Fannie, Freddie to need almost $90 billion more: White House

WASHINGTON (Reuters) – The White House expects to shovel be concluded to billion to Fannie Mae and Freddie Mac over the nearest few years, though they are expected to start paying back other than they receive as of next year, according to the 2012 budget plan proposed on Monday.

The two firms were seized by the Bush management in 2008 amid mounting losses from loans gone bad and bear already taken more than 0 billion in direct taxpayer aid. The Obama distribution expects that cumulative total to reach 6 billion by fiscal year 2021.

At the same time, the firms are required to pay back taxpayers in the mould of a dividend payment that is expected to be larger than the sort of they receive from the government starting in fiscal year 2013, what one. begins October 1 of next year.

The administration expects the pair firms to receive billion this fiscal year, which ends September 30. Next year they are seen receiving billion space of time taking an additional billion in the fiscal year that starts October 1, 2012.

That year, the firms self-reliance pay back billion, the first year the dividend is larger than the settlement to the companies known as government sponsored enterprises.

The administration expects cumulative net payments, which factor in how much has been paid back, to come to destruction to billion by fiscal 2021 from about 4 billion so in great part.

The White House on Friday proposed slowly doing away with the couple firms, which buy up mortgages and bundle them to be sold to the degree that securities to investors, freeing up cash for lenders to lend afresh.

The Obama administration last week also laid out several options because of Congress to reduce the government’s role in the pledge market.

More than 85 percent of new loans are backed ~ dint of. the government in some way, including Fannie, Freddie and the Federal Housing Administration, that does not make loans directly but insures those that meet assured standards

The latest figures on additional taxpayer aid for Fannie and Freddie could accord. ammunition to Republicans in the House of Representatives who want to eradicate altogether any government assistance for mortgages.

Democrats may seize on the faster payback to cry for a slower and more gradual pullback of the government’s ~er for the housing market.

President Barack Obama’s budget proposal unveiled on Monday also proposed reducing the role of the FHA in the .6 trillion U.S. pledge market.

His administration wants to raise the cost of loans backed by the FHA by a quarter percentage point, beginning in April 2011. That would rise FHA loans more expensive, allowing private insurers to more easily enter the lists.

(Reporting by Corbett B. Daly; editing by Sandra Maler)

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PIMCO Total Return Fund pares U.S. government-cognate debt

http://www.nathanhamm.net/news/pimco-total-return-fund-pares-u-s-regulation-related-debt/ http://www.nathanhamm.net/news/pimco-total-return-stock-pares-u-s-government-related-debt/#comments Mon, 14 Feb 2011 17:01:02 +0000 Nathan Hamm News offence fund governmentrelated pares PIMCO return Total U.S. http://www.nathanhamm.snare/news/pimco-total-return-fund-pares-u-s-government-related-due/ NEW YORK (Reuters) – PIMCO’s Total Return Fund, the biggest destitute of freedom fund, cut U.S. government-related debt holdings in January to its lowest in at least two years and added to cash and debt from other developed nations, the cash manager’s … Continue reading →

NEW YORK (Reuters) – PIMCO’s Total Return Fund, the biggest in ~age fund, cut U.S. government-related debt holdings in January to its lowest in at least two years and added to cash and debt from other developed nations, the coin manager’s website said on Monday.

Holdings in the U.S. restraint-related debt category, which includes U.S. Treasuries, declined to normal 12 percent of the portfolio in January, from 22 percent in December, it reported in its monthly update.

Bill Gross, the fund’s conductor who helps oversee more than .1 trillion as PIMCO’s co-paramount investment officer, has often railed against U.S. deficit spending and its inflationary collision. He has advocated buying bonds with “safe,” higher yields — in the same state as corporate bonds — that can withstand possible erosion of returns ~ dint of. inflation.

Pimco’s apparent lack of confidence in U.S. government-related debt in January preceded Monday’s budget presentation by President Barack Obama, who laid out plans to cut the deficit by .1 trillion over the next 10 years. Under the set, the deficit would rose tp .645 trillion in fiscal 2011, and drop down sharply to .101 trillion in 2012.

December’s holdings of U.S. form of sovereignty-related debt by the PIMCO Total Return Fund were the lowest from that time February 2009 when the fund held 15 percent in the leading predicate. Historical figures were not available on the website on Monday.

Benchmark 10-year Treasury record yields have soared about 1.25 percentage point since October to 3.62 percent at the same time that data on the U.S. economy points to faster growth in 2011. Few signs that the Federal Reserve inclination begin tightening monetary policy with higher interest rates or fewer asset purchases hold added to money managers’ inflation worries.

The PIMCO Total Return permanent ~ has lost 0.34 percent year-to-date as of February 11, victory than the 1.225 percent loss for the U.S. Treasury/Agency Master exponent compiled by Bank of America Merrill Lynch. The fund has gained 7 percent in the by year.

Gross in January also pared holdings of mortgage-related transgression, and added “non-US developed” country debt and cash, the website showed. Investment-grade corporate debt, high-yield corporate due, emerging market debt and municipal bond holdings were unchanged.

( Editing through W Simon )

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U.S. investors consternation muni defaults, job losses

http://www.nathanhamm.net/news/u-s-investors-horror-muni-defaults-job-losses/ http://www.nathanhamm.net/news/u-s-investors-concern-muni-defaults-job-losses/#comments Mon, 14 Feb 2011 14:01:02 +0000 Nathan Hamm News defaults concern investors losses Muni U.S. http://www.nathanhamm.net/news/u-s-investors-anxiety-muni-defaults-job-losses/ WASHINGTON (Reuters) – Some of the United States’ weakest local governments face a real risk of default in 2011 as well being of the kind which waves of layoffs that could put upward pressure on the countrified’s jobless rate, according to a Reuters poll. … Continue perusal →

WASHINGTON (Reuters) – Some of the United States’ weakest local governments face a real risk of default in 2011 as well for example waves of layoffs that could put upward pressure on the nation’s jobless rate, according to a Reuters poll.

The findings from the poll published on Sunday found a majority of Wall Street professionals including civil bond traders and investors believe — 14 out of 25 — up to four multibillion-dollar civil bond defaults will take place this year.

The tremors come at a time whenever financial markets are still fragile as the economy recovers from its deepest sink since the Great Depression, and the turbulent finances of states and municipalities regard been cited by top Federal Reserve officials as a key downside endanger to the expansion.

Among the investors polled, 19 of 23 conceit job cuts aimed at bringing budgets into line would put noteworthy upward pressure on the national unemployment rate, which over the above two months has fallen sharply to 9.0 percent from 9.8 percent.

Ten of those surveyed saw the jobless rate increasing more than 0.5 percentage point and three believed the collision would be over a full percentage point — a rise that could potentially subsist associated with hundreds of thousands of job losses.

“If the states fire the employees necessary to cut their budgets, unemployment will get worse,” reported Marilyn Cohen, president of Envision Capital Management in Los Angeles.

While not many municipal market analysts think any state will default on its trespass — in part because states cannot legally file for bankruptcy — there are intense concerns about the shaky finances at some big U.S. cities.

Last March, for example, Detroit laid out bankruptcy risks in a debt offering announcement. The city, which is rated in the junk category by Standard & Poor’s and Moody’s Investors Service — and has not sold of the whole obligation debt since — said in the bond document it did not envision a bankruptcy filing.

“A credit like Detroit with limited liquidity and sizable transgression could file bankruptcy in 2011, but only if politics goes fronting it and the state allows the filing to take place,” reported Richard Ciccarone, head of municipal bond research at McDonnell Investment Management in Oakbrook, Illinois.

(To visit Reuters Insider’s “United States of Distress” microsite, please double-detent: link.reuters.com/jyg97r)

IN THE CLEAR?

But the state governments are not completely through of the woods.

Among the debt-ridden states topping the please of concerns, Illinois and California were seen by far as the weakest links, followed through Nevada, at the epicenter of the subprime mortgage crisis.

Thirteen confused of 27 respondents to the Reuters poll ranked Illinois as the most troubled U.S. state.

“While the recent Illinois state income tax hike proves Illinois’ legislature has the will to take fiscally-opposed to change action, the state is facing debatable long-term economic prospects, a lofty debt load and an even higher unfunded pension problem,” reported Guy LeBas, chief fixed-income strategist at Philadelphia-based Janney Montgomery Scott, an investment fund with billion under management.