Tag: Mortgage

  • In midst of Freddie Mac crisis, Richard Syron tries to salvage his rep

    Until a few weeks ago, it’s likely that many people weren’t quite sure what (or who) Freddie Mac, a giant player in the secondary mortgage market, was.

    But that’s changed, as Freddie Mac and its larger counterpart, Fannie Mae, have been swept up in the ongoing credit and mortgage crisis.

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    Freddie Mac, shorthand for the Federal Home Loan Mortgage Corporation, announced Wednesday a second quarter loss of $821 million and an 80 percent cut in its dividend.

    The news came a day after The New York Times reported that Richard F. Syron, the corporation’s CEO, had ignored warnings in 2004 about the risks associated with some loans.

    The story has placed added attention and blame on Syron, the former head of the American Stock Exchange and an assistant to Paul Volcker when Volcker was chairman of the Federal Reserve.

    When he joined Freddie Mac in 2003, Syron, 64, brought with him a reputation as someone who knew politics and who knew the financial markets. He also had experience turning around companies with problems.

    He inherited and reportedly cleaned up accounting problems at Freddie Mac and revitalized its board of directors.

    Syron was paid well for his work, earning $18.3 million last year.

    In the Boston Globe Tuesday, Syron argued that he has kept Freddie Mac true to its mission of making housing available to people in need.

    “If you’re going to take aid to low-income families seriously, then you’re going to make riskier loans. We have goals to meet,” Syron told the paper.

    He spoke in reaction to the Times story.

    It reported that in 2004, David A. Andrukronis, then Freddie Mac’s chief financial risk officer, told Syron that the company was purchasing bad loans “that would likely pose an enormous financial and reputation risk to the company and the country.”

    The warning proved to be prophetic as Freddie Mac’s holdings, like those of Fannie Mae, lost significant value this year as housing prices continued to drop and more people began to default on mortgages.

    When the stock prices of both companies plummeted last month the Treasury Department led by Henry M. Paulson Jr. stepped in with a plan to inject billions of dollars into the company should they need the funds.

    Syron has said that he doesn’t believe Freddie Mac will need the government’s help, as the company hopes to raise $5.5 billion from investors.

    Syron had planned on leaving Freddie Mac last year, but he has agreed to stay on through 2009 while the organization hunts for his successor.

    “I’ve had four other jobs as CEO, and I came out of them pretty well,” Syron told the Times. “What I’m working for right now is to save my reputation.”

  • Mortgage crisis helped John Paulson reap $3.7 billion (Muckety)

    A bad year for homeowners meant a good year for John A. Paulson.

    Paulson, the founder and president of the hedge fund Paulson & Company, made $3.7 billion last year, according to an annual listing of the 50 most highly paid hedge fund managers.

    The list compiled by Institutional Investor’s Alpha Magazine was previewed on the magazine’s website yesterday.

    Paulson acquired his money by betting against the subprime mortgage market, using a complicated system that increased his earnings as the value of financial instruments bundling the mortgages dropped.

    In other words, as the world got poorer, Paulson got richer.

    He was by no means alone.

    The list of top managers shows four other billion-dollar earners.

    George Soros, of Soros Fund Management, made $2.9 billion last year, followed closely by the 2006 leader, James H. Simons of Renaissance Technologies at $2.8 billion.

    Philip Falcone of Harbinger Capital Partners earned $1.7 billion and Kenneth Griffin of Citadel Investment Group came away with $1.5 billion.

    The average compensation for the top 25 fund managers last year was $892 million, according to the survey.

    The report of this wealth stands in contrast to other recent news about home foreclosures, record-high oil prices and food shortages in some parts of the world.

    Even Wall Street is a little “uneasy” that some individuals are doing so well because others are doing so badly, the New York Times reported.

    “There is nothing wrong with it – it’s not illegal,” William H. Gross, the chief investment officer of the bond fund Pimco, told the newspaper. “But it’s ugly.”

    The Wall Street Journal wrote in January that Paulson had told friends he was going to increase his charitable giving to help those in need.

    In October 2007, he donated $15 million to the Center for Responsible Lending. That money was to help families about to lose their mortgages.

    “While we never made a subprime loan and are not predatory lenders, we think a lot of homeowners have been victimized,” Paulson told the Journal.

    Paulson, 52, who is not related to U.S. Treasury Secretary Henry M. Paulson Jr., began his investment career at Odyssey Partners. He moved on to Bear Stearns, where he was in mergers and acquisitions. From there, he went to Gruss Partners, the investment firm.

    In 1994, Paulson started Paulson & Co. with $2 million. By the end of last year, the firm had $28 billion in assets, an increase in $22 billion from the previous year, the Times reported.

    In January of this year, Paulson & Co. made news by appointing Alan Greenspan, the former chairman of the Federal Reserve, to its advisory board.

    The appointment was panned by some. They said that Greenspan had switched sides by joining up with a company that had profited from the failure of low-interest policies that he had advocated while leading the Federal Reserve.

    ([Muckety](https://createpositivechange.org/2008/04/17/mortgage-crisis-helped-john-paulson-reap-37-billion/2212)

  • Will MTV audience care who rocked the cradle?

    MTV’s Rock the Cradle has kicked off its debut season, but does the average MTV reality show fan even care about these celebuspawn?

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    The nine contestants are the children of musicians of the ’70s, ’80s and ’90s. Specifically, they are the offspring of band members from Twisted Sister, The Eagles, The Doobie Brothers and the artists MC Hammer, Kenny Loggins, Al. B Sure!, Eddie Money, Bobby Brown and Olivia Newton-John.

    MTV’s website describes the premise of the show, “Yeah, we’re searching for the next superstar, but this isn’t your average, every day singing competition. We’re shining the spotlight on children of rock stars to see who has what it takes to step out of the parental shadow and fulfill their DNA destiny. ‘Cause, really, isn’t everything better when celebrities are involved?”

    But really, how many typical MTV viewers even know the music that made the parents of these contestants famous? Aside from seeing episodes of Being Bobby Brown on Bravo and reruns of the movie Grease on cable, it’s likely that “Hammer time,” would be nothing more than a legend for today’s teens, MTV’s target audience.

    The contestants of Rock the Cradle sing each week, and the one with the highest score from the judges is safe from elimination. The rest have to depend on viewer support to keep them from being kicked off the show.

    The show is judged by Britney Spears’ former manager Larry Rudolph, choreographer Jamie King, and celebrity stylist June Ambrose.

    After the first episode, which aired last week, Lucy Walsh, daughter of The Eagles’ Joe Walsh, received the highest score, which isn’t too surprising. She’s the only contestant who already has a record deal, with Island Records.

    Rock the Cradle may get some success if the contestants can hold audience attention without relying on famous parents. It’s pretty certain that the fans of Kenny Loggins, The Doobie Brothers and Olivia Newton-John aren’t tuning in to MTV regularly.

    Rock the Cradle airs on MTV on Thursday at 10 p.m.

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  • Ousted Sierra leaders tie suspension to Clorox criticism

    At the very least, the timing raises questions: The biggest environmental group in the U.S. expelled 27 leaders of its Florida chapter shortly after the state committee accused the Sierra Club’s national directors of betraying their principles to endorse a “green” cleaning line by the Clorox Company.

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    Sierra Club spokesman David Willett denied the suspensions had anything to do with disagreements over the group’s partnership with the Oakland-based Clorox. He said the four-year expulsion, which took effect last week, was the last in a series of steps taken to end bitter infighting that had undermined the Florida group’s work.

    Willett noted another state chapter, Massachusetts, had also criticized the Sierra Club’s decision to endorse the new biodegradable cleaning line, “and no action has been taken against them, and there won’t be. That’s not how the Sierra Club works.”

    First announced in January, the unprecedented partnership between the Sierra Club and Clorox has been hailed by supporters as a way to promote a green marketplace, and denounced by critics as a sell-out to a company most closely associated with Clorox Bleach. Under the deal, the Sierra Club gets an undisclosed percentage of profits from the sale of the new line, marketed under the name Green Works, in exchange for the use of its logo.

    At least some ousted activists don’t buy the assertion that their suspension is unrelated to their criticism. Joy Towles Ezell, former chairwoman of the Florida chapter, told the Guardian that the same weekend in January that the chapter passed a measure condemning the deal, they were told of their impending removal.

    She said that the new Clorox products should be named “Money Works” or “Toxic Works.”

    “Clorox is the bad guy to me,” Ezell said. “. . .You sell your soul when you get involved with something like that.”

    Sierra Club Executive Director Carl Pope admits he was skeptical when first approached by Clorox. But after reviewing the ingredients of the cleaners, most of which are plant products, and contemplating Clorox’s market reach, he decided to take the gamble.

    “One of the reasons green home cleaning products haven’t achieved much market penetration is if they came from an environmental brand, people had the sense they won’t work … And if it came from someone with a cleaning reputation the reaction was: They can’t be green.”

    Green Works may be an even bigger gamble for Clorox’s new CEO Donald Knauss, who came from Cola Cola in 2006, and who has pushed the company to launch its first new product line in 20 years. Knauss has identified sustainability as one of three core consumer trends with which he wanted to align Clorox products, and hired “green” consultants, who led him to the Sierra Club.

    Green consultant Joel Makower, who worked on the project, calls the launch a watershed:

    It’s an intriguing moment. Green Works enters the marketplace with a near perfect storm of market conditions: growing mainstream consumer demand for green products that don’t require compromise or sacrifice; significant interest from Wal-Mart and other big retailers in pushing greener products to the masses; a product that seems competitive with the leading green brands; and endorsement from Big Green.

    Naysayers, however, predict the endorsement will undermine the credibility of the environmental group, noting that a month before the deal was signed, Clorox was fined $95,000 by the Environmental Protection Agency for donating a mislabeled Chinese version of Clorox bleach to a Los Angeles charity.

    “The Sierra Club has become little more than another corporate front group,”
    said Tim Hermach of Native Forest Council in Eugene, Oregon in a piece in Corporate Crime Reporter.

    Hermach had special animus for the group’s executive director: “Carl Pope has sold out the Sierra Club’s mission of saving nature and now seems proud of his role as an obsequious and professional Uriah Heep. As a result, Sierra Club is getting lots of corporate appreciation, cash and favors.”

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  • Cayne, Macklowe keep their condos at The Plaza

    Another way the rich are different: They don’t have to pay mortgages.

    A case in point: Days before Bear Stearns chairman James Cayne suffered a dizzying $900-million loss in wealth as a result of the fire sale of Bear Stearns, he purchased two apartments in the storied Plaza for a cool $28 million.

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    But not to worry: Cayne, a onetime scrap-iron salesman and recently retired Bear Stearns chief, bought the adjacent apartments overlooking Central Park with cash, according to city records.

    The 1907 landmark, famous as the home of children’s book heroine Eloise, recently reopened as a mix of luxury condos and hotel units. The development boasts a Who’s Who of corporate chieftains, including New England Patriots boss Robert K. Kraft, Staples Chief Executive Ronald Sargent, Italian racing mogul Flavio Briatore and Dave Barger, chief executive of JetBlue.

    Like Cayne, several have been socked by recent gyrations in the real estate and financial markets. Real-estate mogul Harry Macklowe, who spent $60 million last year to buy up a string of adjacent apartments, is facing a mountain of debt himself as a result of a $7 billion, seven-building buy last year. To stave off cash-hungry creditors, he has been trying to unload the iconic General Motors building, and the office tower at 1301 Avenue of the Americas. So far, though, he’s shown no sign of giving up his dream of a palace on the park.

    Italian businessman Luigi Zunino, meanwhile, is trying to flip the third-floor apartment which he is in contract to buy, according to the Wall Street Journal. Zunino is the CEO of a Milan-based real estate company that lost three-quarters of its value in the last year. While most condos in The Plaza have been selling for between $4,000 and $6,000 per square foot, Zunino is valuing his apartment at $10,000 per square foot.

    If he gets his $100-million asking price, it would set a record for residential real estate in Manhattan. If not, maybe he can start a support group for onetime Masters of the Universe in the Oak Room.

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  • Geoffrey Garin fills Penn’s post in Clinton campaign

    Sen. Hillary Rodham Clinton replaced one pollster and a strategist with another Sunday, letting Mark Penn go and filling his place with Geoffrey Garin.

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    In elevating Garin, Clinton gives prominence to a Washington insider who is well connected and seems to carry little of the baggage Penn brought to his role.

    The adjective “well-respected” seems glued to Garin’s name in press accounts. The adjectives “controversial,” “abrasive,” “gruff” and “rumpled” were always pasted on Penn.

    Penn had been serving as Clinton’s chief political strategist until he stepped down Sunday. He is also the chief executive of the Burson-Marsteller, a public relations firm.

    Reportedly, Clinton had been angered that Penn and Burson-Marsteller were working to help the government of Colombia obtain a trade agreement with the United States.

    Clinton opposes the alliance. Penn’s connection to Colombia could have hurt her with voters in the April 22 Pennsylvania primary.

    “The important thing is just to win,” Garin told The Washington Post after he took over for Penn. “My view is the campaign has to focus on the work of April and May and the early part of June and do well at all of that. So on one level, first things first.”

    Garin, 54, who joined the Clinton campaign last month as a pollster, has been president of Peter D. Hart Research Associates since 1984. He joined the company in 1978 as a senior analyst and vice president.

    While at the company, he has worked as a pollster and strategist for several Democratic senatorial candidates. They include Charles Schumer of New York, Dianne Feinstein of California and Robert C. Byrd of West Virginia.

    He has also worked with the Bill & Melinda Gates Foundation, the Pew Charitable Trusts, the AFL-CIO and the American Federation of Teachers.

    Garin’s connections to unions could help Clinton in Pennsylvania with some of the voters she needs to win the state and slow the momentum of Sen. Barack Obama.

    Evan Miller of The New Argument blog notes that Garin gave some unsolicited advice to the Clinton campaign in February, advice the campaign ignored.

    “If I were Hillary Clinton, the last thing I’d be doing is talking about super delegates, because the voters don’t want to hear that,” Garin said. “She really needs to make the case about why she’s the better candidate to lead the country.”

    In other comments, Garin has emphasized the importance of speaking to the economic issues that are on people’s minds.

    But at this moment in the Clinton campaign, personnel issues may be as important as policy issues.

    Penn was in the middle of months of internal fighting. He seemed to have alienated everyone but Clinton and her husband, Bill Clinton.

    Wolfson and Garin don’t have this history of contention, The Washington Post reported.

    “People like Howard and Geoff,” one campaign aide said. “I presume there will be less strife.”

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    2 Comments

    • #1.   Perry Washburn 04.10.2008

      Found Muckety by accident. Has the TU come back to life?

    • #2.   Carol Eisenberg 04.10.2008

      Hey Perry. No corporate overseer in this iteration.

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  • Heston’s journey from left to right

    He played Moses and Michelangelo, but Americans under 40 are more likely to know Charlton Heston as the conservative activist who walked out on filmmaker Michael Moore.

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    Heston, who died Saturday night at the age of 84, was once the best-paid actor in Hollywood thanks to his iconic roles in films such as Ben-Hur and The Ten Commandments. After making Planet of the Apes in 1968 and The Omega Man in 1971, however, his acting career went into decline even as he gained prominence on the political stage.

    Those who recall him as president of the National Rifle Association may be surprised that Heston started out as a liberal Democrat. He campaigned for Adlai Stevenson in 1956 and John F. Kennedy in 1960. He opposed Hollywood censors’ attempts to prettify the language in Ben-Hur. He supported a gun control law, passed under President Lyndon Johnson, that forbade addicts and federal convicts from owning guns, and regulated interstate commerce in firearms

    He was also a leading advocate of civil rights, raising money for the cause and joining Martin Luther King Jr.’s March on Washington in 1963 along with Harry Belafonte, Jackie Robinson, Paul Newman, Josephine Baker and Bob Dylan—none of whom can be imagined as a conservative. Two years earlier, he had picketed a segregated theater in Oklahoma that was showing one of his movies.

    “We certainly disagree with his position as NRA head and also his firm, firm, unwavering support of the unlimited right to bear arms,” said Earl Ofari Hutchinson, president of the Los Angeles Urban Policy Round Table, a civil rights group. “Charlton Heston was a complex individual. He lived a long time, and certainly, there were many phases. The phases we prefer to remember were certainly his contributions to Dr. King and civil rights.”

    As he got older, however, Heston’s politics swung rightward. He seemed to follow the lead of Ronald Reagan, who had preceded him as president of the Screen Actors Guild (”Ronald Reagan was my president before he was yours,” Heston once wrote) and also as a liberal Democrat. Heston campaigned for Reagan and for both Bushes when they ran for president.

    In a 1997 speech, he deplored a culture war being waged against “the God fearing, law-abiding, Caucasian, middle-class Protestant–or even worse, evangelical Christian, Midwestern or Southern—or even worse, rural, apparently straight–or even worse, admitted heterosexuals, gun-owning-or even worse, NRA-card-carrying, average working stiff–or even worse, male working stiff–because, not only don’t you count, you are a downright obstacle to social progress.”

    He resigned from Actors Equity, calling the union’s refusal to allow a white actor to play the part of a Eurasian in “Miss Saigon” “obscenely racist.” By then, he also opposed affirmative action and criticized CNN’s coverage of the Gulf War as sympathetic to the Iraqis.

    A staunch defender of the Second Amendment, Heston was elected president of the N.R.A. in 1998. “Those wise old dead white guys that invented this country knew what they were talking about,” he said.

    Perhaps his most famous moment at the organization came at its 2000 convention where, paraphrasing an N.R.A. bumper sticker (”I’ll give you my gun when you take it from my cold, dead hands”), he waved a replica of a colonial flintlock above his head and shouted, “From my cold, dead hands!”

    Michael Moore visited Heston to talk to him for the 2002 anti-gun documentary, Bowling for Columbine, But Heston appeared angry and flustered by Moore’s questions and walked out on the interview. Moore, who was criticized by some for “ambushing” Heston, posted a picture of the actor on his web site after he died.

    In 2002, Heston was diagnosed with Alzheimer’s disease. “If you see a little less spring in my step, if your name fails to leap to my lips, you’ll know why,” he said in announcing his condition. “And if I tell you a funny story for the second time, please laugh anyway.” He withdrew from public life, resigning from the NRA in 2003, although he accepted a Medal of Freedom later that year from President George W. Bush.

    “The largeness of character that comes across the screen has also been seen throughout his life,” Bush said.

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  • Mark Penn leaves Clinton campaign post

    Mark J. Penn, one of Sen. Hillary Rodham Clinton’s key and most controversial advisers, is no longer her chief political strategist.

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    In the end, it was Penn’s day job that did him in.

    Penn is the chief executive of Burson-Marsteller, a Washington public relations firm that had been hired to help the country of Colombia gain a bilateral trade agreement with the United States.

    Any suggestion that Clinton supports the trade agreement could hurt her in Pennsylvania’s April 22 primary. Voters there connect foreign trade with the loss of jobs in their state and in the country.

    Penn had said that other members of the firm were doing the work with Colombia. But according to The New York Times, Clinton was angered when she learned that Penn had met with officials from Colombia last week and she insisted on his demotion.

    “After the events of the last few days, Mark Penn has asked to give up his role as chief strategist of the Clinton campaign,” Maggie Williams, the campaign manager, said in a statement Sunday evening.

    Penn’s company also has ties with Blackwater Worldwide, the military contractor and Countrywide Financial, one of the leading issuer of subprime mortgages. According to the Times, Penn had also refused to stop dealing with those companies while helping Clinton.

    Penn did call his meeting with the Colombia officials an “error in judgment.” After that statement, the government of Colombia severed its ties with Burson-Marsteller.

    Clinton has been under pressure to do something about Penn for months. He is known to have an abrasive style that has irritated other staffers. And, especially when Clinton was losing in primaries, he was criticized for giving her bad advice.

    “No matter how much bad stuff happened, (Clinton) kept to her Bush playbook, stubbornly clinging to her own Rumsfeld, her chief strategist, Mark Penn,” Frank Rich wrote in the Times earlier in the year.

    Drawn to Bill Clinton’s team by Dick Morris, Penn helped fashion President Clinton’s 1996 re-election. Penn was also a leader in Hillary Clinton’s successful senatorial campaign in 2000.

    And he guided Britain’s Tony Blair to his a third re-election as prime minister, just as he put Israel’s Menachem Begin in the win column.

    Penn is the co-author of Microtrends: The Forces Behind Tomorrow’s Big Changes.

    In Microtrends, Penn and co-author E. Kinney Zalesne divide the American public into emerging demographic categories. (Stay-at-home workers, etc.)

    “There is no One America any more, or Two or Three or Eight,” Penn writes. “In fact, there are hundreds of Americas, hundreds of new niches made up of people drawn together by common interests.”

    Penn is the nominal boss of Charles R. Black Jr., a key McCain adviser and spokesman.

    Black is the chairman of BKSH & Associates, a lobbying firm that is a subsidiary of Burson-Marsteller.

    The Times reports that Penn’s polling firm, Penn, Schoen and Berland Associates, will continue to poll for Clinton.

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