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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: James Hutton who wrote (227037)	11/2/2009 12:05:19 AM
From: patron_anejo_por_favor	Read Replies (3) \| Respond to of 306849

Squid's like water, or so I'm told. This one likes anything that smells of money. Like discounted tax credits, for example. I love the title, wanna bet TurboTaxTim rubber stamps this for his handler....ERRRR, client.....ERRRR constituent? online.wsj.com NOVEMBER 2, 2009. Goldman Looks to Buy Fannie Tax Credits Treasury Lurks as Spoiler as Political Climate Favors Main Street's Benefit Over Wall Street's By DAMIAN PALETTA Washington Goldman Sachs Group Inc. is in talks to buy millions of dollars of tax credits from government-controlled mortgage giant Fannie Mae, but the potential deal is running into opposition from the U.S. Treasury, which could block the deal. A sale would bring some needed financial respite to Fannie Mae. But the administration is leery about approving a deal that would help Goldman reduce its tax bill, given the animus held by many lawmakers toward big Wall Street firms in general and Goldman in particular. The Obama administration is looking at the deal with a critical eye and could block it. Goldman, meanwhile, is hopeful it could win approval this week. "Treasury is reviewing and will not let it proceed unless it is clearly in the taxpayers' interest," spokesman Andrew Williams said. Fannie Mae and its regulator, the Federal Housing Finance Agency, declined to comment. "Fannie Mae is owned and controlled by the federal government," said Goldman Sachs spokesman Michael DuVally, who wouldn't confirm the company was in talks with Fannie about the credits. "The only basis on which approval for any transaction would be given would be if it was clearly in the taxpayers' best interest." Precise details of the deal couldn't be learned. Some on Wall Street think Goldman could buy $1 billion of the tax credits, which would allow the bank to offset a portion of its profit. It is unclear how much of a discount Goldman is offering to pay. One person familiar with the potential transaction said Goldman could line up other investors for the deal as well. Nearly every major business decision at Fannie Mae and Freddie Mac is vetted or directed by the government. Officials at both firms have complained about their contradictory missions -- they are at once private companies and tools of public policy. The Goldman talks are emblematic of these conflicts: A deal that could help Fannie Mae might also be politically unpalatable. The Treasury Department has purchased $45.9 billion in preferred stock in Fannie Mae since it took over the company last year to pump money into the firm, giving taxpayers a substantial stake in the firm. The tax credits are an incentive in federal law to spur investments in low-income housing. The law allows investors to receive tax credits for financing qualified housing developments. These credits tend to be drawn out over periods such as 10 years, and are attractive to companies that know they will be profitable during that span. Both Fannie Mae and its rival Freddie Mac loaded up on low-income housing tax credits during the real-estate boom. But the credits have lost considerable value in the past 18 months. Fannie Mae has lost tens of billions of dollars and, like many other financial firms, has been unable to use them. Fannie Mae had $5.8 billion in such partnership investments as of June 30. "There is decreased market demand for [such] investments because there are fewer tax benefits derived from these investments by traditional investors, as these investors are currently projecting much lower levels of future profits than in previous years," Fannie Mae said in an August filing with the Securities and Exchange Commission. Fannie Mae, for its part, would be able to unload credits that are weighing on its balance sheet and forcing it to take losses. Selling them would bring earnings into the firm that might offset the amount of money Fannie Mae has to borrow from the Treasury Department. It could also help free up Fannie Mae's balance sheet so the company can finance more housing loans. A key issue will be how much of a discount Goldman plans to pay for the tax credits, especially if the terms are seen as generous to the bank. Washington officials are likely to look at the deal with a skeptical eye. One reason: Approving it could further the perception that policy makers have taken steps in the last year that aided Goldman above other banks. For many in Washington still in the grip of populist fervor, Goldman has become a symbol of how Wall Street's recovery has outpaced that of Main Street, at taxpayer expense. The Federal Reserve waived normal rules to allow Goldman and Morgan Stanley to quickly become bank holding companies last year, protecting them from some of the financial-market trauma that befell Bear Stearns and Lehman Brothers. The government injected $10 billion into Goldman through the Troubled Asset Relief Program. The bank was also helped by the bailout of American International Group Inc., through contracts Goldman had with the giant insurer. Goldman was one of the first Wall Street banks to pay back its government cash and has either paid or set aside $16.7 billion in compensation and benefits for employees through the first nine months of 2009. "As we see American workers' dreams of retirement being delayed and postponed and vanquished, and we see them losing their homes, as we see them losing their small businesses, we see record profits over at Goldman Sachs," Rep. Luis Gutierrez (D., Ill.) told Treasury Secretary Timothy Geithner at a congressional hearing Thursday. Fannie Mae hasn't sold tax credits in at least a year. Citigroup Inc.'s bank division bought a $676 million portfolio from Fannie Mae in 2007, consisting of funds owning 382 properties with 31,050 rental units. The Treasury has invested a combined $96 billion in Fannie Mae and Freddie Mac since the companies were taken over in September 2008, and it is unclear when either company might be able to repay any of the money. Fannie Mae lost $37.9 billion in the first six months of 2009.

To: James Hutton who wrote (227037)	11/2/2009 8:52:03 AM
From: coug	Respond to of 306849

Thanks for bringing up the RNR.. It has become the best investigative paper in the Reno area.. A couple articles from the latest issue.. >>What if Nevada stops growing? Does the state know how not to be the fastest growing state?<< An excerpt.. ""“Monies generated by newcomers created a Ponzi-scheme economy. Those coming in subsidized those already in Nevada. Over time, neither long-timers nor new residents were required to pay any substantial taxes, causing necessary services, including education, to suffer.”"" Another article.. We’re not gonna take it; we ain’t gonna take it By John Barrette I’m as mad as hell and I’m not going to take this any more.” TV infotainment/news anchor Howard Beale—portrayed by Peter Finch in the 1976 film Network—raged against modern times with that “mad as hell” lament. Reality, however, demonstrates 33 years later that being mad as hell makes no difference if we continue to take it. I’m outraged by big pay for bigwigs in the private sector nationally and bigwigs in the public sector at the local/state level—at least in certain circumstances..... More.. newsreview.com Not bad for a paper that started out as a tabloid mainly selling "sex ads"..:) PS:: From last weeks issue.. This toxic house.. A look at how the sale of a Reno property was handled by a bank on corporate welfare By Dennis Myers dennism@newsreview.com This article was published on 10.22.09. An afternoon at midweek, Lakeridge Shores East is a quiet street, though one suspects that’s always the case. This is a gated community of fantastically expensive, beautiful and well-tended homes. No one would dare make much noise. This is where the ruling class lives and the denizens would likely call the police more readily—and with greater expectation of response—than most citizens. A passing car bears bumper stickers (the rich have bumper stickers on their cars?) reading, Reject Reid and Taxed Enough Already, the latter printed up by George Wallace’s old political party..... More.. newsreview.com