Daily Archives: October 13, 2009

Is this what Patriot Bank is up to?

Lenders and real estate “interests” are lobbying Congress to delay the implementation of new accounting rules that would force assets hidden in “qualifying special purpose entities” to be brought back onto banks’ books. If I understand the issue correctly, many of those toxic loans, the securitized mortgages, were kept off the banks’ balance sheets by use of these SPEs. I don’t know if Patriot Bank’s PinPat company is an SPE, but it sure has absorbed a lot of  Patriot’s bad loans. If those dogs came home, it would hurt.

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I blame Bush

House Democrats upset that Ethics Investigator is investigating them.

The OCE, an independent ethics board made up mostly of former members of Congress, was the brainchild of Speaker Nancy Pelosi (D-Calif.), who pushed for an added layer of ethics oversight after Democrats won the majority in 2006. She succeeded in ramming legislation creating the OCE through the House despite serious opposition within her party. 

As a Democratic leader, Clyburn voted in favor of the OCE, but then-Rep. Rahm Emanuel (D-Ill.) and Majority Leader Steny Hoyer (D-Md.) appeared to buttonhole the most members. 

Resentment over Pelosi’s drive to create the extra layer of ethics scrutiny has lingered ever since. 

“It was a mistake,” Rep. Emanuel Cleaver (D-Mo.) said flatly. “Congress has a long and rich history of overreacting to a crisis.” 

Cleaver, a Congressional Black Caucus (CBC) member who voted against creating the OCE, was referring to the Jack Abramoff lobbying scandal. Democrats used the controversy to impugn the GOP for creating a culture of corruption when it controlled Congress and the White House. 

“The truth of the matter is — everything Jack Abramoff did was against the law and many people involved in that scandal have gone to jail,” Cleaver continued. 

Cleaver is most concerned about the ability of the OCE to launch an investigation based on media reports or an anonymous complaint. The ethics committee can initiate investigations from media reports as well, but a member must file a formal public complaint to require the ethics committee to launch a probe.

The OCE is charged with reviewing suspected ethics rules violations and complaints and making recommendations to the full ethics committee for further investigation and action. Its proponents argue that it is needed to fix a broken, self-policing, members-only ethics committee, which rarely initiated investigations unless compelled to do so by a formal complaint from another member or via intense public scrutiny. …

This transparency measure was included in an attempt to provide more outside accountability and prevent the ethics committee from becoming a black hole for complaints and ethics allegations, but it has become a sore point for some members who argue that it is tarnishing members’ reputations before the ethics committee has a chance to review the accusations. 

Tensions have run high in recent weeks as founding CBC member Rep. Charles Rangel (D-N.Y.) has faced increased scrutiny. 

Three years after promising to drain the swamp in Washington and winning the majority, Pelosi has seen editorial boards across the country call for one of the most prominent members of Congress to step down as chairman of the Ways and Means Committee. 

The main charges against Rangel, one of a handful of members who missed the vote creating the OCE, have nothing to do with the new ethics body. 

He called for the ethics committee to investigate allegations against him last summer after the New York Post reported his failure to pay taxes on $75,000 worth of income on a villa he owns in the Dominican Republic. 

Still, some of his biggest supporters in the CBC may be venting their frustrations at the OCE after it investigated a trip Rangel and four other CBC members took to the Caribbean last year. The OCE looked into whether the travel was improperly sponsored by corporations in violation of new House ethics rules Democrats imposed, and recommended further investigation to the House ethics committee, which launched a formal investigative subcommittee on the trip earlier this year. 

After the the probe was launched, the CBC held a meeting with OCE board members and staff to voice complaints and review the new office’s policies and procedures. 

CBC members also have charged that the office does not have enough minority staffers and that the investigators were brusque in their questioning.….

The OCE also opened cases on Rep. Maxine Waters (D-Calif.), a prominent CBC member, over a conflict-of-interest issue involving her husband, as well as Rep. Sam Graves (R-Mo.) over a conflict of interest involving a business he owns. In both cases, it recommended further ethics committee review. 

This was supposed to be all about Bush, damn it, not Democrats!

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What? Demand some sign of creditworthiness from home buyers? Preposterous!

That’s what the head of the FHA said yesterday in response to a Congressman’s bill proposing that home loans guaranteed by you and me and the FHA require at least a 5% down payment.

But Mr. Stevens warned against “jumping to conclusions” and making credit standards tighter just as some signs show that housing is beginning to stabilize in certain housing markets. “When I see members of Congress move a bill out that says raise it to 5%…I get very concerned,” he said. “It isn’t the down payment on its own that causes a default.”

Mr. Stevens’ strong defense of the FHA’s current role in the marketplace drew applause from the otherwise muted audience of mortgage bankers, brokers and other industry personnel during the trade association’s annual meeting.

The FHA has seen its market share balloon since the subprime market collapsed more than two years ago and led most private investors to exit the mortgage market. The New Deal-era agency’s standards were seen as too strict during the heyday of subprime lending because it required borrowers to document their incomes and pay minimum down payments, but today it remains one of the last sources of low down-payment loans.

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Do the Republicans intend to coast or is it something he said?

Fund raising reports for the great race for town tax collector are in and Republicans seem to be taking to heart Jim Lash’s suggestion that they just forget the whole thing.

Bill Grad, the Demmerkrat candidate, raised $5,000.

Rick Novakowski (sp?), Independent, raised $3,300.

Tod Laudonia, Republican, raised $300, $100 of which was from his own pocket. Does this mean no one likes the hot head?

Update: I’m  not picking on Laudonia – the other candidates aren’t necessarily more experienced, but here’s his resume. Is there any reason we should pay a former golf course maintenance worker $100,000 a year, plus benefits, to do a clerk’s job? I think not. Same reasoning applies to the EMT guy or Mr. Grad. We don’t need this position and certainly don’t need to pay a salary this high to fill it. Walt Noel isn’t too busy these days and he tells me he’ll stop in once a week for just $35,000. When he’s not in Mustique.

Tod Laudonia, Designated Broker, has twenty-eight years of experience in the Real Estate Industry, beginning as a founder and managing partner of Vineyard Realty in Edgartown, Massachusetts on the Island of Martha’s Vineyard in 1981. He moved to Greenwich, Ct in 1985 and founded Soundview Properties where he served as a managing partner until 1998. He moved to Weichert Capital Properties where he achieved recognition as an outstanding sales agent and a Broker Owner of a residential services company in the State of Connecticut. Prior to his career in real estate, Tod spent time as a Head Golf Professional and in successful business start-ups in the Retail sector.[ lemonade stands? Ed.] He is a licensed broker in many staes [sic] and a member of the National Association of Realtors, the Connecticut Association of Realtors and the Greenwich Association of Realtors.

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Here’s a disappointment

When 17 Hendrie Drive in Old Greenwich came on the market for $7.750 million in April ’08 I was delighted because I live just across the creek and figured that my retirement was now assured. Alas, eighteen months later the house remains unsold and today it’s down to a mere $4.450. I’ve lost $3.350 from my nest egg in just a year and a half, merely by breathing. How sad.

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A few more sales and contracts

429 Taconic, 12 acres and an antique way up near Banksville, sold today for $7 million. Started at $12 million in May, 2008.

27 Hettifred, off King Street, sold for $994,000. Original asking price in 2005 was $1.695.

8 Sherwood Farm Lane, new in 2006 and priced at $5.8 million in 2007 dropped its price to $3.8 some months ago and is now under contract. Nothing like a $2 million price reduction to stir up interest.

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Trickle down economics

Global recession pushes Costa Rican prostitution prices down 50%.

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The state of the market

Two contracts today, 22 price changes (21 down, one up). Of note, perhaps, is that dreadful spec job at the corner of Dingletown and 504 North street, for sale since 2007, rented for $28,500 to an out-of-towner. Even at that price, the builder is sucking wind.

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Zombie attack – Rosemary Woods returns to life, edits Greenwich debate tape

Republicans are making noise about a missing two minute segment from the tape of the recent Selectman’s debate in which the Democrat candidate, Lin Lavery, referred to Wilbur Peck and Armstrong Court as ghettos. Big whoop. Lavery explained, plausibly enough, that she used to term to describe the isolated nature of those projects and to urge a fuller integration of the residents into the general community.

While I disagree strongly with Lavery’s proposal to achieve this integration by erecting low income housing on the playing fields of the Riverside and Old Greenwich schools, and her idea that the Riverside Yacht Club would donate the land it presently uses for tennis courts for the same purpose is just plain crazy, her use of the term ghetto is entirely appropriate. The word, the dictionary tells me, comes from a Venetian dialect and refers to the island, with a foundry on it, where Jews were confined long ago. If a place is isolated and discriminatory, ghetto is an appropriate term, as in “pink collar ghetto”, or “Cos Cob”.

I’m far more interested in learning what, if any, specific plans the candidates have for controlling spending – what about Lash’s idea of abolishing the position of Tax Collector, for instance – what do they think about that? – or how about Tesei’s proposal to charge fifty bucks for wheel chair rides on the Island Beach ferry? There’s something to discuss – Lavery’s perfectly apt choice of words is not.

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Government greed

The Economist observes:

Arthur Brooks, the head of the American Enterprise Institute, a conservative think-tank, feels that the real culture war in America today is not about gay marriage or abortion, divisive though those issues are, but about capitalism. Everyone agrees that Wall Street messed up last year, but many are disturbed by the expansion of government that followed the crash. Voters particularly dislike the way the state is using their money to reward deadbeats, says Mr Brooks. They themselves work hard and live within their means. They see their neighbour, who borrowed more than he could afford to buy a fancy house, getting a bail-out to save him from the consequences of his own poor judgment. They see reckless bankers getting bailed out too, and the ill-managed carmakers of Detroit likewise. And they resent it.

There is some truth in Mr Brooks’s analysis. The bank and car bail-outs were indeed unpopular. And the fear that the Democrats aim to make government too big, too expensive and too intrusive set off a wave of “tea-party” protests that is still rolling. Democrats have tried to dismiss the tea parties as motivated by racism, because Mr Obama is black. But racism cannot explain why the president’s approval rating has fallen this year. As Mr Obama observed: “I was actually black before the election.”

Some of the critics of big government are a bit hysterical. Glenn Beck, a talk-show host, foments panic and then urges listeners to buy gold from a company he endorses. Michelle Malkin, a blogger, has written a bestselling book about the Obama administration called “Culture of Corruption”. This is silly, but the rabble-rousers are popular because their audience has genuine grievances. Many working-class men have lost their jobs. Those who are still employed have seen their wages stagnate and their pensions shrivel in the stockmarket crash. Their health insurance is insecure, but they don’t trust Congress not to make it worse.

Working for the man

Meanwhile, they can see that one group of Americans has been practically unaffected by the recession: government employees. Their hours have not been cut, their benefits are gold-plated and they are almost impossible to sack. In good times, few Americans notice these things, but in bad times, the disparity grates. Cops and firefighters can retire in their 40s and draw defined-benefit pensions for life. With overtime, one tenth of the police in Massachusetts made more than the governor’s annual salary in 2006, according to the Boston Globe. Including benefits, the average employee of New York City makes more than $100,000, according to Forbes, while some Californian prison guards “sock away $300,000 a year”.

And what do taxpayers get for their generosity? The bad bargains get all the publicity. Union contracts force the postal service to pay thousands of unneeded workers to do nothing. In New York, public-school teachers who can’t be trusted to teach but can’t be sacked either are paid to sit and do crosswords.

One should not overstate the rage of taxpayers against public servants. Most Americans admire firemen, teachers and cops. They like receiving government benefits, too. And roughly half of them will pay no federal income tax at all this year. The problem is that this is not sustainable. During his election campaign, Mr Obama promised not to raise taxes on anyone except the rich, but with the deficit so vast, the question is not whether he will break this promise but when.

Connecticut has quadrupled state spending (in inflation – adjusted dollars) in the two decades since imposing an income tax on Fairfield County while the state population has remained static. Greenwich municipal employees, including teachers, have done very well, thank you, during that same period. Government never cuts costs or employees, it just soaks taxpayers more. The center will not hold.

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Presented without comment

Because what can I add? White French Catholic priests waving their arms and boogying at “mass”.

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Price changes

5 Conyers farm

5 Conyers farm

This Conyer’s Farm house was first listed in 2008 for $12.5 million so today’s drop to $8.25 represents a “saving” of $4.2 million. That’s enough to buy Walt’s place in Mustique, if you’re interested. On the other hand, assessment is just $5.676 so maybe you’ll want to wait and add Walt’s Round Hill cottage to your portfolio too. Nice guest house, perhaps.

 

Going in a contrary direction, Barry Sternlicht, the Starwood guy who knows more about real estate than most of us, has raised the price of his house at 121 Old Mill $500,000 to $5.950. This 1937 wreck classic hasn’t sold since being listed at $8.250 almost two years ago and I’m not sure creeping closer to the original price will help, but I don’t run Starwood; he does, so I bow to his judgment.

And so too does the would-be seller of 25 Owenoke Drive Way in Riverside, who started at $4.050 in 2005, dropped down to $2.795 by April of this year and raised it yesterday to $2.895. I’m not quite sure of his thought process here but I did see him raking leaves on his front lawn yesterday wearing a tee shirt reading, “I’m with stupid”.

UPDATE: Darn it, now Owenoke’s dropped to $2.695. Make up your mind, would you? (Listing broker George Crossman has telephoned to whine that it was the Board’s error, not his – exactly what you’d expect from a Board that insists all communications be made by fuzzy fax instead of over the Internet – I suspected that, actually, but as I explained to George, the Owenoke story flowed so naturally from the Sternlicht price change that I just couldn’t resist.)

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Contracts

Two were signed yesterday each, depending on price, a little surprising. A condo unit at 340 Valley Road, asking $2.150, was sold via a “foreign” broker. That makes three sales out of ten units, I believe, since 2008. I myself would be reluctant to buy into a project that doesn’t seem to be doing so well, but everyone has their own taste and judgement.

11 Irvine, in Old Greenwich, new construction that was asking $3.495 has also found a buyer. Nice house, but I’d expected it to sit around for longer than it did at that price. Good news for the seller and neighbors.

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And what does the Treasury know that we don’t?

Another Patriot Bank loan up in smoke

Another Patriot Bank loan up in smoke

Treasury coming out with new procedures to make it easier to walk away from your house “without the stigma of foreclosure”. Guess that mortgage modification plan isn’t working out so well.

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Where’s the bottom?

37 Almira Drive

37 Almira Drive

Nah, I’m not referring to the jail post below but to this estate-owned house in Pemberwick. It started at $835,000 last year and is marked down today to $475,000. Assessment is $482,000, but my sense of the market suggests that a 1948 Cape on 0.2 acres in Pemberwick, sans garage, has more room to drop, even if it does sport a new roof. Still, as moderate income goes, this area is looking more affordable with each passing week.

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How’s your tai kwan do, Walt? Seems it’s rough in the Big House

Bernie Madoff whups another old man down in the cell block. It’s okay, though – they kissed and mad up (made off?) and were last seen dining on bologna sandwiches in Bernie’s candlelit cell. Still, Walt, this could get dicey for a 79-year-old guy. You might want to see whether the YWCA still offers courses in self-defense.

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