Fannie, Freddie Soar as Day - Traders Seek Profit

fnm stock

NEW YORK (Reuters) - Shares of U.S. government-controlled mortgage lenders Fannie Mae and Freddie Mac soared for a second straight day on Tuesday after attracting the attention of day-traders looking to turn a quick profit with these low-priced household names.

Fannie Mae shares rose as much as 24 percent to $2.12 while Freddie Mac gained as much as 14 percent to a high of $2.34 in morning trading on the New York Stock Exchange.

Though both hard-hit companies were essentially nationalized by Uncle Sam to prevent them from going under last fall, Fannie Mae shares have more than doubled since starting the year at 76 cents. Freddie Mac shares have almost tripled in value from 73 cents.

"You can get these massive spikes in these low-dollar companies that are structurally in a lot of trouble," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

Shares of other financial companies such as Citigroup Inc and insurers American International Group and Hartford Financial Services Group also have risen dramatically in recent weeks.

The U.S. government seized Fannie and Freddie last September after they reported huge losses caused by plummeting U.S. house prices.

For better or for worse, then, some investors see the mortgage lenders following the rebound of the banking sector.

"If the recession has actually ended and the economy is bouncing back, these investors would hope and believe that Freddie Mac and Fannie Mae will make a similar move as these others," said William Lefkowitz, option strategist at brokerage firm vFinance Investments.

In late morning trading, Fannie Mae shares were up 14 percent at $1.93 while Freddie Mac shares were up 6 percent at $2.18, despite any material news.

Joe Kinahan, chief derivatives strategist at Thinkorswim Group, a division of TD Ameritrade Holding Corp, said some investors may see an improving outlook for the mortgage giants thanks to an economic rebound and government intervention.

"The only rumor I have heard is that the government may extend or increase the time frame for the government's first-time home buyer tax credit, which is supposed to expire this fall. If that happens, that would be great for Fannie and Freddie," he said.

Options markets were also very active Tuesday. During the first 45 minutes of trade, about 61,000 call options changed hands in Fannie -- more than three times its average daily volume and nearly five times the number of puts, according to option analytics firm Trade Alert.

Heavy call demand shows that investors expect Fannie and Freddie stock to rise.

Local car lots ready for Cash-for-Clunkers trade-ins

cars for cash

WENATCHEE — "Old Blue" was Wenatchee's first "clunker."

The 1985 Ford F250 pickup was likely the first vehicle in the Wenatchee area to be exchanged for a new, higher-mileage vehicle under the government's "Cash-For-Clunkers" rebate program that began Monday.

From Wenatchee World

All area dealers and most dealers across North Central Washington are participating in the program, which has set aside $1 billion in federal rebate funding for the dual purpose of stimulating new car sales — hard hit by the recessionary credit crunch — and getting old gas hogs off the road.

That suits the old pickup's former owners, Bob and Barb Butler of East Wenatchee.

"I told Barb that when that program got started, I was going to get rid of Old Blue," Butler said from the living room of his East Wenatchee home. "I wrote to our senators, encouraging them to pass the program. It puts the purchasing power at the bottom and lets the consumer decide how to spend the money."

In his driveway is the old truck's successor — a beautiful metallic-maroon Ford Ranger, a small pickup freshly purchased from Town Ford.

Butler, a 2001 retiree from Alcoa's Wenatchee Works, bought Old Blue a few years ago from his son, who was moving out of the area.

Cash for Clunkers gave Butler $4,500 for the old pickup, a vehicle that normally would have garnered some $500 in a trade in.

He used the Cash-For-Clunkers rebate toward the purchase of the $13,950 Ranger. His final price, including taxes, was $11,040, he said.

"He's happy. We're happy, and hopefully, it'll generate some more business," said Mike Andruss, the salesman who sold Butler the Ranger.

A Cash-for-Clunkers spokeswoman in Washington, D.C., said 22,330 dealers nationwide had registered for the program by early Wednesday.

Some $68.9 million of the total $1 billion in available rebate funding had already been claimed by Wednesday, she said.

Car dealers around town say the program has caused a buzz among potential buyers and kept their phones busy with inquiries.

"The program is going to be good for business. It's generated a lot of phone questions," Mark Prater, general sales manager of Town Ford said. "Anytime anybody's out there thinking about replacing a rig, that's good for sales."

Sid Kane, owner of Wenatchee Kia and Suzuki, says his local dealership has already received some seven clunkers in trade.

The program will stimulate sales, he says, but it's a "quick fix" that doesn't solve the industry's real problem: a credit crunch.

"Banks are not lending or are picky about who they lend to," he said. "The program is limited to a buyer who has the means and the credit. The person who most needs a new car is being penalized, and a lot of these people are good credit risks."

He said about half the people who traded in clunkers at his dealership paid in cash.

Todd McLaughlin, general manager of Apple Valley Honda, says the program creates uncertainty for dealers, because the government has 10 days to send out the rebates, but customers can drive their new cars off the lot the day of the trade.

"I think it's made a lot of dealers nervous," McLaughlin said.

For small city dealerships the program also presents another challenge — finding a local wrecking yard willing to take and scrap the clunker trade-ins.

"I haven't found anybody local who'll do it," said Dale Damskov, owner of Ford and Chrysler dealership, Damskov Auto Sales of Omak.

Of the required paperwork and regulations, he added, "I signed up for the program, but it won't hurt my feelings if we don't receive any (clunkers), because it's going to be a headache."

Bob Ramin, sales manager at Sunrise Chevrolet, also in Omak, says he has six to eight clunker deals on hold while he awaits authorization to participate in the program.

He said he'll be sending the clunkers to Spokane for the mandatory wrecking.

Butler's Old Blue remained parked at Town Ford Wednesday, the word "clunker" now scrawled across its windshield.

The old truck had its quirks, but it was far from the broken-down old beater that the word "clunker" normally conjures.

Its wheel hubs were rusty, but its brakes were good. Dents and scratches marred parts of its namesake paint job, but it had a plastic bed liner. Its ignition didn't work, but a "MacGyvered" switch under the dash — marked with a piece of blue tape — fired the engine right up.

The clunker program requires that it be scrapped and its engine rendered unusable — a sorry end to a trusty old vehicle.

But its 8 miles to a gallon "on a good day" can't match the approximately 25 miles per gallon of Butler's new Ranger.

And that metallic-maroon color ...

"It's as close as I could get to the color of the Corvette I used to have," he said.

Jones spent clients' money

'Planes, Hotels'; Financial adviser, wife lived off $60,000 a month: accountant

Earl Jones cut himself and his wife monthly cheques of several thousand dollars from the same account in which his clients' money was deposited, an accountant investigating Jones's business dealings said yesterday.

Between those cheques and a monthly credit card balance that regularly hit $50,000, the Joneses were living off $60,000 to $70,000 a month, accountant Gilles Robillard said.

"Plane tickets, meals, hotels," he said. "From the payments that were doled out to (his wife), she was the best-paid employee."

Following a brief hearing yesterday in Quebec Superior Court during which Jones's company, Earl Jones Consultant and Administration Corp., was declared bankrupt, Robillard gave more insight into the man who is alleged to have ripped off dozens of Montrealers - many of them friends - in an elaborate Ponzi scheme.

After about a month in hiding, Jones, 67, turned himself over to provincial police this week. He was charged Tuesday with four counts of fraud and four counts of theft over $5,000. More charges are pending.

Jones, a Dorval resident, was released on $30,000 bail. He is to return to court on Sept. 28.

But Jones wasn't at yesterday's bankruptcy hearing, nor was he represented by a lawyer.

Neil Stein, the lawyer representing several of Jones's alleged victims, called three witnesses, including Robillard, Mary Sue Gibson, who is one of Jones's purported victims, and Robin Whitrod, who is owed $32,500 by Jones for doing many of his clients' income tax returns.

Yesterday's declaration of bankruptcy means the accounting firm RSM Richter has the power to try to find a way to repay about 150 creditors.

"We now have the ability ... to conduct examinations and do whatever necessary to recoup assets," Stein said.

But Robillard didn't provide much optimism for investors, who are out an estimated $50 million in total.

"It doesn't seem the money just disappeared in the last year. It was gone long before that," he said.

"We've found very little. In 60 bank accounts, there's probably less than $30,000."

In the accounts that have been examined, Robillard said, the balance hovered near $200,000 at the end of the month, which would be "flushed out throughout the month to customers, his wife and himself, and to pay some accounts."

"Then there'd be deposits and the balance would come up to $200,000 (again), and it kept rolling like that from month to month."

Robillard said his company has to sift through 20 years' worth of accounting figures, and he suspects some of the money may be in offshore accounts.

"We haven't pinpointed yet when the money disappeared," he said. "It could have been 10 years ago, for all we know.

"Either the money was stolen and it's sitting somewhere or it's been lost, spent."

The accountants will be questioning Jones and his wife, Robillard said.

On Monday, Stein filed for permission to have Jones declared personally bankrupt. A hearing on that petition is to be held Aug. 19.

Quebec Superior Court granted Stein permission to seize all of Jones's personal assets, including his homes in Dorval and Mont Tremblant, as well as all bank accounts.

But even that is not producing fruit.

"It appears Mr. Jones cashed in all his personal investments, RRSPs, life insurance in January 2009," Robillard said.

"He's been seeing this coming for quite a while."

VIA Rail's goodwill gesture backfires

via rail\
60% discount: Offer extended after deal-seekers crash website and ticket lines overflow

VIA Rail was still struggling to get back on track yesterday after a major promotion turned into a customer service nightmare for the company this week.

In an effort to redeem itself after a two-day strike disrupted service across Canada last weekend, VIA offered a 60-per-cent discount on regular-fare tickets countrywide. But the deal proved to be a little too popular, prompting a flood of bookings that overwhelmed the company's website and tied up its phone lines.

Unable to get through from home, many people made their way to the nearest train station to try their luck in person. By noon yesterday, the line at the Central Station in Montreal had snaked halfway across the main terminal's huge atrium.

"I couldn't get through on the phone ... and I tried the Web last night but it didn't work," said Matt Milner, who was waiting to buy tickets for a friend in Toronto. "If you're going to offer this kind of promotion, the website should really be able to handle it."

One woman, who gave her name as Cathy, said she had tried coming down on Wednesday, but turned around when she saw the line.

"It was three times as long as today," she said. "I just thought, forget it."

It was similar scene at Toronto's Union Station. Rob Shier, 52, who stood halfway through the line, said he had been waiting for 30 minutes to pay and pick up a ticket for his son. "I tried online ... but it was really slow."

Jane Bergman also tried to book her trip to Montreal online before giving up. She said the discounted ticket price made the 45-minute wait more bearable

"I tried the website, but it was down," she said nearing the front of the line. "I tried the phone many times, but the line was busy. Still, the savings are good."

In response to the "difficulties being encountered by some passengers," VIA quickly went into damage control, extending the promotion by two days, calling in an additional 10 employees for each of its call centres, and adding extra bandwidth to its website.

"We normally have 1,500 hits on our website per day, and yesterday we had over 12,000 hits, so it's a bit overwhelming compared to our usual standards," said VIA spokesperson Claude Arsenault, who would not comment on how much the company spent to expand its webspace. "The website seems to be up and running smoothly."

But while many travellers have been able to secure an unexpected mid-summer deal, the feeding frenzy has also prompted complaints from those holding multi-ticket passes, who say they are now having trouble securing seats.

Arsenault said any passes will be extended by three days, and the company is looking into adding extra trains and wagons to squeeze everyone in. "So far, very few trips are totally full. We're working at maximum capacity."

The VIA promotion ends tonight at 11:59 PST, 8:59 local time.

canwest news service contributed to this report

mmuise@thegazette.canwest.com

DFAS adds a layer of security to myPay

dfas mypay

The Defense Finance and Accounting Service is using a virtual keyboard feature to increase security for users of its myPay online payment system.

Customers will use the feature to enter their personal identification numbers each time they access the myPay system, DFAS said. The virtual keyboard will appear on customers' computer screens after they type their myPay log-in IDs into the system on standard keyboards. The system will then prompt customers to enter their PINs via mouse clicks on their screens.

The feature changes the appearance of the virtual keyboard each time it appears. This is done to thwart hacking techniques used to capture or generate PINs, including Trojan horses, spyware and keystroke logging software, DFAS said.

The accounting service began providing the feature in mid-May. The system's other features will continue to operate as they always have, DFAS said. DFAS manages payments departmentwide, including payrolls and payments to contractors.

Bad loans threaten CIT Group

cit group

CIT Group (CIT) is teetering on the edge of bankruptcy -- again -- a day after getting $3 billion from bondholders in emergency financing. The lender said it could still head to bankruptcy court if bondholders reject its debt restructuring proposal.

The problem is that CIT has about $10 billion in debt coming due through next year. If CIT fails, it would be the largest U.S. financial company to go bankrupt since Lehman Bros. last September, Reuters reports.

CIT is a lender to some 1 million businesses, including Dunkin' Brands and Eddie Bauer. How did the company get into such trouble in the first place? Lay part of the blame on its decision to go into subprime mortgages and student loans, says Reuters. The company is $3.3 billion in the hole since the end of 2007.

The Wall Street Journal asked a financial-research firm to look over CIT's $75 billion loan portfolio, and said the findings were pretty bad. Here's what the researchers discovered:

- The company's overall delinquency rate was 4.7%, compared with an industry average of 2.8%.
- Just looking at consumer loans, the delinquency rate jumped to 9.6% compared with the industry average of 4.5%.
- About 5.4% of its commercial and industrial loans had received no payment in several months -- nearly double the average.
- A shocking 16% of its commercial mortgages were no longer being paid. That compares to 2% nationally.

"Across the board, CIT made shakier loans than most other lenders," the Journal reports. "It isn’t hard to imagine some in Congress asking the question: Is this really the type of the lender the U.S. government wants to help keep lending?"

Shares of CIT Group lost nearly 22% of their value Tuesday to close at 98 cents.

2009-2010 City of Midland Budget Highlights 7/8/09

budget highlights 2009

Midland, Texas - The proposed budget for the City of Midland was presented to the Midland City Council.

According to the City of Midland, there are decreases across the board.

But keep in mind, it is far from ready to be adopted.

The city, like everyone else, is looking to be good stewards with taxpayer money in tough economic times.

For instance, the proposed operating budget for 2009-2010 shows a decrease in expenditures from the year before of more than $7 million dollars.

The city also says the proposed general fund budget is a balanced budget of $79-million, a savings of over $4-million.

The current ad valorem tax rate also decreased 87 cents to $47.72 cents per $100 dollar valuation.

But keep in mind, if your propery value is up, you could still be paying more in property taxes.

The city is also projecting $24 million in sales tax revenues.

Public hearings on the tax rate and budget will begin on August 4th, and should wrap up on August 24th.

City officials stress it is a work in progress, and will likely change before finally being adopted.

3 girl children adopted by State Bank of India, Chedema

3 girl children adopted by State Bank of India, Chedema

Observing the 54th Bank Day, the State Bank of India (SBI), Chedema Branch, located at D. Khel, Seikhazou, adopted three young girls, Khriezokuonuo Kire, Kelhoulenuo Kire and Ketoulhounuo Khezhie. The trio will be getting Rs.6000 each annually till Class X. A passbook each was handed over to them by Chief Secretary Lalthara at a function held at the branch office this afternoon. Expressing happiness to SBI for opening its 49th branch in Nagaland, Lalthara maintained that the SBI was doing a good job, and added that its community service was laudable.

Also attending the function, State Planning Board (SPB) deputy chairman, Neiba Kronu, acknowledged the SBI for rendering good service to the people of the state. Expressing regret that the banking habit was still very poor in Nagaland, he challenged the people to come forward and familiarise themselves with the bank, and added, “we have to start working with the bank.”

Earlier, the Chedema branch also felicitated Khriezovonuo Lhounyu for her valuable contribution in the field of journalism. There are around 150 girl children adopted by the SBI across the state. The idea behind the adoption of a girl child is to help the poor parents who cannot afford to pay the school fees of their children.