Monthly Archives: January 2012

FISERV CASE-SHILLER: Home Prices Reach New Low, but Stabilization and Recovery Are in Sight

FISERV CASE-SHILLER:  Home Prices Reach New Low, but Stabilization and Recovery Are in Sight

 

Brookfield, WI-based Fiserv Inc. ((NASDAQ: FISV) on Monday, Jan. 30 released an analysis of home price trends in more than 380 U.S. markets based on the Fiserv Case-Shiller Indexes. The indexes are owned and generated by Fiserv, a leading global provider of financial services technology solutions, and data from the Federal Housing Finance Agency (FHFA).

The report said the double-dip in home prices that began two years ago continued to take home prices lower through the third quarter of 2011, during which the average price of a U.S. single-family home fell to a new post-bubble low, declining 3.9 percent compared to the year-ago period. Current average home prices are now 33 percent below the 2006 peak, with broad weakness across the U.S. Over the past year, home prices fell in 337 of the 384 metro areas tracked by Fiserv Case-Shiller. This trend in home prices was in line with the forecast made by Fiserv a year ago, which projected a year-over-year drop of 5.5 percent.

Despite continued price erosion, some metro areas saw significant home price gains in the past year including markets that were deeply affected by the housing bubble and recession. Examples include Detroit, Mich. (11.1 percent), Buffalo, N.Y. (6.7 percent) and Fort Myers, Fla. (2.8 percent).

Fiserv Chief Economist David Stiff pointed to encouraging trends in the U.S. housing market. “While prices continued to fall in most markets, sales activity picked up at the end of 2011, setting the foundation for price stabilization in 2012,” Stiff said. “We stand by our projection that average U.S. home prices will move sideways in 2012. But we do anticipate that increasing sales activity will begin to drive small increases in prices in as many as half of U.S. metro areas. Some larger metro areas that escaped the worst of the home price bubble, such as Houston, Fort Worth and Salt Lake City, can expect increases of 1 to 3 percent. Many smaller metro areas, such as Boise and Albuquerque, are forecast to see increases of 4 to 6 percent.”

The recovery in such markets, however, is not expected to be broad enough to move the national average this year. Fiserv Case-Shiller projects that average U.S. prices will decline another 2.7 percent by the third quarter of 2012, compared to the year-ago period, before rising 3.8 percent by the third quarter of 2013.

“The other big story is the continued improvement in housing affordability,” Stiff noted. “The monthly mortgage payment for the median-priced U.S. home fell to $640, nearly 45 percent lower than the housing bubble peak of $1,150. That represents the lowest level since 1994. Similarly, mortgage payments now account for only 14 percent of monthly median family income, as households made more progress in repairing their balance sheets.”

Stiff also cited the impact of improving economic indicators. “Consumer confidence remains low, but has bounced back from its sharp decline following the downgrade of U.S. debt,” Stiff continued. “Auto sales have also rebounded after stalling in the summer, which indicates an increasing willingness of consumers to purchase big-ticket items. If the job market continues to improve, then the rebound in consumer confidence will be sustained this year and more households will be willing to purchase the biggest ticket item, a house.”

Some other highlights of the report:

 

  • Average U.S. home prices are one-third  below peak 2006 levels
  • Housing affordability continues to improve, with the  ratio of monthly mortgage payment to median family income the lowest since  1994
  • Almost half of U.S. metro markets are projected to see  modest home price gains by Q3 2012; average home prices expected to rise 3.8 percent by Q3 2013

 

  • Average home prices are projected to increase in 172 of  the 384 metro areas tracked through the 2012 third quarter, and in 376  metro areas through the 2013 third quarter.
  • Home prices fell by double-digits in 18 metro areas, including Carson City, Nev.; Tucson, Ariz.; Atlantic City, N.J.; and  Madera, Calif.
  • Of the 15 best-performing housing markets in the 2011 third quarter, 11 markets had unemployment rates lower than the national    average. Examples include Bismarck, N.D.; Pittsburgh, Penn.; and Dubuque,  Iowa.
  • Between 2011 third quarter and 2012 third quarter,  prices are projected to rise by at least 5 percent in seven metro areas:      Gainesville, Ga.;Sumter, S.C.; Lake Havasu City-Kingman, Ariz.; Pueblo, Colo.; Coeur d’Alene, Idaho; Bremerton-Silverdale, Wash.; and Madera, Calif.
  • California and Florida, two of the states hit hardest  by the housing market bubble, account for 10 of the 20 metro areas  forecast to see the greatest increase in home prices through 2016.

 

For selected metropolitan area statistics, click HERE metro prices

 

Resources:

 

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COMMENTARY: Freddie Mac Must Go in Light of Its Practices

I awoke Monday morning, Jan. 30 to hear a report on my South Texas NPR station that Freddie Mac, one of two Government Sponsored Enterprises (GSEs) that I would like to see gone (the other is Fannie Mae) is “Betting Against Struggling Homeowners” and has “placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.” (Link: www.npr.org). Yes, this is the same taxpayer-owned mortgage giant that we — the long-suffering taxpayers — bailed out a few years ago.

The story, a joint venture between NPR and the nonprofit news organization ProPublica, added that “Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages.”

Freddie sounds a lot like the feckless Wall Street banks that we bailed out under the TARP program, the companies profiled in the excellent HBO movie “Too Big to Fail” (I recommend the flick for those mostly nonreaders who want to understand what went wrong on Wall Street and plunged us into the biggest financial crisis since the Great Depression).

The NPR/ProPublica story went on to say that “No evidence has emerged that these decisions were coordinated. The company is a key gatekeeper for home loans but says its traders are ‘walled off’ from the officials who have restricted homeowners from taking advantage of historically low interest rates by imposing higher fees and new rules.”

Freddie’s charter calls for the company to make home loans more accessible, according to the NPR/ProPublica story. “Its chief executive, Charles Haldeman Jr., recently told Congress that his company is ‘helping financially strapped families reduce their mortgage costs through refinancing their mortgages.’”

I read a dissenting view that said such trades were commonplace on Wall Street, but the last time I looked, Freddie wasn’t Goldman Sachs, Citigroup or any of the other Wall Street banks saved by taxpayers. As a GSE, it is backed by the credit of the USA, and it should be fully accountable to the federal government, in my opinion.

The trades, “uncovered for the first time in an investigation by ProPublica and NPR, give Freddie a powerful incentive to do the opposite, highlighting a conflict of interest at the heart of the company. In addition to being an instrument of government policy dedicated to making home loans more accessible, Freddie also has giant investment portfolios and could lose substantial amounts of money if too many borrowers refinance.”

Echoing Capt. Louis Renault, played by Claude Rains in the classic 1942 movie “Casablanca” Scott Simon, head of the giant bond fund PIMCO’s mortgage backed securities team said “We were actually shocked they did this. It seemed so out of line with their mission.” Simon said the trades “put them squarely against the homeowner.”

Those homeowners have a lot at stake, too. Many of them could cut their interest payments by thousands of dollars a year.

Freddie Mac, along with its cousin Fannie Mae, was bailed out in 2008 and is now owned by taxpayers. The companies play a pivotal role in the mortgage business because they insure most home loans in the United States, making banks likelier to lend. The companies’ rules determine whether homeowners can get loans and on what terms.

The Federal Housing Finance Agency effectively serves as Freddie’s board of directors and is ultimately responsible for Freddie’s decisions. It is run by acting director Edward DeMarco, who cannot be fired by the president except in extraordinary circumstances.

Jacob Gaffney at HousingWire, a mortgage news blog (link: http://www.housingwire.com), the dissenter referred to above, says Freddie is just exercising sound business practices, adding that “the same thing is happening at Ginnie Mae and Fannie Mae and just about everywhere a house is bought, sold and financed.”

Gaffney adds: “Yes, Freddie Mac securitizes loans. Yes, Freddie Mac doesn’t sit on those loans. …”Even more importantly, the very federal conservatorship status that both Fannie and Freddie are under is designed to protect their assets. That means keeping performing loans right where they are — in a position that most efficiently monetizes loans for investors.”

Gaffney goes on to write how large of an investor the United States of America is in Freddie Mac: “The Federal Reserve Bank of New York, acting on behalf of the Treasury, currently holds $835.6 billion of Fannie, Freddie and Ginnie mortgage-backed securities….Looks like one of the largest Freddie Mac investors, the U.S. government, is pretty confident in low-interest Freddie bonds.” My answer to mortgage expert Gaffney: “Sure, the U.S. government can do no wrong, even though its actions — and in the case of the SEC, inactions — contributed to the fine mess we’re in now.”

Under the headline: “Freddie Mac places multibillion-dollar bets against homeowners” business columnist and author Loren Steffy of the Houston Chronicle (“Drowning in Oil: BP and the Reckless Pursuit of Profit.” ( link to my review:.www.huntingtonnews.net/…/101207-kinchen-columnsbookreview.ht..) says Freddie Mac’s placing multibillion-dollar bets that homeowners would stay trapped in expensive mortgages with high interest rates, known as inverse floaters, “even as it was making it more difficult for homeowners to get out of high-interest mortgages” “give Freddie a powerful incentive to do the opposite, highlighting a conflict of interest at the heart of the company. In addition to being an instrument of government policy dedicated to making home loans more accessible, Freddie also has giant investment portfolios and could lose substantial amounts of money if too many borrowers refinance.”

Steffy adds that as “Aaron Layman points out, Freddie and Fannie Mae are already under fire for jacking up fees and making it more difficult for homeowners to refinance existing mortgages. Your bailout dollars at work.”

This is my opinion and you can take it to the bank: It’s long past time that we do away with Fannie and Freddie and bring some Canadian common sense (“Canada: Like Us, Only Smarter”) to our mortgage market. In the Great White North, only people who can afford to buy a house can get a mortgage. Canada has no equivalent of our Fannie Mae, Freddie Mac or Ginnie Mae and is better off because without them. We’ve had FHA since the 1930s and it has served the housing consumers of the nation well in the past and can continue to do so. We should also call a halt to the idea that everybody should be a homeowner, when the reality is that not everybody should be or in many cases wants to be a homeowner.

 

BOOK REVIEW: ‘Secret Weapon’: Was the 2008 Economic Meltdown Caused by Economic Terrorism? Financial Expert Kevin Freeman Thinks So — And Says It Could Happen Again

Kevin Freeman

  Reviewed by David M. Kinchen 

Conventional Wisdom says the economic meltdown of the U.S. and most of the rest of the world was a self-inflicted wound, caused by greedy Wall Street types creating toxic assets from sub-prime mortgages, short sellers who wanted to maximize their profits, people buying overpriced houses they couldn’t possibly afford, lack of regulation by the federal government, etc. etc.

This is the message of the HBO movie “Too Big to Fail,” as well as the 2011 “The Financial Crisis Inquiry Report,” the final report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, published for the trade by PublicAffairs ( I’m reprinting my review of this document below the review of Kevin Freeman’s book).

What if there was a more sinister cause for the worst recession since the Great Depression, asks Kevin D. Freeman in “Secret Weapon: How Economic Terrorism Brought Down the U.S. Stock Market and Why It Can Happen Again” (Regnery Publishing Inc., 256 pages, $27.95).

The meltdown, which ended up with half of the world’s wealth disappearing (Page 189), was caused by foreign enemies: China, the sovereign wealth funds of Arab nations — including many which are considered friendly — an embittered Russia getting back at the U.S. for ending its superpower status, says financial expert Freeman, a disciple of the legendary Sir John Templeton (think Franklin Templeton Investment Services, the widely respected worldwide sponsors of the Australian Open).

“Secret Weapon” grew out of a report (link:http://av.r.ftdata.co.uk/files/2011/03/49755779-Economic-Warfare-Risks-and-Responses-by-Kevin-D-Freeman.pdf) Freeman wrote in for the Defense Department in June 2009. The conclusions of the report were rejected by supporters of conventional wisdom, a phrase popularized by economist John Kenneth Galbraith, who used it in a pejorative sense in his 1958 book “The Affluent Society.” Previous  authors had used the phrase “conventional wisdom” as a synonym for commonly accepted knowledge, but Galbraith appended “The” to the phrase to emphasize its uniqueness, and “sharpened its meaning to narrow it to those commonplace beliefs that are also acceptable comfortable to society, thus enhancing their ability to resist facts that might diminish them,” according to the Wikipedia entry.

Galbraith wrote: “It will be convenient to have a name for the ideas which are esteemed at any time for their acceptability, and it should be a term that emphasizes this predictability. I shall refer to these ideas henceforth as the conventional wisdom.” (my emphasis).

Freeman says when it comes to America’s flailing economy, everyone is quick to assign blame, with liberals blaming corporate greed (there’s plenty of that to go around!) and conservatives blaming federal regulations or regulators (I ask what regulators, with the SEC asleep at the switch and short sales basically unregulated in the Clinton and Bush II administrations and continuing in the Obama one); with both sides denying the existence of financial terrorism, which dates back to early history and was used by the Nazis during World War II in the form of counterfeit U.S. dollars created by concentration camp inmates producing bills so perfect that they passed the scrutiny of the experts. We used economic warfare against the Japanese in the months preceding Pearl Harbor, when we cut off scrap metal and oil shipments to the Japanese, Freeman notes on pages 20-23. The Germans first used counterfeiting against Britain in Operation Bernhard (pages 23-25) and later branched out to counterfeiting U.S. currency. The Nazis used skilled Jewish inmates for the work and rewarded the inmates with better conditions.

Is it a coincidence that the meltdown came in September 2008, at a time when GOP presidential candidate John McCain was leading Obama in the public opinion polls, Freeman asks, suggesting that the economic terrorists wanted Barack Hussein Obama to win in November. So far, he writes, the Obama administration and its commissions (see above report) have ignored the possibility of financial terrorism, mostly out of politically correct motives.

One of the elements in “Too Big to Fail” was the rejection by British financial regulators of a takeover by London-based Barclays Bank of Lehman Brothers in the summer of 2008. On Page 157 Freeman writes that in the summer of 2008 Barclays was “heavily dependent on capital from the Middle East and China.” Neither the Middle East or China was interested in rescuing Lehman Brothers.

About those short sales, which Freeman talks about throughout this book, their lack of transparency — and oversight by the Securities and Exchange Commission (SEC); on Page 153 he writes that two firms — Wedbush Morgan Securities of Los Angeles and Penson Financial Services Inc. of Dallas — were responsible for much of the naked short selling that was used as a financial weapon of mass destruction, in the words of investing icon Warren Buffett. “These two firms were both pioneers in developing naked sponsored access prior to the 2008 crash, and both lobbied heavily to keep the practice legal,” Freeman says (Pages 153-4). The name Wedbush struck a chord with me: I worked briefly in financial public relations in L.A. in 2000 and one of the clients of the firm for which I worked was Wedbush Morgan Securities, 1000 Wilshire Blvd. overlooking the Harbor Freeway in downtown L.A.!

It’s important to note that short selling has been banned by Germany and most other countries, Freeman writes, noting (pages169-70) that our fast and loose fiscal mismanagement have caused German Chancellor Angela Merkel and other politicians around the world to be “scared stiff by what the U.S. is doing with its currency. Others are positioning themselves to exploit the coming crisis. The answer in Europe, according to George Soros and others, is to create a Eurobond that would replace debt from individual currencies. That would give global investors a credible alternative to the U.S. bond market.”

Following this passage, Freeman writes about what would happen if this “Eurobond” came into being, as well as “The Continuing Islamic Threat” (pages 171-4), “A Failure of Imagination” (pages 177-9), and “The BRIC Danger” (pages 174-177). BRIC refers to Brazil, Russia, India and China and now is called BRICS, with the addition of South Africa, a nation with “around half the world’s gold resources” (page 176). Freeman’s book turns Galbraith’s “The Conventional Wisdom” on its head, and so does Freeman’s  2009 report referenced above. Because of this, the passage that follows is quoted directly from the 2009 report’s “executive summary”:

Serious risks to the global economic system were exposed by the crisis of 2008, raising legitimate questions regarding the cause of the turmoil. An estimated $50 trillion of global wealth evaporated in the crisis with more than a quarter of that loss suffered by the United States and her citizens.

A number of potential causative factors exist, including sub-prime real estate loans, ahousing bubble, excessive leverage, and a failed regulatory system. Beyond these, however, the risks of financial terrorism and/or economic warfare also must be considered. The stakes are simply too high for these potential triggers to be ignored.   The Obama administration‘s recent call for greater financial regulation stipulates to the facts that hedge fund activity has been virtually unregulated and that dark-pool trading,Credit Default Swaps, and naked short selling provide tremendous vulnerabilities in the system. This report concurs with these concerns as recently outlined by the heads of the SEC, US Treasury, and Federal Reserve and provides supporting data.

Beyond that, this report exposes the fact that these vulnerabilities are subject to exploitation not only by greedy capitalists seeking profit but also by financial terrorists, intent on destroying the American financial system.

  From a historical perspective, there are numerous examples of financial attacks on specific companies and industries both for economic and non-economic reasons. In addition, there are other examples of financial attacks conducted against individual nations both for economic and non-economic reasons. Based on this awareness, the economic collapse of 2008 must be critically examined to determine the possibility that a financial attack took place as well as an assessment of future risks. The purpose of this report is to consider the implications of financial terrorism and/or economic warfare and to identify and realistically list prospective threats to U.S. economic security from a means, motive, and opportunity perspective.

The preliminary conclusions of the research suggest that, without question, there were actors who had the motive to harm the U.S. economy. These motives can be categorized as both economic and non-economic. In addition, these same actors have clearly demonstrated the means to carry out such an attack. Finally, the opportunity was clearly present given the existing economic condition and regulatory framework in operation. The hypothesis under consideration is that a three-phased attack is underway with two of those phases completed to date. The first phase was a speculative run-up in oil prices that generated as much as $2 trillion of excess wealth for oil-producing nations, filling the coffers of Sovereign Wealth Funds, especially those that follow Shariah Compliant Finance. This phase appears to have begun in 2007 and lasted through June 2008. 

The rapid run-up in oil prices made the value of OPEC oil in the ground roughly$137 trillion (based on $125/barrel oil) virtually equal to the value of all other world financial assets, including every share of stock, every bond, every private company, all government and corporate debt, and the entire world‘s bank deposits. That means that the proven OPEC reserves were valued at almost threetimes the total market capitalization of every company on the planet traded in all 27 global stock markets.  The second phase appears to have begun in 2008 with a series of bear raids targeting U.S. financial services firms that appeared to be systemically significant. An initial bear raid against Bear Stearns was successful in forcing the firm to near bankruptcy. It was acquired by JP Morgan Chase and the systemic risk was averted briefly. 

Similar bear raids were conducted against various other firms during the summer, each ending in an acquisition. The attacks continued until the outright failure of Lehman Brothers in mid-September. This created a system-wide crisis, caused the collapse of the credit markets, and nearly collapsed the global financial system. The bear raids were perpetrated by naked short selling and manipulation of credit default swaps, both of which were virtually unregulated. The short selling was actually enhanced by recent regulatory changes including rescission of the uptick rule and loopholes such as ―the Madoff exemption.  

While substantial, unusual trading activity can be identified, the source of the bear raids has not been traceable to date due to serious transparency gaps for hedgefunds, trading pools, sponsored access, and sovereign wealth funds. What can bedemonstrated, however, is that two relatively small broker dealers emergedvirtually overnight to trade ―trillions of dollars worth of U.S. blue chip companies. They are the number one traders in all financial companies that collapsed or are now financially supported by the U.S. government. Trading by the firms has grown exponentially while the markets have lost trillions of dollars in value. The risk of a Phase Three has quickly emerged, suggesting a potential direct economic attack on the U.S. Treasury and U.S. dollar. Such an event has already been discussed by finance ministers in major emerging market nations such as China and Russia as well as Iran and the Arab states. A focused effort to collapse the dollar by dumping Treasury bonds has grave implications including the possibility of a downgrading of U.S. debt forcing rapidly rising interest rates and a collapse of the American economy. In short, a bear raid against the U.S.financial system remains possible and may even be likely. Phase Two may have concluded with the brief market rebound that was supported by an emerging regulatory response calling for greater transparency across the board.  Efforts including regulation of credit default swaps and proposed oversight of previously unmonitored trading activity, as well as Federal support of systemically vital institutions. But, we remain left with the critical unanswered questions of who and how? The recent seizure of $134 billion face value in supposedly counterfeit U.S. Federal Reserve bonds underscores the reality of the economic threat. This may be assignificant as the Japanese radio intercepts were before December 1941. Immediate consideration of the issues outlined in this report is vital.  Further study is essential and prospective responses must be crafted to address future risks.Finally, there are legitimate questions about the performance of the regulatory regime and Wall Street institutions. Implications that these parties have beencomplicit or otherwise co-opted cannot be ruled out. Therefore, it is strongly recommended that this study and any task-force response be conducted outside of traditional Washington and Wall Street circles.


Again, I can’t stress too strongly the need to read and digest both Freeman’s book and his 2009 report. They’re vital documents to understanding the meltdown.

About the Author:

Kevin D. Freeman, a Certified Financial Adviser (CFA) and registered investment adviser, is Chief Executive Officer of Freeman Global Investment Counsel, an investment advisory firm founded in 2004 operating under Cross Consulting Services LLC, where he serves as President. He is also Chief Investment Officer of Capitalist Publishing Co., Inc. Formerly he was Chairman of Separate Account Services, Inc and held several offices at Franklin Templeton Investment Services. He holds a B.S. in business administration from University of Tulsa, Tulsa, Oklahoma.Freeman was also Chairman of Separate Solutions, Inc., which he co-founded. He has consulted for congressional members as well as past and present CIA, FBI, SEC, Homeland Security, and government department officials.

  * * *

February 3, 2011

BOOK REVIEW: ‘The Financial Crisis Inquiry Report’: Plenty of villains, Few Good Guys/Gals in This Tale of Woe

Take all of Stephen King’s horror novels: “The Shining,” “Dolores Claiborne”, “Christine,” etc. add  H.P. Lovecraft and Peter Straub and you still won’t have the sheer horror contained within the paperback covers of “The Financial Crisis Inquiry Report”, the final report of the National Commission on the Causes of the Financial and Economic Crisis  in the U.S. (PublicAffairs Books, $14.99). The  index is not included in the book I received, but can be accessed at: http://www.publicaffairsbooks.com/fcicindex.pdf.

What horrifies me more than almost anything after I plowed through this dismal record of malfeasance, misfeasance and general screwing up is that most the people who are responsible for the biggest financial crisis since the Great Depression — some say it’s even bigger and it certainly is in terms of wealth loss and maybe even lives ruined — are walking around free and rich beyond the dreams of average Americans. I know of a few federal prisons, including one in Bastrop, Texas, that I’d like to see populated by the criminal class that created this crisis.

I’m talking about people — among many others — like former Federal Reserve Board chairman Alan Greenspan, former Fannie Mae CEO Daniel Mudd,  Angelo Mozilo (more about his penalty: last October the Securities and Exchange Commission  announced that former Countrywide Financial CEO Angelo Mozilo will pay a record $22.5 million penalty to settle SEC charges that he and two other former Countrywide executives misled investors as the subprime mortgage crisis emerged. The settlement also permanently bars Mozilo from ever again serving as an officer or director of a publicly traded company. Mozilo’s financial penalty is the largest ever paid by a public company’s senior executive in an SEC settlement. Mozilo also agreed to $45 million in disgorgement of ill-gotten gains to settle the SEC’s disclosure violation and insider trading charges against him, for a total financial settlement of $67.5 million that will be returned to harmed investors.) and a host of financial “geniuses” that got us into the mess.  Daniel Mudd, the son of TV anchorman Roger Mudd, walked away with tens of millions of dollars in compensation for running what one regulator called “the worst run financial institution” he had seen in his 30 years as a bank examiner. Fannie Mae and its fellow partner in the secondary mortgage market Freddie Mac were taken over by the government in 2008.

The sad saga of Fannie and Freddie is chronicled in Chapter 17, one of 22 chapters in the majority accepted part of the report (as I noted, three of the minority party commissioners dissented, and one, Peter J. Wallison, went further and issued a lengthy statement of dissent that is included in the report.).  Essentially, the dissenters criticized the report as a simplistic chronological narrative of the events leading up to the crash and beyond. The dissenters also said that the majority commissioners put forth simplistic sole causes for the crisis, including the lack of a firewall that existed from 1933 until 1999 when the Clinton Administration obliterated the Glass-Steagall  firewall separating investment and commercial banking. I tend to be on the side of those who would like to see an end to the Gramm-Leach-Bliley Act that replaced Glass-Steagall and a return to measures separating risky investment banks from more conservative commercial banks, but that’s probably not in the cards. Absent that, I’d like to see one powerful regulator keeping an eagle eye on bankers, rather than the multitude of non-regulating regulators, asleep at the switch.

Dissenters also said that regulation or lack of it per se wasn’t the cause of the meltdown. I didn’t see the majority conclusions, contained in text boxes at the end of each of the chapters, say that regulation or lack of it was the SOLE cause; rather the multiplicity of regulators and the ability of financial institutions to pick and choose the least onerous regulator helped fuel the increase in toxic assets. (Probably the best-ever oxymoron: “Toxic Assets.”).

The report was accepted by the six Democratic party members of the commission — and rejected for the most part by the three GOP members, vice-chairman Bill Thomas, Keith Hennessey and Douglas Holtz-Eakin — and by a fourth minority party member Peter J. Wallison, who contributed a dissenting statement. Remember, the commission was established in 2009, when the Democrats still controlled the House of Representatives, before last fall’s election which saw the GOP take over the House.
The six majority party members of the commission are chairman Phil Angelides, a former California state treasurer and gubernatorial candidate; Brooksley Born; Sen. Bob Graham, D-FL; Heather F. Murren; John W. Thompson, and Byron Georgiou.

Brooksley Born, a native of San Francisco, comes across as one of the few good people in the financial mess. She was appointed in 1996 by Bill Clinton to head the Commodity Futures Trading Commission (CFTC) to regulate derivatives, one of the biggest single triggers of the meltdown. She served for three years, a prophet without honor in an administration that laughed at her warnings about proliferating derivatives (read pages 45-51 to learn more about derivatives and their role in the meltdown).

Born, a 1964 graduate of Stanford University Law School at a time when only a handful of women attended prestigious law schools,  tells  (on Page 47-48) how she wanted the CFTC to re-examine the way it regulated the over the counter derivatives market, “given the market’s rapid evolution and the string of major losses since 1993.”  Born says the CFTC requested comments and got them, including negative — to say the least — comments from Treasury Secretary Robert Rubin, Fed Chairman Alan Greenspan and Securities and Exchange Commission (SEC) chairman Arthur Levitt who issued a joint statement blasting Born’s action: “We have grave concerns about this action and its possible consequences….We are very concerned about reports that the CFTC’s action may increase the legal uncertainty concerning certain types of OTC derivatives.”  The three men proposed a moratorium on the CFTC’s ability to regulate OTC derivatives.  A decade later Born’s fears were realized; it’s no wonder that in 2009 she, along with Sheila Bair of the FDIC, was awarded the John F. Kennedy Profiles in courage Award in recognition of the “political courage she demonstrated in sounding early warnings about conditions that contributed to the current global financial crisis.”

During the hearings that led to the report, on April 7, 2010, Born tugged the tail of the sainted Greenspan, declared that “The Maestro’s” running of the Fed was an unmitigated failure…and she said it to his face, according to a news report I found on Google. Born, who pushed to strictly regulate derivatives under the Clinton Administration, but lost the battle to, among other people, Greenspan, told the former Federal Reserve chairman that his agency “failed to prevent housing bubble, failed to prevent the predatory lending scandal, failed to prevent the activities that would bring the financial system to the verge of collapse.”

You failed to prevent many of our banks from consolidating and growing to a size that are now too big or too interconnected to fail,” Born added. She added that Greenspan’s views on deregulation, which he took as an article of faith, contributed to the Federal Reserve’s failure in delivering on its mandate. Looking as angry as he could at his advanced age, Greenspan replied, “The flaw in the system I acknowledged was an ability to fully understand the state of potential risks that were fully untested… That means we were under-capitalizing the banking system for 40 or 50 years.”

As a chronicle of the events leading to the meltdown, the book is very useful; even the dissenters agree with that. The report concisely covers the bailouts, the creation of TARP, the bankruptcy of Lehman Brothers and the rescue of AIG, Merrill Lynch and Bear Stearns. There is a succinct section on the horrendous foreclosure problem and the decline and fall of housing, with particular emphasis on the stress both the Clinton and George W. Bush administrations placed on homeownership. There’s even a discussion of the collapse of commercial real estate. As  a reporter who has covered real estate for 40 years and who has read and reviewed many books on aspects of the financial meltdown, I recommend this “Report” to a reader seeking a one-volume discussion. Publisher’s web site: www.publicaffairsbooks.com

BOOK REVIEW: ‘The Financial Crisis Inquiry Report’: plenty of villains, few good guys/gals in this tale of woe

  • Reviewer’s note: This review originally ran on another site almost a year ago — Feb. 3, 2011. I’m running it again because it relates to my upcoming review of “Secret Weapon”  (Regnery) by Kevin Freeman
  • Reviewed by David M. Kinchen
BOOK REVIEW: 'The Financial Crisis Inquiry Report': plenty of villains, few good guys/gals in this tale of woe
Take all of Stephen King’s horror novels: “The Shining,” “Dolores Claiborne”, “Christine,” etc. add  H.P. Lovecraft and Peter Straub and you still won’t have the sheer horror contained within the paperback covers of “The Financial Crisis Inquiry Report”, the final report of the National Commission on the Causes of the Financial and Economic Crisis  in the U.S. (PublicAffairs Books, $14.99). The  index is not included in the book I received, but can be accessed at: http://www.publicaffairsbooks.com/fcicindex.pdf.

What horrifies me more than almost anything after I plowed through this dismal record of malfeasance, misfeasance and general screwing up is that most the people who are responsible for the biggest financial crisis since the Great Depression — some say it’s even bigger and it certainly is in terms of wealth loss and maybe even lives ruined — are walking around free and rich beyond the dreams of average Americans. I know of a few federal prisons, including one in Bastrop, Texas, that I’d like to see populated by the criminal class that created this crisis.

I’m talking about people — among many others — like former Federal Reserve Board chairman Alan Greenspan, former Fannie Mae CEO Daniel Mudd,  Angelo Mozilo (more about his penalty: last Octoberthe Securities and Exchange Commission  announced that former Countrywide Financial CEO Angelo Mozilo will pay a record $22.5 million penalty to settle SEC charges that he and two other former Countrywide executives misled investors as the subprime mortgage crisis emerged. The settlement also permanently bars Mozilo from ever again serving as an officer or director of a publicly traded company.Mozilo’s financial penalty is the largest ever paid by a public company’s senior executive in an SEC settlement. Mozilo also agreed to $45 million in disgorgement of ill-gotten gains to settle the SEC’s disclosure violation and insider trading charges against him, for a total financial settlement of $67.5 million that will be returned to harmed investors.) and a host of financial “geniuses” that got us into the mess.  Daniel Mudd, the son of TV anchorman Roger Mudd, walked away with tens of millions of dollars in compensation for running what one regulator called “the worst run financial institution” he had seen in his 30 years as a bank examiner. Fannie Mae and its fellow partner in the secondary mortgage market Freddie Mac were taken over by the government in 2008.

The sad saga of Fannie and Freddie is chronicled in Chapter 17, one of 22 chapters in the majority accepted part of the report (as I noted, three of the minority party commissioners dissented, and one, Peter J. Wallison, went further and issued a lengthy statement of dissent that is included in the report.).  Essentially, the dissenters criticized the report as a simplistic chronological narrative of the events leading up to the crash and beyond. The dissenters also said that the majority commissioners put forth simplistic sole causes for the crisis, including the lack of a firewall that existed from 1933 until 1999 when the Clinton Administration obliterated the Glass-Steagall firewall separating investment and commercial banking. I tend to be on the side of those who would like to see an end to the Gramm-Leach-Bliley Act that replaced Glass-Steagall and a return to measures separating risky investment banks from more conservative commercial banks, but that’s probably not in the cards. Absent that, I’d like to see one powerful regulator keeping an eagle eye on bankers, rather than the multitude of non-regulating regulators, asleep at the switch.

Dissenters also said that regulation or lack of it per se wasn’t the cause of the meltdown. I didn’t see the majority conclusions, contained in text boxes at the end of each of the chapters, say that regulation or lack of it was the SOLE cause; rather the multiplicity of regulators and the ability of financial institutions to pick and choose the least onerous regulator helped fuel the increase in toxic assets. (Probably the best-ever oxymoron: “Toxic Assets.”).

The report was accepted by the six Democratic party members of the commission — and rejected for the most part by the three GOP members, vice-chairman Bill Thomas, Keith Hennessey and Douglas Holtz-Eakin — and by a fourth minority party member Peter J. Wallison, who contributed a dissenting statement. Remember, the commission was established in 2009, when the Democrats still controlled the House of Representatives, before last fall’s election which saw the GOP take over the House.

The six majority party members of the commission are chairman Phil Angelides, a former California state treasurer and gubernatorial candidate; Brooksley Born; Sen. Bob Graham, D-FL; Heather F. Murren; John W. Thompson, and Byron Georgiou.

Brooksley Born, a native of San Francisco, comes across as one of the few good people in the financial mess. She was appointed in 1996 by Bill Clinton to head the Commodity Futures Trading Commission (CFTC) to regulate derivatives, one of the biggest single triggers of the meltdown. She served for three years, a prophet without honor in an administration that laughed at her warnings about proliferating derivatives (read pages 45-51 to learn more about derivatives and their role in the meltdown).

Born, a 1964 graduate of Stanford University Law School at a time when only a handful of women attended prestigious law schools,  tells  (on Page 47-48) how she wanted the CFTC to re-examine the way it regulated the over the counter derivatives market, “given the market’s rapid evolution and the string of major losses since 1993.”  Born says the CFTC requested comments and got them, including negative — to say the least — comments from Treasury Secretary Robert Rubin, Fed Chairman Alan Greenspan and Securities and Exchange Commission (SEC) chairman Arthur Levitt who issued a joint statement blasting Born’s action: “We have grave concerns about this action and its possible consequences….We are very concerned about reports that the CFTC’s action may increase the legal uncertainty concerning certain types of OTC derivatives.”  The three men proposed a moratorium on the CFTC’s ability to regulate OTC derivatives.  A decade later Born’s fears were realized; it’s no wonder that in 2009 she, along with Sheila Bair of the FDIC, was awarded the John F. Kennedy Profiles in courage Award in recognition of the “political courage she demonstrated in sounding early warnings about conditions that contributed to the current global financial crisis.”

During the hearings that led to the report, on April 7, 2010, Born tugged the tail of the sainted Greenspan, declared that “The Maestro’s” running of the Fed was an unmitigated failure…and she said it to his face, according to a news report I found on Google. Born, who pushed to strictly regulate derivatives under the Clinton Administration, but lost the battle to, among other people, Greenspan, told the former Federal Reserve chairman that his agency “failed to prevent housing bubble, failed to prevent the predatory lending scandal, failed to prevent the activities that would bring the financial system to the verge of collapse.”

“You failed to prevent many of our banks from consolidating and growing to a size that are now too big or too interconnected to fail,” Born added. She added that Greenspan’s views on deregulation, which he took as an article of faith, contributed to the Federal Reserve’s failure in delivering on its mandate. Looking as angry as he could at his advanced age, Greenspan replied, “The flaw in the system I acknowledged was an ability to fully understand the state of potential risks that were fully untested… That means we were under-capitalizing the banking system for 40 or 50 years.”

As a chronicle of the events leading to the meltdown, the book is very useful; even the dissenters agree with that. The report concisely covers the bailouts, the creation of TARP, the bankruptcy of Lehman Brothers and the rescue of AIG, Merrill Lynch and Bear Stearns. There is a succinct section on the horrendous foreclosure problem and the decline and fall of housing, with particular emphasis on the stress both the Clinton and George W. Bush administrations placed on homeownership. There’s even a discussion of the collapse of commercial real estate. As  a reporter who has covered real estate for 40 years and who has read and reviewed many books on aspects of the financial meltdown, I recommend this “Report” to a reader seeking a one-volume discussion.
Publisher’s web site: www.publicaffairsbooks.com

CIA Officer, Author Charged with Revealing Covert Officers’ Identities

By Jim Kouri


“Prior to publication of his book, The Reluctant Spy: My Secret Life in the CIA’s War on Terror  [John] Kiriakou submitted a draft manuscript in July 2008 to the CIA’s Publication Review Board (PRB). In an attempt to trick the CIA into allowing him to publish information regarding a classified investigative technique, Kiriakou allegedly lied to the PRB by falsely claiming that the technique was fictional and that he had never heard of it before.”
A former veteran Central Intelligence Agency operations officer has been charged with frequently disclosing classified intelligence to journalists, including the identity of a covert CIA officer and information revealing the identity and role of another CIA employee in classified activities, according to a U.S. Justice Department report obtained by the National Association of Chiefs of Police.
The charges result from an investigation involving CIA Senior Operations Officer  John Kiriakou that was triggered by a defense filing in January 2009, which contained classified information the defense had not been given through official government channels, and, in part, by the discovery in the spring of 2009 of photographs of certain government employees and contractors in the materials of high-value detainees at Guantanamo Bay, Cuba.
The investigation revealed that on multiple occasions, one of the journalists to whom the 47-year old Kiriakou is alleged to have illegally disclosed classified information, in turn, disclosed that information to a defense team investigator, and that this information was reflected in the classified defense filing and enabled the defense team to take or obtain surveillance photographs of government personnel.

The journalists are not identified by name in court documents, but many believe that Kiriakou was a source for a June 2008 New York Times article written by Scott Shane.

 

There are no allegations of criminal activity by any members of the defense team for the detainees.

Kiriakou, of Arlington, Virginia, was a CIA intelligence officer between 1990 and 2004, serving at headquarters and in various classified overseas assignments. He was charged with one count of violating the Intelligence Identities Protection Act for allegedly illegally disclosing the identity of a covert officer and two counts of violating the Espionage Act for the alleged illegal disclosure of national defense information to individuals not authorized to receive it.

 

Kiriakou was also charged with one count of making false statements for allegedly lying to the Publications Review Board of the CIA in an unsuccessful attempt to trick the CIA into allowing him to include classified information in a book he was seeking to publish.

 

CIA Officer Betrays Fellow Intel Agents

The four-count criminal complaint, which was filed Monday, Jan. 23. 2012  in the Eastern District of Virginia, alleges that Kiriakou made illegal disclosures about two CIA employees and their involvement in classified operations to two journalists on multiple occasions between 2007 and 2009.

 

In one case, revealing the employee’s name as a CIA officer disclosed classified information as the employee was and remains covert (identified in the complaint as “Covert Officer A”). In the second case, Kiriakou allegedly disclosed the name and contact information of an employee, identified in the complaint as “Officer B,” whose participation in an operation to capture and question terrorism subject Abu Zubaydah in 2002 was then classified. Kiriakou’s alleged disclosures occurred prior to a June 2008 front-page story in The New York Times disclosing Officer B’s alleged role in the Abu Zubaydah operation.

 

Patrick J. Fitzgerald, United States Attorney for the Northern District of Illinois, who was appointed Special Attorney in 2010 to supervise the investigation, announced the charges with James W. McJunkin, Assistant Director in Charge of the Washington Field Office of the Federal Bureau of Investigation, and they thanked the Central Intelligence Agency for its very substantial assistance in the investigation, as well as the Air Force Office of Special Investigations for its assistance.

 

“Protecting the identities of America’s covert operatives is one of the most important responsibilities of those who are entrusted with roles in our nation’s intelligence community. The FBI and our intelligence community partners work diligently to hold accountable those who violate that special trust,” said Mr. McJunkin.

 

The CIA filed a crimes report with the Justice Department on March 19, 2009, prior to the discovery of the photographs and after reviewing the January 19, 2009, classified filing by defense counsel for certain detainees with the military commission then responsible for adjudicating charges. The defense filing contained information relating to the identities and activities of covert government personnel, but prior to January 19, 2009, there had been no authorized disclosure to defense counsel of the classified information.

 

The Justice Department’s National Security Division, working with the FBI, began the investigation. To avoid the risk of encountering a conflict of interest because of the pending prosecutions of some of the high-value detainees, Mr. Fitzgerald was assigned to supervise the investigation conducted by a team of attorneys from the Southern District of New York, the Northern District of Illinois, and the Counterespionage Section of the National Security Division who were not involved in pending prosecutions of the detainees.

 

According to the complaint affidavit, the investigation determined that no laws were broken by the defense team as no law prohibited defense counsel from filing a classified document under seal outlining for a court classified information they had learned during the course of their investigation.

 

Regarding the 32 pages of photographs that were taken or obtained by the defense team and provided to the detainees, the investigation found no evidence the defense attorneys transmitting the photographs were aware of, much less disclosed, the identities of the persons depicted in particular photographs and no evidence that the defense team disclosed other classified matters associated with certain of those individuals to the detainees.

 

The defense team did not take photographs of persons known or believed to be current covert officers.

 

Rather, defense counsel, using a technique known as a double-blind photo lineup, provided photograph spreads of unidentified individuals to their clients to determine whether they recognized anyone who may have participated in questioning them. No law or military commission order expressly prohibited defense counsel from providing their clients with these photo spreads.

 

Upon joining the CIA in 1990 and on multiple occasions in following years, Kiriakou signed secrecy and non-disclosure agreements not to disclose classified information to unauthorized individuals.

 

Regarding Covert Officer A, the affidavit details a series of e-mail communications between Kiriakou and Journalist A in July and August 2008. In an exchange of e-mails on July 11, 2008, Kiriakou allegedly illegally confirmed for Journalist A that Covert Officer A, whose first name only was exchanged at that point, was “the team leader on [specific operation].” On August 18, 2008, Journalist A sent Kiriakou an e-mail asking if Kiriakou could pick out Covert Officer A’s last name from a list of names Journalist A provided in the e-mail. On Aug. 19, 2008, Kiriakou allegedly passed the last name of Covert Officer A to Journalist A by e-mail, stating “It came to me last night.” Covert Officer A’s last name had not been on the list provided by Journalist A. Later that same day, approximately two hours later, Journalist A sent an e-mail to the defense investigator that contained Covert Officer A’s full name. Neither Journalist A, nor any other journalist to the government’s knowledge, has published the name of Covert Officer A.

 

At the time of Kiriakou’s allegedly unauthorized disclosures to Journalist A, the identification of Covert Officer A as “the team leader on [specific operation]” was classified at the Top Secret/Sensitive Compartmented Information (SCI) level because it revealed both Covert Officer A’s identity and his association with the CIA’s Rendition, Detention, and Interrogation (RDI) Program relating to the capture, detention, and questioning of terrorism subjects. The defense investigator was able to identify Covert Officer A only after receiving the e-mail from Journalist A, and both Covert Officer A’s name and association with the RDI Program were included in the January 2009 classified defense filing. The defense investigator told the government that he understood from the circumstances that Covert Officer A was a covert employee and, accordingly, did not take his photograph. No photograph of Covert Officer A was recovered from the detainees at Guantanamo.

 

In a recorded interview last Thursday, FBI agents told Kiriakou that Covert Officer A’s name was included in the classified defense filing. The affidavit states Kiriakou said, among other things, “How the heck did they get him? . . . [First name of Covert Officer A] was always undercover. His entire career was undercover.” Kiriakou further stated that he never provided Covert Officer A’s name or any other information about Covert Officer A to any journalist and stated “Once they get the names, I mean this is scary.”

 

Regarding Officer B, the affidavit states that he worked overseas with Kiriakou on an operation to locate and capture Abu Zubaydah, and Officer B’s association with the RDI Program and the Abu Zubaydah operation in particular were classified until that information was recently declassified to allow the prosecution of Kiriakou to proceed.

In June 2008, The New York Times published an article by Journalist B entitled “Inside the Interrogation of a 9/11 Mastermind,” which publicly identified Officer B and reported his alleged role in the capture and questioning of Abu Zubaydah—facts which were then classified. The article attributed other information to Kiriakou as a source, but did not identify the source(s) who disclosed or confirmed Officer B’s identity. The charges allege that at various times prior to publication of the article, Kiriakou provided Journalist B with personal information regarding Officer B, knowing that Journalist B was seeking to identify and locate Officer B. In doing so, Kiriakou allegedly confirmed classified information that Officer B was involved in the Abu Zubaydah operation. For example, Kiriakou allegedly e-mailed Officer B’s phone number and personal e-mail address to Journalist B, who attempted to contact Officer B via his personal e-mail in April and May 2008. Officer B had provided his personal e-mail address to Kiriakou, but not to Journalist B or any other journalist. Subsequently, Kiriakou allegedly revealed classified information by confirming for Journalist B additional information that an individual with Officer B’s name, who was associated with particular contact information that Journalist B had found on a website, was located in Pakistan in March 2002, which was where and when the Abu Zubaydah operation took place.

 

After The New York Times article was published, Kiriakou sent several e-mails denying that he was the source for information regarding Officer B, while, at the same time, allegedly lying about the number and nature of his contacts with Journalist B. For example, in an e-mail dated June 30, 2008, Kiriakou told Officer B that Kiriakou had spoken to the newspaper’s ombudsman after the article was published and said that the use of Officer B’s name was “despicable and unnecessary” and could put Officer B in danger. Kiriakou also denied that he had cooperated with the article and claimed that he had declined to talk to Journalist B, except to say that he believed the article absolutely should not mention Officer B’s name. “[W]hile it might not be illegal to name you, it would certainly be immoral,” Kiriakou wrote to Officer B, according to the affidavit.

 

From at least November 2007 through November 2008, Kiriakou allegedly provided Journalist A with Officer B’s personal contact information and disclosed to Journalist A classified information revealing Officer B’s association with the RDI Program. Just as Journalist A had disclosed to the defense investigator classified information that Kiriakou allegedly imparted about Covert Officer A, Journalist A, in turn, provided the defense investigator information that Kiriakou had disclosed about Officer B. For example, in an e-mail dated April 10, 2008, Journalist A provided the defense investigator with Officer B’s home phone number, which, in light of Officer B’s common surname, allowed the investigator to quickly and accurately identify Officer B and photograph him. Both Officer B’s name and his association with the RDI Program were included in the January 2009 classified defense filing, and four photographs of Officer B were among the photos recovered at Guantanamo.

 

In the same recorded interview with FBI agents last week, Kiriakou said he “absolutely” considered Officer B’s association with the Abu Zubaydah operation classified, the affidavit states. Kiriakou also denied providing any contact information for Officer B or Officer B’s association with the Abu Zubaydah operation to Journalists A and B prior to publication of the June 2008 New York Times article. When specifically asked whether he had anything to do with providing Officer B’s name or other information about Officer B to Journalist B prior to the article, Kiriakou stated “Heavens no.”

 

As background, the affidavit states that sometime prior to May 22, 2007, Kiriakou disclosed to Journalist C classified information regarding Officer B’s association with Abu Zubaydah operation, apparently while collaborating on a preliminary book proposal. A footnote states that Journalist C is not the coauthor of the book Kiriakou eventually published.

 

Prior to publication of his book  “The Reluctant Spy: My Secret Life in the CIA’s War on Terror” Kiriakou submitted a draft manuscript in July 2008 to the CIA’s Publication Review Board (PRB). In an attempt to trick the CIA into allowing him to publish information regarding a classified investigative technique, Kiriakou allegedly lied to the PRB by falsely claiming that the technique was fictional and that he had never heard of it before.

 

In fact, according to a transcript of a recorded interview conducted in August 2007 to assist Kiriakou’s coauthor in drafting the book, Kiriakou described the technique, which he referred to as the “magic box,” and told his coauthor that the CIA had used the technique in the Abu Zubaydah operation. The technique was also disclosed in the June 2008 New York Times article and referred to as a “magic box.”

 

In his submission letter to the PRB, Kiriakou flagged the reference to a device called a “magic box,” stating he had read about it in the newspaper article but added that the information was “clearly fabricated,” as he was unaware of and had used no such device. The affidavit contains the contents of an August 2008 e-mail that Kiriakou sent his coauthor admitting that he lied to the PRB in an attempt to include classified information in the book. The PRB subsequently informed Kiriakou that the draft manuscript contained classified information that he could not use, and information regarding the technique that Kiriakou included in the manuscript remained classified until it was recently declassified to allow Kiriakou’s prosecution to proceed.

 

Upon conviction, the count charging illegal disclosure of Covert Officer A’s identity to a person not authorized to receive classified information carries a maximum penalty of five years in prison, which must be imposed consecutively to any other term of imprisonment; the two counts charging violations of the Espionage Act each carry a maximum term of 10 years in prison; and making false statements carries a maximum prison term of five years. Each count carries a maximum fine of $250,000.

Jim Kouri, CPP, formerly Fifth Vice-President, is currently a Board Member of the National Association of Chiefs of Police, an editor for ConservativeBase.com, and he’s a columnist for Examiner.com.  In addition, he’s a blogger for the Cheyenne, Wyoming Fox News Radio affiliate KGAB (www.kgab.com) and editor of Conservative Base Magazine (www.conservativebase.com). Kouri also serves as political advisor for Emmy and Golden Globe winning actor Michael Moriarty.  

BOOK REVIEW: ‘Money Well Spent?’ : Reporter Travels the Nation to See if the Stimulus Accomplished Its Goals

  • Reviewed by David M. Kinchen
BOOK REVIEW: 'Money Well Spent?' :  Reporter Travels the Nation to See if the Stimulus Accomplished Its Goals
Cash for ClunkersShovel Ready. These phrases are so 2009. I’ve been trying to put them out of my mind, but Michael Grabell necessarily uses them in his new book about the American Recovery and Reinvestment Act of 2009 — more commonly known as The Stimulus — in “Money Well Spent? The Truth Behind the Trillion-Dollar Stimulus, the Biggest Economic Recovery Plan in History” (PublicAffairs, 368 pages, $28.99).

Grabell, a reporter for ProPublica, which supplies news for publishing partners under a creative commons agreement,  traveled the country, visiting places like Elkhart, Indiana, Aiken, South Carolina, and  Fremont, California,  interviewing people who have been body-slammed by the biggest economic downturn since the Great Depression of the 1930s. (For a good brief story on ProPublic in the Columbia Journalism Review, click:http://www.cjr.org/the_news_frontier_database/2011/01/propublica.php).

One could argue that Elkhart, the nation’s recreational vehicle capital, has only itself to blame for its economic collapse, with its unemployment rate rising from 4 percent before the 2007-2008 meltdown to more than 20 percent after, but this criticism could be made of the nation as a whole, as people from the very top — George W. Bush, Alan Greenspan, and Wall Street’s “smartest guys in the room”, predicted that the nation had entered a new era of prosperity, with recessions a thing of the past. Many people took advantage of easily obtained home equity lines of credit (HELOCs) to go on a spending spree, buying gas-guzzling RVs, home improvements to houses that would soon be underwater — along with other spending decisions based on the erroneous idea that housing prices could only go up.

Grabell talks to real people affected by meltdown, putting a human face on the recession. In Elkhart, he chronicles attempts by “Green” industries to take over empty RV plants and finds that the much touted “Green” industries — electric vehicles, battery plants — didn’t materialize. A former RV industry worker loses his home to foreclosure and takes on several jobs to keep his family together.

Michael Grabell

Michael Grabell

Green jobs — or any jobs at all — also impacted Fremont, across the bay from San Francisco,  where the empty NUMMI automobile assembly plant — a revolutionary and highly successful joint venture between Toyota and General Motors — closed its doors and everybody looked longingly at East Bay solar  panel manufacturer Solyndra as a company that would bring jobs to the region. Two years later Solyndra declared bankruptcy  — unable to compete with foreign competitors — mostly from China, where most of the Silicon Valley’s jobs have gone. (All my Apple products — three computers and an iPad 2 are “designed in California and assembled in China”)  President Obama addressed the issue of outsourcing, but it’s a case of King Canute calling for the waves to stop or closing the barn doors after the animals have fled.

Grabell discusses the Solyndra scandal, showing how friends of the current administration who were investors in Solyndra benefited from government support to a company that was owned in part by Obama supporters like George Kaiser “the billionaire investor who also happened to be a major fund-raiser for Obama,” Grabell writes in Chapter Eleven (an ominous number!) “The Green Revolution.” I expected more media coverage of the scandal, but that’s too much to hope for in a mainstream media that isn’t interested in wrong-doing in the current administration. ProPublica was founded by two excellent journalists, Paul Steiger, formerly of The Wall Street Journal and the L.A. Times (I worked there when Steiger was business editor) and  Stephen Engelberg, formerly of The Oregonian (Portland, OR).

Aiken could be considered a success story, where the Department of Energy supplied $1.6 billion to clean up a closed Cold War nuclear plant. One could argue, as  Grabell points out throughout the book, that in the normal course of events funds would have arrived to accomplish this goal, but the stimulus accomplished this sooner rather than later.

The $825 billion stimulus was huge, when adjusted for inflation nearly five times bigger than the Depression-era Works Progress Administration, and bigger than the Moon race, the Manhattan Project that built the atom bombs, the Marshall Plan that rebuilt Europe after World War II and the cost of the Iraq War from 2003 to 2010, Grabell writes, but it was spread across the entire country, resulting in situations where thinly populated South Dakota, with unemployment in the 5 percent range, received more money per capita than Florida, with unemployment topping 12 percent, and which received less per capita than any other state. South Dakota and other states benefited with stimulus money for roads and bridges based on a formula that included the mileage of federal highways in a state — regardless of population. The thinly spread stimulus ended up being invisible in many states, with more than half of the package coming in the form of tax cuts and safety net programs, Grabell writes.

Grabell tallies up the successes and failures of the stimulus and finds it to be a qualified success. However, four years after the start of the recession, the economy is still struggling, with high unemployment and the foreclosure crisis continuing to impact people in many states.

In the failures column, cutbacks by states cancelled out the effects of the federal stimulus. For example, education funds went to saving the jobs of teachers whose jobs were going to be cut by states. In another example, transportation contracts that states were ready to cancel were fulfilled with federal money — resulting in saving programs that would have been cut, not incite new spending. In other words, a wash.

Among the successes, the stimulus is estimated to have saved 2 to 3 million jobs. Without it, Grabell says, the unemployment rate would have reached 12 percent, instead of the official numbers in the 9-10 percent range. Of course, these “official” numbers are, in my opinion, figments of fully employed economists’ imaginations, not taking into account people who’ve given up looking for work or those who are underemployed.

What about Cash for Clunkers? Grabell discusses its successes and failures on Pages 169-172 and comes to the conclusion that it did encourage many people to take advantage of the rebate to trade in older cars for newer — presumably more fuel-efficient ones. But he cites sources that say that people would have bought new cars regardless of the short-lived rebate program. In its own assessment of the program, the White House Council of Economic Advisers concluded that almost half of the nearly 700,000 car sales generated by the program would have happened anyway. Grabell writes: “But that’s  not necessarily a bad thing. ‘Such time- shifting is valuable in a recession, when the economy has an abundance of unemployed resources that can be put to work at low net economic cost,’ the council said in its report.”  Don’t you just love the way economists refer to people as “resources”!

The stimulus was a success for highway contractors: at a time when construction crash-dived in just about every other sector, highway, street and bridge construction, where the stimulus provided nearly $27 billion, kept contractors and their employees working.

In this very well researched and accessible-to-the-general reader book, Grabell concludes (Page 358) that the Recovery Act — the stimulus — failed to live up to its promise “not because it was too small or because Keynesian economics is obsolete, but because it was poorly designed…During the transition, Obama could have given a speech in which he said, ‘My economic advisers have considered packages of $400 billion, $600 billion, and $800 billion, but their research shows that to fully get our country back to strength, we need a package or $1.2 trillion. I recognize the political difficulties of doing that, but I promised to be up front and tell you what the facts are, no matter how uncomfortable they may be.'”

I recommend “Money Well Spent?” as a model of investigative journalism, which may be in a period of rebirth with programs like ProPublica, the Chicago News Cooperative founded in 2009 by former Chicago Tribune and Los Angeles Times editor James O’Shea,  and similar efforts around the country. I think the future of print journalism rests with these organizations, as metropolitan newspapers relentlessly shed their best reporters and editors.

About the Author

Michael Grabell has been a reporter at ProPublica since 2008, producing stories for USA Today, Salon, NPR, MSNBC.com and the CBS Evening News. Before joining ProPublica, he was a reporter at The Dallas Morning News. He has twice been a finalist for the Livingston Award for Young Journalists. He lives in New Jersey. His site at ProPublica: http://www.propublica.org/site/author/michael_grabell

Publisher’s website: www.publicaffairsbooks.com

BOOK REVIEW: ‘Point, Click, Love’: Relationships Are More Complicated in the Social Network, Digital Age

  • Reviewed by David M. Kinchen
BOOK REVIEW: 'Point, Click, Love': Relationships Are More Complicated in the Social Network, Digital Age

What do women want? — Sigmund Freud (all quotes from The Portable Curmudgeon by Jon Winokur)

Wife: A former sweetheart — H.L. Mencken

 Women are God’s second mistake — Friedrich Nietzsche

 A woman without a man is like a fish without a bicycle — Gloria Steinem

Calling all women: If you’re wondering what to get your male significant other for Valentine’s Day, may I suggest a delightful new novel by Molly Shapiro called “Point, Click, Love” (Ballantine Books trade paperback, 272 pages, $15.00).  Yeah, I know, it’s in the so-called “chick-lit” section of the bookstore, but trust me on this, a guy can learn a lot about what makes you and other women tick from Molly Shapiro’s take on relationships and how they’ve adapted — or not — to the digital and Social Network age. “Point, Click, Love” is a lot like the HBO series “Sex and the City” — only the city is Kansas City.

We first meet Katie Rawlings, a divorced mother of two who gets along amicably with her ex-husband, Rob. It’s good for the kids, but Katie wants some bedroom action so she goes online to a dating service. Her experiences alone would make a good book, but wait, there’s more, namely:

Molly Shapiro

Molly Shapiro

 

# Katie’s friend Annie Sax, who’s had it up to here with relationships: She just wants to get the right kind of male sperm to have a child. What could go wrong with that? Plenty, if you’re like New York City transplant Annie and decide to stalk the potential donor and meet him in person. Annie works for Sprint-Nextel, one of the many big companies based in the Kansas City MO-KS metro area. The supposedly white-bread flyover city is home to H&R Block, Hallmark Cards, AMC Theatres, Applebee’s, giant construction firm HNTB, Russell Stover Candies and many, many more. Ernest Hemingway reported for the Kansas City Star before he became a famous novelist and Walt Disney worked there  from 1911 to 1923, when he moved to Los Angeles.

# Maxine Walters, a friend of Katie and Annie,  an established artist who everybody thinks is in a happy relationship with her physician husband Jake. Little do they know all is not happy in Maxine-Jake Land. Maxine is also a celebrity gossip junkie, the kind of people People magazine was made for. She’s concerned about Jake’s text messages to his lovely blonde colleague Dr. Deirdre. Jake says it’s all about X-Rays, but Maxine isn’t convinced.

# Claudia Spinelli, a friend of Katie, Annie, and Maxine, a high-powered public relations executive whose husband Steve is out of work. He sends out resumes but nothing resembling a job is on the horizon for this stay-at-home dad who’s consumed with friending people on Facebook. Claudia suspects Margaret Gooding, one of Steve’s friends, may be more than that, so  Claudia’s roving eye lights on Fred, a handsome support employee at the firm and soon they’re doing lunch and much more.

BOOK REVIEW: 'Point, Click, Love': Relationships Are More Complicated in the Social Network, Digital Age

 

I talked to Molly Shapiro on the phone and found out that she’s 44, has been divorced since she was 38 and has two kids, like Katie. (When you’re a reporter, you learn sneaky ways to ask a woman her age!). She’s a busy free-lance writer in an area where writers are in demand. Molly grew up in Kansas City, but nobody believed it when she majored in semiotics at Brown University in Providence, RI and earned her master’s in writing from Columbia University in New York.

“Everybody thought I was an East Coast girl, and they didn’t believe I grew up in Kansas City,” she said. A lot of East Coasters don’t know a thing about the metro area of 2 million people  straddling the Missouri-Kansas state line. To many New Yorkers their world ends at the Hudson River and doesn’t resume until you reach Las Vegas and Los Angeles. The famous Saul Steinberg cover for a 1976 issue of The New Yorker is a real life Mapquest creation to many residents of the Big Apple.

How did you decide to  frame your first novel around online dating and Social Networking, I asked Molly. She responded: “When my 12-year marriage came to an end when I was 38, I had to rethink what love and marriage was all about. When I was ready to find companionship again, I turned to online dating. It was a hilarious, bizarre, sometimes creepy experience.”

Like Katie’s experiences, I asked, and Molly responded that the four characters aren’t based on her friends, although many of them find similarities. “I guess I have a little of Katie in me, but I’m Molly, not Katie.”

I asked her one more question, about Jewish deli food, which she mentions in the novel, particularly a smoked fish called sable, also called black cod. Can you get a decent bagel and sable fish in Kansas City, I asked. “No, you have to go to Barney Greenglass’s deli on Amsterdam Avenue on the Upper West Side of New York — where my character Annie grew up — to get a decent sable. My mom, who lives in Kansas City,  orders it and they ship it air express from New York City.”

Repeating what I said at the beginning of this review, I loved “Point, Click, Love” and think it would make a great gift book. For men, for women, for everybody! And it would be a good book club choice, too.

About the Author

Molly Shapiro is the author of Eternal City, a short story collection and winner of the Willa Cather Fiction Prize. She earned a bachelor’s degree from Brown and a master’s degree in creative writing from Columbia. She currently lives in Kansas City, Missouri, with her two children, Fanny and Harry. Visit her website at mollyshapiro.com or connect with her on Facebook or Twitter (@Molly_Shapiro).

 

BOOK REVIEW: ‘The Military Industrial Complex at 50: Edited by David Swanson, With Contributions from 30 Others

BOOK REVIEW: 'The Military Industrial Complex at 50: Edited by David Swanson, With Contributions from 30 Others

Bainbridge Island, WA  — I hate war — and question the sanity and intent of anyone who thinks war is anything but destruction and terror, even when fought in defense of nations and the world.  Often wars are rackets for the profit of those who supply the means to conduct them.

And I have written extensively on the subject even as I have served for about 14 years in the Regular Army of the United States and the Reserve, both as an enlisted man and officer –serving with some of the most  intelligent and ethical people I have ever known.

As a longtime critic of the ‘Military-Industrial Complex’, so named in his Jan. 17, 1961 Farewell Address by the late President Dwight Eisenhower (see link to the address at the end of this review), I greeted the chance to review an anniversary commentary with great personal enthusiasm.

“The Military-Industrial Complex at 50” (Published by David Swanson, Charlottesville, VA, $25.00)  was unfortunately not what I had expected and hoped for:  a clear quantification and evaluation of what had occurred in the years since Ike gave it a name.

I was disappointed.

Before anything else, I should emphasize that what is in this 368-page volume is a collection of sincere and passionate commentary. What is not present in the book is an acceptable and objective recitation of what has evolved that could be useful.

What I did find was a collective indictment of the United States of America and the State of Israel with here and there opinions suggesting or outright asserting that America and Israel have waged all sorts of wanton slaughter around the world.

It might have helped as widely ranging as this book is had it included a detailed subject index so the reader, and this reviewer, could trace sources and details.  Instead, there are about a dozen pages of “Notes” from references that make it virtually impossible and far too time consuming to go back and forth to check commentary.

All that said, one of the commentaries that struck me as both groundless and naïve was that of Helena Cobban, indicated as a former reporter for ABC News and BBC, among others.  As with other writers, the lady is offered as having “expertise” with respect to Middle Eastern diplomacy and politics.  Unfortunately, though listed as a reporter, there is little question her biases do not permit her to include the many atrocities visited upon here chief and consistent target: Israel.

What I called naïve was her  her comment on page 306 of the book in which she asserts:  ….”We’re told that the people who are ruling Gaza, who were elected authorities….are irrational, Islamist madmen who want to oppress women.  Not true.”

She goes on to say she met four “elected Hamas women parliamentarians” and they were all very nice.

I have not been able to find the commentaries about their being madmen, etc.  However, anyone with slightest knowledge of Hamas and Hizbollah need  not take a college course to find not only their declarations to destroy Israel but to deny the Holocaust, a denial that is endemic in the Arab world.  Beyond that, and within only recent days, a major appointee of the Palestinian Authority declared the need to destroy all Jews, period.

Furthermore, as far back as 2009, The Washington Institute reported that stemming the flow of arms into Gaza will enhance regional stability. Much of this weaponry is provided by Iran, and specifically by the IRGC, increasing Iran’s regional influence while threatening the position of Fatah in Palestinian politics. Dealing effectively with these tunnel systems could curtail Iranian influence. Conversely, if Gaza remains a terror base — a safe haven for extremists and global jihadists — regional instability and Palestinian suffering will surely grow.

Neither Ms Cobban nor any of the other anti-Israel writers mentioned the slaughters of schoolchildren in Ma’alot by terrorists, the murder of a wheelchair bound old man on the Achille Lauro, the 1972  murder of Israeli Olympic Athletes in Munich and hundreds of other atrocities.  Mostly, they avoid the reality Israel was given a rebirth by the United Nations and was promptly attacked by several Arab nations who could not destroy the newly minted nation.

In the end, this one point is beside the fact the book’s title has misused President Eisenhower’s powerful warning about the Military Industrial Complex as well as the heroic US Marine Corps hero General Smedley Butler, the only American ever to win two Medals of Honor.

As noted earlier, I had hoped for an objective assessment of the business of the Military Industrial Complex and the misuse of such combinations….not a naked effort to use that historic review by President Eisenhower to become the chief court of condemnation only of the United States and Israel with only the most modest understanding of other forces at work.

If one wishes to be a judge of history, historical fact and objectivity are useful but not part of this book which arrived wrapped in a T-shirt  showing a pair of handcuffs and the declaration calling for the arrest of Presidents George Bush and Barack Obama.

The book, however impassioned the authors and their widely scattered commentaries on their ideas of history, failed to be the needed legitimate history of this issue.Frankly, and my own bias, the authors and publisher seem unwilling to accept virtually any kind of even a legitimate force to defend the US and certainly not Israel.  That virtually diminishes the energetic effort as a credible review of a massively important subject.

Link to Eisenhower’s Farewell Address: http://www.ourdocuments.gov/doc.php?doc=90

BOOK REVIEW: ‘The New Health Age’: Futurists Take on America’s Creaking Health Care System

  • Reviewed By David M. Kinchen
  • BOOK REVIEW: 'The New Health Age': Futurists Take on America's Creaking Health Care System
In the revelation of any truth, there are three stages. In the first, it is ridiculed, in the second, it is resisted, and in the third it is considered self-evident.” — Arthur Schopenhauer, quoted in “The New Health Age”

* * *

I’m very skeptical of futurists — unless they’re named George Orwell!

Many of the concepts he wrote about in “Animal Farm” and especially “Nineteen Eighty-Four” have come true, unfortunately. The Bush administration’s so-called Patriot Act and similar efforts by the Obama administration bring to my mind the dictatorial rulers and torturers of “Nineteen Eighty-Four.” I’m old enough to remember reading first hand the predictions  in magazines like Popular Science and Popular Mechanics— two magazines I devoured — about flying cars in every suburban garage. Thank God that didn’t come to pass!

I think the same fate is in store for predictions on radical health care changes made by authors David Houle and Jonathan Fleece in their new book “The New Health Age: The Future of Health Care in America” (Sourcebooks, 368 pages, notes, but unfortunately, NO INDEX,  $19.99).

Houle and Fleece say we  live in a transformational time in the history of medicine and health care and that the current century will be a “time of dramatic change, incredible breakthroughs, and totally altered thinking about health, medicine, and health care delivery.” I beg to disagree; I think our fragmented health care system is one reason why we rank so low on the World Health Organization’s ranking of systems. Believe it or not, France is No. 1 and we’re a miserable No. 37, despite spending a heckuva lot more on health care. (link:www.who.int/healthinfo/paper30.pdf)

We don’t even have computerized health care cards like the French do. My Medicare card is a piece of flimsy cardboard, unlike the French “smart”card — called the “carte vitale” — which is encoded with the holder’s health care information, making diagnoses much easier when there’s an emergency. T. R. Reid references this card in a book I reviewed on this site: “The Healing of America” (link: archives.huntingtonnews.net…/091016-kinchen-columnsbookreview) where he traveled the world examining health care in several countries.

Newsweek  referenced Reid’s outstanding book — I recommend it without reservation — in a February 2010 article, which I found on the Daily Beast site:

“When veteran foreign correspondent T. R. Reid set out to write about France’s health-care system for his recently published book, what impressed him most was not the country’s universal coverage. Nor was it the system’s low prices and wide-ranging benefits. Instead, as he explains in The Healing of America, the defining element of the French health-care system is a small green card that each patient carries: the carte vitale. The plastic credit card carries all the essentials of health care: medical records, insurance information, prescriptions, and reimbursements. It is used to check in, identify the patient, and provide the doctor with a complete background on the patient. “For me,” Reid explains, “the carte vitale … became a symbol of what the French have achieved in designing a health-care system to treat the nation’s 61 million residents.” In fact, the only picture that Reid includes in his 277-page book is one of the carte vitale.

Quoting from my 2009 review of Reid’s book — which I once again recommend to everybody:

“Washington Post correspondent Reid traveled to about a dozen countries in his quest to fix his aching right shoulder and — more importantly — to find out which system would work to fix our ragged, patchwork quilt health care delivery system. “The numbers tell the story: All the other developed industrial nations spend far less on health care than the U.S., which spends a whopping 15.3 percent of its GDP on health care (in 2005…it’s closer to 17 percent now) and have greater longevity, lower infant mortality and better recovery rates from major diseases than Americans, Reid says, and backs up these statements with statistics from the World Health Organization (WHO) and other agencies.” 

Despite the above caveats, I recommend the book by Houle and Fleece — and T.R. Reid’s book. They both are well written and contain many sensible solutions that would make us rank higher than 37th in the world. Read them and weep.

REALTORS: December Existing Home Sales Up 5%; Home Prices, Interest Rates Continue To Decline

  • By David M. Kinchen
  •  REALTORS: December Existing Home Sales Up 5%; Home Prices, Interest Rates Continue To Decline
Existing home sales continued on an uptrend in December, rising for three consecutive months and remaining above a year ago, according to a report issued Friday, Jan. 20 by  the National Association of Realtors (NAR). The latest monthly data shows total existing-home sales  rose 5 percent to a seasonally adjusted annual rate of 4.61 million in December from a downwardly revised 4.39 million in November, and are 3.6 percent higher than the 4.45 million-unit level in December 2010.

Single-family home sales increased 4.6 percent to a seasonally adjusted annual rate of 4.11 million in December from 3.93 million in November, and are 4.3 percent higher than the 3.94 million-unit pace a year ago. The median existing single-family home price was $165,100 in December, which is 2.5 percent below December 2010.

Existing condominium and co-op sales rose 8.7 percent to a seasonally adjusted annual rate of 500,000 in December from 460,000 in November but are 2.0 percent below the 510,000-unit level in December 2010. The median existing condo price was $160,000 in December, down 3.0 percent from a year ago.Regionally, existing-home sales in the Northeast jumped 10.7 percent to an annual pace of 620,000 in December and are 3.3 percent above a year ago. The median price in the Northeast was $231,300, which is 2.7 percent below December 2010.

Distressed homes – foreclosures and short sales – accounted for 32 percent of sales in December (19 percent were foreclosures and 13 percent were short sales), up from 29 percent in November; they were 36 percent in December 2010. All-cash sales accounted for 31 percent of purchases in December, up from 28 percent in November and 29 percent in December 2010. Investors account for the bulk of cash transactions.Investors purchased 21 percent of homes in December, up from 19 percent in November and 20 percent in December 2010.

The estimates are based on completed transactions from multiple listing services that include single-family homes, townhomes, condominiums and co-ops. NAR Chief Economist Lawrence Yun  said these are early signs of what may be a sustained recovery: “The pattern of home sales in recent months demonstrates a market in recovery.”

“Record low mortgage interest rates, job growth and bargain home prices are giving more consumers the confidence they need to enter the market,” Yun added. ”For all of 2011, existing-home sales rose 1.7 percent to 4.26 million from 4.19 million in 2010.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to another record low of 3.96 percent in December from 3.99 percent in November; the rate was 4.71 percent in December 2010; recordkeeping began in 1971.

NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami, said more buyers are expected to take advantage of market conditions this year:

“The American dream of homeownership is alive and well. We have a large pent-up demand, and household formation is likely to return to normal as the job market steadily improves,” he said. “More buyers coming into the market mean additional benefits for the overall economy. When people buy homes, they stimulate a lot of related goods and services.”

Total housing inventory at the end of December dropped 9.2 percent to 2.38 million existing homes available for sale, which represents a 6.2-month supply  at the current sales pace, down from a 7.2-month supply in November. Available inventory has trended down since setting a record of 4.04 million in July 2007, and is at the lowest level since March 2005 when there were 2.30 million homes on the market.

“The inventory supply suggests many markets will see prices stabilize or grow moderately in the near future,” Yun said. Foreclosures  sold for an average discount of 22 percent in December, up from 20 percent a year ago, while short sales closed 13 percent below market value compared with a 16 percent discount in December 2010.The national median existing-home price4 for all housing types was $164,500 in December, which is 2.5 percent below December 2010.

First-time buyers fell to 31 percent of transactions in December from 35 percent in November; they were 33 percent in December 2010. Contract failures were reported by 33 percent of NAR members in December, unchanged from November; they were 9 percent in December 2010. Although closed sales are holding up better than this finding would suggest, contract cancellations are caused largely by declined mortgage applications and failures in loan underwriting from appraised values coming in below the negotiated price.

Existing-home sales in the Midwest rose 8.3 percent in December to a level of 1.04 million and are 9.5 percent above December 2010. The median price in the Midwest was $129,100, down 7.9 percent from a year ago.

In the South, existing-home sales increased 2.9 percent to an annual level of 1.76 million in December and are 3.5 percent above a year ago. The median price in the South was $146,900, down 1.1 percent from December 2010.

Existing-home sales in the West rose 2.6 percent to an annual pace of 1.19 million in December but are 0.8 percent below December 2010. The median price in the West was $205,200, up 0.3 percent from a year ago.