Daily Archives: April 6, 2010

Mortgage modification plan distorting economic signals

Or that’s what some people are postulating. Millions of house “owners” have stopped paying their mortgages  and are sitting around with $1,000 extra a month that no longer goes to their lender. So they’re spending it on other things, like vacations, tanning sessions or even, last resort probably,braces for their kids. Whatever, it’s tossing billion of bucks into the economy, but it’s all illusion and temporary. Which isn’t a good thing if you’re trying to figure out what’s happening in our economy.

Don’t know if that’s a valid argument, but it’s interesting.


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Can Eastern Middle School kids cross the Post Road safely?

A typical NoPo bus route

The school board thinks so and is canceling the short-lived experiment of providing school buses in (some portions of) NoPo. I’m a little skeptical – the Post Road’s a busy route, but I also remember that in my side of Riverside we all used a shortcut across the rail road tracks to get to that same school, so maybe, what’s a little traffic? I’ll bet NYC kids manage worse and besides, it’ll weed out the slow and careless.


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Can a state take archeologically significant property from an individual and pay him nothing?

Darned if I know, but there’s an interesting case going on in Rhode Island where the state is trying to do just that to prevent a developer from destroying the remains of an entire Indian village. Hmm – seems to me that wet lands regulations can do that, but my memory of the relevant case law is fuzzy and there is certainly a constitutional provision against complete takings (although the first suit, brought in federal court, was dismissed for lack of jurisdiction, so ….)

My sympathies are entirely with the archeologists who want to preserve this site, but is there a regulation that empowers the state to do this? And is it fair to impose the cost of such preservation on an individual instead of a state’s taxpayers?

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Did Greenwich Bank & Trust do the dirty with Bernie Madoff?

That’s what our aspiring senator but still, to his intense frustration, Attorney General Richard Blumenthal says he is investigating. In fact, he’s poking around GB&T’s parent, Westport National Bank, but same thing; all are owned, mostly, by Greenwich’s William Berkley, he with the huge spread up on Doubling Road and the insurance building on the corner of Steamboat Road.

NEW YORK, April 6 (Reuters) – The Connecticut Attorney General said on Tuesday he was looking into whether Westport National Bank and a Connecticut pension consultant aided and abetted Bernard Madoff in his $65 billion Ponzi scheme.

Connecticut Attorney General Richard Blumenthal said in a statement that his office and the Connecticut Department of Banking have been conducting “a wide-ranging investigation” into federally chartered Westport National Bank, pension consultant PSCC Services Inc and its owner Robert Silverman.

“Our investigation is focused on allegations that Westport National Bank, PSCC and Mr. Silverman operated investment funds that fed cash into Madoff’s massive fraud, skimming millions of dollars in fees for themselves,” Blumenthal said in the statement.

“I expect to make a decision soon regarding possible legal action.” Legal action could be aimed at recovering money for investors as well as fees.

Madoff is serving a 150-year prison sentence after pleading guilty to running the Ponzi scheme in which scores of investors were defrauded.

Connecticut Governor Jodi Rell said in a statement on Tuesday that the probe suggested that clients of the bank had invested some $59 million with Madoff, but received statements from the bank showing that they had invested in “shares” or “units” with specific market values.

“The probe found information indicating that Silverman and PSCC Services allegedly steered clients toward pooled investments for which Westport National Bank served as the nominal custodian and which were to be managed exclusively by Madoff’s company,” Connecticut Department of Banking Commissioner Howard Pitkin said in a statement.

Silverman and PSCC received more than $14 million in fees and Westport National Bank got $2.5 million in fees for managing the investments, the governor’s statement said.

UPDATE: Silverman seems to be a Wilton residence with a “pension consulting” practice  a half block from Westport National.

And there’s this, from the (February 9, 2009) New York Times:

The arrangement seemed odd to specialists on bank custodial services.

Custody accounts typically involve an array of specific services, explained Marshall N. Carter, the retired chairman and chief executive of State Street Bank, one of the largest custodial banks in the world. Those include settling customer trades, insuring safekeeping of the securities, servicing customer transfers and providing information about the portfolio.

In this case, no customer trades were settled and the safekeeping of securities was apparently left to Mr. Madoff. Finally, although the bank said it provided record keeping, tax reporting and “other ministerial services” to the custodial clients, Mr. Silverman was also being paid a “record keeping” fee.

Together, the fees paid to the bank and PSCC Services were almost 4 percent of the customers’ assets — well above normal levels for those services, according to Charles Ruffel, founder and director of Plan Sponsor, a financial information business serving institutional investors.

The bank’s custody fee was about three times the going rate, Mr. Ruffel said, and he called the record-keeping fee paid to PSCC “unconscionable.”


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California’s public pensions – a half trillion in the hole

Nothing new here for those like Pension Watch who has been following and reporting on it since 2004, but you can count on who’s going to be expected to cough up the cash to cover this and hint: it’s you and me.

An independent analysis of California’s three big pension funds has found a hidden shortfall of more than half a trillion dollars, several times the amount reported by the funds and more than six times the value of the state’s outstanding bonds.


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7.8 quake in Indonesia

Headline news today, gone tomorrow, unless a tsunami or something like that is spawned.

I heard an interesting show on NPR yesterday where Ira Flatow was discussing earthquakes with some expert on another (and I can’t find the link, damn it, but here’s the USGS data). Listeners were calling in blaming these quakes on everything from sunspots to global warming and they sounded entirely unconvinced when Flatow, his expert and, a geology professor who called in from the University of Houston all said the same thing: the earth sees 20-30 earthquakes above 7.0 every year, and literally hundreds of smaller (5-6.9) quakes. The media only pays attention when they strike near populated areas and cause damage, so the average geologically illiterate media consumer can be forgiven if they don’t know this. But really – earthquakes happen, a lot – it’s in the nature of our planter’s construction.

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Head for the hills!

Okay, so I was wrong - think I'll admit it?

WSJ columnist James Stewart, who I assume is not the gentleman pictured to the left, is crowing about calling the bottom of the residential market last summer and now claims that the office glut is ending. I wonder if the Journal passed out bongs as Christmas bonuses or Mr. Stewart is just determined to wish his way to happiness, whistling “Buffalo Gals Won’t You Come Out Tonight?” as he goes.

In any event, I think he’s wrong on both counts.


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