Monday, September 20, 2010

Realty reality

Guambat wonders, as he waddles about, whether the housing glass is half empty or empty.

Home Sales in U.S. Probably Rose in Sign Real Estate Market Is Stabilizing
Purchases of new and previously owned homes rose 7 percent to a combined 4.395 million annual pace, according to the median forecast in a Bloomberg News survey.

The 7.1 percent gain would follow the record 27 percent plunge in July.

“Housing is in a fragile bottoming process,” said Aaron Smith, a senior economist at Moody’s Analytics in West Chester, Pennsylvania. The projected gains in home sales and durable goods are “consistent with stabilizing growth, albeit at a slower” pace than earlier this year, he said.

U.S. Home Seizures Reach Record for Third Time in Five Months
Bank repossessions climbed 25 percent from a year earlier to 95,364, the most since the Irvine, California-based data provider began keeping records in 2005.

“We’re on track for a record year for homes in foreclosure and repossessions,” Rick Sharga, RealtyTrac’s senior vice president, said in a telephone interview. “There is no improvement in the underlying economic conditions.”

Foreclosures are contributing to a growing housing supply that may add as many as 12 million homes to the U.S. market.

U.S. Home Prices Face 3-Year Drop as Inventory Surge Looms
The slide in U.S. home prices may have another three years to go as sellers add as many as 12 million more properties to the market.

Shadow inventory -- the supply of homes in default or foreclosure that may be offered for sale -- is preventing prices from bottoming after a 28 percent plunge from 2006, according to analysts from Moody’s Analytics Inc., Fannie Mae, Morgan Stanley and Barclays Plc. Those properties are in addition to houses that are vacant or that may soon be put on the market by owners.

“Whether it’s the sidelined, shadow or current inventory, the issue is there’s more supply than demand,” said Oliver Chang, a U.S. housing strategist with Morgan Stanley in San Francisco. “Once you reach a bottom, it will take three or four years for prices to begin to rise 1 or 2 percent a year.”


Friday, September 03, 2010

Gone waddle about

Guambat will be waddling off for a short bit. He might and mightn't get up a post or two before he's off.

But after a wee dawdle, he'll toddle his wattle back home.


And talk of all the things we did today
And laugh about our funny little ways
While we have a few minutes to breathe
Then I know that it's time you must leave

But darling be home soon
I couldn't bear to wait an extra minute if you dawdled
My darling be home soon
It's not just these few hours but I've been waiting since I toddled
For the great relief of having you to talk to

Darling Be Home Soon
-- The Lovin Spoonful


Thursday, September 02, 2010

Latest wrinkle in Allergan case

600 million Botox settlement
Allergan Inc., maker of the wrinkle smoother Botox, said it agreed to pay $600 million and plead guilty to a single misdemeanor charge in settling a U.S. investigation of its marketing practices.

Allergan will pay $375 million to the government as part of a “misbranding” charge that the marketing of Botox from 2000 to 2005 led to intended use in treating headache, pain, muscle stiffness and juvenile cerebral palsy, which were not approved by the Food and Drug Administration during that time.

Allergan will also pay $225 million to resolve civil claims from the Justice Department, the company said Wednesday in a statement.

Read more:


Wednesday, September 01, 2010

No rendition for Moody's European unit up to its nexus in fraud-like behaviour

Moody's Investor Services (MIS) was born of an American, John Moody, around the turn of the Nineteenth into the Twentieth Century. And, my, how it has grown.

According to its resume, "Moody's is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets. Moody's Corporation (NYSE: MCO) is the parent company of Moody's Investors Service."

The Securities Exchange Commission regulates American companies, especially credit reporting agencies. Moody's became a nationally recognized statistical rating organization ("NRSRO"), registered with SEC, after the middle of 2007. But just prior to that time, Moody's European operations bad a boo-boo. A not insignificant one.

But one apparently safely separated from the SEC by the Atlantic Ocean. That is the story told by the SEC itself in its Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: Moody's Investors Service, Inc. released August 31st:
In the summer of 2006, MIS began developing a methodology for rating notes issued by a newly created CPDO.

The rating committee responsible for the credit ratings of the CPDO notes met in France and the United Kingdom. The CPDO notes were arranged by European banks and marketed in Europe.

Because CPDO notes were new instruments, MIS had no existing model for use in rating them. MIS created a model and in September 2006 gave the notes issued by the newly created CPDO issuer an Aaa credit rating. By the end of 2006, MIS had issued credit ratings for notes issued by an additional eleven CPDO issuers. The notes of all twelve CPDO issuers were marketed in Europe.

In January 2007, an MIS analyst in New York, assisting on a CPDO deal with a United States investment bank, was asked to determine why the MIS CPDO model was not generating the same output as the investment bank's model.

Upon examination, the analyst discovered a coding error in the MIS model. The coding error upwardly impacted by 1.5 to 3.5 notches the model output used to determine MIS credit ratings for notes issued by eleven CPDO issuers.

The CPDO notes with affected credit ratings had a combined notional value of just under $1 billion.

MIS subsequently held several internal rating committee meetings in France and the United Kingdom to address the coding error.

MIS corrected the coding error on February 12, 2007, but made no changes to the outstanding credit ratings for CPDO notes at that time.

Internal e-mails show that committee members were concerned about the impact on MIS's reputation if it revealed an error in the rating model. The committee was comprised of senior level staff, including two Team Managing Directors, two Vice President-Senior Credit Officers, and a Vice President-Senior Analyst.

In declining to downgrade the credit ratings, the committee considered the following inappropriate non-credit related factors:
>(i) that downgrades could negatively affect Moody's reputation in light of ongoing negative media focus in Europe on Moody's Joint Default Analysis;
>(ii) that downgrades could impact investors who relied on the original ratings; and
>(iii) the desire not to validate the criticisms of Moody's ratings of CPDOs that had been made by a competitor and covered in the local media.
The actions of the rating committee that evaluated the affected credit ratings for the CPDO notes did not comply with MIS' own Core Principles.

Members of the rating committee involved in the monitoring of CPDO ratings allowed concerns regarding Moody's reputation and other non-credit related considerations to influence decisions not to downgrade the affected CPDOs.

Further, we conclude that, in early 2007, members of the European rating committee believed they could violate MIS's procedures without detection

[How-ever,] Because of uncertainty regarding a jurisdictional nexus to the United States in this matter, the Commission declined to pursue a fraud enforcement action.

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