Posts

FHA Gets $1.7 Billion Bailout, No Congressional Approval Required

Photo Credit: AP

Photo Credit: AP

For the first time in its 79-year history, the Federal Housing Agency (FHA) announced on Friday the need for a $1.7 billion bailout from the Treasury to cover losses on its reverse home mortgage programs.

FHA Commissioner Carole Galante said in a letter to Congress that the FHA will withdraw the money from the Treasury by Monday when the fiscal year ends. Galante does not need congressional approval to tap the funds.

“In the next few months, we expect updated data and economic forecasts to reflect what we already know to be true–the health of the fund has improved significantly,” wrote Galante.

Read more from this story HERE.

Dems Favor Federal Bailout of Detroit, But Majority of Public Opposed

Photo Credit: real clear politicsA new national poll from Quinnipiac University shows that a majority Democrats believe the federal government should bail out Detroit, but an even larger majority of Americans oppose such a move. Fifty-one percent of Democrats support Washington providing federal assistance to Detroit, which last month became the largest American city ever to seek bankruptcy protection.

Not surprisingly, there is a strong partisan divide on the question of a federal bailout for the Motor City. Seventy-three percent of Republicans oppose a bailout, while only 18 percent support the idea. Independents are nearly of the same mind as Republicans on the issue: 68 percent oppose federal assistance for Detroit and 28 percent support it.

The poll also shows a significant racial divide on the issue. Whites overwhelmingly oppose a federal bailout (63 percent against vs. 26 percent in favor) while a solid majority of African-Americans support a bailout (57 percent favor vs. 36 percent against) as do a plurality of Hispanics (48 percent favor vs. 36 percent against).

Read more from this story HERE.

Postmaster General: Postal Service Bailout Would Cost $58 Billion

Photo Credit: Newsmax

A taxpayer bailout of the U.S. Postal Service would cost about $58 billion through 2017, which Congress could avoid by changing the agency’s business model, Postmaster General Patrick Donahoe said.

The service, which lost $15.9 billion last year, doesn’t want a bailout, and it would be “unnecessary,” Donahoe said today in prepared remarks for a speech at the National Press Club in Washington.

“It may shock you to learn that the Postal Service could be profitable today and for the long-term future; it just needs to operate differently,” he said. “I’m optimistic that Congress will pass a bill this year.”

Read more from this story HERE.

Governor Jerry Brown Heads to China to Beg for California Bail-Out

Photo Credit: Washington Times

California Gov. Jerry Brown has designs on building some of the most expensive public works projects in the nation and wants to keep the state moving forward in its slow recovery from the recession.

Where better to go searching for the money to further those interests than the world’s second largest economy and a country that has piles of cash to invest around the globe?

The governor of the most populous U.S. state heads to China next week to begin a weeklong trade mission that he hopes will produce investments on both sides of the Pacific. Brown will lead a delegation of business leaders in search of what he calls “plenty of billions.”

“They’ve got $400 billion or $500 billion they’re going to invest abroad, so California’s got to get a piece of that,” Brown said in an interview last week ahead of his seven-day trip to China.

The governor and business leaders accompanying him are trying to rebuild the state’s official relationship with China after the state closed its two trade offices and others around the world a decade ago in a cost-cutting move. California finds itself playing catch-up to other states that have had a vigorous presence in China for years.

Read more from this story HERE.

Wisconsin Among Worst for Business Taxes, Now Considers Multimillion Circus Bailout

Photo Credit: Elsie esq.

Wisconsin led the nation in collective bargaining reform for public employees in 2011, but the state’s current tax and regulatory climate led the Tax Foundation to recently declare Wisconsin among the worst in the country for business taxes. But while lawmakers mull over how best to reduce taxes and streamline regulations, they are being asked by one state agency to spend $3.7 million on a circus museum…

Yes, Wisconsin taxpayers may have to spend millions of dollars to bailout a cash-strapped circus museum.

The proposed state budget under consideration by lawmakers is the largest in the state’s history. Included in its various proposals are provisions that would add 710 new employees to state government. That’s a jumbo-jet and a half of new state workers complete with pensions and health care plans financed by taxpayers. Hardly a small irony after Governor Scott Walker balanced his first budget in 2011 by forcing state workers to contribute more to their health insurance and pension plans.

Read more from this story HERE.

Cyprus Rejects Bailout Deal Leaving Eurozone Facing Fresh Crisis

Photo Credit: Filip Singer

The Cypriot parliament has thrown out a controversial plan to skim €5.8bn (£5bn) from savers’ bank accounts, in a move that risks plunging the eurozone into a fresh crisis and heightens expectations that the cash-strapped country will seek a funding lifeline from Russia.

Cyprus has just 24 hours to find a solution to its funding gap before its banks are due to reopen following the dramatic no vote on Tuesday night, which failed to support a hastily renegotiated change to the original deal.

Late on Tuesday night the eurozone governments said that despite the vote Cyprus would still need to raise the €5.8 bn – a third of the €17bn bailout.

With the crisis escalating, an RAF flight carrying €1m in low-denomination notes landed in Cyprus to provide cash for 3,000 British service personnel based on the Mediterranean island. The banks have been shut since Friday and electronic transactions halted, although cash machines are still working and the Ministry of Defence said the euros were being flown in as “contingency measure”.

About 2,000 of the military staff, typically posted to the island for 18 or 24 months, have their salaries paid into local accounts. The MoD said it was “approaching personnel to ask if they want their March, and future months’ salaries paid into UK bank accounts, rather than Cypriot accounts”.

Read more from this story HERE.

Nobody’s Property Is Safe When Bailouts Begin

Photo Credit: Petros Giannakouris

Imagine checking your bank statement one day only to discover that someone had just taken 10 percent out of your savings account without your permission.

You’d be pretty upset, wouldn’t you? So were many citizens of Cyprus, whose government announced last Friday it would be assessing a 9.9 percent “stability levy” on all deposits of more than $100,000 and a 6.75 percent levy on deposits less than that. Cypriots quickly deduced that the government was seizing their property to bail out their nation’s banks and immediately tried to withdrawal their funds. To prevent them, the government of Cyprus has declared a bank holiday that has been extended through at least Wednesday.

The Cyprus crisis began last spring when the face value of Greek debt was cut after that government was bailed out last spring. Cyprus banks, which have longstanding cultural ties with Greece, carried substantial exposure and lost billions. Cyprus Popular Bank alone had $3.4 billion in Greek government debt, whose value was reduced to $2.5 billion. Cyprus was forced to nationalize that bank last November, and things haven’t gotten any better since.

Like the rest of the European Union, Cyprus has been mired in recession since 2011. Its government has been seeking a bailout from its EU partners since last June. But EU member nations, especially Germany, are tired of bailing out their spendthrift neighbors, especially ones like Cyprus, where the banking sector was recently measured to be eight times as large as the entire Cypriot economy.

Read more from this story HERE.

Russia’s Gazprom Offers Cyprus Restructuring Deal to Avoid EU Bailout in Exchange for Gas Fields

Photo Credit: Greek Reporter

Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening, Sigma TV reported.

The proposal states that Gazprom will fund the restructuring of the country’s crippled financial institutions in exchange for substantial control over the country’s gas resources while Cyprus won’t need to take the harsh bailout package offered by the EU.

EU offered a 10 billion euros rescue package to Cyprus with the condition of raising 5.8 billion euros ($7.5 billion) by taking a piece of every bank account in Cyprus. The originally proposed levies on deposits are 9.9 percent for acounts exceeding 100,000 euros and 6.7 percent on anything below that.

Cypriot President Nicos Anstasiades is not willing to discuss the Russian’s offer according to Newsit who cited an anonymous source close to the President.

“The president is not going to discuss this plan because he wants a solution that will come from the EU,” said the anonymous source.

Read more from this story HERE.

Controversial Cyprus Proposal Brings Euro Crisis Back Into Focus

Photo Credit: Images_of_Money

A controversial bailout proposal and bank depositor levy for Cyprus brought the euro-zone’s debt crisis back into focus Monday, causing bond yields to leap, the euro to initially sink against the dollar and Europe’s bank shares to plunge.

News over the weekend spooked the market, after a 10 billion euro ($13 billion) bailout for Cyprus included an unpopular levy on all deposits in the island’s banks.

If the proposal is passed by parliament–Cypriot lawmakers are expected to vote today–this would mark the first time such a strategy has been implemented during the five-year euro-zone crisis.

The European currency was initially hit hard, falling to a three-month low of $1.2882 and the yen resumed its role as a safe-haven asset as it strengthened against the dollar. However the euro started to pare losses one hour into the European session as did other areas of the financial spectrum.

Italian and Spanish bond yields at first climbed sharply and then eased; by 0900 GMT Italy’s 10-year government bond yield was 0.08 percentage points higher at 4.68% and Spain’s bond yielded 5.03% up by 0.13 percentage points, its highest level in 10 days. The Cypriot bailout deal could put the spotlight on Spain’s bond auction, due later in the week.

Read more from this story HERE.

George Will: The Manufactured Crisis of Sequester

Photo Credit: Washington PostEven during this desultory economic recovery, one industry thrives — the manufacture of synthetic hysteria. It is, however, inaccurate to accuse the Hysteric in Chief of crying “Wolf!” about spending cuts under the sequester. He is actually crying “Hamster!”

As in: Batten down the hatches — the sequester will cut $85 billion from this year’s $3.6 trillion budget! Or: Head for the storm cellar — spending will be cut 2.3 percent! Or: Washington chain-saw massacre — we must scrape by on 97.7 percent of current spending! Or: Chaos is coming because the sequester will cut a sum $25 billion larger than was just shoveled out the door (supposedly, but not actually) for victims of Hurricane Sandy! Or: Heaven forfend, the sequester will cut 47 percent as much as was spent on the AIG bailout! Or: Famine, pestilence and locusts will come when the sequester causes federal spending over 10 years to plummet from $46 trillion all the way down to $44.8 trillion! Or: Grass will grow in the streets of America’s cities if the domestic agencies whose budgets have increased 17 percent under President Obama must endure a 5 percent cut!

The sequester has forced liberals to clarify their conviction that whatever the government’s size is at any moment, it is the bare minimum necessary to forestall intolerable suffering. At his unintentionally hilarious hysteria session Tuesday, Obama said: The sequester’s “meat-cleaver approach” of “severe,” “arbitrary” and “brutal” cuts will “eviscerate” education, energy and medical research spending. “And already, the threat of these cuts has forced the Navy to delay an aircraft carrier that was supposed to deploy to the Persian Gulf.”

“Forced”? The Navy did indeed cite the sequester when delaying deployment of the USS Truman. In the high-stakes pressure campaign against Iran’s nuclear weapons program, U.S. policy has been to have two carriers in nearby waters. Yet the Navy is saying it cannot find cuts to programs or deployments less essential than the Truman deployment. The Navy’s participation in the political campaign to pressure Congress into unraveling the sequester is crude, obvious and shameful, and it should earn the Navy’s budget especially skeptical scrutiny by Congress.

The Defense Department’s civilian employment has grown 17 percent since 2002. In 2012, defense spending on civilian personnel was 21 percent higher than in 2002. And the Truman must stay in Norfolk? This is, strictly speaking, unbelievable.

Read more from this story HERE.