their pews on Sunday mornings. When Amy Butler, pastor of Calvary Baptist in Northwest Washington decided to woo the Obamas, a friend in the local faith community had some advice: "He just laughed and told me that I should get in line." She made a pitch to the Obamas that includes the following: We're diverse and multi-generational, we're 10 blocks from the White House, the pastor (Butler) is from Hawaii and attended Obama's rival high school, and "the sermons rock!" Read The Full Story Stevens Trial Witness Cries Foul 2008-11-22 02:49:55 A witness in the corruption trial of Sen. Ted Stevens (R-Alaska) has told a federal judge that he received extensive help from prosecutors prior to taking the stand and would have testified differently had he not been given the assistance. He also said he had an agreement with the government that gave him immunity from prosecution in the case. During the trial, he told the jury that no formal deal existed. "I would not have given the same testimony" without the help or the agreement, wrote the witness, David Anderson. Stevens' attorneys disclosed the allegations in a motion yesterday asking to question Anderson and others and accusing the government of "suborning perjury and making intentionally false statements" tied to Anderson's testimony. Stevens'  attorneys asked U.S. District Judge Emmet G. Sullivan, who presided over the case, to schedule a hearing into the matter. In a court filing later Friday, federal prosecutors said Anderson's allegations are false. "The government has now obtained substantial additional evidence, including both documents and video surveillance, that prove the falsity of Mr. Anderson's allegations and that further explicitly prove Mr. Anderson's collusion with an interested party in the preparation and transmission of Mr. Anderson's letter," they wrote. They said they would provide more details Monday. Read The Full Story
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