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The U.S. Treasury Department will remove the caps on aid to Fannie Mae and Freddie Mac for the next three years, to allay investor concerns that the companies will exhaust the available government assistance.

The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under the new agreement announced today, these limits can rise as needed to cover net worth losses through 2012.

The Obama administration is “beginning to realize it’s not getting better and it’s not likely to get better” soon in the housing market, said Julian Mann, who helps oversee $5.5 billion in bonds as a vice president at First Pacific Advisors LLC in Los Angeles. “They don’t want the foreclosures now, so they’re saying, we’ll pay whatever it takes to continue to kick the can down the road.”

Fannie Mae and Freddie Mac now are using a combined $111 billion of the total $400 billion lifeline. Treasury Department officials said they didn’t expect the companies to need assistance beyond what is available under the current caps, barring significant deterioration in the economic outlook.

Today’s announcement “should leave no uncertainty about the Treasury’s commitment to support these firms as they continue to play a vital role in the housing market during this current crisis,” the Treasury said in a statement in Washington.

Portfolio Size

The Treasury also relaxed its timeline for Fannie Mae and Freddie Mac to shrink their portfolios of mortgage assets. Previously, the companies were instructed to reduce their portfolios at a rate of 10 percent a year. Now, they will be required to keep the value of their portfolios below a maximum limit, currently $900 billion, that will go down by 10 percent a year.

This means they will not need to take immediate action to trim their holdings and could allow them to rise. Fannie Mae’s portfolio ended October at $771.5 billion and Freddie Mac’s holdings at the end of November were $761.8 billion, according to the latest figures released by the companies.

“Treasury does not expect Fannie Mae and Freddie Mac to be active buyers to increase the size of their retained mortgage portfolios, but neither is it expected that active selling will be necessary,” the Treasury said.

Fed Program

The change in the portfolio limits may ease investor concern that the companies could be forced to shrink their portfolios at the same time that the Federal Reserve ends its $1.25 trillion mortgage-bond purchase program. That could have exacerbated pressure on mortgage rates caused by the end of the Fed program, Laurie Goodman, an analyst in New York at Amherst Securities Group LP, said this month.

The Treasury said today that it is ending its mortgage- backed security purchase program as of Dec. 31, after about $220 billion in purchases. The government also is eliminating a short-term credit facility for the two companies and the Federal Home Loan Banks that was never used.

Also today, the companies disclosed in regulatory filings that Fannie Mae Chief Executive Officer Michael Williams and Freddie Mac CEO Charles Haldeman Jr. are each eligible for compensation of as much as $6 million this year.

Executive Pay

Pay at the mortgage-finance companies, which were seized by the U.S. in September 2008, added to debate over salaries for executives at companies dependent on government bailouts. Compensation must be sufficiently high to “attract and retain” top talent, their regulator, the Federal Housing Finance Agency, said in a statement.

In addition to the CEO pay, 10 additional executives at the two companies are eligible collectively for $30.1 million in compensation for this year. Overall, pay for top executives of the mortgage-finance companies is down 40 percent from before they were seized, the regulator said.

Brian Faith, a Fannie Mae spokesman, and Michael Cosgrove, a Freddie Mac spokesman, declined to comment on the executive compensation and didn’t immediately return messages on the later Treasury announcement.

The Obama administration is still developing its long-term plan for Fannie Mae and Freddie Mac. In today’s statement, the department said it expected to release a preliminary report on the companies as part of the 2011 budget, due in February.

‘Prudent’ Policy

Recent announcements from the companies and the Federal Housing Administration “demonstrate a commitment to prudent housing finance policy that enables a transition to an environment where the private market is able to provide a larger source of mortgage finance,” the Treasury said.

The Treasury and Federal Housing Finance Agency seized control of the mortgage-finance companies almost 16 months ago amid fears the two were at risk of failing. The government- sponsored enterprises, or GSEs, own or guarantee about $5.5 trillion of the $11.7 trillion in U.S. residential mortgage debt.

Officials set up the Treasury lifelines, which were expanded in May, to keep the companies solvent. If the two firms exhaust that backstop, regulators will be required to place them into receivership.

Treasury officials weren’t likely to take the chance of allowing the companies to fall into receivership, which is a bankruptcy-like process that would increase the companies’ debt costs and disrupt the mortgage markets, Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia, said in an interview last week.

GSE Losses

Washington-based Fannie Mae has lost $120.5 billion over the past nine quarters and McLean, Virginia-based Freddie Mac has recorded $67.9 billion in cumulative losses over the past nine quarters amid a three-year housing slump.

The companies are an integral part of President Barack Obama’s housing-relief plan and have been pushed by the government to help more homeowners renegotiate their mortgages to stay out of foreclosure.

As part of today’s announcements, made ahead of a Dec. 31 expiration of some of the Treasury’s authority, the department said it would delay setting certain fees connected with the assistance program until the end of next year. The Treasury also made technical changes that affect the definition of mortgage assets and other accounting issues.

Tags: call options, fnm, fre, Freddie Lifeline for 3 Years, long, U.S. Ends Cap on Fannie

22Dec

Markets internals are pointing to a down session

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Gold may see a breath of life Wednesday however the new lows are following the inverse of the US Dollar trade. It may be a very quiet session but internals are pointing down for the most part. A rally could result in a drop from this proce zone.
Yields are up and the the 30year mortgage rate on homes is climbing, this may not bode well for the housing markets. Housing numbers Wednesday could be ugly.

Signal for 12/23/09 BIDU may rally here, if it continues to slide, Short BIDU to the 100 DMA 391.63 from 398.81 if the bounce is triggered by the MA support play the reversal for 5% gain target. BIDU is flashing signs that it is ready for about a 20 point rally! Stockshakers utilizing puts and calls for these moves.

If rates start to rise, the US Dollar advance continues, and the OIH takes out the 110.46 low, and the BKX also takes out the previous 41.42 swing point low, the equity market will come under significant pressure.

Canadian Dollar continues up

Tags: Markets internals are pointing to a down session

22Dec

Fund of the decade posts a 1,524% return

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Fund of the decade posts a 1,524% return
The best-performing funds over the past 10 years have capitalized on emerging markets in Eastern Europe and Russia.

In light of the news that we’re ending the worst decade ever for stocks, maybe it’s a good time to look at the best-performing fund in that period.

A Stockholm-based equity fund has produced a 1,524% return over the past decade, EFinancialNews.com reports. How? By betting heavily on emerging-market stocks.

The East Capital Ryssland fund specializes in Eastern Europe and Russia, according to EFinancialNews. If you had handed $10,000 to this fund in 2000, you’d have about $152,400 by now.

Here are the other funds in the top five, according to data from Morningstar:

2: Russian HQ Rysslandsfond, with a 962% return

3: FIM Russia, a Finnish fund with a 906% return

4: Baring Russia, with an 839% return

5: Odin Maritime, a shipping specialist run out of Norway, with an 832% return.

You’d think an Asian fund would have been on that list, but the top Chinese equity fund, Invesco PRC, achieved only a 466% return in the period, EFinancialNews reports.

Tags: 524% return, Fund of the decade posts a 1, mutual funds

19Dec

Seven U.S. banks closed by regulators 140 have failed in 2009

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Seven U.S. banks closed by regulators 140 have failed in 2009

Seven U.S. banks were closed by regulators on Friday, bring the total this year to 140 as the effects of the credit crisis continued to be felt across the country.

What’s more, the Federal Deposit Insurance Corp. established temporary institutions to help close two of the failed banks.

Atlanta-based RockBridge Commercial Bank became the 25th Georgia-based bank to fail this year. The FDIC was unable to find another institution to take over the failed bank, and so will mail checks to retail depositors for insured funds.

RockBridge Commercial Bank had roughly $294 million in assets and $291.7 million in deposits as of Sept. 30. Its failure will cost the federal deposit-insurance fund $124.2 million, the regulator said.

Panama City, Fla.-based Peoples First Community Bank became the 14th to fail in that state in 2009. Peoples First Community Bank had $1.7 billion in deposits as of Sept. 30, and Gulfport, Miss.-based Hancock Bank has agreed to assume those deposits.

Peoples First Community Bank’s failure will cost the deposit-insurance fund $556.7 million, according to the FDIC.

New Baltimore, Mich.-based Citizens State Bank’s failure will cost the deposit-insurance fund $76.6 million, with the FDIC creating the Deposit Insurance National Bank of New Baltimore to protect depositors of Citizens State Bank.

The new bank will remain open for 45 days to allow depositors to access insured deposits and open an account elsewhere, the agency said. Columbus, Ohio-based Huntington National Bank will operate the DINB under contract with the FDIC.

An FDIC spokesman said the agency has created such bridge banks “several times this year and in previous years.”

Irondale, Ala.-based New South Federal Savings Bank also was closed by regulators Friday. The bank had $1.2 billion in deposits as of Sept. 30, which will be assumed by Plano, Texas-based Beal Bank, the FDIC added.

New South Federal Savings Bank’s failure will cost the deposit-insurance fund $212.3 million.

Springfield, Ill.-based Independent Bankers’ Bank was closed, with $511.5 million in deposits as of Sept. 30.

The FDIC said it created the Independent Bankers’ Bank Bridge Bank to allow client banks of Independent Bankers’ Bank “to maintain their correspondent banking relationship with the least amount of disruption.”

Independent Bankers’ Bank’s failure will cost the deposit-insurance fund $68.4 million.

Two Southern California banks were closed Friday, the 16th and 17th such failures in the Golden State as a whole.

First Federal Bank of California in Santa Monica was taken over by regulators. OneWest Bank of Pasadena will assume all of its deposits and take over First Federal’s 39 branches, the FDIC said.

OneWest Bank agreed to purchase all of the $6.1 billion in First Federal Bank assets and did not pay the FDIC a premium for the $4.5 billion in total deposits; the hit to the deposit-insurance fund will be $146 million.

Separately, La Jolla, Calif.-based Imperial Capital Bank was closed. It had $2.8 billion in deposits as of Sept. 30, the FDIC said, and its failure will cost the deposit-insurance fund $619.2 million. City National Bank of Los Angeles is assuming all of the deposits in the “least costly” resolution, according to the agency.

Tags: Seven U.S. banks closed by regulators 140 have failed in 2009

18Dec

Credit card’s newest trick: 79.9 percent interest

Financial transaction, Life settlement, banking, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, credit, debt, equity, leverage, liquidity, loan, money, savings, settlement, trend, usa economics No Comments

Credit card’s newest trick: 79.9 percent interest
First Premier card carries heavy interest rate

It’s no mistake. This credit card’s interest rate is 79.9 percent.

The bloated APR is how First Premier Bank, a subprime credit card issuer, is skirting new regulations intended to curb abusive practices in the industry. It’s a strategy other subprime card issuers could start adopting to get around the new rules.

Typically, the First Premier card comes with a minimum of $256 in fees in the first year for a credit line of $250. Starting in February, however, a new law will cap such fees at 25 percent of a card’s credit line.

In a recent mailing for a preapproved card, First Premier lowers fees to just that limit — $75 in the first year for a credit line of $300. But the new law doesn’t set a cap on interest rates. Hence the 79.9 APR, up from the previous 9.9 percent.

“It’s the highest on the market. It’s the highest we’ve ever seen,” said Anuj Shahani, an analyst with Synovate, a research firm that tracks credit card mailings.

The terms are eyebrow raising, but First Premier targets people with bad credit who likely can’t get approved for cards elsewhere. It’s a group that tends to lean heavily on credit too, meaning they’ll likely incur steep financing charges.

So for a $300 balance, a cardholder would pay $20 a month in interest.

First Premier said the 79.9 APR offer is a test and that it’s too early to tell whether it will be continued, according to an e-mailed statement. To comply with the new law, the bank said it will no longer offer the card that has $256 in first-year fees as of Feb. 21, 2010. However, customers will still be able to use their existing cards.

According to First Premier’s Web site, the credit cards are issued by its sister organization Premier Bankcard. The company, based in Sioux Falls, S.D., says Premier Bankcard is the 10th largest issuer of MasterCard and Visa cards in the country, with more than 3.5 million customers.

In a mailing sent to prospective customers in October with the revamped terms, First Premier writes “…you might have less-than-perfect credit and we’re OK with that.” The letter notes that an online application or phone call is still required, but guarantees a 60-second status confirmation.

The letter also states there are no hidden fees that aren’t disclosed in the attached form. That’s where the 79.9 percent interest rate and $75 annual fee are listed. There’s also $29 penalty if you pay late or go over your credit limit. The credit limit is $300.

The bank did not say how many people were offered the 79.9 APR card, but noted that it needed to “price our product based on the risk associated with this market.”

Even if First Premier doesn’t stick with the 79.9 APR, it will likely hike rates considerably from the current 9.9 percent to offset the lower fees, said Shahani of Synovate.

The revamped terms may not be the only changes; First Premier also appears to be moving away from the riskiest borrowers.

The bank typically mails offers to subprime households, meaning those with credit scores below 700. In the third quarter, however, 84 percent of its offers were sent to subprime households, down from 91 percent the same period last year, according to Synovate.

First Premier could be cleaning up its credit card portfolio since the new regulations will limit its ability to raise interest rates. That could mean First Premier won’t issue cards as liberally to those with bad credit.

As harsh as First Premier’s terms seem, that could be a blow to those who rely on the card, said Odysseas Papadimitriou, CEO of CardHub.com.

“Even when the cost of credit is astronomical, for people in true emergencies, it’s much better than not having access to credit,” said Papadimitriou.

Until Feb. 21, First Premier is still offering its even-higher-fee card online. So the price for credit the bank charges is at least $256 in first-year fees.

Tags: Credit card's newest trick: 79.9 percent interest

15Dec

Internals point to possible selling during Tuesdays session

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Even with the spectre of a potential sell day Stockshakers remain bullish. As the fear increases along with the certainty that the bull market has ran too far too fast, Stockshakers looks to the 2003 market and economic conditions as a possible reference point.
2009 was a challenge and 2010 doesn’t look much easier, sure there will be this looming overhead resistance on equities markets but is the level enough to create a problem for traders?

Look at the lows reached by many equities in the first quarter of 2009 and you will see the over reaction from the fallout of 2008. Sure this is the Great recession and it will always be remembered as one of the big ones, and while we are not out of the woods yet, Stockshakers sees the potential for the ull to gain traction here and continue into February of 2010.

The U.S. Government and the Fed of the US will continue to stimulate the economy to begin the start of job generation. The key to recovery is Jobs and liquidity. Banks must start loaning money and the captiol machine must be stoked to deliver real lasting and effective results.

The return of competition to the market place is a welcome sight, we may just see jobs start to pop up.

For the trading day watch for reversals and a rise in volatility. Always check the World Bank for news announcements.

Approved
Middle East and North Africa: Over $5.5 Billion in New Investment for Clean Energy Technology
The Clean Technology Fund (CTF), a multi-donor trust fund that facilitates the deployment of low-carbon technologies, approved financing of $750 million on December 2, 2009 for Concentrated Solar Power (CSP) programs in five countries in the Middle East and North Africa: Algeria, Egypt, Jordan, Morocco, and Tunisia. The CTF will mobilize an additional $4.85 billion from other sources to support the deployment of about 1 gigawatt of CSP generation capacity, support associated transmission infrastructure in the Maghreb and Mashreq, and leverage public and private investments for CSP power plants.

Clean Air - CLEN & CLNX

Have a great trading day www.stockshakers.com

Tags: clean air funds, clen, clnx

11Dec

Akeena Solar stock jumped nearly 54 percent

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Akeena Solar, Inc. stock jumped nearly 54 percent Thursday after the company announced that Lowe’s is now stocking its solar panels in California.

Akeena stock added 53 cents to $1.52 a share in afternoon trading. Company stock has traded between 58 cents and $2.61 a share during the past year.

The company, which has headquarters in Los Gatos, Calif., develops a user-friendly solar panel that Lowe’s agreed to carry on store shelves. The home improvement retailer said it would stock Akeena products in 21 California stores this week, followed by other states and Canada next year.

The deal could bring Akeena’s panels to a large audience of do-it-yourselfers.

Tags: Akeena Solar stock jumped nearly 54 percent, bid up, price jump, shares sold, solar

05Dec

Taxpayers in 29 states will see tax increases

Taxes, breaking market news, breaking news, breaking stock market news, breaking stock news, breaking wall street news, usa economics No Comments

Twenty nine states raised taxes or fees this year, bringing in an estimated $23.9 billion the highest increase since at least 1979, according to data released this week. The reliance on so much new revenue is sudden, to say the least. In the previous year, tax and fee hikes totaled $1.5 billion.
That’s the word from the National Governors Association and the National Association of State Budget Officers, which together issued a state by state tally of actions taken to close ever expanding budget gaps and balance state spending plans. The report is an update (PDF) of preliminary numbers released last month.
Eleven states upped their personal income taxes, accounting for $10.7 billion in new revenue. But a closer look reveals that most of that comes from just two states: California and New York, which raised payroll taxes for a combined $8.4 billion. California also accounted for $4.4 billion of the $6.1 billion in new sales taxes nationally.
Meanwhile, 22 states and Puerto Rico used layoffs to trim state expenses, and 23 states applied across-the-board cuts, according to the study.
The final report paints an even grimmer picture of state finances for fiscal 2010 that began for most states in July than last year, which was plenty painful. Last year’s general fund spending by states shrank by 4.8 percent and marked the first time on record that state year to year spending dropped two years in a row. There will likely be a third year: The report estimated that state spending this year will drop even more, by an “unprecedented” 5.4 percent.

Tags: tax hike, tax rate increase, Taxes

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US Stock market indexes 2009 gains totals

Stockshakers Breaking Market News

U.S. Ends Cap on Fannie, Freddie Lifeline for 3 Years

Markets internals are pointing to a down session

Fund of the decade posts a 1,524% return

Seven U.S. banks closed by regulators 140 have failed in 2009

Credit card’s newest trick: 79.9 percent interest

Internals point to possible selling during Tuesdays session

Akeena Solar stock jumped nearly 54 percent

Taxpayers in 29 states will see tax increases

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