The number of people who are losing their homes has reached record levels.

(WASHINGTON) The Federal Reserve proposed new regulations on Tuesday to clean up a broad array of deceptive mortgage lending practices, a move that represents the central bank’s most significant response to the nation’s housing tumult.

The proposed rules signify a shift by the Fed towards an active regulatory role over the mortgage business and would affect a wide range of borrowers, lenders, banks, and brokers.

• 0 Comments

(NEW YORK) Mortgage applications in the US fell last week by the most since 2004 as a jump in interest rates caused purchases and refinancing to decline, a private survey showed.

The Mortgage Bankers Association’s index decreased 20 per cent to 653.8 from 881.8 the prior week. The group’s purchase index fell 11 per cent and its refinancing gauge plunged 27 per cent.

Loan restrictions and a glut of unsold homes on the market are prompting buyers to wait for even bigger price discounts, economists said. Higher borrowing costs and more foreclosures suggest that the real-estate slump will continue to hurt economic growth well into 2008.

• 0 Comments

Inaction may stem from his view of reputation as a built-in safeguard of free enterprise.

Why did Alan Greenspan fail to act while the roots of the sub-prime mortgage crisis spread? Here’s one possible explanation: The Ayn Rand disciple held fast to his unwavering laissez-faire beliefs.

Mr Greenspan: ‘A fly-by-night securities operator can quickly meet all the SEC requirements, gain the inference of respectability, and proceed to fleece the public.’

Tuesday’s New York Times carried a front-page article chronicling the many warnings the former Federal Reserve chairman received about aggressive sub-prime lenders luring unsuspecting customers into crazy mortgages they never could afford. ‘Where was Washington?’ the newspaper asked. And where was Alan?

• 0 Comments

Single-family build activity down 5.5%, permit applications fall for 6th month.

(WASHINGTON) Housing construction in the US fell in November and single-family activity dropped to the lowest level in more than 16 years as a severe housing slump showed no signs of a turnaround.

The Commerce Department reported that construction of new homes and apartments dropped by 3.7 per cent last month to a seasonally adjusted annual rate of 1.187 million units.

Construction of single-family homes fell by 5.5 per cent to an annual rate of 829,000 units, the lowest level since April, 1991, while multi-family construction was up 4.4 per cent to an annual rate of 332,000 units.

• 0 Comments

(LOS ANGELES) The largest US public pension will shift 11 per cent of its US$260 billion portfolio from stocks and bonds into private equity, real estate and investments pegged to inflation.

The board of the California Public Employees Retirement System, voted 9-3 on Monday to reduce fixed-income investments to 19 per cent from 26 per cent of assets and to lower stock holdings to 56 per cent from 60 per cent. The money will shift to alternative investments, real estate and a new inflation-linked asset class.

‘This should be gradual, from an implementation perspective,’ said the fund’s chief investment officer Russell Read.

• 0 Comments

Only time will tell if financial engineering without regulation introduces a new fragility.

No one knows, at year’s end, whether there will be global recession in 2008. Or whether Europe and America will enjoy a moderate growth in jobs and incomes. Why this new ignorance?

Panic room: Under proper regulation and with optimal transparency, the present-day science of finance helps to spread risks efficiently and in that sense reduces intrinsic risk. But sans transparency and lacking understanding of the arithmetic of cancerous leveraging, fresh dangers arise.

• 0 Comments

They failed to act on clues to risky loans and default rates.

(WASHINGTON) Until the boom in sub-prime mortgages turned into a national nightmare this summer, the few people who tried to warn federal banking officials might as well have been talking to themselves.

Edward Gramlich, a Federal Reserve governor who died in September, warned nearly seven years ago that a fast-growing new breed of lenders was luring many people into risky mortgages they could not afford.

But when Mr Gramlich privately urged Fed examiners to investigate mortgage lenders affiliated with national banks, he was rebuffed by Alan Greenspan, the Fed chairman.

• 0 Comments

US Commerce Dept attributes this to implementation of bilateral free trade pact.

Far from losing ground, Singapore has become even more important to American multinational corporations as a manufacturing hub, according to the US Department of Commerce.

And this should spell good news for Singapore’s manufacturing sector which some observers believe is headed for decline - although it remains in a healthy state. US MNCs still account for a high proportion of offshore manufacturing, globally. Their continued presence here will help keep the manufacturing sector buoyant.

• 0 Comments

But plan might cost billions of dollars, says an academic.

(NEW YORK) Former Federal Reserve chairman Alan Greenspan favours spending government money to rescue Americans who are at risk of losing their homes because they can’t make mortgage payments.

Mr Greenspan: Cash bailouts, while creating a larger budget deficit, have the advantage of helping homeowners without distorting property prices or interest rates on mortgages

Mr Greenspan, speaking on ABC’s This Week programme on Sunday, said cash bailouts, while creating a larger budget deficit, have the advantage of helping homeowners without distorting property prices or interest rates on mortgages.

• 0 Comments

But mid-market room rates of US$200-300 still too high for some.

(NEW YORK) While planning her vacation to New York, Lisa Werness was so horrified by the prices in Manhattan that she chose cheaper lodging in Brooklyn - where she got a room rate of just US$400 a night.

No room at the inn: Visitors to New York have long faced a shortage of hotel rooms & high prices

‘Don’t remind me. I’m trying to forget about it,’ she said.

In a city where residents often pay more than half their salaries for a place to sleep, visitors have long faced a shortage of hotel rooms and rising prices.

• 0 Comments