U.S. Economic/Financial News

Now, Commercial Real Estate Is Crashing

Jan. 26 (EIRNS)—Commercial real estate, in conventional wisdom thought to be less vulnerable than residential real estate, is nonetheless crashing, especially the office real estate market in the United States.

In the fourth quarter of 2007, office real estate deals dropped 42% from a year earlier, and sales of property portfolios dropped to $5 billion from the $105 billion posted over the first three quarters. This is according to new data released by Real Capital Analytics on Jan. 25, and cited in today's Financial Times. A further symptom is that the number of newly issued commercial mortgage-backed securities, which are used to fund commercial real estate deals, dropped 54% in the fourth quarter, according to Bloomberg News on Jan. 26. The cost of borrowing for commercial real estate deals is rising, as are delinquencies in the $3.2 trillion commercial market.

Sales volumes in retail commercial real estate dropped by 30%, buoyed by the closing of the mega-sale of apartment owner Archstone-Smith for $22 billion. Otherwise, the drop in activity would have been 60%. Industrial property sales volumes were down 22% for the quarter.

Congressman Kanjorski To Investigate Monoline Insurers' Scams

Jan. 25 (EIRNS)—U.S. Rep. Paul Kanjorski (D-Pa.), having witnessed the havoc unleashed by the collapse of vulture bond insurers (a.k.a., monolines), upon municipal governments' credit ratings, pension funds, and the financial markets generally, has initiated an investigation of the bond insurance sector. Kanjorski, chair of the House Financial Services subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, has demanded answers by Feb. 1 from five banking regulatory agencies, including the Federal Reserve, the SEC, and the Federal Reserve Bank of New York, and three state insurance regulators, in letters issued Jan. 23.

Citing news reports of the $2 trillion of debt securities "guaranteed" by these vultures, specifically Ambac, MBIA, and ACA, Kanjorski asks the regulators to "detail steps you are taking ... [to] ensure the continued safety and soundness of banks and/or financial holding companies."

Meanwhile, according to the Jan. 25 London Telegraph, New York State Insurance Superintendent Eric Dinallo is circulating a desperate $15 billion bailout scheme that would have the major U.S. banks buy $15 billion of equity (stock) of the monoline insurers, to "shore up" the monolines' balance sheets.

New York State Sues Underwriters Over Countrywide Fiasco

Jan. 26 (EIRNS)—Goldman Sachs, Citigroup, JPMorgan Chase, along with 23 additional securities firms are being sued by three New York agencies for helping Countrywide Financial defraud investors. Two accounting firms and Countrywide management personnel are also named in the suit by the city and state comptrollers and their pension funds. "The underwriters and accountants enabled Countrywide to release false statements. Investors lost millions and New Yorkers lost their homes," according to New York State Comptroller Thomas DiNapoli, quoted in a Jan. 26 Bloomberg News report. The New York pension fund losses from Countrywide investments may reach $100 million before the dust settles.

The suit points out that Countrywide CEO Angelo Mozilo and other company insiders were dumping millions of shares of Countrywide stock, even as they and the underwriting firms were hyping Countrywide loans as safe and profitable investments for New York public pension funds.

Fivefold Increase in California Foreclosures

Jan. 22 (EIRNS)—Today's Sacramento Bee reports that notices of default are up in the state in the fourth quarter by 114%, to 81,550 homes. Actual foreclosures, in which the bank or lending agency took over the home, totaled 31,676—a stunning fivefold increase, compared with 2006.

Among the areas hardest hit is Sacramento, the capital. In the eight-county Sacramento region, notices of default were up 106% in the fourth quarter. For the year 2007, foreclosures in the Sacramento region were up by 496%, to 10,049.

A spokesman for Gov. Arnold Schwarzenegger declined to comment on these figures, saying only that the governor "is very concerned" about the "situation," which he declined to describe as a "crisis."

Illinois Dem Calls for 90-Day Freeze on Foreclosures

Jan. 23 (EIRNS)—Illinois Democrat Rep. Phil Hare became the second from the state and the fourth in Congress to call for a home foreclosure moratorium, following Sen. Hillary Clinton (D-N.Y.), Rep. Chakah Fattah (D-Pa.), and Rep. Danny Davis (D-Ill.). "Our nation is in the midst of one of the most unique, devastating and tragic economic crises it has faced in some time," wrote Hare in a letter to the Register-Mail of Galesburg. "In the next few months, I will work to establish a temporary moratorium on foreclosures, help responsible consumers lock in a fixed-interest rate, and bring needed regulation and enhanced consumer protection against predatory lenders."

Hare, a freshman in Congress, represents a large agricultural district.

Rockefeller Cash Behind Bloomberg Infrastructure Swindle

Jan. 21 (EIRNS)—There was a fourth person on the stage at the Jan. 19 press conference that featured California Gov. Arnold Schwarzenegger and Michael Bloomberg, the would-be Mussolini-style independent candidate for President.

Standing alongside the fascist duo, and Pennsylvania Gov. Ed Rendell, was Judith Rodin, president of the Rockefeller Foundation, whose money is bankrolling the "populist" Building America's Future Coalition, which aims to propel Bloomberg into the White House. The coalition is promoting a delphic scheme for infrastructure building as a counter to Lyndon LaRouche's efforts. So new that it doesn't yet have a website, the Rockefeller-funded group has big plans, including pulling hundreds of local and state elected officials into their swindle.