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Sep 15, 2010

Mining Interactive : Midweek with Nick Nicolaas,Henk Krasenberg - European Gold Centre Editor & Publisher. September 15th., 2010

09/15/10 ‘MIDWEEK’ with Nick Nicolaas

"Postcards from Europe"

Nick Nicolaas and Henk Krasenberg, European Gold Centre Editor & Publisher of Mining in Africa; Goldview and Mining in Europe discuss the topics expressed in Henk’s publications
  • Why Africa?
  • Why should you be in gold?
  • Why Mining in Europe?
Dear Friends:
While in Europe my friend Henk Krasenberg and I spent a pleasant afternoon in Loosdrecht, Holland in an area where, in my youth, I enjoyed many leisurely summer holidays and where I learned to sail.
My discussions with Henk were recorded in early August.  It is now September and this video, because of technical difficulties, is now a month old however Henk’s insights with regard Africa and Europe as well as his views on the gold price are still valid today.  It is well worth your time (12 minutes) to view and listen to his sage words.

Stay Tuned for more Midweek with Nick Nicolaas 

FORBES ASIA : Special Report. Asia's Fab 50. September 15th., 2010

Latest Stories

Special Report:
Asia's Fab 50

Special Report: <br>Asia's Fab 50
Our sixth annual ranking of the best of Asia-Pacific's biggest listed companies.
Read More Read More

Caterpillar's China Challenge

Caterpillar's China Challenge
For one, the construction equipment giant's price tags are just too expensive.
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Indian Animator Goes To Hollywood

Indian Animator Goes To Hollywood
A.K. Madhavan is trying to crack the American animation movie market.
Read More Read More

The Steve Jobs Of China

The Steve Jobs Of China
Alibaba's Jack Ma shows off his marketing flair at the annual AliFest summit.
Read More Read More

The Google Of China Has Its Own Youtube Clone

The Google Of China Has Its Own Youtube Clone
The leaders in the online video market in China have to worry about a new competitor.
Read More Read More

FINANCIAL AND FOREX INDO : REUTERS DAI: Wall Street ticks up but trading range-bound


Wall Street ticks up but trading range-bound
Industrial output growth slows
EU claims victory in WTO case versus Boeing
Oil spill lawsuits to start with clash over pace
Japan intervenes to drag down yen, warns of more
U.S. industry, lawmakers urge action on China's yuan
Wal-Mart U.S. sees Christmas of socks and underwear
Sinochem says not keen on Potash buy
Kraft sees revenue opportunities as N. America lags
Goldman sued by women claiming gender bias

CNBC EVENING BRIEF: The New 'Short': What Steve Eisman's Betting Against Now.September 175th., 2010


»click here to see the latest top stories from


  • Post-Crisis Aftershocks
    Nothing in the financial reform bill can prevent another housing bubble, Robert Shiller, a Yale economics professor and co-creator of the Case-Shiller housing index, tells CNBC.
    » Watch Video

  • Status Update: I'm Driving
    OnStar is testing technology that will allow verbal Facebook updates from the driver's seat. Chris Preuss, president of OnStar, discusses the new technology with CNBC.
    » Watch Video

  • Banking on a Recovery
    BB&T is one of the three big regionals that remained profitable during the financial crisis. Kelly King, the bank's CEO, said its conservatism helped it avoid problems.
    » Watch Video

  • Lightning Round
    You say the name of a stock, and Mad Money's Jim Cramer tells you whether to buy or sell.
    » Watch Video

  • The "Halo" Effect
    The Halo video game franchise is on track to surpass $2 billion in sales this week, reports CNBC's Julia Boorstin. Dan Ackerman, of, tells CNBC whether the blockbuster game can reignite gamers.
    » Watch Video


MarketWatch : CHUCK JAFFE . Six Investing Lessons From Lehmans Fall. September 15th., 2010

Chuck Jaffe: Six investing lessons from Lehman’s fall
By Chuck Jaffe MarketWatch

Investors can’t afford to forget the collapse of Lehman Brothers, because the lessons from that crisis will pay dividends for years to those who learn them. 

NYT : Breaking News Alert :Poll Suggests Big Opening for G.O.P. Going Into Midterms

Breaking News Alert
The New York Times
Wed, September 15, 2010 -----

Poll Suggests Big Opening for G.O.P. Going Into Midterms

Republicans are heading into the general election phase of
the midterm campaign backed by two powerful currents: the
highest proportion of Americans in two decades say it is time
for their own member of Congress to be replaced, and voters
are expressing widespread dissatisfaction with President
Obama's leadership.

But the latest New York Times/CBS News poll also finds that
while voters rate the performance of Democrats negatively,
they view Republicans as even worse, providing a potential
opening for Democrats to make a last-ditch case for keeping
their hold on power.

Read More:

MarketWatch: Stocks Post Solid Gains As Markets Look Past Tepid Economic Data - U.S. Commentary.September 15th., 2010

Evening Market Wrap Wed Sep 15 17:06 2010  


Sep 15, 2010 Stocks Post Solid Gains As Markets Look Past Tepid Economic Data - U.S. Commentary Stocks were able to recover from early losses and ended moderately higher on Wednesday, as traders shrugged off data showing limited growth in New York State manufacturing and national production. The major averages saw some upside in late-session dealing, ending near their best levels of the day. Full Article

Economic News

Sep 15, 2010 Import Prices Rise 0.6% In August Amid Higher Fuel Import Prices With fuel import prices showing a notable increase in the month of August, the Labor Department released a report on Wednesday showing moderate total import price growth. The report also showed an increase in export prices following two monthly decreases. Full Article
Sep 15, 2010 New York Manufacturing Index Indicates Slower Pace Of Growth Conditions in New York's manufacturing sector held relatively steady in September, according to a report released by the Federal Reserve Bank of New York on Wednesday, but the index of activity in the sector fell by more than economists had been expecting. The New York Fed said its general business conditions index fell to 4.1 in September from 7.1 in August, although a positive reading indicates continued growth in the manufacturing sector. Full Article
Sep 15, 2010 Industrial Production Inches Up By 0.2% In August While a report released by the Federal Reserve on Wednesday showed that a jump in mining output contributed to a modest increase in industrial production in August, the pace of growth was limited by a notable decrease in the output of utilities. The report showed that industrial production edged up by 0.2 percent in August following a downwardly revised 0.6 percent increase in July. Economists had expected production to increase by 0.3 percent. Full Article
Sep 15, 2010 MBA: Mortgages Applications Drop For Second Week U.S. mortgage applications dropped to their lowest since early August last week, as extraordinarily low interest rates failed to spark demand for home purchases, industry data revealed Wednesday. Refinancing activity also tailed off, as most qualified homeowners wishing to lower their monthly mortgage costs have already done so. Full Article

Corporate News

Sep 15, 2010 Shelby Says WTO Has Confirmed That Boeing Received SubsidiesWhile the details of the World Trade Organization’s interim ruling on a trade dispute between Europe and aerospace giant Boeing Co. (BA) were not made public, Sen. Richard Shelby, R-Ala., said the WTO has confirmed that Boeing has received prohibited subsides for aircraft development. "Today’s preliminary ruling clearly states that Boeing was involved in practices prohibited by the World Trade Organization," Shelby said. Full Article

Forex Commentary

Sep 15, 2010 Japan Intervenes On Yen, Dollar Soars The dollar rebounded dramatically versus the yen on Wednesday, after Japanese officials intervened in the markets for the first time in six years. The fragile Japanese economy, which relies heavily on exports, has been threatened by the yen's dramatic rise to levels not seen since 1995. Officials were forced to sell the yen after attempts to talk down its value were ignored. Full Article

Political News

Sep 15, 2010 Ayotte Named Winner In New Hampshire GOP Senate PrimaryFormer New Hampshire Attorney General Kelly Ayotte has been named the winner in New Hampshire's Republican Senate primary that had earlier been too close to call. Ayotte, who was seen as the establishment candidate, received 53,044 votes, just 1,667 more than the 51,377 votes for Tea Party favorite Ovide Lamontagne. Full Article
Sep 15, 2010 White House Backs Bill To Close Independent Contractor Tax LoopholeSen. John Kerry, D-Mass., and Rep. Jim McDermott, D-Wash., released a statement Wednesday noting that the White House has endorsed their legislation to close a tax loophole currently allowing businesses to misclassify workers as "independent contractors." Kerry and McDermott said that the Fair Playing Field Act of 2010 would protect workers from losing benefits and protections as the result of the tax loophole. Full Article

NYT : Afternoon Market Update. U.S. Accuses China of Violating Trade Rules on 2 Fronts. September 15th., 2010


U.S. Accuses China of Violating Trade Rules on 2 Fronts

One case involves barriers that Washington claims discriminate against United States credit and debit card companies. The other involves duties on steel products.

Hayward Defends BP's Safety Record

The BP chief faced a British Parliamentary committee and rejected claims that the accident in the Gulf of Mexico was partly the result of cost-cutting.

Women Sue Goldman, Claiming Bias in Pay and Jobs

Three former employees of Goldman Sachs sued the investment bank, contending that the firm systematically discriminates against its women employees.

Craigslist Executive Says 'Adult Services' Section Is Closed

At a House hearing, Craigslist also defended its right to post sex-related ads as well as its efforts to fight sex trafficking.

Ruling Said to Find Boeing Got Some Improper Subsidies

A trade panel found the company received aid that violated global trade rules, but European and American officials disagreed on how much.

MarketWatch : Personal Finance Daily: Buying versus renting: the debate rages on. Sep.15th., 2010

Personal Finance Daily
SEPTEMBER 15, 2010

Wednesday's Personal Finance stories

Don't miss these top stories:

By MarketWatch

There's a lot of talk of late, post-housing-crash, about how renting your home makes more financial sense than buying, and certainly that is true for many people, depending on their financial situation and where they live.

But the argument that renting is better than buying often assumes that renters will save or invest the money they're not spending on a pricier mortgage or on maintenance costs. As Brett Arends writes today in his column on "10 reasons to buy a home," that's often not the case, and the fact that homeownership forces people to save is an important benefit for many Americans who, after all, are not known for their savings prowess.

Read Arends's column today for more on why now might be a good time to buy, and don't miss Jennifer Openshaw's column for tips on how to insure all those valuable electronic goods your college student is lugging to school this year.

As Arends points out, there's also the impossible-to-quantify benefit of being able to paint your walls any color you choose, or to even knock out a wall if you want. On the other hand, homeownership may force you to learn things you really weren't all that interested in learning, like how to deal with clogged pipes.

Andrea Coombes , Personal Finance editor

10 reasons to buy a home

Enough with the doom and gloom about homeownership. Sure, maybe there's more pain to come in the housing market. But when Time magazine starts running covers that declare "Owning a home may no longer make economic sense," it's time to say: Enough is enough. This is what "capitulation" looks like. Everyone has given up.

Read more on 10 reasons to buy a home.


Insure your college kid's laptop, and more

It's that time of year when parents are helping to move their children into college. Cars are stuffed to the brim with the must-haves: a laptop, portable music player, cell phone, DVDs, gaming system and more.

Read more on how to insure your college kid's laptop, and more.


Changes to money funds won't come easy

Investment ratings agency Moody's Corp. plans to replace its AAA ratings for money-market mutual funds with a more detailed grading system, but some in the fund industry give the idea low marks.

Read more on changes to money funds won't come easy.

Drowning? Financial lifeguards still on duty

It's been a busy couple of days for financial lifeguards. Last Wednesday, the government of Ireland addressed a bank run at already-nationalized Anglo Irish Bank, by literally pulling all of the deposits out of the troubled financial institution and backing them directly.

Read more on financial lifeguards still on duty.

Commentary: Joining the Dow can be the kiss of death

You might think companies would fall over themselves to join the Dow Jones Industrial Average, and that shareholders would find stability in the index's ranks. But the truth is that joining the list of 30 components can be a stomp on the neck rather than a stamp of approval.

Read more on joining the Dow can be the kiss of death.


Commentary: Consumers rule recovery with a wary hand

Uneasy lies the head that wears the recovery crown. Consumers, who reign supreme in the U.S. economy, are doing their part to support growth. They are doing it cautiously, however. They can increase spending only about as fast as their incomes grow.

Read more on consumers rule recovery with a wary hand.

Commentary: Is tea party the end of our two-party system?

Tuesday's stunning primary results made it official: The tea-party movement has captured the Republican Party.

Read more on is tea party end of our two-party system?

Outsider candidates win Delaware, N.Y. primaries

Outsider candidates scored victories over the Republican establishment in primaries in Delaware and New York on Tuesday, demonstrating the vigor of the tea-party movement in a tumultuous election year marked by voter anger and economic anxiety.

Read more on outsider candidates win Delaware, N.Y. primaries.

Tea party win in Delaware stuns Washington

The stunning victory Tuesday by a tea party-backed candidate in the Delaware's U.S. Senate primary election has roiled the Republican party and given Democrats fresh hope that they can keep control of the Senate in the November elections.

Read more on tea party win in Delaware stuns Washington.
Senate may cut $8 billion from defense bill

A Senate subcommittee reduced the Obama administration's proposed fiscal-2011 military budget by $8.1 billion, with cuts in procurement funding for F-35 fighter jets, combat ships and missile-defense equipment.

Read more on Senate may cut $8 billion from defense bill.


Start-ups bring big dreams to DEMO

For the first time, the 20-year old technology debutante conference called DEMO is taking place right in Silicon Valley.

Read more on start-ups bring big dreams to DEMO.

The Washington Post Afternoon Edition : Ten most read articles. Sep. 15th., 2010

Most Viewed Articles on

1) How Adrian Fenty lost his reelection bid for D.C. mayor

One afternoon in late June, D.C. Mayor Adrian M. Fenty's political advisers invited their boss to a downtown conference room to report an unsettling development: Focus groups commissioned by the campaign were saying that Fenty's leadership style was offensive and that he was oblivious to constitu...

2) 2 D.C. Council members to push Gray and Rhee to compromise on contract extension

Two D.C. Council members said Tuesday that they will press mayoral primary winner Vincent C. Gray and Schools Chancellor Michelle A. Rhee to negotiate an "extended transition" that could keep her in the job until the end of the 2011-12 school year.

3) Senate Republicans unveil a plan to make Bush tax cuts permanent

Even as they hammer Democrats for running up record budget deficits, Senate Republicans are rolling out a plan to permanently extend an array of expiring tax breaks that would deprive the Treasury of more than $4 trillion over the next decade, nearly doubling projected deficits over that period u...

4) Kabul protest over canceled Koran burning in U.S. turns violent

KABUL - A demonstration in Kabul over nixed plans by a Florida pastor to burn Korans turned violent Wednesday morning as police officers and demonstrators exchanged gunfire, Afghan officials said.

5) Japan moves to weaken yen

Japan on Wednesday intervened in the foreign currency market for the first time in six years, buying dollars as a means to weaken the yen and lower the price of Japanese exports overseas.

6) Christine O'Donnell beats Rep. Mike Castle in Delaware Republican Senate primary

Christine O'Donnell, a "tea party"-backed long-shot candidate, stunned the Republican establishment Tuesday night by defeating nine-term Rep. Michael N. Castle in Delaware's GOP Senate primary, one of the most shocking upsets in an already tumultuous primary season.

7) For Yankees, actions say it all

For all practical purposes, the New York Yankees and Tampa Bay Rays have already clinched playoff berths, so wide are the gaps between the two best teams in baseball and the teams chasing them with less than three weeks remaining in the season. All that's left to decide is playoff seeding.

8) Conservatives gone mad

The last thing Republicans need is to be routing around in the ancient histories of black vs. white.

9) More than just white tea?

Dick Armey and Matt Kibbe are brewing a recipe for a more inclusive Tea Party.

10) The TV Column: Michaele Salahi: I'm not thin, I have MS

Tareq and Michaele Salahi fired a big ol' shot at Bravo network and the other cast members of "The Real Housewives of DC" when Michaele announced on Fox News Channel's "Fox & Friends" Wednesday morning that she suffers from Multiple Sclerosis.

MarketWatch Special Financial Services : Brokers hit by trading slowdown. Sep. 15th., 2010


Financial Stocks: Brokers hit by trading slowdown
By John Spence MarketWatch

Financial sector opens lower as investors digest further weakening in online-broker metrics and MasterCard’s $1 billion stock buyback. 

U.S. DEPARTMENT OF THE TREASURY: Assistant Secretary Michael S. Barr Written Testimony Before House Committee on Financial Services

Assistant Secretary Michael S. Barr Written Testimony Before House Committee on Financial Services
September 15, 2010
Assistant Secretary for Financial Institutions Michael S. Barr
Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprise of House Committee on Financial Services 
Written Testimony as Prepared for Delivery

Chairman Kanjorski, Ranking Member Garrett, and members of the Subcommittee, thank you for the opportunity to testify today about housing finance reform and the progress made since the placement of Fannie Mae and Freddie Mac (the GSEs) into conservatorship in September 2008.

Before I talk about the state of the GSEs in conservatorship, it is important to remember how we got here.

Events Leading to Conservatorship

The GSEs were allowed to operate under an unacceptable "heads I win, tails you lose" system.   They enjoyed the benefits of the perception of government support.  They had inadequate oversight and inadequate capital, and the market did not instill appropriate discipline at Fannie Mae and Freddie Mac because the market assumed that they had a government backstop.    

The events that led the last Administration to need to put the GSEs into conservatorship was symptomatic of a range of regulatory, management, and oversight failures throughout our financial system.  As the private, unregulated mortgage market grew, and market players began to loosen credit standards to pursue ever-riskier business in a booming market, the GSEs, which initially stuck to their core business of guaranteeing well-underwritten loans, saw their market shares fall precipitously.  Driven by profit motives and an effort to regain market share, the GSEs sought, and were permitted, to guarantee and to purchase riskier mortgages without holding adequate capital or employing appropriate risk management techniques.  These moves left Fannie Mae and Freddie Mac dangerously exposed when the housing bubble began to burst.

As a result of the substantial deterioration in the housing market and Fannie Mae and Freddie Mac's growing inability to raise new capital, FHFA placed the GSEs into conservatorship on September 6, 2008 under the authority granted to them by Congress under the bi-partisan Housing Economic Recovery Act of 2008 (HERA).  Under HERA authority, Treasury agreed to provide financial support to the GSEs through the establishment of Preferred Stock Purchase Agreements (PSPAs).  The goal of the PSPAs and subsequent amendments was to preserve overall stability in financial markets and to allow the GSEs to continue to provide liquidity in the secondary market.  The PSPAs ensured that the GSEs would be able to meet their obligations and continue to support the housing finance system, which was then on the verge of collapse.

Fannie Mae and Freddie Mac Under Conservatorship

Since September 2008, FHFA, in its role as conservator, has acted carefully to help ensure that Fannie Mae and Freddie Mac's assets are conserved while continuing to play a critical role in making mortgage credit available.  By facilitating the flow of credit for responsibly underwritten mortgages, the GSEs have served as a source of stability for the housing market and enabled millions of Americans to continue to have the ability to take out a new mortgage or refinance. 

Important progress has been made towards stabilizing the housing market; however, this critical sector of the economy remains fragile.  Private capital has not yet returned to the market, and the GSEs and the government continue to play an unfortunately outsized, though necessary, role in ensuring the availability of mortgage credit.  Roughly 95% of the mortgages originated in this country are currently financed through either the GSEs or Ginnie Mae (GNMA), via the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), and the Department of Agriculture (USDA).  Put simply, without the GSEs and GNMA, there would be no functioning mortgage market today.

The new loans being guaranteed by the GSEs are not contributing in any material way to the losses the GSEs face.  Quite the contrary.  In fact, the FHFA Conservator's Report released on August 26th shows that it is the GSEs' old book of loans, those acquired before conservatorship, which are the overwhelming source of losses.   The losses that the GSEs are continuing to report today are the result of delinquencies and defaults on loans that were originated and guaranteed in 2006, 2007, and 2008.  Those loans account for over 70% of all credit losses in the single-family guarantee book, with the balance of realized losses almost entirely coming from 2005 and earlier.  Less than 1% of losses have come from loans originated in 2009 and 2010.   The conservatorship is working in keeping GSE activities within prudent bounds.

Another myth that the FHFA Conservators' Report dispels is the perception that the retained portfolios were the main source of the GSEs' problems.  Early on, large losses were recorded on the securities held in the retained portfolios as the secondary market prices for those securities declined sharply at the onset of the crisis.  However, the retained portfolios have not been the largest drivers of loss over time.  The bulk of the cumulative losses (73%) have occurred in the single-family guarantee book. 

FHFA, acting as conservator, has carefully sought to ensure that the GSEs do not assume undue incremental risk to the taxpayer through their new loans.  As a result, the credit quality and risk profile of the post-conservatorship book of business of the GSEs has dramatically improved compared to pre-conservatorship:

  • Guarantee fees have been increased and the GSEs have risk-adjusted their pricing.
  • Alt-A loans now account for 0% of the new book of business since conservatorship; this compares to 22% for Fannie Mae in 2006 and 18% for Freddie Mac in 2006.
  • Low credit (<620 FICO scores) purchases are now only 1% as compared to 5% for both Fannie Mae and Freddie Mac from 2001-2008.
  • Average FICO scores of new business improved from roughly 715 in 2006 to 750 or more for both Fannie Mae and Freddie Mac in 2010.
  • While new mortgages with loan-to-value ratios greater than 90% are slightly up in 2010 from 2009, much of this is related to the Home Affordability Refinance Program (HARP) for GSE loans, which is a loss mitigation mechanism that reduces the risk of default and any potential losses at the GSEs.

The new, higher credit quality book of business from 2009 has seen substantially lower cumulative default rates when adjusted for loan age:

  • 2009 cumulative defaults for Freddie Mac and Fannie Mae were 1.1% and 1.2%, respectively, in the loans' first 18 months, as compared to cumulative default rates for the first 18 months for loans originated in 2007, which were 22.3% and 28.7% for Freddie Mac and Fannie Mae, respectively.  This performance is better than even earlier vintages (pre-2005).

The resulting quality of the loan book has made a huge difference.  As I indicated previously, less than 1% of the post-conservatorship credit losses are a result of loans guaranteed in 2009 and 2010.  

The country is unfortunately stuck with the consequences of the poor credit choices the GSEs made prior to conservatorship.  No one can undo those decisions.  Some suggest that taking time to get reform right will expose taxpayers to even greater losses at Fannie Mae and Freddie Mac.  That is simply not true.  The losses that Fannie Mae and Freddie Mac face are the result of mistakes made in the years leading up to the crisis, not the consequences of actions by the GSEs since 2008.  There is nothing we can do to decrease the obligations Fannie Mae and Freddie Mac incurred ahead of this crisis; those exposures are already baked in. Given this unfortunate truth, the most responsible course is to minimize the risk that those losses get worse. 

The GSEs today are working hard to apply loss mitigation techniques through loan modifications and foreclosure prevention.  They are also managing their foreclosure and real estate disposition process to recover the value on those exposures.   The GSEs are continuing to promote overall stability in the housing finance system.  Housing market stability is the most important source of loss mitigation for the GSEs.  If there is another downturn in the housing market, delinquencies and defaults could rise even further as performing loans from today would become delinquent. 

Housing Finance Reform Process

While we continue to bring stability to the mortgage market, we are also hard at work on reform.  It is not tenable to leave in place the system that we have today.  The Administration is committed to delivering a comprehensive proposal for reform of Fannie Mae, Freddie Mac, and our broader system of housing finance to Congress by January 2011, as called for under the Dodd-Frank Act.  Our proposal will call for fundamental change.

Congress began the process of reform with the passage of HERA in 2008.  The prior Administration continued the path of reform when it placed Fannie Mae and Freddie Mac into conservatorship in September 2008.  That action arrested the sharp deterioration of market confidence in these two institutions that was intensifying the broader financial crisis.  And it finally put an end to the harmful practices that had contributed to the firms' failures.

This Administration put in place a housing market stability plan soon after coming into office.  The plan included continuing to ensure that the GSEs have the necessary financial resources to meet their obligations on an ongoing basis, continuing to buy (alongside the Federal Reserve) agency mortgage-backed securities, and initiating foreclosure prevention plans, a first-time homebuyer tax credit, and state and local housing agency initiatives.  These programs have helped to stabilize the market.

The next phase of reform came with the passage of the Dodd-Frank Act, which improves the regulation of lending standards so that the mistakes of the past are not repeated in the housing market in the future.  The Dodd-Frank Act includes fundamental reform of mortgage market rules, including ability-to-pay requirements and risk retention standards for mortgages.  This new Act will help to ensure that homeowners are not sold products that they cannot afford and that originators retain skin in the game when they originate risky mortgages.  These necessary reforms are critical steps, and more remains to be done.

The Administration is committed to maintaining an open dialogue with the public, Congress, and other stakeholders as we all work together towards responsible reform.  It is imperative that we get all of the best ideas, representing a wide range of views, onto the table and debated in a constructive fashion. 

To that end, earlier this year the Administration began outreach efforts to key stakeholder groups and policy experts to assess existing GSE reform proposals.  In April, Treasury and the Depart of Housing and Urban Development (HUD) posted seven questions for public comment, to which we received over 300 responses from a broad cross-section of stakeholders.  There was a wide range of views represented in the comments; some argued for removing government support for the market all together while others argued to leave the system broadly in place as it is today.  Some argued that we provided too much support for housing while others emphasized that we provided too little support for affordable rental options. 

In August, Treasury and HUD hosted a Conference on the Future of Housing Finance in which we heard a wide range of perspectives from people with substantial expertise, ranging from academic experts, consumer and community organizations, industry groups, market participants, Congressional staff, and other stakeholders.  We had a robust, constructive, honest debate.  We are looking forward to continuing our outreach efforts over the coming weeks and months and the Administration is committed to working together with Members from both sides of the aisle as we move forward together towards reform of our nation's housing finance system.

Objectives and Goals for Housing Finance Reform

Earlier this year, Secretary Geithner and Secretary Donovan testified to the full committee and laid out, as a guide, some important objectives for reform and characteristics of systems that meet those goals.  They are worth re-iterating.  A stable, well-functioning market should achieve the following objectives:

·         Widely available mortgage credit.  Mortgage credit should be available and distributed on an efficient basis to a wide range of borrowers, including those with low and moderate incomes, to support the purchase of homes they can afford.  This credit should be available even when markets may be under stress, at rates that are not excessively volatile. 
·         Housing affordability.  A well-functioning housing market should provide affordable housing options, both ownership and rental, for low- and moderate-income households.  The government has a role in promoting the development and occupancy of affordable single and multifamily residences for these families.
·         Consumer protection.  Consumers should have access to mortgage products that are easily understood, such as the 30-year fixed rate mortgage and conventional variable rate mortgages with straightforward terms and pricing.   Effective consumer financial protection should keep unfair, abusive or deceptive practices out of the marketplace and help to ensure that consumers have the information they need about the costs, terms, and conditions of their mortgages.
·         Financial stability.  The housing finance system should distribute the credit and interest rate risk that results from mortgage lending in an efficient and transparent manner that minimizes risk to the broader financial and economic system and does not generate excess volatility.  The mortgage finance system should not contribute to systemic risk or overly increase interconnectedness from the failure of any one institution.  
The housing finance system could be redesigned in a variety of ways to meet these objectives. However, the Administration believes that any system that achieves these goals should be characterized by:
·         Alignment of incentives.  A well functioning mortgage finance system should align incentives for all actors – issuers, originators, brokers, ratings agencies and insurers – so that mortgages are originated and securitized with the goal of long-term viability rather than short term gains.
·         Avoidance of privatized gains funded by public losses.  If there is government support provided, such as a guarantee, it should earn an appropriate return for taxpayers and ensure that private sector gains and profits do not come at the expense of public losses.  Moreover, if government support is provided, the role and risks assumed must be clear and transparent to all market participants and the American people.
·         Strong regulation.  A strong regulatory regime should (i) ensure capital adequacy throughout the mortgage finance chain, (ii) enforce strict underwriting standards and (iii) protect borrowers from unfair, abusive or deceptive practices.  Regulators should have the ability and incentive to identify and proactively respond to problems that may develop in the mortgage finance system. 
·         Standardization.  Standardization of mortgage products improves transparency and efficiency and should provide a sound basis in a reformed system for securitization that increases liquidity, helps to reduce rates for borrowers and promotes financial stability.  The market should also have room for innovations to develop new products which can bring benefits for both lenders and borrowers.
·         Support for affordable single and multifamily housing.  Government support for multifamily housing is important and should continue in a future housing finance system to ensure that consumers have access to affordable rental options.  The housing finance system must also support affordable and sustainable ownership options.  
·         Diversified investor base and sources of funding.   Through securitization and other forms of intermediation, a well functioning mortgage finance system should be able to draw efficiently upon a wide variety of sources of capital and investment both to lower costs and to diversify risk. 
·         Accurate and transparent pricing.  If government guarantees are provided, they should be priced appropriately to reflect risks across the instruments guaranteed.  If there is cross-subsidization in the housing finance system, care must be exercised to insure that it is transparent and fully consistent with the appropriate pricing of the guarantee and at a minimal cost to the American taxpayer. 
·         Secondary market liquidity.  Today, the U.S. housing finance market is one of the most liquid markets in the world, and benefits from certain innovations like the "to be announced" (or TBA) market.  This liquidity has provided a variety of benefits to both borrowers and lenders, including lower borrowing costs, the ability to "lock in" a mortgage rate prior to completing the purchase of a home, flexibility in refinancing, the ability to pre-pay a mortgage at the borrowers' discretion and risk mitigation.   This liquidity also further supports the goal of having well diversified sources of mortgage funding.
·         Clear mandates.  Institutions that have government support, charters or mandates should have clear goals and objectives.  Affordable housing mandates and specific policy directives should be pursued directly and avoid commingling in general mandates, which are susceptible to distortion.


There are several important challenges that we will face in transitioning from our current housing finance system to a new one.  The GSEs and the government are currently playing an outsized role in the housing finance market.  Today they are practically the only game in town.  This situation is neither sustainable nor desirable, but if the GSEs were to suddenly exit the market the stability of the housing market would be undermined.  Mortgage rates would skyrocket and most homeowners would be unable to obtain mortgage credit. The transition to a new system must occur in an orderly fashion that is minimally disruptive to the market.  Enabling households to maintain access to credit at reasonable rates throughout the transition is essential to our housing and broader economic recovery. 

We also recognize that financial markets and the public are depending on the ability of the GSEs in their current form to perform on their obligations.  The government is committed to ensuring that the GSEs have sufficient capital to perform under any guarantees issued now or in the future and the ability to meet any debt obligations.  The Administration will take care not to pursue policies or reforms that would threaten to disrupt the function or liquidity of GSE securities or the ability of the GSEs to meet their obligations. 

Designing an effective transition mechanism that ensures the GSEs' financial obligations are met and borrowers have continuous access to mortgage credit is critical to an effective reform plan. 


The FHFA has carefully overseen the GSEs since they were placed into conservatorship by the Bush Administration in 2008, under the HERA legislative authority, to conserve their assets and ensure that Americans are still able to access the market for mortgage credit. 

Fixing our nation's housing finance system is critically important to our economy and to our country's future.  The housing market supports millions of jobs for Americans in construction, manufacturing, real estate, finance, and other industries.  Moreover, for the majority of Americans homeowners, their house is their largest financial asset and the single largest purchase that they will make in their lifetimes.  Housing is equally important to the tens of millions of families who choose to rent; their quality of life is directly affected by access to affordable, quality rental housing in good neighborhoods. 

A new system must be designed to ensure that our housing finance system is more stable, consumers are protected, sustainable credit is widely accessible and important housing policies, such as affordable housing for low- and moderate-income families, are administered effectively and efficiently. 

After reform, the GSEs will not exist in the same form as they did in the past.  Private gains will no longer by subsidized by public losses, capital and underwriting standards will be appropriate, consumer protection will be strengthened and excessive risk-taking will be restrained.  

MarketWatch : Special Financial Services : Biggest gaining and Declining Stoks / Tokyo stocks surge on yen-weakening move. Sep,. 15th., 2010

Wednesday’s biggest gaining and declining stocks
By MarketWatch

MarketWatch’s daily rundown of major gainers and decliners in the U.S. stock market. 

By Chris Oliver MarketWatch

Asian equity markets end generally higher after Tokyo intervenes in currency markets to halt the yen’s ascent. 

RTTNews : Morning Market Briefing: Stocks May Slide After Disappointing New York Manufacturing Number - U.S. Commentary .Sep. 15th., 2010


Morning Market Briefing Wed Sep 15 09:01 2010 


Sep 15, 2010 Stocks May Slide After Disappointing New York Manufacturing Number - U.S. Commentary Stocks are on pace for a modestly lower open on Wednesday after the September reading on New York State manufacturing activity came in lower than expected. The major averages are all in negative territory, with the Dow futures down by 35 points. Full Article

Economic News

Sep 15, 2010 Australian Consumer Morale Drops SharplyConsumer confidence in Australia waned notably in September suggesting consumers are still cautious over the economic outlook, a new survey revealed on Wednesday. Full Article
Sep 15, 2010 Eurozone Inflation Eases To 1.6%Eurozone annual inflation slowed from a 20-month high in August, official figures showed on Wednesday. Full Article
Sep 15, 2010 U.K. Jobless Claims Rise For First Time Since JanuaryBritish jobless claims increased in August for the first time since January. Full Article
Sep 15, 2010 Japan Intervenes In Forex Market For First Time Since 2004Wednesday in Asia, the yen fell sharply against its major counterparts as Japan intervened in the currency market for the first time since early 2004 to stem the yen's surge against the dollar that threatens a fragile economic recovery. Full Article
Sep 15, 2010 Import Prices Rise 0.6% In August Amid Higher Fuel Import Prices With fuel import prices showing a notable increase in the month of August, the Labor Department released a report on Wednesday showing moderate total import price growth. The report also showed an increase in export prices following two monthly decreases. Full Article
Sep 15, 2010 New York Fed Manufacturing Index Falls More Than Expected Conditions in New York's manufacturing sector held relatively steady in September, according to a report released by the Federal Reserve Bank of New York on Wednesday, although the index of activity in the sector fell by more than economists had been expecting. Full Article

Earnings News

Sep 15, 2010 Pall Q4 profit up 21%, beats Street; guides FY11 EPS above consensusTuesday, Pall Corp. (PLL) reported a 21% drop in its fourth quarter profit, hurt by higher restructuring and other charges, as well as costs related to the prepayment of debt. However, both adjusted earnings per share and sales, which grew 4.1% year-over-year, came in above the Street views. Looking ahead, the company guided fiscal 2011 earnings above the current estimate of analysts. Full Article

Corporate News

Sep 15, 2010 Arena Pharma's diet pill faces FDA stumbling blockTuesday, a Food and Drug Administration report cited safety issues with a proposed obesity drug, lorcaserin, manufactured by Arena Pharmaceuticals Inc. (ARNA). Additionally, on September 15, the panel will assess if it needs to recall Abbott Laboratories' (ABT) diet pill Meridia, which has been linked to heart problems. Full Article

Broker Ratings Changes

Sep 15, 2010 KeyBanc Capital Markets Initiates Toll Brothers Inc. (TOL) At Buy With $22 Price Target
Sep 15, 2010 KeyBanc Capital Markets Lowers Sonic Corp (SONC) To Hold From Buy
Sep 15, 2010 KeyBanc Capital Markets Starts KB Home (KBH) At Hold
Sep 15, 2010 KeyBanc Capital Markets Starts Lennar Corp. (LEN) At Buy With $20 Price Target

Todays WS Events

Sep 15, 2010 ConocoPhillips To Present At Barclays Capital CEO Energy-Power Conference; Webcast At 9:45 AM ET ConocoPhillips [COP] will present at the Barclays Capital CEO Energy-Power Conference on September 15, 2010. The event is scheduled to begin at 9:45 AM ET. To access the live webcast, log on at
Sep 15, 2010 Union Pacific To Present At Morgan Keegan 2010 Industrial/Transportation Conference; Webcast At 10:4Union Pacific Corp. (UNP) will address the Morgan Keegan 2010 Industrial/Transportation Conference in Chicago, IL. The event is scheduled to begin at 10:45 AM ET, September 15, 2010. To access the live webcast, log on to
Sep 15, 2010 Wal-Mart Stores, Inc. To Present At Goldman Sachs Conference At 11:55 AM ET Wal-Mart Stores, Inc. (WMT) will present at the Goldman Sachs 2010 Global Retailing Conference, on September 15, 2010. The event is scheduled to begin at 11:55 AM, ET. To access the live webcast, log on at
Sep 15, 2010 Cisco To Present At The Deutsche Bank Technology Conference; Webcast At 3:05 PM ET Cisco Systems, Inc. (CSCO) will present at the 2010 Deutsche Bank Technology Conference, on September 15, 2010. The event is scheduled to begin at 3:05 PM ET. To access the live webcast, log on at
Sep 15, 2010 Dell To Present At The Deutsche Bank Technology Conference; Webcast At 3:55 PM ET Dell Inc. (DELL) will present at the Deutsche Bank Technology Conference in San Francisco on September 15, 2010. The event is scheduled to begin at 3:55 PM, ET. To access the live webcast, log on at