States $3 trillion in Pension Obligation Debt

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..........................Joshua Rauh, an economist at Northwestern University, and Robert Novy-Marx of the University of Chicago, recently recalculated the value of the 50 states’ pension obligations the way the bond markets value debt. They put the number at $5.17 trillion.

After the $1.94 trillion set aside in state pension funds was subtracted, there was a gap of $3.23 trillion — more than three times the amount the states owe their bondholders.

“When you see that, you recognize that states are in trouble even more than we recognize,” Mr. Rauh said.

With bond payments and pension contributions consuming big chunks of state budgets, Mr. Rauh said, some states were already falling behind on unsecured debts, like bills from vendors. “Those are debts, too,” he said.................

http://www.nytimes.com/2010/03/30/business/economy/30states.html?bl

History of Healthcare Legislation

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Pivotal moments in American health care history:

_1798: The Act for the Relief of Sick and Disabled Seamen in 1798 marks the beginning of federal involvement in health care.

_1854: President Franklin Pierce vetoes a national mental health bill on the basis that it would be unconstitutional to regard health as anything but a private matter in which government should not become involved.

_1912: Former President Theodore Roosevelt campaigns as the Progressive Party candidate on a platform calling for a single national health service.

_1920: The Snyder Act of 1920 is the first federal legislation to deal with health care for Native Americans, setting up the beginnings of what became the Indian Health Service.

_1921: The Maternity and Infancy Act of 1921 (Sheppard-Towner Act) provides grants to states to plan maternal and child health services. The legislation serves as a prototype for federal grants-in-aid to the states in the area of health.

_1924: The Veterans Act of 1924 codifies and extends federal responsibilities for health care services to veterans, who receive aid if they are injured in the line of service.

_1932: The Committee on the Costs of Medical Care report is published and raises concerns about the costs of health care and the number of people lacking medical services.

_1935: The Social Security Act, providing pensions and other benefits to the elderly, is signed into law by President Franklin Delano Roosevelt. National health insurance is left out of the final Social Security bill because of the opposition of organized medicine and its allies.

_1937: The Technical Committee on Medical Care, a group of federal agency representatives, is convened to advance health care reform.

_1938: A national health Conference proposes federal aid to the states to expand public health, maternal and children's services and hospital facilities.

_1939: The Wagner National Health Act of 1939, FDR's second push for national health insurance, fails as Southern Democrats align with Republicans to oppose government expansion.

_1943: The National War Labor Board declares employer contributions for health insurance to be tax free, which encourages companies to offer health-insurance packages to attract workers.

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http://sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/03/20/national/w063410D75.DTL

Loan Modification is a credit Killer

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WASHINGTON (AP) -- Some homeowners who sign up for the government's mortgage assistance program are getting a nasty surprise: Lower credit scores.

For borrowers who are making their payments on time but are on the verge of default, the Obama administration's loan modification program can reduce their credit score as much as 100 points. That makes it harder to get a loan and can present a problem when applying for a new job.

Housing counselors say it's unfair, especially because the news often comes as a surprise to homeowners.

"Why should people's credit be hurt even worse when they're trying to do the right thing?" said Eileen Anderson, senior vice president at Community Development Corp. of Long Island, a housing counseling group in New York.

And many homeowners are angry that a program designed to help carries such a penalty, said Kathy Conley, a housing counselor with GreenPath Inc., a nonprofit group in Farmington Hills, Mich.

"It's a feeling of being duped," she said.

Still, the impact is far less severe than a foreclosure, where borrowers typically find their credit is in tatters for years. That's due to the cumulative impact of many months of missed payments and the foreclosure itself, which drags down a homeowner's' credit by 150 points or more on a scale of 300 to 850.

To enroll in the Obama administration's $75 billion "Making Home Affordable" program, borrowers enter a trial period in which they make at least three payments. But some are finding out that their credit score takes a dive during this trial phase. It happens once their mortgage company notifies the three big credit bureaus -- Experian, Equifax and TransUnion.

http://finance.yahoo.com/news/Credit-scores-can-drop-after-apf-1601705094.html?x=0

Non favored Banks Cash Strapped?

Banks scramble to raise cash after Fannie Mae cuts

NEW YORK, March 5 (Reuters) - Banks scrambled to raise cash this week after U.S. mortgage finance agency Fannie Mae abruptly slashed the number of financial institutions that hold its funds, market sources said on Friday.

The move forced banks dropped by Fannie Mae to liquidate Treasuries and other short-term securities and borrow in the open market so they can return money Fannie Mae had with them, they said.

The banks had to collectively raise $100 billion to pay back Fannie Mae, said an analyst who declined to be identified.

The cash scramble on Wednesday and Thursday led to a spike in overnight interest rates on federal funds and repurchase markets to their highest levels since December.

It is unclear why Fannie Mae made the sudden move to reduce the number of banks to hold its cash.

Nearly all the financial institutions cut by Fannie Mae were foreign banks, market sources said.

Fannie Mae has declined to comment on the matter.

http://uk.reuters.com/article/idUKN0522784220100305

State to lever up in risk exposure

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Oregon may invest pension money in troubled-bank rescues

In a deal being pitched as a home-run investment opportunity for the state pension fund, Oregon's public pensioners may be about to buy stakes in several of the 700 troubled banks around the country that are wallowing in bad loans.

The deal's unusual structure and hefty fees raise concerns, particularly in light of the Oregon Investment Council's recent insistence that it would push for better terms, more transparency and better corporate governance from investment managers it does business with.

The transaction also provides a window into how Wall Street financiers are lining up to unwind the banking crisis that many helped create -- with high potential for another round of windfall profits for savvy investors.

The citizen's council that oversees the Oregon Public Employees Retirement Fund gave its approval last week -- subject to final fee negotiations -- to invest $100 million in a bank holding company being organized by Sageview Capital, whose partners bring deep experience in the world of leveraged buyouts.

http://www.oregonlive.com/business/index.ssf/2010/03/oregon_may_invest_pension_mone.html

Too big to Fail!

The 10 largest U.S. banks’ share of the industry’s assets has increased to 60 percent in 2009 from 44 percent in 2000 and about 25 percent in 1990, Fisher said.

“The existing rules and oversight are not up to the acute regulatory challenge imposed by the biggest banks,” Fisher said. “Because of their deep and wide connections to other banks and financial institutions, a few really big banks can send tidal waves of troubles through the financial system if they falter.”

http://www.businessweek.com/news/2010-03-03/fed-s-fisher-calls-for-accord-to-break-up-big-financial-firms.html

Commercial Real Estate delinquent balance up 326%

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In January 2010, the delinquent unpaid balance for CMBS increased by another $4.3 billion, up to $45.94 billion from $41.64 billion a month prior. The overall delinquent unpaid balance is up 326% from one-year ago (when only $10.79 billion of delinquent unpaid balance was reported for January 2009), and is now over 20 times the low point of $2.21 billion in March 2007. The distressed 90+-day, Foreclosure and REO categories grew in aggregate for the 25th straight month – up by $7.42 billion (28%) from the previous month and over $27.95 billion (508%) in the past year (up from only $5.51 billion in January 2009). This included a substantial jump in 90+-day delinquency in January 2010.

Overall, the total unpaid balance for CMBS pools reviewed by Realpoint for the January 2010 remittance was $797.3 billion, up slightly from $797.18 billion in December 2009 (affected by

some servicer and trustee reporting delays). Both the delinquent unpaid balance and delinquency percentage over the trailing twelve months are shown in Charts 1 and 2, clearly

trending upward. The resultant delinquency ratio for January 2010 of 5.76% (up from the 5.22% reported one month prior) is over four times the 1.281% reported one-year prior in

January 2009 and 20 times the Realpoint recorded low point of 0.283% from June 2007. The increase in both delinquent unpaid balance and ratio over this time horizon reflects a steady increase from historic lows in mid-2007.

https://www.realpoint.com/PublicDocDisplay.aspx?i=6Z4f4G6%2b0QA%3d&m=i0Pyc%2bx7qZZ4%2bsXnymazBA%3d%3d&s=LviRtUKXqs8kml5dHt7FTeE2SZmY0Fvqd4iX49Mk/9UapyiFTEO6TA%3d%3d