10-3-08 Merced Sun-StarForeclosure Crisis: Lawmakers say Merced was shortchanged...MICHAEL DOYLE, Sun-Star Washington Bureauhttp://www.mercedsunstar.com/167/story/481440.htmlWASHINGTON -- California lawmakers say the Bush administration shortchanged Merced in a new foreclosed-housing grant program.But Department of Housing and Urban Development officials say they are simply being efficient and playing by the rules Congress set.Now, the two sides are figuring out who gets the money, and when.On Sept. 26, the Department of Housing and Urban Development announced it was spreading $3.9 billion among all 50 states and numerous cities, including Stockton, Modesto and Fresno. The grant money will help distressed communities buy foreclosed properties, fix them up and sell them.Foreclosure problems of equal or greater magnitude likewise haunt the city and county of Merced. Nonetheless, neither city nor county were included in the new grant allocations."I'm very disgusted and disappointed with the HUD folks," said Rep. Dennis Cardoza, D-Merced. "They did not do this correctly." With a lobbying flurry, California lawmakers and state officials have been challenging the HUD grant allocations ever since they were announced. On Thursday, Cardoza spoke with Lynn Jacobs, secretary of California's Department of Housing and Community Development, about the problem."She says she will do everything in her ability to get Merced (funding)," Cardoza reported.HUD officials, in turn, stress that cities like Merced, Los Banos and others passed over in the first round can still pick up federal dollars that will be distributed by the state. In some cases, moreover, officials contend Congress itself limited the funding.Asked about Merced County, one HUD official Thursday cited the language of the law authorizing the $3.9 billion grant program.This official, speaking on condition of anonymity because he was not authorized to speak to the press, said the bill language indicates that only "entitlement communities" under an existing community development block grant program can receive funding. Merced County is not currently deemed an "entitlement community." Administration officials and California lawmakers also dispute over how to count foreclosures.The Californians cite figures from RealtyTrac, which pegged the state's overall foreclosure rate at 13 percent. HUD officials, though, use a Mortgage Bankers Association delinquency survey that put California's delinquency rate at 6.7 percent California's two senators, Democrats Dianne Feinstein and Barbara Boxer, and most of the state's House members wrote HUD on Monday to complain about the California funding in general and the Merced shortfall in particular. Lawmakers are also trying political bank shots.Cardoza, for instance, said he discussed the issue with House Speaker Nancy Pelosi. Pelosi, in turn, reportedly had a word with a Massachusetts Democrat who chairs the powerful House appropriations panel that funds HUD.The $529 million allocated to California overall amounts to about 13 percent of the total funding, which the lawmakers note is less than was given Florida. By HUD's formula, though, Florida has the worst foreclosure problem.Forty-five California cities and counties were awarded individual grants, ranging from $2.3 million for Visalia to $48 million for Riverside County. In addition, the state will receive $145 million that it can distribute among other communities."To make Merced wait, that doesn't make sense," Cardoza said.Federal officials took into account the number and percent of foreclosures, subprime loans and defaulted or delinquent loans. Under the department's funding formula, cities such as Merced, Los Banos and Turlock would receive less than $2 million. This fell below the threshold set for individual grants."HUD believes that a grantee must receive a minimum amount of $2 million to have adequate staffing to properly administer the program effectively," the department states on its Web site.The new grant program was part of a larger housing bill, which also includes a "Hope for Homeowners" program that provides mortgage assistance to those in danger of foreclosure. This program provides new, fixed-rate 30-year mortgages; for more information, see http://www.hud.gov/hopeforhomeowners/consumerfactsheet.cfm. Cardoza offers flood control money...Sun-Star staffhttp://www.mercedsunstar.com/167/story/481438.htmlCongressman Dennis Cardoza said $500,000 in federal funds would be used to provide flood protection and prevention in Merced.The funds will be used in engineering, environmental and preliminary designs to build a detention basin one mile north of the Fairfield Canal to reduce flood flows from Black Rascal Creek into Bear Creek. "Environmental impacts have blocked progress on our efforts to control flooding in Merced along Black Rascal Creek in the past," Cardoza said. "I am extremely pleased to see this effort finally moving forward."The project still needs millions more to implement, and Merced County will be the lead agency for it. Substantial flooding along Bear Creek has occurred during recent years, most recently in 2006. The project is expected to substantially reduce, if not eliminate, flooding in the city, Cardoza said."We're excited to have the process moving along," said city spokesman Mike Conway. "Once the funding is in place, it will improve the safety and well-being of the citizens and residents of Merced." Modesto BeeHow valley home data compares nationally...J.N. Sbrantihttp://www.modbee.com/local/story/450831.htmlForget falling home values for a moment and let's look instead at housing from a different perspective.That's what the U.S. Census Bureau does when it gathers data, and its findings show distinct differences between Northern San Joaquin Valley homes compared with those nationwide.Homes here, for example, are significantly newer than those elsewhere in America.The recently released 2007 American Community Survey quantifies how the recent building boom modernized the valley's housing stock.Nearly 15 percent of Stanislaus County's homes now are relatively new, having been built since 2000. In San Joaquin County nearly 18 percent are new, as are more than 17 percent in Merced County.That's not the case elsewhere in California, where fewer than 10 percent of homes are so new. Nationwide, just 12 percent of homes have been built since 2000.Having a relatively new housing stock is important for communities, especially when it comes to energy use.Newer homes are substantially more energy efficient than older homes, according to a recent study by ConSol, a Stockton firm that advises home builders on energy issues.The study notes how building standards requiring energy efficiency have become increasingly stringent in California. Technological advancements have made home appliances much more efficient as well. Because of that, ConSol calculated that new homes use about 25 percent less energy than those built before 1990.That's good news for Northern San Joaquin Valley homeowners, and for renters.And there are a lot of renters in the valley, the new census statistics show.Nationwide, more than 67 percent of homes were occupied by their owners in 2007. Ownership rates were much lower around here.In the city of Merced, for instance, fewer than 39 percent of homes were lived in by owners in 2007. The rest were filled by renters. That was a major change since 2000, when the census determined nearly 47 percent of Merced's homes were owner-occupied.In Modesto, about 61 percent of homes were owner- occupied in 2007, compared with about 59 percent in 2000. In Turlock, about 58 percent were owner-occupied in 2007, compared with 56 percent in 2000.The impact of the current foreclosure crisis on homeownership rates probably will be apparent in the 2008 American Community Survey, which will be released next fall.The slump in housing construction also should be evident in that data. In a different set of Census Bureau statistics released last month, the building downturn was evident.During the peak of the housing boom -- 2002 through 2005 -- more than 3,000 housing units (including homes, condos and apartments) were built in Stanislaus County. That means the county's housing stock expanded by more than 2 percent a year.Census records for 2007, however, show Stanislaus added about 2,300 housing units, or 1.3 percent.Construction has slowed significantly since then. During the first eight months of 2008, 396 building permits for any type of housing were issued in Stanislaus. That's about a 70 percent decline, according to statistics from the Construction Industry Research Board.Permit declines were also dramatic in Merced and San Joaquin counties. Statewide, there have been about 45 percent fewer building permits issued this year compared to last.About 70,000 housing units are expected to be built in California this year, which is the fewest since the construction industry started keeping records in 1954.Fresno BeeDrug disposal sites few in ValleyOpportunities to properly discard prescription drugs, needles locally are rare...Barbara Andersonhttp://www.fresnobee.com/263/v-printerfriendly/story/911764.htmlAcross the state, communities are opening disposal sites where people can drop off their unused medicines instead of flushing them down the drain. But not in most of the central San Joaquin Valley. A Tulare County disposal site in Visalia is the only Valley location that will accept medicine for disposal during a statewide "No Drugs Down the Drain" event Saturday through Oct. 11. And the Visalia location is open only on Saturdays. Fresno and Kings counties accept medications a few times a year, but not next week. Madera County doesn't dispose of drugs at its site.Tossing old pills out with household trash -- a less environmentally friendly disposal method -- may be the best Valley residents can do. But even that's better than flushing them. Landfills have been the default choice for disposing household hazardous wastes in the Valley, which has been slow to open permanent disposal sites for paint, batteries and other common trash. Keith Quinlan, solid waste manager for Madera County, suggests that people hold on to expired and used medicines "if you can do that in a safe manner until there is a collection, recycling event or proper disposal system in place."It's important to stop flushing drugs, organizers of the "No Drugs Down the Drain" event say, because traces of birth-control pills, antibiotics and other medicines are finding their way into surface water. A 2002 sample of 139 streams in 30 states found 80% had measurable concentrations of prescription and nonprescription drugs, according to a U.S. Geological Survey.So far, there's no evidence that the drug residue is causing human health problems. In ocean fish, however, researchers have observed changes in the gender balance and male fish with female characteristics. While nobody is sure why, it warrants concern, said Phil Bobel, who works for the Palo Alto wastewater treatment plant. Bobel is a "No Drugs Down the Drain" organizer. "It can't be good that we're finding these chemicals around, even if they're not at levels of concern for humans yet," he said.The city of Fresno did a one-time sampling of ground water near its wastewater treatment plant in 2004. The laboratory was unable to detect anything, said Stephen Hogg, the city's assistant director of public utilities. Bobel said the purpose of the "No Drugs Down the Drain" event is not to alarm people, but to inform them of the proper way to dispose of medications. Nobody knows how many pills would be taken to Valley disposal sites, but 300 to 400 pounds of pills are dropped off each month at a disposal site in Palo Alto, a Bay Area city of about 50,000, Bobel said. Starting next year, it will be illegal to dump old medicine in landfills in California. That means county disposal sites are more likely to start accepting them.Meanwhile, people can wait months for a collection event only to find they can't get rid of medications. And not all disposal sites take used needles and syringes. A state law that took effect in September makes it illegal to throw away needles and syringes with household trash. Fresno County is working on the problem, said Leslie Kline, the county's recycling coordinator. A location at Vine and Elm avenues for a permanent household hazardous waste disposal site has been identified, she said. Fifteen cities and the county are involved in the venture, she said. "It's not cost-effective for a small community to hire a contractor. That's why we've been doing these kind of programs on a regional basis. Our hope and aspirations are that we'll be able to provide a lot more service in the future." Tulare County residents can drop off medications at the Visalia disposal site at 335 N. Cain St. from 8 a.m. to 1 p.m. on Saturdays. The site does not dispose of narcotics. Low Storage Levels Cause Metropolitan to Suspend Public Boat Launches at Diamond Valley Lake After Oct. 13¶ Lake to Remain Open to Fishing From Shoreline, Rental Boats...Metropolitan Water District of Southern California Bob Muirhttp://www.fresnobee.com/547/vprinterfriendly/story/911451.htmlClearly demonstrating the need for water conservation throughout Southern California due to the statewide drought and supply challenges, Metropolitan Water District announced plans today to indefinitely suspend private boat launches at the region's largest reservoir -- Diamond Valley Lake -- at the close of business Monday, Oct. 13, because of low lake levels. With storage levels receding at the lake near Hemet in southwest Riverside County as water is drawn to meet the region's supply needs, Metropolitan projects the reservoir's water levels will reach the end of the existing boat ramp at the lake's marina by Oct. 13. "This action speaks volumes about the seriousness of the water-supply situation Southern California faces next year, particularly should we not rise to meet the water-saving challenge that's before us," said Metropolitan General Manager Jeff Kightlinger, cautioning that the lake's boat launch lanes could close earlier if conditions warrant...Nearly doubling the region's surface water storage capacity when it was dedicated in 2000, Diamond Valley Lake has a storage capacity of 810,000 acre-feet of water, with a surface water elevation of 1,756 feet above sea level. Since last January when the 4,500-surface-acre lake held nearly 597,000 acre-feet, Metropolitan has withdrawn 107,000 acre-feet to meet member agency needs, dropping lake levels 24 feet. The lake currently holds about 490,000 acre-feet, with plans to draw it down to about 400,000 acre-feet by year's end. An acre-foot of water is nearly 326,000 gallons, about the amount used by five to seven people in a year."Diamond Valley Lake's exposed shoreline and dry boat ramp serves as a reminder to Southland consumers about the importance of saving water during this drought," Kightlinger said. Southern Californians can do their part to help local agencies build and maintain reserves for 2009 by dramatically reducing water use, particularly outdoors, where up to 70 percent of residential use occurs, Kightlinger said. In addition to Metropolitan's actions, record dry conditions have caused many local water agencies to draw down reservoirs and groundwater supplies.To help preserve the region's water reserves, Metropolitan's board last June accelerated the regional water-saving call by declaring a Water Supply Alert. Metropolitan's board urged cities, counties, local public water agencies and retailers to achieve extraordinary conservation by adopting and enforcing drought ordinances, accelerating public outreach and messaging, and developing additional local supplies...EPA's New Stormwater Industrial Permit Requires Quick ActionAfter a 3-Year Wait, the Release of 2008 Multi-sector General Permit (MSGP) by EPA Means Industrial Business Owners and Facility Operators Must Move Quickly...Business and Legal Reports, Inc. Karin Staschkehttp://www.fresnobee.com/547/vprinterfriendly/story/912265.htmlOn Monday, the Environmental Protection Agency (EPA) announced the release of the 2008 Multi-sector General Permit (MSGP) in the Federal Register -- after a 3 year wait. The MSGP 2008 replaces the 2000 MSGP which expired in October 2005, and regulates and authorizes the discharge of stormwater associated with industrial activities. The permit was effective on September 29, 2008 and your stormwater plan must be in place before the Notice of Intent (NOI) submission deadline. BLR(R) encourages industrial business owners and facility operators who are impacted by the 2008 Multi-sector General Permit (MSGP) change to act quickly. The submission deadline for NOIs for existing permit holders and unpermitted current dischargers is Jan 5, 2009. Businesses not in compliance with stormwater requirements face up to $32,500 in fines per day. "The structure of the 2008 MSGP differs greatly from the 2000 MSGP, providing greater distinction between effluent limitations and the requirements of the Stormwater Pollution Prevention Plan," said Amanda Czepiel, JD, Legal Editor for Environmental Compliance at BLR. "Building owners and facility operators with industrial stormwater discharges should expect new monitoring and reporting requirements, and new procedures for determining eligibility under the Endangered Species and National Historic Preservation Acts and for calculating site-specific benchmarks." The new 2008 Multi-sector General Permit (MSGP) affects building owners and facility operators in 29 different industrial sectors located in five states where EPA is the permitting authority, Indian country, and at federal facilities in all 50 states. Many states also use the 2008 MSGP as a basis for the formulation of their own, state-specific permits. To help understand the new permit and its impact, BLR has made a number of resources available: -- EHS Compliance Focus: EPA's New Stormwater MSGP-2008: What You Need to Know Now (http://www.blr.com/product.cfm/product/17105060/source/PRS/ effort/129) -- Enviro.BLR.com (http://www.blr.com/product.cfm/product/5120XX00/source/PRS/ effort/129) -- Easy EHS Plan - Stormwater Pollution Prevention (http://www.blr.com/product.cfm/17002000/source/PRS/ effort/129) Summary of Permit Impact on Industrial Owners and Operators -- Stormwater Pollution Prevention Plans will require revision to comply with 2008 MSGP before NOIs may be submitted for coverage. -- Permittees will now be required to submit an annual report to EPA that includes findings from annual comprehensive site inspections and a summary of corrective action. -- New reporting requirements apply to transfers, anticipated noncompliance, noncompliance, and planned changes. -- There is now a waiting period of 30 days after a Notice of Intent has been posted on EPA's eNOI website for operators who have correctly completed and submitted their Notices of Intent to provide for sufficient review by the Fish and Wildlife Service and/or the National Marine Fisheries Service. -- There is some good news for permittees. EPA has added provisions enabling dischargers to avoid corrective action and subsequent monitoring requirements, and a waiver for inactive and unstaffed sites for benchmark monitoring and quarterly visual assessments. -- The permit contains different requirements for new and existing discharges that are discharging to water with a total maximum daily load (TMDL) as compared with those without a TMDL. What Owners and Operators need to do now to prepare: -- Review Stormwater Pollution Prevention Plans and revise as needed to comply with the 2008 MSGP. -- Become familiar with EPA's electronic submission system, eNOI. -- Determine eligibility under the Endangered Species Act and National Historic Preservation Act. -- Prepare information concerning the receiving water body, using EPA's new web-based tool, the Water Locator. -- Prepare either a Notice of Intent or, if applicable, a No Exposure Certification. -- Become knowledgeable of applicable industry sector-specific requirements. For media who would like to talk to Stormwater subject-matter expert Amanda Czepiel, JD, Legal Editor for Environmental at BLR, please call (800) 727-5257 X2442 or email: Media@BLR.com About Business & Legal Reports, Inc. BLR(R) is the leading compliance information services company dedicated to helping all-sized organizations and industries--and their employees--reduce their compliance-related legal exposure. We do this by helping our customers understand, adhere to, and achieve best practices related to safety (OHSA), environmental (EPA), and employment (HR and Compensation) regulatory compliance. Our award-winning products and services include compliance information, news & analysis, training, best practice guidance, and turnkey tools delivered in myriad formats--from online applications, live events, and websites to books & booklets, newsletters, CDs/DVDs, and posters. For more information, please visit www.BLR.com or call 1-800-727-5257. Long URLs in this release may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.Wells Fargo acquiring Wachovia for $15.1 billion...SARA LEPROhttp://www.fresnobee.com/state_wire/business/v-printerfriendly/story/912107.htmlIn an abrupt change of course, Wachovia said Friday it agreed to be acquired by San Francisco-based Wells Fargo & Co. in a $15.1 billion all-stock deal, trumping rival suitor Citigroup's plan to acquire Wachovia's banking operations. A key difference is that the Wachovia deal will be done without government assistance, while the Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp. "This deal enables us to keep Wachovia intact and preserve the value of an integrated company, without government support," Robert Steel, Wachovia's president and chief executive, said in a statement. The Wachovia-Wells deal, announced Friday, comes in a turbulent time for banks and financial firms as they grapple with the ongoing credit crisis, which led to the recent bankruptcy of Lehman Brothers Holdings Inc. and the failure of Washington Mutual Inc.Wachovia Corp. shareholders will receive 0.1991 shares of Wells Fargo for every share of Charlotte, N.C.-based Wachovia stock they own, valuing Wachovia at about $7 per share. This is a nearly 80 percent premium over the stock's Thursday closing price of $3.91. Shares closed at $10 last Friday, the last trading session before the deal with Citigroup Inc. was announced. The board approved Wells Fargo's offer late Thursday. The deal is still subject to Wachovia shareholder and other regulatory approvals. Wells Fargo said it expects the deal to close by year-end."It provides superior value compared to the previous offer to acquire only the banking operations of the company and because Wachovia shareholders will have a meaningful opportunity to participate in the growth and success of a combined Wachovia-Wells Fargo that will be one of the world's great financial services companies," said Wells Fargo Chairman Dick Kovacevich. Wells Fargo will record merger and integration charges of about $10 billion, but says it expects earnings to be boosted within the first year after the acquisition closes. No government assistance is part of the deal terms. Wells Fargo said it will record Wachovia's credit-impaired assets at fair value, but provided no estimate of what that would be. In its planned takeover of Wachovia, Citigroup said it would write down those assets by $30 billion at the close of the transaction and be responsible for the next $12 billion in losses over a period of three years. If the total exceeded that, the FDIC would cover the difference.Additionally, Wells Fargo plans to issue up to $20 billion of stock, primarily common stock, to maintain a strong capital position. Charlotte will be the headquarters for the combined company's East Coast retail and commercial and corporate banking business. St. Louis will remain the headquarters of Wachovia Securities. Additionally, three members of the Wachovia board will join the Wells Fargo board when the transaction is completed. The combined company will have total deposits of $787 billion and assets of $1.42 trillion, more than doubling Wells Fargo's totals on both counts. The bank will operate more than 10,000 locations. The two banks currently employ a combined 280,000 people.On Monday, Citigroup agreed to buy Wachovia's banking operations for $2.16 billion in a deal orchestrated by the federal government. That deal, which had been approved by the boards of both companies, was still subject to approval by Wachovia's shareholders and regulators. It is not clear whether Citigroup will be entitled to a break-up fee.In addition to assuming $53 billion worth of debt, Citigroup had agreed to absorb up to $42 billion of losses from Wachovia's $312 billion loan portfolio. The FDIC agreed to cover any remaining losses in exchange for $12 billion in Citigroup preferred stock and warrants. But the failure of the government's proposed $700 billion bailout for financial institutions Monday afternoon cast doubt on whether Citigroup would be able to rid itself of some of Wachovia's bad debt. While the proposal would have prevented most banks from profiting on the sale of troubled assets to the government, an exception would have been made for assets acquired in a merger or buyout.That would have allowed Citigroup to sell Wachovia's distressed mortgage-related assets to the government for a profit. A revised version of the bailout plan was passed on Wednesday by the Senate and goes up for a House vote on Friday. The plan still centers on enabling the government to spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. Citigroup has not turned a profit for three straight quarters, and lost a total of $17.4 billion during that period after writing down its assets by about $46 billion. That's the most write-downs of any U.S. bank.While Wells Fargo has logged three straight quarters of profit declines, the bank has been weathering one of the nation's worst credit crises much better than most of its competitors, in part because it had less exposure to the subprime mortgages whose failure undermined the financial sector. That means it hasn't been forced to take the huge number of write-downs that other banks have needed. Under Stumpf the bank also has continued raising its dividend at a time when many other financial institutions are slashing theirs to preserve capital.John G. Stumpf, Wells Fargo president and CEO, took over in June 2007 - near the start of the credit crisis - from Kovacevich, who remains chairman. Both men worked since the 1980s at Norwest Corp., Wells Fargo's predecessor. Wachovia, like Washington Mutual, which was seized by the federal government last week, was a big originator of option adjustable-rate mortgages, which offered very low introductory payments and let borrowers defer some interest payments until later years. Delinquencies and defaults on these types of mortgages have skyrocketed in recent months, causing big losses for the banks. This summer, Wachovia reported a $9.11 billion loss for the second quarter, announced plans to cut 11,350 jobs - mostly in its mortgage business - and slashed its dividend. Wachovia also boosted its provision for loan losses to $5.57 billion during the second quarter, up from $179 million in the year-ago period.Wachovia shares were up $2.89, or 74 percent, at $6.80 in premarket trading, while Wells Fargo rose $2.09, or 5.9 percent, to $37.25. Citigroup shares were down $3.30, or 14.7 percent, to $19.20. Sacramento BeeHome Front: 'Anti-sprawl' law unlikely to radically alter Sacramento trends...Jim Wassermanhttp://www.sacbee.com/103/v-print/story/1285305.htmlThe hyperbole soared into overdrive when Gov. Arnold Schwarzenegger signed a major "anti-sprawl" bill this week authored by state Sen. Darrell Steinberg, D-Sacramento.The governor called it the biggest revision of land-use law since 1970's California Environmental Quality Act. Forecasts abounded about a new emphasis on high-density housing near transit stops.But in Sacramento? Don't look for an end to suburbs and single-family homes in popular school districts. While the thrust of SB 375 is toward "infill" housing in bypassed urban corridors, suburban real estate will still be king, say some who tracked the bill."You can't do it on infill. It doesn't matter what anyone says. You can't do it," said Dennis Rogers, vice president of the North State Building Industry Association, the region's homebuilder trade group.He said building trends might change some in suburbs. But the population will still grow and the number of households will, too. "You won't keep up with that with infill," he said.Homebuilders supported the bill, which has the reduction of traffic to curb greenhouse gases as one of its major goals. The bargaining won them a key goal: less interference from CEQA lawsuits that are often used to stop infill projects.Yet the impact on the area's growth pattern will likely be modest, said David Mogavero, a Sacramento architect and infill builder. Mogavero said expensive gasoline will be a far bigger factor than SB 375 in driving city-focused growth in years to come.A new player steps inWho can blame homebuilding giant Pardee Homes of Los Angeles for feeling cursed by Northern California?Its third try to build houses north of the Tehachapis is so tough the company finally unloaded 637 unbuilt home lots in Natomas rather than ride out this market any longer.Pardee's Natomas Meadows, which opened to fanfare in June 2007, closed five months later. Last week Pardee surrendered entirely. It sold eight model homes and 100 empty acres to Roseville-based Granite Bay Development, a firm with cash and no debt. Granite Bay says it will sell lots to builders in two or three years when the Natomas levees are fixed and the market rebounds.Though the price was undisclosed, it's not hard to guess it was something of a haircut. Pardee bought the land in 2004 at the height of the Central Valley residential land boom. It sold in a trough...Pardee dipped its toes in the Bay Area in the 1970s and left. It tried again in Livermore in 2005, but voters rejected its plans for 2,450 new homes. Then it tried Sacramento.The firm is holding onto land it bought in 2004 for 1,100 houses in Rancho Cordova's Sunrise-Douglas area and 2,200 homes in Stockton. It's also still building a 135-unit apartment complex at Natomas Meadows.Income and home pricesEverybody knows that houses in the area have gotten way more affordable after they flew too high. Sacramento Regional Research Institute economist Suzanne O'Keefe can explain exactly what's happened.In a speech earlier this week at the Sacramento Association of Realtors, O'Keefe offered the definitive brief history of area home prices. Listen in:"From 1990 to 2000 people would buy a house about three or four times their annual salary," she said. "And that was also true in the year 2000. You take your income and multiply it by three or five, or take the median income for the region and multiply it by three or five and you get about the average home value."But during that housing bubble from 2000 to 2007, this ratio was out of synch with where it's been in the past," O'Keefe said. "It went way up in Yolo County to almost nine. This number was high across the region. The lowest was Sutter County, six and a half."What now in 2008?"Based on the numbers that are coming out now in terms of home sales prices for this year, May 2008 to August 2008, they're getting close to that four to five range. To me, that indicates we're getting back to where house prices are at a point where people can afford them with the median income here in this region."The question now is will they buy? Many have apparently stopped looking recently, said Folsom building industry consultant Greg Paquin. He noted reports from homebuilders that visits at model home sites have dropped seriously the past two weeks as the White House, Wall Street and Congress raise threats of economic calamity during negotiations on a rescue package.Residents oppose Aerojet well to track tainted water…Ramon Coronado http://www.sacbee.com/101/v-print/story/1284993.htmlPlans to drill a well in Fair Oaks to monitor a plume of contaminated groundwater migrating from Aerojet's Rancho Cordova rocket-engine facility have stalled over residents' objections."We won't be drilling in seven days," Aerojet's Timothy Murphy told the sometimes angry and loud crowd who attended a community meeting Wednesday night.The meeting was hosted by the Fair Oaks Water District and Aerojet to inform area residents of the planned well at Park Avenue and Winding Way, a rural, residential area.To serve as a monitoring well, the drilling site needs to be at a leading edge of the plume that has migrated under the American River and is advancing on Fair Oaks and Carmichael 250 feet underground.The well is planned as part of Aerojet's $1.2 billion Superfund site cleanup of the rocket fuel contamination from its Rancho Cordova site.If the monitoring well later is installed and confirms the edge of the plume, another well will be drilled next to it to extract the contaminated water and pipe it back underground to an Aerojet water treatment facility in Rancho Cordova.County, state and federal regulators, who attended the meeting, have said the plume is about 2 miles wide and traveling, on average, about 500 feet a year.The plume also appears headed toward a drinking well about a mile away. The Fair Oaks Water District drilled the well several years ago for water storage.Aerojet postponed its plans for the monitoring well, which would have been located in a road right of way on county property, after residents objected to it being drilled in their neighborhood."We will explore options. We will evaluate the sites," Murphy said of at least two nearby locations suggested by the residents.Murphy is the director of public affairs for GenCorp Inc., the parent company of Aerojet.No timetable was set, and Murphy said there would be another community meeting on the issue.San Francisco ChronicleWater rationing falls short of EBMUD's goal...Kelly Zitohttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/03/BA6F13ALM6.DTL&type=printableNearly five months after an East Bay water district imposed the strictest water rationing plan in the Bay Area, the agency's 1.3 million customers have cut back - but not quite as much as officials had hoped.Savings across parts of Contra Costa and Alameda counties served by the East Bay Municipal Utility District have reached 11.3 percent, officials said Wednesday. Water managers had hoped fixed leaks, shorter showers, and less frequent lawn watering would net a 15 percent reduction.With experts forecasting the third dry winter in a row, the district said the pressure is on."There will be rain this weekend, but who knows for how many days, or how much rain will make it into our reservoirs - this weekend and this winter," said Laura Luong, public information representative at the district. "Since we declared the drought May 13, (savings) started slow, but our customers are getting the message. We just need to remind them that they need to conserve for what's to come."The district announced the emergency rationing and drought pricing - one of the first in Northern California - in May after the state experienced the driest spring on record, and key East Bay reservoirs hit crucially low levels. In the weeks following, Gov. Arnold Schwarzenegger declared a statewide drought and other districts around the state that had not yet asked for voluntary water conservation called on their customers to do more. Residents and businesses in the East Bay district's service area were slow to trim their water use, achieving only 4 percent savings overall not long after the announcement. But conservation has improved, and officials expect more declines after customers get their first bills - mailed out this week - that demand higher fees for those who use more than their allotments. District officials do not expect to boost the savings target in coming months, but much will depend on how rainy the rainy season is...Feds sued over endangered species protections...(10-02) 15:06 PDT San Francisco, CA (AP) --http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/09/30/national/a135502D43.DTL&type=printableEnvironmentalists have sued the Bush administration over its handling of six threatened and endangered species that live in California and other Western states.The Center for Biological Diversity filed the complaints Wednesday in federal courts in San Francisco, Sacramento and Fresno and Tucson, Ariz.The lawsuits accuse the Bush administration of failing to protect habitat considered crucial to the survival of the western snowy plover, the California tiger salamander, the southwestern willow flycatcher, the Buena Vista Lake shrew and two California plants.They seek to require the U.S. Department of Interior to designate more areas as "critical habitat" for the imperiled species.The Interior Department declined to comment.Tax breaks big and small sweeten financial bailout...JIM ABRAMS, Associated Press Writerhttp://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2008/10/01/national/w130835D74.DTL&type=printableWind power developers, disaster victims, college students, teachers and millions of taxpayers and businesses stand to see substantial benefits from the tax relief package that lawmakers added to the huge financial rescue plan.So will more narrowly focused groups, including motor sports racetrack owners, film producers and bicycle commuters.Virtually all of the tax breaks already exist. But many of them expired Jan. 1 for use in the current tax year, and the others will expire three months from now unless Congress renews them.The largest group of beneficiaries in what is now the tax portion of the financial rescue bill is about 20 million mainly upper-middle income taxpayers. Without congressional action, the AMT, with originally was supposed to affect only the very rich, would add some $2,000 this year to the tax bill of people mostly earning under $200,000 a year.Thousands of businesses are waiting for renewal of the research-and-development tax credit, which expired at the end of last year. Without that credit, industry advocates say, high tech, biotech and aerospace companies would have trouble hiring the highly skilled workers needed to compete with foreign competitors.The Information Technology Association of America reports an $18.5 billion drop in R&D activity since the beginning of the year when the credit lapsed. The R&D credit extension would cost $19 billion over 10 years. The cost of the entire tax portion of the bill is close to $110 billion.The renewable energy incentives include an eight-year extension of investment credits for solar energy, as well as breaks for wind, geothermal and other alternative sources. The solar industry says extension of the credits through 2016 would produce an extra 440,000 jobs and more than $230 billion in investments.The measure also has $8 billion in tax breaks for disaster victims, $5 billion for higher education tuition deductions and $400 million in deductions for teachers who buy school supplies with their own money.There are $3 billion in deductions for residents of states without income taxes that have state and local sales taxes. Extending the deduction would save Texans a projected $1.2 billion a year or an average of $520 per filer claiming the deduction, said Matt Mackowiak, spokesman for Sen. Kay Bailey Hutchison, R-Texas.There are also some four dozen small provisions. Among them, with projected costs over 10 years:_Extending an expired provision that gives Puerto Rico and the Virgin Islands a rebate against excise taxes charged on imported rum. The rebate, at $13.50 per proof gallon, has been in effect since 1999. The cost is $192 million._Establishing a new tax credit ranging from $2,500 to $7,500 for purchasers of plug-in electric-drive vehicles. Cost: $758 million._Extending tax credits that expired at the end of 2007 for certain domestic corporations involved in American Samoa economic development. Cost: $33 million._Extending a credit of up to $10,000 for the training of mine rescue team members. The credit expires at the end of this year and the one-year extension costs $4 million._Enacting President Bush's proposal to erase the debt of the black lung disability trust fund at a cost of $1.3 billion._Extending for one year a seven-year depreciation timetable that NASCAR and other motorsport racing facilities have had for some years, the same tax break that amusement parks enjoy. Without the extension, the tracks would have to depreciate the cost of their improvements over 15 years, raising their taxes by $100 million._Extending for five years a program that reduces import duties on some wool fabrics. The tariff relief benefits U.S. worsted wool fabric producers that use imported fibers and yarns. Cost: $148 million._Increasing the single-year deduction in production costs, from $15 million to $20 million, that film and TV productions may take if the costs are incurred in economically depressed areas. In an effort to keep film and TV productions in the U.S., it also allows more companies to use a domestic production deduction. Cost: $478 million._Allowing commercial fishermen and others hurt by the 1989 Exxon Valdez oil spill in Alaska to average out damage awards over three years rather than taking a one-year hit from the IRS. Cost: $49 million._Extending two programs that fund rural schools and rural communities that have been relying on declining income from logging on federal land or have low property tax bases because they are located on or next to federal lands. This is a major issue in the West. Cost: $3.3 billion._Exempting wooden practice arrows used by children from an excise tax of 39 cents per arrow. Oregon's two senators have pushed for the action, saying the tax was meant for more expensive archery arrows and is untenable for makers of toy arrows that may cost only about 30 cents apiece. The bill would affect about nine manufacturers nationwide, including one in Oregon. Cost: $2 million._Allowing employers to exempt from taxation what they spend on some fringe benefits for workers who commute to work by bicycle, for example reimbursing the cost of parking the bikes. Cost: $2 million.Some House members and radio-TV commentators have called for eliminating several of the measures, including those affecting wooden arrows, Puerto Rican rum, racetracks and film producers."All these things are called sweeteners in order to get votes from Democrats and Republicans in the House," conservative commentator Rush Limbaugh said at the opening of his show Thursday. "To get this bailout through the Senate and House, they've added pork. Surprise, surprise."Contra Costa TimesAppeals court dismisses lawsuit over bird deaths at Altamont Pass...Chris Metinkohttp://www.contracostatimes.com/environment/ci_10625004A state appeals court has upheld an earlier ruling that rejected a lawsuit brought by an environmental group against wind-turbine operators in the Altamont Pass for the killing of raptors and other birds.In a Sept. 18 decision, the Court of Appeal in San Francisco dismissed the lawsuit brought by the Center for Biological Diversity, saying while members of the public may sue under the "public trust doctrine" to protect wildlife, they may sue only government agencies and not private parties.The decision reaffirms a Superior Court ruling to dismiss the lawsuit, although the appeals court differed with the original ruling by saying wildlife is considered a public trust resource "and private parties have a right to bring an action to enforce the public trust.""While we are gratified that the Court of Appeal reaffirmed the traditional public trust ownership of wildlife, we are disappointed that it rejected the possibility of a lawsuit directly against those who are illegally killing wildlife," said Rick Wiebe, the attorney representing the Center for Biological Diversity. "A lawsuit against those who are killing wildlife is the most direct and effective means of protecting wildlife and vindicating the public trust in wildlife."Jeff Miller, an advocate with the center, said his organization is studying whether to ask the California Supreme Court to review the court of appeals' decision and if the center should bring action against local or state agencies in charge of protecting public trust resources. In 2004, the center filed its lawsuit in state court to seek restitution from Altamont wind power operators for the killing of raptors. The lawsuit alleged that these violations by wind power companies FPL Energy, GREP, Green Ridge Power, Altamont Power, Enxco, Seawest Windpower, Windworks, Altamont Winds and Pacific Winds are unlawful and unfair business practices under California's Unfair Competition Law.Alameda County officials, environmental groups and wind companies have sought a solution for years on how to decrease the number of raptors, such as the golden eagle, red-tailed hawk, American kestrel and burrowing owl, killed by the turbines. Los Angeles TimesHow did this happen? Bush appointee gets last say on San Onofre toal road...Veronique de Turenne...L.A. Nowhttp://latimesblogs.latimes.com/lanow/2008/10/how-did-this-ha.htmlAfter all the studies, all the meetings, all the hours of lobbying and arguing and testimony and acrimony, it comes down to this: a political appointee of the Bush administration will decide whether or not a toll road cuts through San Onofre State Beach -- and through a pristine watershed. How did this happen? Our own Susannah Rosenblatt explains:U.S. Commerce Secretary Carlos M. Gutierrez -- who oversees international trade operations, economic development work, patents and the census -- will have sole discretion over the 16 miles of California 241 intended to link Orange and San Diego counties and ease traffic on Interstate 5.A jumble of state and federal coastal regulations has bounced the decades-long toll road battle from state to federal hands as the clock runs out on the current administration. The decision seems to have little precedent."There's certainly nothing the least bit comparable to this case that one could look to for how the secretary might rule," said Mark Delaplaine, a California Coastal Commission manager who specializes in energy, ocean resources and federal matters. "There's really no case like it."You may recall that actor Clint Eastwood was a member of a state parks commission until he opposed the toll road and got the boot from Arnold Schwarzenegger. (Proving he doesn't play favorites, the Governator also dumped his own brother-in-law, Bobby Shriver, from the panel.)For more views, here's Surfrider's take, and here's Red County, which says the road has strong support. And check out Karin Klein, at our Opinion blog.Thoughts?Employers cut 159,000 jobs, most in more than 5 years; jobless rate holds steady...JEANNINE AVERSA, AP Economics Writerhttp://www.latimes.com/business/nationworld/wire/ats-ap-economyoct03,0,384575,print.storyWASHINGTON (AP) _ Employers slashed payrolls by 159,000 in September, the most in more than five years, a worrisome sign that the economy is hurtling toward a deep recession.The Labor Department's fresh snapshot, released Friday, also showed that the nation's unemployment rate held steady at 6.1 percent as hundreds of thousands of people streamed out of the work force for any number of reasons.The reduction in payrolls was much sharper than the 100,000 cuts economists were forecasting. They expected the jobless rate to be unchanged.It marked the ninth straight month that the economy has lost jobs. The drop underscores fallout from a long slump in the housing market and a dangerous credit crunch that intensified last month throwing Wall Street — and the economy — into chaos.So far this year, 760,000 jobs have disappeared."The economy is now sliding down the slippery slope of recession," said economist Ken Mayland, president of ClearView Economics.Wall Street appeared relieved the decline in payrolls wasn't deeper. Stock futures were strengthening, pointing to a higher opening. The Dow fell 348 points Thursday amid worries about the broader economy.The White House called the latest employment report disappointing, "but not unexpected given the shocks to the economy" and was urgent proof Congress need to complete action on a $700 billion financial bailout."Everyone should understand that it will take some time for our economy to recover from the housing correction, elevated energy prices, and the credit crisis," said spokesman Tony Fratto. "The best action we can take to limit damage to the economy is to pass the emergency rescue package legislation in the House."Employers cut 73,000 jobs in August, slightly less than the 84,000 initially estimated, according to revised figures. However, the cuts in July turned out to be a bit deeper — 67,000 versus the 60,000 previously reported.The 159,000 jobs lost in September were the most since March 2003, when the labor market was still struggling to get back on its feet after being knocked down by the 2001 recession.Job losses were widespread last month.Manufacturers cut 51,000 jobs, construction companies axed 35,000 jobs, retailers got rid of 40,000 positions, business services shed 27,000 and financial services slashed 17,000 positions, with securities and investment firms accounting for 8,000 of those reductions. Leisure and hospitality companies also reduced employment by 17,000. That overwhelmed employment gains by the government, in education, health and elsewhere.Cost-cutting employers are getting rid of workers as companies chafe under a slew of problems related to the economy's slowdown, a painful housing collapse and a dangerous credit crunch.Companies announcing layoffs in September included Hanesbrands Inc., Hewlett-Packard Co., Schering-Plough Corp., Alaska Airlines and Alcoa Inc.Friday's employment snapshot is the last before America goes to the polls in November.Mounting job losses, shrinking paychecks, shriveling nest eggs and rising foreclosures all have weighed heavily on American voters.The economy is their No. 1 concern. An Associated Press-GfK poll earlier this week showed that likely voters now back Democratic presidential contender Sen. Barack Obama 48 percent to GOP rival John McCain's 41 percent. They believe Obama is better suited to lead the country through the financial turbulence.To avert even more economic upheaval, Congress is weighing the rescue plan to buy bad assets from banks and other institutions to shore up the financial industry. The legislation is urgently championed by President Bush and his top economic generals.Spooked consumers and businesses have pulled back so much that some analysts fear the economy could stall out — or even worse — shrink in the July-to-September quarter. Many predict the economy will contract in both the final quarter of this year and the first quarter of next year, meeting the classic definition of a recession. The economy's last recession was in 2001.Wage growth for workers is slowing.Average hourly earnings rose to $18.17 in September, a 0.2 percent increase from the previous month. That was half the pace logged in the previous month and was weaker than the 0.3 percent gain economists were expecting. Over the past year, wages have grown 3.4 percent but paychecks aren't stretching as far because of high food and energy prices.All the economic and financial fallout has put more pressure on the Federal Reserve to reverse course and cut a key interest rate again on or before its late October meeting. The Fed halted its rate-cutting campaign in June out of fear it was aggravating inflation. Since then, it has opted to hold rates steady. Some analysts believe the conditions have eroded enough to warrant another rate reduction in an effort to revive the economy.The financial crisis intensified in September, forcing a seismic shake-up on Wall Street.Lehman Brothers, the country's fourth-largest investment bank, filed for bankruptcy protection. A weakened Merrill Lynch, deciding it couldn't go it alone anymore, found help in the arms of Bank of America. AIG was thrown a financial lifeline. And, the last two investment houses — Goldman Sachs and Morgan Stanley — decided to convert themselves into commercial banks to better weather the financial storms. The number of banks that have failed this year are up sharply from last year.On Friday, Wachovia Corp. said it will be acquired by Wells Fargo & Co. in a $15.1 billion all-stock deal, wiping out Wachovia's previous plan to sell its banking operations to rival suitor Citigroup Inc.Schwarzenegger to U.S.: State may need $7-billion loanIn a letter obtained by The Times, the governor warns that tight credit has dried up funds California routinely relies on and it may have to seek emergency aid within weeks...Marc Lifsher and Evan Halperhttp://www.latimes.com/business/la-fi-calif3-2008oct03,0,7326326,print.storySACRAMENTO — California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.The warning comes as California is close to running out of cash to fund day-to-day government operations and is unable to access routine short-term loans that it typically relies on to remain solvent.The state of California is the biggest of several governments nationwide that are being locked out of the bond market by the global credit crunch. If the state is unable to access the cash, administration officials say, payments to schools and other government entities could quickly be suspended and state employees could be laid off.Plans by several state and local governments to borrow in recent days have been upended by the credit freeze. New Mexico was forced to put off a $500-million bond sale, Massachusetts had to pull the plug halfway into a $400-million offering, and Maine is considering canceling road projects that were to be funded with bonds.California finance experts say they know of no time in recent history when the state has sought an emergency loan of this magnitude from the federal government. The only other such rescue was in 1975, they said, when the federal government lent New York City money to avoid bankruptcy."Absent a clear resolution to this financial crisis," Schwarzenegger wrote in a letter Thursday evening e-mailed to Paulson, "California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the federal treasury for short-term financing."The letter, obtained by The Times, came on the eve of a vote by the House of Representatives on a $700-billion rescue package, but it was too soon to know how the package would affect the nation's paralyzed credit markets. The Senate approved the so-called rescue bill Wednesday night.A top Schwarzenegger aide followed up the letter with a call to the Treasury secretary Thursday night. Treasury Department officials could not be reached for comment.It's customary for California to borrow billions of dollars at the start of the fiscal year to fill its coffers until the usual flood of sales tax receipts comes in after Christmas and income tax receipts arrive in the spring."California is so large that our short cash-flow needs exceed the entire budget of some states," Schwarzenegger wrote.The cash needs to be in the state's bank account by Oct. 28 to be available to fund a scheduled $3-billion payment to more than 1,000 school districts.Said Matt David, Schwarzenegger's communications director: "California faces the potential of a perfect storm created by the financial crisis' effect on liquidity, lower-than-anticipated revenues currently coming into the state, and our late budget. The governor is taking steps to prepare for this scenario to ensure that the state can make critical payments."But those payments won't be forthcoming if the state can't do routine borrowing. For now, "the window is shut, and if it stays shut, we are in deep trouble," said an administration official, who asked not to be identified, citing the sensitive talks with Washington.Quick passage of the rescue bill by the House of Representatives today and a signature by President Bush could inject more money into the international financial system and allow California to borrow at a reasonable interest rate, the official said.But there are no guarantees that the economic recovery plan before Congress will succeed, said California Treasurer Bill Lockyer, who has been working with Schwarzenegger to keep the state solvent.Asking the federal government for a loan "is one option on the table," said Tom Dresslar, a spokesman for Lockyer. The treasurer, he added, is working with outside financial advisors on a possible emergency plan to sell short-term debt notes to the U.S. government. Lockyer believes that such a plan is both feasible and legal, Dresslar said."I don't think we have ever gone to the feds," said Fred Silva, senior fiscal policy advisor with California Forward, a state budget think tank.Silva said the closest California came may have been in the days after the 1994 Northridge earthquake, when at the request of the state, Washington sped up payment of federal funds that the state was owed.State officials now fear they face a potential cash crisis worse than California confronted in 2003, in the final days of Schwarzenegger's predecessor, Gov. Gray Davis.At that time, the precipitous decline of state revenue in the middle of a budget year forced officials to pay a syndicate of banks a premium of hundreds of millions of dollars for what amounted to an expensive "payday loan."Even that option, administration officials say, would not be available during the current credit drought. They say if Congress does not approve a bailout plan -- and maybe even if it does -- there will be no lenders available to provide the state with the money it needs, regardless of the premium the state is willing to pay."We need to go as wide as possible to try to find buyers at reasonable rates," said Robert Fayer, an attorney advising the state on its planned $7-billion bond sale."Whether it could ultimately be the federal government, I have no idea. It is a fairly radical concept."Washington PostHouse Approves $700B Financial Rescue Package...Lori Montgomery, Paul Kane and Shailagh Murrayhttp://www.washingtonpost.com/wp-dyn/content/article/2008/10/03/AR2008100301108_pf.htmlIn a dramatic reversal, the House today approved by a comfortable margin a $700 billion financial rescue package that will bring the greatest intervention of the federal government into the private marketplace since the Great Depression, attempting to prevent the economy from sliding into a deep recession.Coming just four days after the legislation's initial demise sparked a free fall on Wall Street, the House approved the legislation 263-171. At 1:23 p.m., the measure cleared a majority of votes and the chamber broke out in applause.After initially rejecting the legislation on a 2-to-1 margin, 91 House Republicans backed the legislation on the second try, with 172 Democrats supporting its passage. One hundred eight Republicans and 63 Democrats voted against the bill."It is a difficult vote. It is a vote we must win for the American people," House Speaker Nancy Pelosi (D-Calif.) said, closing out 2 1/2 hours of debate.The Senate approved the bill Wednesday, and President Bush said he would sign the legislation as soon as Congress sends it to him, ending a 15-day odyssey that roiled the financial markets and focused the presidential campaign debate on the economy...Formally known as the Emergency Economic Stabilization Act, it would authorize Treasury Secretary Henry M. Paulson Jr. to initiate what is likely to become the biggest government bailout in U.S. history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates.The plan would give Paulson broad latitude to purchase any assets from any firms at any price and to assemble a team of individuals and institutions to manage them. In wielding those powers, Paulson and others hope to contain a crisis that has caused the failure or forced the rescue of a half-dozen major Wall Street firms and unnerved markets around the world...CNN MoneyWells, Citi square off in Wachovia bidHours after Wells Fargo unveiled plans to buy Wachovia for $15B, Citigroup, which agreed to buy Wachovia assets Monday, demands firms terminate deal...David Ellishttp://money.cnn.com/2008/10/03/news/companies/wells_fargo_wachovia/index.htm?postversion=2008100314NEW YORK (CNNMoney.com) -- Wachovia and Wells Fargo unveiled plans to merge Friday, just four days after Citigroup said it would buy Wachovia's banking assets, sparking what could be an ugly takeover battle for the Charlotte, N.C.-based bank.Citigroup (C, Fortune 500), which offered $2.2 billion for only Wachovia's banking operations Monday, demanded that Wachovia and Wells Fargo terminate the proposed transaction. In a statement, Citigroup said the Wells Fargo merger would break an exclusivity agreement it had with Wachovia.Unlike the Citigroup-Wachovia deal, Wells Fargo (WFC, Fortune 500) intends to absorb all of Wachovia's assets including its vast deposit network, its massive brokerage business and investment management division.Wachovia shareholders would receive 0.1991 shares of Wells Fargo common stock in exchange for each share of Wachovia common stock in the transaction, valuing the deal at roughly $7 per Wachovia common share, or approximately $15.1 billion.In a conference call with investors Friday morning, Wachovia CEO Robert Steel would not comment about whether or not his firm had an exclusive deal to sell to Citigroup.John Stumpf, Wells Fargo's chief executive, expressed his confidence that the deal had been handled "appropriately" and that he expected it to be consummated with the approval of regulators."We think that this deal is solid," Stumpf said in a joint conference call with Steel.A copy of the exclusivity agreement between Citigroup and Wachovia obtained by CNNMoney.com revealed that Wachovia had agreed not to seek out another bidder as well as provide information or enter talks that might facilitate a rival bid.The agreement also indicated that there was no specified break-up fee in the deal.Still, there were signs that regulators were favoring Monday's Citigroup deal over the Wells-Wachovia merger."The FDIC stands behind its previously announced agreement with Citigroup," Federal Deposit Insurance Corporation Chairman Sheila Bair said in a statement, adding that it would pursue a resolution with all three companies.Both the Federal Reserve and the Office of the Comptroller of the Currency said it was reviewing the proposed deal by Wells Fargo and the issues it raises.Unlike the Citi deal, the Wells Fargo purchase would require no financial assistance. With the Citi transaction, the FDIC would cover any losses over $42 billion on Wachovia's $300 billion loan portfolio.News of the deal, which came just hours before the House passed the $700 billion rescue package aimed at propping up the nation's banking system, sent Wachovia (WB, Fortune 500) shares soaring 63% higher in afternoon trading. Shares of Wells Fargo moved off their highs after Citigroup threatened to scuttle the deal, but were still up 6%. Citigroup stock moved 14% lower.A 'comfortable deal'Wells Fargo had reportedly walked away from negotiations with Wachovia over the weekend after concerns surfaced regarding parts of Wachovia's loan portfolio, which has been ravaged by the fallout in the housing market in recent months.Executives at Wells Fargo offered few details about what happened in the days that followed. But they said that their own team of credit experts continued to perform due diligence on previously obtained information about Wachovia's loan portfolio even after Citigroup revealed its own plan to buy Wachovia's banking operations.After closer inspection, Stump said Wells Fargo finally felt more secure about a tie-up with Wachovia."We will not do any deal that we are not comfortable with," Stumpf said. "It took us that amount of time to make sure that was the case." As of Thursday night, Wachovia's board voted in favor of the Wells Fargo's offer, viewing it as superior to Citi's proposed deal, according to a person familiar with the matter. "This deal enables us to keep Wachovia intact and preserve the value of an integrated company," Wachovia CEO Robert Steel said in a statement.The tie-up, however, comes at a cost for the San Francisco-based Wells Fargo. The company said it expected to incur about $10 billion in merger related costs. It said it would also record Wachovia's impaired assets at fair value, which could herald further writedowns.Howard Atkins, Wells Fargo's chief financial officer, said that pre-tax losses and market adjustments from Wachovia's loan portfolio would hit $74 billion and the bulk of that would be written off shortly after the transaction closes.At the same time, rating agency Standard & Poor's said it placed Wells Fargo on watch for a potential ratings downgrade.Still, the company said it expected the acquisition to add to earnings in the first year of operations, adding that it planned to raise $20 billion, primarily through a common stock sale to help prop up its capital position.The best suitor?Unlike many of its peers, Wells Fargo has managed to ride out the credit crunch and turmoil in the housing market without taking a big hit. The company reported better-than-expected earnings for the second quarter in July.But for months, top executives at Wells Fargo had shunned the notion of doing a large acquisition, instead stressing that they preferred to do a smaller deal, if at all. It was only recently however, that that stance changed. In mid-September, current Wells Fargo chairman and former CEO Dick Kovacevich said he felt "like a kid in a candy store" given the number of attractive buying opportunities in the banking industry.Should Wells Fargo succeed in buying Wachovia, it would transform the company, whose operations and bank branches are largely located in the Midwest and on the West Coast, into a dominant presence along the East Coast and in the Southeast. That would put the San Francisco-based bank squarely in competition with the likes of JPMorgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500).Should Wachovia shareholders and regulators approve the deal, Wells Fargo will control about $800 billion in deposits and have nearly 11,000 banking locations.If Citigroup is not able to prevail over Wells Fargo for Wachovia, it would represent a blow to Citigroup's retail banking aspirations, whose footprint has lagged many of its biggest rivals.Investors cheered Citigroup's decision earlier this week to buy Wachovia's banking assets. But some observers had wondered whether Citigroup could pull off the deal since it is in the process of a major restructuring after posting close to $18 billion in losses over the past three quarters.Citigroup CEO Vikram Pandit, however, said on Monday that the purchase was more "compelling" than other deals it had considered, in part, because of Wachovia's geographic exposure. In the last month alone, the nation's banking industry has undergone a dramatic facelift, including the failure of Washington Mutual and its subsequent purchase by JPMorgan Chase as well as Bank of America's acquisition of Merrill Lynch.Credit woes: More than home loans$700 billion bailout will let Treasury buy securities backed by credit cards and car loans. Delinquencies rising.http://money.cnn.com/2008/10/03/news/economy/credit_cards/index.htm?postversion=2008100307NEW YORK (CNNMoney.com) -- Mortgages aren't the only loans in line for a government bailout.Though all eyes have been focused on faltering mortgage-backed securities, the Treasury Department last month amended its original $700 billion bailout plan to buy up a wider range of troubled assets after heavy lobbying by financial industry groups. If the proposal passes the House on Friday, the Treasury Secretary will have the power to take depressed securities backed by credit card debt and auto loans off banks' hands.Delinquencies are rising fast in the $2.6 trillion consumer credit market. While the sector's troubles aren't as severe as those in the $14.8 trillion mortgage arena, experts expect Americans to fall more behind in their payments as the economy continues to weaken. This will only further erode the value of securities backed by consumer credit, much as late payments and foreclosures have decimated mortgage-backed securities."Once you dig into it, you realize the credit crisis has spread far beyond the mortgage sector," said Martin Weiss, founder of Weiss Research "When you sum up all the debt sectors and all the potential for bad debt, you recognize that $700 billion is a drop in the bucket."Not keeping up with credit card, car paymentsConsumers are falling behind on their credit card bills. The delinquency rate jumped to 4.52% in July, up 20% from a year earlier, according to Moody's Investors Services. And banks are writing off 40% more of this debt as uncollectable as they did a year ago.Payments on 2.38% of credit card debt were 90 days or more behind schedule, the highest level since 1991, according to the Federal Deposit Insurance Corp.These figures are expected to rise as more people lose their jobs and file for bankruptcy, experts said. Moody's is predicting the charge-off rate, which measures uncollectable debt, to jump to 7.5%, up from 6.36% in July.The rising delinquencies have wreaked havoc in the credit card industry and securitization market. Citigroup, for instance, said earlier this week it expects to take a $2 billion loss on securitizations in its cards division.If they can find investors willing to buy securities backed by credit card debt, issuers are paying "significantly higher" rates, according to Moody's.Stung by the rising delinquencies, credit card companies are clamping down on customers. They are tightening standards, reducing credit lines, increasing fees and rates and more diligently pursuing collections.Delinquencies on auto loans, meanwhile, are projected to hit their highest rate in at least six years, according to Peter Turek, automotive vice president at TransUnion, whose records go back to 2003. He is forecasting the 60-day delinquency rate to reach 0.85% in the fourth quarter, up from 0.79% a year earlier.As a result, lenders are pulling back on financing. This is making it harder for people to buy cars, leading to massive drops in car sales and big troubles for automakers. Not helping matters is that lenders can't turn to the securitization market for financing."Auto-backed securities have dried up," Turek said. "Lenders were guilty by association."Not a repeat of the mortgage meltdownTreasury officials said they widened the range of the troubled assets eligible for purchase to give them the flexibility of dealing with future threats to the financial system.While it remains to be seen whether the government will actually scoop up consumer credit-backed securities, experts said the sector's problems do not pose as great a danger as mortgage delinquencies, which are blowing through previous records."The American financial system is not going to collapse because of bad auto loans and bad credit card debt," said Gus Faucher, director of macroeconomics at Moody's economy.com. "They are a much smaller piece of the puzzle." UPISafe bacterium found to kill zebra musselshttp://www.upi.com/Science_News/2008/10/02/Safe_bacterium_found_to_kill_zebra_mussels/UPI-32711222974442/WASHINGTON, Oct. 2 (UPI) -- U.S. scientists say they've created an environmentally safe bacterial toxin to control invasive zebra and quagga mussels. The new bio-pesticide was derived from a common soil bacterium by researchers at the New York State Museum Field Research Laboratory in Cambridge, N.Y. Scientists in the U.S. Department of Energy-funded study said that when ingested in large quantities, the bacterium is lethal to zebra and quagga mussels but harmless to non-target organisms, including native freshwater mollusks.Officials said the bio-pesticide achieved a 98 percent kill rate of zebra and quagga mussels in water systems at a New York power plant. Officials said the addition of the bacterium to the plant's water supply showed no effects on humans.The two non-native species have found their way into the waterways of 25 states during the past two decades, fouling the aquatic environment.The project was funded by Energy Department's Office of Fossil Energy and managed by the National Energy Technology Laboratory.The New York State Museum's laboratory and Marrone Organic Innovations Inc., a private laboratory in Davis, Calif., will share a $500,000 grant from the National Science Foundation to improve the bio-pesticide for an even higher mussel kill rate.