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AIG Bailout or Blackmail

AIG Bailout or Abortion

AIG Bailout or Blackmail

GAO: Treasury should take a harder line with AIG

WASHINGTON – The Treasury Department should deny American International Group Inc. a $30 billion “contingency” bailout until the company agrees to take back millions in bonuses and negotiate cheaper exits from its financial contracts, congressional auditors said Tuesday.

The Government Accountability Office report also found that payouts from the $700 billion financial system bailout nearly halted over the past two months. The slowdown occurred as Treasury Secretary Timothy Geithner came under fire for moving too slowly to announce financial rescue plans and assemble a team to oversee the largest government market intervention ever.

Treasury should withhold the latest $30 billion of bailout money it committed to AIG until the failed insurer agrees to “seek additional concessions from employees and existing derivatives counterparties,” the GAO report recommended.

Congress and the public grew so outraged this month over AIG’s awarding $165 million in bonuses that some called for Geithner’s resignation. The Treasury and Federal Reserve have committed more than $182 billion to save AIG. Treasury now owns nearly 80 percent of the New York City-based company, and experts warn it may require even more money.

The Fed also took heat for refusing to name the indirect recipients of billions of dollars AIG was spending to wind down financial contracts. Despite warnings that such revelations would threaten the global economy, AIG eventually released the names, but the news was overshadowed by the bonus controversy.

At a Senate Finance Committee hearing Tuesday, Neil Barofsky, who audits bailout spending as special inspector general for the Troubled Asset Relief Program, said his office is investigating the issue, including who approved the payments.

As of March 27, Treasury had disbursed $303.4 billion from the TARP, according to the GAO report. That’s only $9.7 billion more than Treasury had paid out by Jan. 23, at the start of Geithner’s tenure.

The review by government auditors adds to criticism of Treasury’s failure to manage expectations and move quickly to roll out its rescue programs.

“While articulating its plan was an important step, Treasury continues to struggle with developing an effective overall communication strategy that is integrated into TARP operations,” according to the new GAO report. It says that could make it harder to build support for additional funding requests.

In the law authorizing the TARP money, Congress required the GAO to produce reports on the program’s condition and internal controls at least every 60 days. The law also created a bipartisan Congressional Oversight Panel to report on Treasury’s actions, the financial markets and the regulatory system. Besides conducting audits and investigations, Barofsky’s office promotes transparency.

A Treasury spokesman, Andrew Williams, said in a statement that transparency and accountability are key concerns as the department tries to maximize its use of taxpayer money.

He said Treasury has made “significant progress in implementing every GAO recommendation” from previous reports, including hiring more staff for the new financial stability office and expanding a bank survey on lending and other activities.

At Tuesday’s Senate hearing, Barofsky for the first time gave some clues about how banks were using their bailout dollars, including some that identified specific loans made possible through the TARP.

Despite questions from the oversight bodies, Treasury has not yet satisfied concerns that it runs the programs behind closed doors and doesn’t require enough disclosure about how banks are spending billions in bailout money, the GAO report says.

To help the department meet standards for accountability and transparency, the report includes recommendations. Among them:

_Reporting the dividends Treasury has received from TARP participants.

_Hiring a communications officer to work in the office overseeing TARP.

_Scheduling regular meetings between Treasury officials and congressional leaders, and holding “town hall meetings with the public across the country.”



GM’s Bankruptcy is More Probable

GM's New CEO Says Bankruptcy More Probable

GM's New CEO Says Bankruptcy More Probable

GM’s new CEO says bankruptcy is ‘more probable’

DETROIT – General Motors Corp.’s new chief executive said Tuesday that more of the automaker’s plants could close and bankruptcy is “more probable” as GM works to meet new, tougher requirements for government aid. In his first news conference as CEO, Fritz Henderson said he expects the company would “need to take further measures” beyond the five plants the company said it would shutter when it submitted a restructuring plan to the government last month.

GM also is likely to offer another buyout program to workers as it looks to cut labor costs, Henderson said.

President Barack Obama said Monday that GM’s initial plans to become viable didn’t go far enough. He gave the company 60 days to make more cuts and get more concessions from bondholders and unions or it won’t get any more government help.

The Obama administration also asked former CEO Rick Wagoner to resign, and Henderson took over as CEO on Monday.

Henderson said that although GM would prefer not to use bankruptcy protection to save itself, it is “certainly more probable” than in the past.

The company, he said, has until June 1 to accomplish changes sought by the government, or it will be in bankruptcy. The 60-day deadline should be enough time, but if it becomes evident that the changes can’t be made by the deadline, GM could go into court sooner, he said.

“It doesn’t have to take 60 days. If it’s quite clear that we’re not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment” reviewed by the Obama administration’s autos task force, he said.

Henderson also said GM is still talking with potential buyers of the Hummer brand, and a decision on the brand’s fate will come in the next few weeks. GM said in a viability plan filed with the government in February that it would make the decision in the first quarter, which ends Tuesday.

In an effort to increase sales, GM launched a program called “Total Confidence” that will make car payments for customers who lose their jobs through no fault of their own.

GM will make up to nine payments of $500 each to qualifying customers. Consumers must qualify for state unemployment benefits to be eligible for the program.

The program starts Wednesday and runs until April 30.

Ford Motor Co. announced a similar program Tuesday, which will take over customer’s payment of up to $700 a month for a year in the event of job loss.

Shares of GM fell 32 cents, or 11.9 percent, to $2.38 in midday trading. Ford shares fell 6 cents, or 2.2 percent, to $2.70.



Unemployment Olympics

Unemployment Olympics

Unemployment Olympics

Christopher Dawes tosses an office phone during the Unemployment Olympics in New York, Tuesday, March 31, 2009. The lighthearted competition was only open to the unemployed, and included a such games as ‘Pin the Blame on the Boss’ and ‘Office Telephone Toss’.


Record 19% Drop in U.S. Homes Prices in January 2009

Record 19% Drop in U.S. Home Appraised Values

Record 19% Drop in U.S. Home Appraised Values

US home prices drops set records in Jan.

By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer 15 mins ago
WASHINGTON – Home prices sank by the sharpest annual rate on record in January, and the pace continues to accelerate, but there were a handful of battered metro areas where price declines slowed, according to data released Tuesday.

The Standard & Poor’s/Case-Shiller index of home prices in 20 major cities tumbled by a record 19 percent from January 2008. It was the largest decline since the index started in 2000. The 10-city index dropped 19.4 percent, also a new record.

All 20 cities in the report showed monthly and annual price declines, with 13 posting new annual records. Prices dropped by more than 10 percent in 14 cities. Faring better were Dallas, Denver and Cleveland, with annual price declines of around 5 percent.

“There are very few bright spots that one can see in the data,” David Blitzer, chairman of S&P’s index committee, said in a prepared statement. “Most of the nation appears to remain on a downward path.”

In the Cleveland, Los Angeles, Las Vegas and Washington D.C. metro areas — all ravaged by foreclosures_ annual price declines eased somewhat. Meanwhile, six cities, including Minneapolis, Charlotte, Seattle and New York, showed smaller price declines in January compared with December.

Last week, the National Association of Realtors said sales of previously occupied homes unexpectedly jumped in February by the largest amount in nearly six years as first-time buyers took advantage of deep discounts on foreclosures and other distressed properties. Some economists say that could help moderate declines.

“We still think there is a good chance the rate of (price) decline will slow through the spring as existing home sales stabilize and perhaps pick up a bit, but foreclosures are weighing heavily on prices,” wrote Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Prices in the 20-city index have plummeted 29 percent from their peak in summer 2006, while the 10-city index has fallen 30 percent. Prices have sunk back to levels not seen since late 2003, and analysts say the ultimate drop in prices could easily be 35 percent or greater in some metros.

To provide some relief, Congress in February passed a new $8,000 tax credit for first-time homebuyers and President Barack Obama is directing $75 billion to a new foreclosure prevention plan. But the success of those efforts could well depend on how far the U.S. economy falls.

Some slivers of hope about the economy buoyed consumers in March and consumer confidence crept upward for the first time in four months, the Conference Board said Tuesday.

“We have seen some signs of improvement in the economy, but they are subtle,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.

Lennar Corp.’s chief executive also said there are some signs suggesting the housing market is beginning to stabilize, but he’s not projecting significant improvement for some time.

Stuart Miller blamed weak consumer confidence and competition from deeply discounted foreclosed properties for a 28 percent decline in new home orders in its most recent fiscal quarter.

But Miller told Wall Street analysts Tuesday there’s been a discernible uptick in sales this month, though believes it’s too early to say it’s a defining trend


What U.S. $1 Million Buys in Homes Worldwide

$1M Houses Worldwide

$1M Houses Worldwide

What $1 Million Buys in Homes Worldwide
From One-Bedroom Apartments to McMansions, Tour Real Estate Around the Globe
Jan. 5, 2008 Special to ABCNEWS.com —

Home prices in many parts of the world swelled last year, with Eastern European and Scandinavian markets leading the way with double-digit growth.

The result? On foreign soil, $1 million buys less than ever.

In London, it’ll get you a one-bedroom, one-bathroom flat in Primrose Gardens. You’ll save on cabs, however; the building is steps from the Belsize Park tube station. In Hong Kong, $1 million buys a three-bedroom, 825-square-foot apartment in a high-rise between the residential areas of Aberdeen and Pokfulam.

Click here to see more about what $1 million buys in homes worldwide at our partner site, Forbes.com.

Shoppers in New York don’t get much more space. A 647-square-foot Turtle Bay condo, not far from the United Nations, nips the seven-figure mark, and some may say justly: The property features a 45-square-foot balcony, white oak floors and 11-and-a-half-foot ceilings.

Forbes.com looked for million-dollar properties representative of the world’s offerings and found a range of apartments, townhouses, lofts and vacation homes on every continent, excluding Antarctica. In emerging markets like South Africa or Egypt, $1 million might buy a small estate. In major cities like Paris, Sydney and Dublin, you’re likely limited to apartments.

Costly City Dwellings
In places such as these, convenience of commute, access to leisure pursuits and the prestige of a prime address like Kensington or the Sutton Place means that prices will grow so long as wealth does.

“The growth of wealth in recent years is a real and substantial trend,” says Liam Bailey, head of residential research for London-based property adviser Knight Frank. “Over the next five years, we believe the trend of growing wealth and greater wealth concentration will continue.”

And if it comes in the form of pounds sterling and euros, American real estate as a result looks incredibly cheap. One example: the luxurious residences at The Plaza in New York–many listed for upward of $10 million–are filling fast with Europeans.

But it’s not just marquee properties that are going to overseas investors. Jonathan Miller, director of research at Radar Logic, a New York real estate research firm, estimates that one-third of Manhattan condo sales over the last year have gone to foreign buyers.

Top Performers
However, those who prefer to stay home should fare just as well. That’s because, while U.K. prices have spiked almost 10% this year, according to Savills, a London-based real estate research firm, both mature and growing markets have outperformed it.

“It is not just the emerging markets such as Poland and Bulgaria that are enjoying strong growth,” says Charles Weston-Baker, director of Savills’ International Residential Department. “Traditional markets such as Canada, Sweden and Spain all outperformed the U.K.”

Here, though, buyers of million-dollar prices still get more than they would for a comparably priced property in London. In Montreal, $1 million buys a three-bedroom, three-bathroom, Art Deco-style home with a deck overlooking rear gardens and three fireplaces.

A good investment? It’s likely. Although “price growth this year will be lower,” says Bailey, “we predict prime markets will outperform mainstream markets by quite a margin.”

World’s Most Expensive Homes

World's Most Expensive Homes

World's Most Expensive Homes


Trump Flips $41M Manse for $100M

Trump Flips $41M for $100M

Trump Flips $41M for $100M

Donald Trump’s Palm Beach mansion, Maison de l’Amitie, has been sold for $100M to a Russian fertilizer Billionaire. The 68,000- square -foot home sits on over seven beachfront acres and features 16 bedrooms and three guesthouses. Trump purchased the home @ auction for $41M million in 2004 after Hamptonite Insurance Guru Mr. Gossman lost the ultra luxury asset.
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