11-21-08

 11-21-08Merced Sun-StarHome price swings back to affordableCounty's average income can buy more house now...SCOTT JASONhttp://www.mercedsunstar.com/167/story/558474.htmlKevin Reeves began house-hunting this summer with a strict budget of not paying more than $150,000. He looked at about 20 bank-owned homes, trying to find the perfect fit for his family of four.Six weeks later, the 41-year-old Reeves had moved into an Atwater home that overlooks a golf course and has a pool. It was $5,000 less than the upper end of his budget, and he believes it once sold for about $300,000.Without the market's free-fall, he wouldn't be calling this house home."This market exists whether I take advantage of it or not," he said Thursday. "While I feel for those who bought at its peak, I'm not sure it was wise."Like Reeves, hundreds of other residents are taking advantage of the cut-rate prices for homes and programs that help them get the keys to their first home.It's hard to predict where the market's headed, local real estate agents say, because they're expecting nearly 8,000 foreclosures to hit the state in early 2009. More than a third will be within the Valley.Merced County ranks as the most affordable place to live in the state as a result of the plummet of home values, according to a quarterly report by the National Association of Home Builders and Wells Fargo released earlier this week. Sacramento is second, Modesto third.Just three years ago, Merced topped the list of least-affordable small cities and hovered near the top until last year.Now, 60 percent of the homes on the market are within reach of families earning Merced's median income of $47,400. In 2007, that figure was 3.8 percent.Affordable, as defined by the NAHB, is when a family spends no more than 30 percent of its income on a mortgage.Scott Oliver, with Coldwell Banker Gonella Realty, said the prices are back to late-1980s levels and that the ranking is a good one for Merced."You'd like to see affordability higher than that," he said. "If you're at 60 percent, you have a great market."Local agents sold 494 homes in October, the third-strongest month of the year. However, 315 homes still went back to the banks.Of course, the housing market is still far from predictable, Oliver added. A handful of offers typically come in on homes in the range of $100,000 to $135,000. He's been selling most of the houses to first-time homebuyers who are being helped by the Federal Housing Administration."It's created a little feeding frenzy," he said. There's about a six-month surplus of homes, down from 18 months' worth in late 2006. Prices may have hit bottom, Oliver said. However, a flood of foreclosures, delayed by the state's request that major lenders work harder to keep owners in their homes, will probably crash in early 2009.Historical data suggest the market probably won't stabilize for close to 11 months, he said. Of course, these are extraordinary times and when the economy, driven strongly by home equity, recovers is anyone's guess. Residents like Kevin Reeves are only helping it along -- and finding deals of a lifetime in the process.COMMENTSThis is in response to crashg1972. You have a very articulate argument and I commend your candor regarding your situation. It is is very unfortunate that you are going through your current difficulties. The MSS, I believe, is attempting to show a good news story regarding the housing market crunch. It is suppose to be, after all, a newspaper, not a "good news" paper, or "bad news" paper. I personally have mixed emotions about the current housing situation in Merced and other areas throughout the state. I was honorably discharged from the military in 1995 and I returned to the Merced area where I was raised. It wasn't until 1997 that I finally landed a good job, and it wasn't until 2002 that my wife and I were in a financial position to purchase a home. We were pre-approved for a loan of $240,000. At that time, housing prices were skyrocketing and 240K would get you a crackerbox on the bad side of town. I had lived here most of my life and wondered how people earning the median income of the area could afford a home. My wife and I sat on the sidelines as all our neighbors, who I'm certain earned less money than us, bought houses. I knew that something was terribly wrong. I believed that most couldn't afford these homes, and as it turns out, I was right. My wife and I sat on the sidelines for SIX YEARS, waiting patiently and RENTING. It wasn't until this summer that we were able to purchase our first home. Was it a bargain? It certainly was !! I am very happy about our new home. The current housing spiral, in my view, was caused by the following factors. First of all, people of this area should not have jumped on the "consumerism bandwagon" and purchased a home they couldn't afford. What's wrong with renting? My family use to live in a good neighborhood with affordable rent. As a matter of fact, that neighborhood in which we rented was better than the neighborhood in which we live now. Secondly, greedy real estate people (lenders, flippers, and others) caused this whole mess. If the county was a responsible one, they should have seen what was happening in the area regarding inflated home prices and perhaps initiated a residency clause for homebuyers. Instead, they "sat on their hands" as out of state speculators came in and scooped up property as if it were a yard sale. Most of the blame, in my opinion, goes to those trying to make a quick buck "flipping houses" (artifically inflating home values by taking supply out of the market). Real estate has always been considered a long term investment. If the market presents the potential of making a quick buck on homes, look out!!......something is usually out of whack.I believe that everything goes in cycles. Indeed, it may be many years before houses in this area re-coup their original value, but that day will come. Unfortunately, it won't be in the near future. I am not walking in your shoes, and I certainly cannot feel your pain. I am truly sorry for the situation that many are in regarding home values and the current foreclosure crisis. For those that plan on being long time residents of this area, contact your local representative and ask them to put safeguards in place that won't allow something like this to happen again. :: 11/21/08 11:12am - remedy88and I agree with REinsider. the days of getting rich off real estate are over. you will never again see the dramatic increases in property values as that of a few years ago. those that made money got lucky. those that got screwed by inflated prices, tough luck. it was only a matter of time before the market crashed. real estate values will continue to drop until they reach they balance out with an area's income. and in merced, we still have a ways to go :: 11/21/08 10:36am – dmntdThis article is a little misleading. home prices havent exactly dropped. houses on the market are cheap because most of them are short sales and bank-owned properties. these are special circumstances and that is why the prices are so low. you dont exactly see a regular home being sold by a regular home owner for dirt cheap. its always somebody on the verge of foreclosure, or a house thats already been foreclosed on. it will still be a while before all home prices stabilize. :: 11/21/08 10:33am – dmntdIF history is an accurate measure the "bottom of the market" will be marked by 78% affordability. So Scott at CB Gonella is correct in stating that "we still have a way to go". And then one cannot expect appreciation from that point to do much more than exceed the annual increase in area Median Income. :: 11/21/08 9:24am – Reinsider-----KEVIN,WISH YOU ALL THE BEST. I HOPE YOU CAN KEEP YOUR JOB. AND THAT YOU DIDN'T PAY TO MUCH. I HATE SAY IT, BUT THIS IS JUST THE START. HOLD ON THIS IS GOING TO BE A WILD RIDE. :: 11/21/08 9:00am – RACERXKEVIN,WISH YOU ALL THE BEST. I HOPE YOU CAN KEEP YOUR JOB. AND THAT YOU DIDN'T PAY TO MUCH. I HATE SAY IT, BUT THIS IS JUST THE START. HOLD ON THIS IS GOING TO BE A WILD RIDE. :: 11/21/08 9:00am – RACERXa bunch of crap! :: 11/21/08 5:11am – youshaWhat an amazing way to put a spin on this story! I applaud your method of redirecting the train-wreck of our economy to cover this one persons fortune. Never-you-mind that the banks are folding and that its becoming increasingly unlikely that anybody will be able to borrow the money to purchase houses in the central valley even at these cut-rate prices because of the housing-markets implosion. I am guessing your original title for this article might have ready something like, "Merced County has collectively has lost BILLIONS of dollars on real estate to become the foreclosure capitol of the United States! But speculative vultures can profit from our loss! Our loss is your gain!"? I'm guessing that your spin does sound so much better to the depressed masses out there holding on to whatever they can as they open their monthly mortgage statements. That doesn't sound quite like the headline you would want does it? I do wonder about the poor bugger who was forced to sell that 300,000 dollar house at half value. How does he feel about Kevin Reeves new found windfall?Apparently nobody wants to ruminate over bad news anymore so perhaps more fluffy-pink-colored-spin will candy-coat things and people will feel more positively about reading your articles regardless of the actual content's impact on their daily lives. Writer, you need a hefty dose of reality. You might want to seriously lay off what anti-depressants populate your medicine cabinet or change your prescription altogether because its putting too much of a Polly-Anna head-trip on you here. If your next headlines are to be about the wave of job loss in California are you going to write, "Local businesses save millions in overhead as thousands of employees receive massive cut in FICA tax!"? Wow, that does sound good! Hmmm, how about a harder one like a school bus crash, I'm sure we can spin that equally beneficently. "10 children's selfless organ donations helps 50 children nationwide lead better lives." Yeah that's some pretty good spin there I think too.I am one of these unfortunates who's been struggling to sell my house. With all this going on I have discovered that I cannot afford to sell my home and move to a new town where there are jobs to be had and unemployment and welfare aren't the primary income for the community. The economic crash has totally shackled me to this decaying corpse of a town, but I am glad you have put a POSITIVE spin on this happenstance. Perhaps you can even help me find somebody who will profit off of my loss, buy my house at half value, and maybe I might feel good about this if I down a few of the little yellow "Mothers-little-helpers" that your taking as well.I want to live to a community here my family won't hear gunshots on a nightly basis. Where there aren't children killed in their beds by their parent's rival gangs. Or read about thieves murdering elderly people in their houses at night. Instead I've been horrified by what is happening to my community. I've watched my house value plummet nearly to HALF of what it was 5 years ago due to the rampant overbuilding in "North Merced". So many people now are holding onto mortgages that owe far more than the house may ever be worth again. Many more are hair-breadth's away from foreclosure. Lets see some of your amazing spin on these?So please, pop a few more anti-depressants with your formaldehyde-fortified tannin-free white wine tonight as you excrete your next article into your laptop and generate more spin for our undereducated masses in town to graze upon mindlessly. Something such as foreclosure related homelessness goes on the rise, "Thousands across the nation discover about life sleeping beneath the stars (Or bridges)" or, "Bio-degradable mini-structures made from recycled materials the choice for the new generation of home-owners." Card-board box anyone? And, as suicide rates climb I expect to read, "Reduced population pressure leads to a greener environment.":: 11/21/08 4:52am - crashg1972Our View: Tough call on G StreetRail underpass is going to disrupt commute, lives of local residents, but decisions must be made.http://www.mercedsunstar.com/177/story/558477.htmlA G Street free from rail-related traffic delays and the preservation of calm and quiet neighborhoods aren't mutually exclusive concepts.The city of Merced plans to build an $18 million underpass at the spot where G Street crosses the BNSF railroad tracks.It will end years of headaches for Merced drivers.Not far away, residents in the Ragsdale neighborhood worry that their quiet, charming street won't stay that way very long.It can't be emphasized enough how important it is to continue the momentum on the underpass project.Merced residents have been held hostage for too long by unrelenting traffic jams caused by stopped trains on the BNSF line. In some cases, trains have held up the crossing for hours. It's annoying at best, and dangerous at worst.The concerns of homeowners, renters and business owners in the areas adjacent to the proposed project are understandable. Big changes are ahead and it's easy to see why some are nervous.Plans presented at a recent city meeting called for rerouting traffic to 26th Street while closing other nearby intersections.More traffic in a residential neighborhood certainly isn't ideal.However, efforts at compromise are being made.The city is making the right move creating a citizens advisory committee to help design the undercrossing and connecting roads. It allows the people affected by the project to become a part of the process.The council told city staff to work with the residents on West 23rd, West 25th and East 25th streets to decide whether to keep their roads connected to G Street or turn them into cul-de-sacs. Hopefully, input from neighbors will lead to a safe and aesthetically pleasing outcome.We caution, however, that this issue still needs a speedy resolution.Caltrans is picking up roughly half the tab of the $18 million underpass project, and city officials warn that that money won't be available forever.Squabbles over road closures and design issues shouldn't be allowed to significantly delay the project.If consensus can't be reached, the council needs to be prepared to make hard decisions for the good of the greater community. Modesto BeeHome values plunge againBut number of properties sold in area is up sharply...J.N. Sbrantihttp://www.modbee.com/local/story/507315.htmlHome sales prices took another tumble in October, as the three-year slide in home values continued.Stanislaus County homes sold for a median $161,500 last month, which was $17,500 below September. Home prices have dropped a staggering 59.2 percent below the $396,000 peak hit in December 2005.Stanislaus home prices have fallen back to spring 2001 levels, wiping out more than seven years of appreciation.Merced County is even worse. Median-priced homes there sold for $136,750 last month, which was down $3,250 from September. Merced prices have plunged 64.3 percent since peaking at $382,750 in December 2005. Prices haven't been that low in eight years.San Joaquin County did a bit better last month. Its median sales price reached $200,000, which was $8,500 more than September. It was the only county in the Northern San Joaquin Valley where prices didn't decline last month, according to sales statistics from MDA DataQuick Information Systems.But San Joaquin County home values still are 55.7 percent below their November 2005 peak of $451,500."It's impossible to say when the bottom will hit," said John Knight, professor of finance and real estate at the University of the Pacific. "I never anticipated such a huge drop in housing prices so quickly."On the positive side, the number of homes sold has risen dramatically since last year throughout the region. More than 2.5 times as many houses sold this October as last Oc- tober."That sales volume is good because it means the inventory of homes is starting to clear out," Knight said.There's been a glut of homes on the market because of foreclosures. Many of those repossessed properties now are bargain-priced as lenders try to cash out what they can from their so-called toxic assets. That's created buying opportunities."Investors have re-entered the market," Knight said. Prices are so low that "now it actually pencils out to buy a rental home. Investors now can cover their costs with rent."And for "prudent consumers who waited to buy," Knight said, "there are some tremendous opportunities now. Prices really cannot go much lower ... because it's becoming less expensive to own than to rent. That provides kind of a floor to housing prices."So how affordable are houses?Kevin Hawes, a loan consultant for Ability Mortgage in Ripon, ran the numbers.To buy a $161,500 home using the most popular Federal Housing Administration- insured loan, a buyer would need to put 3 percent down. That's $4,845. After the mortgage premium is added, the loan cost would be $159,396.Figuring a 6.5 percent, 30-year fixed-rate loan, the mortgage payment would be about $1,267 per month, including principal and interest, home insurance, property taxes and mortgage insurance.To qualify for a $1,267 monthly payment, Hawes said the buyer would have to earn about $4,000 per month, or $48,000 per year. Stanislaus County's median family income was $57,511 last year, according to U.S. Census Bureau estimates. So most families, theoretically, could afford to buy homes now.But qualifying for home loans isn't as easy as it used to be, Hawes said. Buyers must verify their income and have a good credit history, with credit scores of at least 620."FHA loans are great loans," Hawes said. FHA is part of the U.S. Department of Housing and Urban Development, and its insured-loan program is what most first-time buyers use in this region. Investors must get mortgages elsewhere, but Hawes said there are loans available for those who make large down payments. For a $161,500 home, an investor who put 20 percent down could get a 7 percent loan. The total monthly cost for such a loan would be about $1,066.Hawes said interest rates are even lower for those who make larger down payments, which lowers monthly costs even more.But what kind of home will $161,500 buy?Here are few examples from current real estate listings:East Modesto: A three-bedroom, two-bath, 1,572-square-foot home with a 6,100-square-foot lot, built in 1973 on Bella Terra Drive, $160,000.West Modesto: A four-bedroom, two-bath, 1,848-square-foot home with a 10,000- square-foot lot, built in 1961 on Shirley Court, $160,000.Riverbank: A three- bedroom, three-bath, 1,813- square-foot home with a 6,970-square-foot lot, built in 1989 on Topeka Street, $160,000.Patterson: A four-bedroom, 3.5-bath, 2,669-square-foot home with a 6,360-square-foot lot, built in 2004 on Meadow Creek Drive, $160,000."There are incredible opportunities out there," Hawes said. "I try to tell everybody that this may be the only time in a long time to come when first-time buyers can get a home."Knight agreed the long-term outlook for Northern San Joaquin Valley homes is good. "The location of this valley is still very positive," he said, referring to the climate, the proximity to the Bay Area and housing affordability for commuters."Ten years from now, we'll have some sort of normalcy between supply and demand," Knight predicted. He noted how new home builders already are preparing for where to put new subdivisions. "The market will come back."Valley expert sees few signs of hope, but says 1981-82 recession was worse...J.N. Sbrantihttp://www.modbee.com/business/story/507297.htmlAn overview of the economy's "troubling trends" was offered to mortgage lenders this week by a California State University, Stanislaus, economics professor."The economy just is so dismal" that Professor Kelvin Jasek-Rysdahl said he couldn't offer much positive news for those attending the Mortgage Lenders Association of Stanislaus County luncheon.Rising unemployment, falling retail sales, soaring foreclosure rates, shrinking consumer confidence, failing financial institutions, languishing auto manufacturers, sagging new home sales, increasing bankruptcies, and recession spreading through Europe and Asia were all part of the depressing picture Jasek-Rysdahl painted for the crowd.But how long is this recession going to last? That's what the audience wanted to know.Perhaps 14 months, the professor said, based on predictions from the Federal Reserve Bank of Philadelphia, and "this quarter will be the worst of it.""There's a lot of variation and uncertainty in these projections," warned Jasek-Rysdahl, who is co-director of the Center for Public Policy Studies at the university. He expects this recession will hurt the Northern San Joaquin Valley more than other regions because there already was more poverty here than elsewhere.Though the economic times are tough, things have been worse than this."It doesn't seem like this recession is going to get as bad as the one in the early 1980s," he said. During the '81 to '82 recession, which lasted 16 months, Jasek-Rysdahl said the valley's agricultural sector was struggling. "But ag has been very strong here now."National unemployment and inflation rates hit about 10 percent during the '81 to '82 recession. In this recession, national inflation has been below 5 percent and unemployment is about 6.5 percent.The economy's "misery index" is a combination of the inflation and unemployment rates, Jasek-Rysdahl said. By that measure, the current situation is much better than 1981-82.Monopoly offers lessions on foreclosures...David Gelles, The Miami Heraldhttp://www.modbee.com/business/story/507287.htmlIf people want to understand what's happening with this foreclosure crisis, they should just play Monopoly.That was the word from my Uncle Mark on a recent Sunday night, after a group of five of us finished a spirited two-hour game of Monopoly, the popular board game from Parker Brothers.He had a point. Though the game started benignly enough, it soon devolved into a bitter competition with family members scheming against one another -- and, yes, groveling for loans.Here's a breakdown of the game and its lessons: The strategy of most players seemed to be to buy property early. This meant cash reserves soon dwindled, but players accrued a spattering of properties, most of them unrelated.After 20 minutes or so, the first monopolies formed, either through a player's luck in landing on all the related spaces, or some wheeling and dealing. But with cash still in short supply, players with monopolies moved slowly to build houses and hotels.Once my 12-year-old cousin developed hotels on several of her properties, the ante was upped. Landing on one of these properties meant having to fork over nearly $1,000. As a result, the other players were pressured to build hotels of their own. Here the board game and reality started to converge.When you look around and see all your neighbors getting rich on real estate, you're naturally compelled to do the same. The real estate market becomes a feeding frenzy.Soon enough, players were landing on hotels and bills came due. But after spending on property, houses and hotels, we were all strapped for cash. As a result, we had to "mortgage" our properties, handing them over to the bank for a fraction of their value, just so we could pay our debtors. This is akin to taking out a second mortgage on your house to pay for a vacation at a Sandals resort.After a few rounds of mortgaging our properties to pay our bills, some players were out of cash. So when my uncle landed on a hotel and owed his wife $1,275 but had no cash, he offered her a grab bag of unrelated properties. But by this point, those properties were essentially worthless. No one wanted to take on more real estate, especially if it was already mortgaged. In other words, home prices were falling, and no one was buying.Still, bills were due, and my aunt, cousin and friend soon went bankrupt, forking over their last few dollars and worthless property to either me or my uncle. From there, we duked it out, one roll at a time. I caught the lucky breaks, with my uncle landing on more of my properties than the reverse. After two hours, he was toast.I'll admit, it was a bit of a rush to win at Monopoly. But looking around at my bankrupt, property-less family was no fun.As in real life, even the victors don't feel great these days. And though I had a pile of Monopoly money, I wondered how much it really was worth.With no one to trade with and nothing left to buy, what's the value of cold hard cash? If only they didn't have Monopoly money, but rather Monopoly commodities.Interior Dept. takes action after scandal...DINA CAPPIELLO, Associated Press Writerhttp://www.modbee.com/2020/story/507589.htmlWASHINGTON — The Interior Department has taken disciplinary action against more than a half dozen workers who accepted lavish gifts, partied and in some cases had sex with employees from the energy companies they regulated.The actions announced Friday range from a warning letter to termination. The Interior Department would not confirm how many employees were fired, citing privacy.The eight employees at one time worked in a Denver Minerals Management Service office in charge of collecting billions of dollars in federal oil royalties.An Interior Department Inspector General investigation issued in September referred to a "culture of substance abuse and promiscuity" in the office from 2002 through 2006. During that time, the report found that some employees were getting drunk and having sex with oil company personnel. The report also highlights instances where co-workers in the office used cocaine and marijuana.Much more widespread were the golf and ski trips, snowboarding lessons and concert tickets workers in the office accepted from oil companies. Nearly a third of the 55-person staff in the Denver office had accepted gifts, but only nine workers had exceeded the $20-per-gift limit or $50-a-year threshold on outside gifts.MMS Director Randall Luthi said in a statement Friday that "the behavior of some MMS employees prior to 2007 was clearly inappropriate and warranted strong administrative action."Eight of those workers were still employed with the agency when the scandal broke, but not in the same office.Interior Secretary Dirk Kempthorne had vowed to take swift action to squelch what he called an "ethics storm." But disciplinary procedures for civil servants prevented him from taking action for at least a month.Calif. agrees to limit trout stocking...SAMANTHA YOUNG, Associated Presshttp://www.modbee.com/state_wire/story/506799.htmlThe California Department of Fish and Game will stop adding millions of hatchery-raised trout to many of the state's mountain rivers and lakes, according to a deal announced Thursday.The agreement was reached between the state and two environmental groups as part of a 2006 lawsuit over declines in native fish and frogs.Noah Greenwald, a conservation biologist with the Center for Biological Diversity, said limiting the number of trout will preserve native species while the state prepares a more comprehensive environmental review of its fish-stocking programs.The deal prohibits stocking where 16 native fish species and nine frog species are found. It allows stocking programs in all large reservoirs and smaller ones not connected to rivers."A trout is the top-level predator," Greenwald said. "It's like going out in the woods and stocking a bunch of mountain lions."Jordan Traverso, a spokeswoman for the Department of Fish and Game, said the agreement will go before a Sacramento County Superior Court judge on Monday for approval. She declined Thursday to comment on the agreement.The department has argued that curtailing the century-old practice will affect recreational fishing."Our stocking program has important benefits to many small businesses and communities that depend on fishing," director Donald Koch said in a statement earlier this month.Sacramento County Superior Court Judge Patrick Marlette last year found that the department's stocking program had contributed to declines in native fish and frogs. They include the mountain yellow-legged frog, Cascades frog, California golden trout, McCloud River redband trout and Santa Ana sucker.He ordered the department to evaluate how the addition of trout affects native species, but the review has not been yet completed as quickly as expected.As a result, Marlette instructed the department earlier this month to negotiate with the Pacific Rivers Council and Center for Biological Diversity on a temporary fish stocking program while it completes the study.A spokesman at California Trout said the group had not yet reviewed the agreement.Here's an idea: Short-haul rail...Editorialhttp://www.modbee.com/opinion/story/506968.htmlHere's an idea: Get diesel trucks off the congested valley highways by transporting goods by rail to and from the Port of Oakland. The valley would benefit in multiple ways -- less air pollution, more jobs and an easier way for ag industries to move their products.This should sound familiar, because these are the arguments for the West Park inland port proposed for the former Crows Landing Naval Air Field.The same reasoning appears in a new report from the Kern County Council of Governments that is far more expansive. A concept paper by the KernCOG advocates a third rail line nearly the length of the valley to move goods and people. It suggests re-establishing the old Southern Pacific line on the West Side, including restoring and repairing abandoned track segments.That happens to be the same rail line on which West Park developer Gerry Kamilos proposes to run trains between Crows Landing and Oakland.So is something amiss here? Not necessarily.The idea of reviving that old rail line has been around for some time. More than a year ago, Kamilos was throwing out long-term possibilities for extending the rail south -- at some unknown point in the future. His consultants mentioned the possibility at a meeting with The Bee's editorial board Nov. 7, 2007.Here's the big difference between the West Park and the Kern ideas: The West Park proposal has a skeleton and meat and muscle on the bones. It is being analyzed for its environmental impacts and its financial viability.The Kern concept paper isn't fully formed, with a whole lot of questionable assumptions. Whether it could be executed within a decade or more is an unknown.Many factors determine whether and when an idea grows into a feasible project. Money and opposition are two key factors. Timing and politics are two others.The Kern concept hit the public radar at a bad time for West Park -- while Kamilos and Stanislaus County are fighting a lawsuit filed by Patterson, which objects to more freight trains through the city and to the size of the West Park plan.On the politics side, KernCOG planners were remiss in not informing Stanislaus County officials about their specific proposal, especially since it incorporates West Park as part of the big picture.Long-term, rail offers promise as a way to improve the movement of people and products through the San Joaquin Valley. But it has its obstacles -- noise, community disruption and, most of all, cost. The Kern concept has merit, but it is only a rough idea, far from being realized.West Park, on the other hand, appears to be within reach as a major economic boost for Stanislaus County. It deserves our focus, and our support, at this moment.Fresno BeeFresno Co. home sales take offForeclosures make up an increasing share of resales as prices fall...Sanford Naxhttp://www.fresnobee.com/business/v-printerfriendly/story/1027764.htmlInvestors and first-time home buyers were out in force last month, snapping up foreclosures and driving up sales of existing homes in Fresno County by 87% from a year earlier, a market tracking company reported Thursday. Analysts say it is no coincidence that sales are soaring in regions where prices have plummeted. The median price of an existing home in Fresno County tumbled almost 32% to $168,000 last month from a year ago and on new houses fell 12.7% to $248,000. In Merced County, existing-home prices fell 43.2% to $130,300, and the area now is the most affordable market in the state. Bank-owned houses are increasingly the product of choice, totaling 56% of the 799 resales in October, said MDA DataQuick of La Jolla. Only a month earlier, foreclosures represented 54.4% of all the sales. They comprised 15.4% of the market in October 2007. Add new homes and condominiums, and the total number of houses sold in Fresno County last month reached 1,046, a boost of almost 40% from October 2007 -- and the highest tally since December 2006, according to DataQuick. Other central San Joaquin Valley counties showed similar results: Total sales in Tulare, Madera and Merced counties climbed 21.3%, 78.7% and 177.5%, respectively, as the correlation between falling prices and increased sales strengthened. Fresno real estate agent Michael Gavin said foreclosures are putting pressure on prices. He represents banks trying to unload houses they have repossessed, as well as traditional home sellers. The traditional sellers are having to drop prices to compete, said Gavin, who knows of a family who dropped their price $20,000. "A lot of people are buying, and a lot of investors are buying," he said. "Activity has picked up for me." About 30% of his recent sales have been to investors. Banks, he said, have become more willing to deal as their fortunes sag under the weight of foreclosures. Lenders also are more willing to pay for repairs required by the Federal Housing Administration, which has emerged as the major lender in this economic climate, Gavin said. For example, he said Countrywide Financial agreed to spend $2,000 to paint the exterior and window sills of a foreclosure in addition to paying $6,000 in closing costs. That was on top of slashing the price $5,000, he said. "Countrywide said, 'We want this off our books. Get it done,' " Gavin said. Sellers of new homes are finding it tough to compete with the abundance of foreclosed houses, even though their prices are falling. Production and sales are down so far that the president of the California Building Industry Association is predicting a shortfall of new housing. "California needs to be building around 230,000 units per year to keep up with population growth, but we won't even build a third of that number this year," said Robert Rivinius. The association is trying to juice sales by pushing Congress to increase the temporary homebuyer tax credit of $7,500 enacted earlier this year, and to make it a credit that does not have to be repaid. Calif. unemployment rate rises to 8.2 percent...JULIET WILLIAMShttp://www.fresnobee.com/state_wire/business/v-printerfriendly/story/1028739.htmlCalifornia's unemployment rate jumped to 8.2 percent in October, the highest rate in 14 years, just as a state fund that pays unemployment benefits was about to run out of money. State officials are preparing to ask the federal government to step in with a loan on Dec. 1 so they can continue paying jobless benefits to California's now more than 1.5 million unemployed, nearly a third of whom have lost their jobs in the last year. The rate announced Friday by the state Employment Development Department was up from 7.7 percent in September, and from 5.7 percent in October 2007. The largest hit came in the construction industry, which has lost 65,900 jobs in the last year, followed by manufacturing. The department said its monthly survey found 527,918 people were receiving regular unemployment checks in October. But the fund from which California makes those payments is on the brink of insolvency. The state's unemployment insurance fund is expected to have a deficit of $2.4 billion at the end of 2009, forcing it to borrow from the federal government for only the second time since the program was established in the 1930s. If no steps are taken to increase the fund's revenue or reduce its payouts, its deficit is projected to hit $4.9 billion by the end of 2010. Gov. Arnold Schwarzenegger has proposed raising the payments from employers into the fund by $56 to $427 per employee, as well as reducing benefit levels from the current wage replacement rate of 50 percent to 45 percent and raising income eligibility requirements. The governor used Friday's news to remind the state Legislature that urgent action is needed. "We've known for years that changes must be made to the fund to keep it solvent, and it is unfortunate that now, when we need it most, it is racing toward the red," he said in a statement Friday. Schwarzenegger, a Republican, called lawmakers into a special session this month to tackle California's now-$11.2 billion budget deficit. Democrats and Republicans have so far been unable to reach a compromise on a combination of proposals to increase taxes and cut program spending to fill the gap. Labor leaders have slammed Schwarzenegger's unemployment proposals, saying they will do further harm to the slumping economy by hurting the unemployed just when they most need help. "For these families and those who have already been without work for months, unemployment benefits are a safety net to keep them from falling into the economic abyss," said Art Pulaski, executive secretary-treasurer of the California Labor Federation. Also Friday, President Bush signed into law a bill that Congress approved to keep unemployment checks flowing to jobless Americans through the holiday season. The Senate passed the measure after a report released Thursday said new claims by laid-off workers for jobless aid had reached a 16-year high and the number of people looking for work had surged past 10 million. The U.S. unemployment rate hit 6.5 percent in October. Sacramento BeeMore California cities hurtling into fiscal void?...Robert Lewishttp://www.sacbee.com/111/story/1416488.htmlWhen the city of Vallejo filed for bankruptcy protection in May, the logical question was: Is this a sign of things to come?Now two more California cities – Rio Vista and Isleton – are considering bankruptcy protection as an option as they face large budget shortfalls and staggering debt.While experts caution against ringing the alarm bells just yet, they do say tough economic times could push municipalities already on the brink over the edge. "I think it's quite possible municipal bankruptcies could become somewhat more common but will still be very rare," said Jason Dickerson, budget and policy analyst at the state's Legislative Analyst's Office. "There are more municipalities that will look at what it means."Cities, counties and other governing bodies across the state are reeling as budget projections many considered to be conservative at the start of the fiscal year, July 1, are proving to be wildly optimistic as the housing slump is affecting property tax revenue and sales tax receipts are well below last year.Many municipalities not only are looking ahead to cuts next year but also are actively trimming expenditures to fix shortfalls in the current fiscal year's budget."California cities are like the rest of the country and rest of the state, really struggling right now," said Eva Spiegel, spokeswoman for the League of California Cities.Rio Vista is facing an $816,000 deficit in its general fund budget for the current fiscal year and a $1.6 million deficit in its sewer fund, said Hector De La Rosa, the city manager. While officials and the City Council are looking at other cuts and ways to save money – hiring freezes, work furloughs and increased fees, among others – bankruptcy protection is an option."There are some benefits to Chapter 9 bankruptcy," De La Rosa said. "It holds off creditors until the city has time to get a plan in place."On Wednesday, Isleton's city manager said if his city couldn't borrow $1 million by Jan. 1 to pay off $950,000 in years of accrued debt, he would urge the City Council to seek bankruptcy protection.If both cities file a bankruptcy action, they would become just the third and fourth cities in California to do so since 1980. Vallejo filed for bankruptcy protection in May.The best way to get out of bankruptcy protection – or avoid it in the first place – is to cut expenditures and raise revenue, said Marc Levinson, lead bankruptcy attorney at the firm representing Vallejo."It's not rocket science," he said.The problem is municipalities have little control over the markets, voters don't want to raise taxes, and large expenditures – pension obligations, health care costs and collective bargaining agreements – limit a city's options, he said."I'm surprised not every city is discussing (bankruptcy)," Levinson said. "It's absolutely horrible out there."That doesn't mean the state will suddenly see a spike in municipal bankruptcies, said Bob Leland, Fairfield's director of finances.That city is expecting a $5 million to $6 million budget shortfall next year. But like most municipalities, Fairfield should be able to fix its budget with cuts and reserve funds.Cities that do opt for bankruptcy filings "often have issues that are so unique you can't really extrapolate," Leland said.Vallejo spent an inordinate amount of its budget on public safety salaries and benefits; Isleton has had years of debt that added up; and Rio Vista has had problems with its sewer system for decades.While Vallejo's bankruptcy filing could encourage other cities to at least consider filing bankruptcy as an option, such a move still carries a stigma, said Dickerson, the budget analyst."Bankruptcy is a really big deal," he said. "It's a mark of shame."It also means a municipality might have trouble borrowing money in the future as wary lenders worry about getting repaid, Dickerson said.Keenly aware of the drawbacks to filing for bankruptcy protection, Rio Vista officials are looking at all other options, but times are tough, said De La Rosa, the city manager."A lot of municipalities are going through the same situation Rio Vista is going through," he said. "For those communities that do not have healthy reserves, they will look at all options." State emissions plan debated at Sacramento hearing...Jim Downinghttp://www.sacbee.com/378/story/1416164.htmlBusiness and environmental groups argued Thursday over whether California's plan to fight global warming will be a boon or a burden for the economy and low-income communities.More than 200 people from around the state signed up to testify at the final public hearing on the Air Resources Board's proposal for cutting climate-warming emissions to 1990 levels by 2020, as required under a 2006 state law.The strategy, first released in June, would get most of those cuts by mandating large improvements in energy efficiency as well as rapid expansion of the state's renewable power capacity. It also calls for a market for buying and selling the right to produce greenhouse gases – a so-called cap and trade system. The air board is scheduled to approve a final version of the framework at its meeting Dec. 11-12 in Sacramento. State regulators will spend the next two years filling in the details, with most policies taking effect in 2012 or later.By cutting power and fuel bills and fostering a green-tech industry, the plan should ultimately deliver billions of dollars in net economic benefit, according to the state's analysis.But the transition to a lower-carbon economy carries uncertain costs – a point several business leaders emphasized Thursday."They don't tell us how we get there," said Edwin Lombard, a board member of the California Black Chamber of Commerce, in an interview.Environmental groups, along with some business and venture capital interests, argue that efficiency improvements have been shown to pay off quickly."This is not an experiment. This is pretty straightforward stuff," said James Fine, an economist with the Environmental Defense Fund, in an interview.The cap-and-trade proposal also drew criticism Thursday. Groups representing low-income and minority groups have united to oppose it altogether, arguing that a market would tend to concentrate polluting industries in their communities. At noon Thursday, about 100 activists rallied outside the air board headquarters.The crafting of the state's plan is being watched across the country and may serve as a model for federal greenhouse-gas strategies. Indeed, air board Chairwoman Mary Nichols is rumored to be a candidate to head the U.S. Environmental Protection Agency under President-elect Barack Obama. Deal reached to limit planting fish for sport...Matt Weiser http://www.sacbee.com/378/story/1416221.htmlAnglers may no longer be able to catch rainbow trout in many of California's mountain lakes, the result of an agreement reached Thursday to protect native fish.The California Department of Fish and Game has agreed to cease stocking fish reared in hatcheries – including trout, bass and catfish – in many lakes and streams where the practice threatens 16 native fish and nine native frog species.The deal was reached after weeks of negotiations with two environmental groups that sued the state over its hatchery and stocking practices. The interim rules are meant to protect native species while the state prepares a broader, permanent plan to reform its hatchery and stocking programs. The agreement will have potentially far-reaching effects on sport fishing in the state.Species targeted for protection range from Central California steelhead, found in the American River, to the California golden trout, found in lakes and rivers of the southern Sierra Nevada. Protected amphibians include the California red-legged frog and mountain yellow-legged frog.Hatchery-reared fish have been planted by the state into lakes and streams for a century to support recreational fishing. But these fish compete with native species for food and habitat, and in some cases also prey on native fish and frogs or their young."Interim measures limiting stocking are needed to help save California's native fish and frogs from extinction," Noah Greenwald, program director for the Center for Biological Diversity, said in a statement. "Fish and Game will still be able to stock hatchery fish, but mainly in places where they won't harm native species."Greenwald's group and Pacific Rivers Council sued the state in Sacramento Superior Court in 2006 to force reform of its hatchery and stocking practices. The Department of Fish and Game is preparing an environmental impact report on the program but recently asked Judge Patrick Marlette for a one-year extension, until January 2010, to complete the study.In response, environmental groups asked for interim measures to protect native species, resulting in the agreement announced Thursday.Fish and Game officials had little to say about the deal, except to confirm its basic terms."Nothing is final until the judge certifies it on Monday," spokeswoman Jordan Traverso said.Greenwald said the deal will take effect immediately if approved by the court. It was structured, he said, so that some stocking can continue in order to support the state's popular inland sport fishing industry.He said the state will be allowed to continue stocking hatchery fish in reservoirs that have more than 1,000 acres of surface area. That means popular fishing spots like Folsom Lake and Lake Oroville will probably continue to be stocked.The American River also will not be immediately affected. Fish are not stocked directly in the river, though procedures at the state's Nimbus Hatchery, which produces most of the salmon found in the river, could be altered by the permanent changes being studied.Stocking may also continue in smaller reservoirs if they are not connected to a stream that hosts any of the 25 native species. And Fish and Game will be allowed to renew existing permits for fish stocking on private land or backyard ponds.But natural lakes and streams that are home to the native species will no longer be stocked. And new requests for private stocking permits must first prove that no native species are present.Greenwald said Fish and Game has identified 81 water bodies where stocking will be halted. Another 112 also might be affected, and the state may be hoping for some leeway to continue stocking these waters. Neither list was available Thursday.Mike Seefeldt, vice president of the Hot Creek Hatchery Foundation in Mono County, said the agreement could harm many small businesses that depend on fish stocking for a major portion of their tourism-related income."It's going to have a significant impact on Mono County and the people that run the resorts," said Seefeldt, who lives in Sacramento and is a retired Fish and Game hatchery manager. "A lot of them are only open in fishing season. If they're on a lake that's not stocked, they're probably going to be facing catastrophic financial impacts." My View: Let's make a future for California's fish...Peter Moylehttp://www.sacbee.com/opinion/story/1416007.htmlCalifornia has a remarkable diversity – 32 species – of native salmon and trout, thanks to our long coastline and high mountains. However, the disappearance of bull trout in the 1970s may foretell a series of salmon and trout extinctions in the near future, including our coho salmon and golden trout.In collaboration with my colleagues at UC Davis and with support from California Trout, I recently completed a two-year research study that indicates 65 percent of California's salmon and trout species face extinction within this century, if not sooner.These are not just obscure species that only a few people care about, but species that support fisheries, that are extraordinarily beautiful, and that are emblematic of California's diverse streams, rivers and lakes. For example, silvery spring Chinook salmon once ascended streams of the Central Valley in the hundreds of thousands. Today, just a few thousand spawn in three small streams in the shadow of Mount Lassen. Lahontan cutthroat trout, a spotted bronze trout that was once found throughout the northeastern Sierra, is now fighting to survive in a few protected localities. And just a handful of oceangoing steelhead remain to struggle up the damaged streams of Southern California.For most species, the major cause of decline is degraded habitat, either through water removal or through watershed conditions that allow temperatures to warm, silt to cover spawning gravels and shade-providing riparian trees to disappear. In the Klamath River, for example, most of its nine varieties of native salmon and trout are in serious trouble, in part because there is not adequate cold water to support spawning and rearing during the warmer months of the year.This doesn't have to happen. The Goose Lake redband trout, in remote Modoc County, is thriving because of watershed restoration projects resulting from cooperation among ranchers, agencies and diverse citizen groups. Restoration projects on important streams such as Clear Creek and Battle Creek in the Sacramento Valley are increasing habitat for the four runs of Chinook salmon. A court settlement has ordered restoration of Chinook salmon to the San Joaquin River. Major efforts are under way to protect the three kinds of golden trout in the upper Kern River basin, funded by water users.Providing a future for our iconic native fishes and their waters is not easy. It requires a fundamental shift in the way our society treats its streams and natural lakes. We have to leave more water for fish while protecting their diverse habitats. We need to engage in more large-scale restoration projects, following the example of the San Joaquin River.To start this effort, we must re-energize, fund and empower the fisheries, water protection and landscape management agencies so they can do their jobs and lead efforts to re-create healthy streams and landscapes. Water is California's most valuable commodity, and the environmental costs of its heavy use by humans need to be repaid, through a combination of better management of our natural systems and creating stable funding sources for fish and wildlife conservation programs. Above all, we need to teach the public how to better live in a world of limited resources.Our fish are telling us that we are using our water and watersheds in an increasingly unsustainable fashion. If we lose our native salmon and trout, we will have created environments much less suitable for humans, and we will leave our grandchildren an unfortunate legacy of water shortages, poor water quality and degraded landscapes. The drastic decline of California's native fish is symptomatic of a much larger water crisis that, unless addressed, will severely impact every Californian in the future. Capital PressFinally, progress on the San Joaquin...Editorialhttp://www.capitalpress.info/main.asp?SectionID=75&SubSectionID=767&ArticleID=46317The on-again-off-again San Joaquin restoration settlement is on its way to congressional approval early next year, tucked away in one of those omnibus funding bills Congress loves. It will be another section of the 2009 Omnibus Natural Resources bill.It's a quiet end to controversy that began shortly after Friant Dam east of Fresno and a network of delivery canals went into operation in the early 1950s. Friant Division is a star in the U.S. Bureau of Reclamation Central Valley Project.Salmon, closed out of migrating up the water-short San Joaquin for decades, are supposed to be returned to that watershed by 2012 if all goes down as parties agreed after a near all-nighter in Washington, D.C., on Nov. 10.Central Valley farmers and the Natural Resource Defense Council that took the CVP to court in 1988 have Sen. Dianne Feinstein and three congressmen to thank for bringing the stalled San Joaquin settlement to a conclusion. They had a pact in 2006 that went nowhere because of concerns over the federal cost to make it happen. This deal shrinks direct federal cost to $88 million, although NRDC once estimated it might run as high as $800 million. This time, California pledged $200 million, and water users agreed to pay another $100 million over 10 years from the Friant Division share of continuing CVP operations. Another $100 million is authorized, but not appropriated, for improvements to conveyance facilities that could go a long way toward efficiencies replacing water promised for fish flows. Friant water released by the deal would return to that 60 mile stretch of the San Joaquin that's been dry off and on for decades.The deal puts a cap on the amount of CVP water going to instream flows at 15 to 19 percent of CVP contract obligations.The alternative is letting federal Judge Oliver Wanger in effect control the valve for about 1 million acres of farmland, the life source for hundreds of farming communities dependent on irrigated agriculture.As Marvin Hughes, chairman of the Friant Water Users Authority, put it last week in a Fresno Bee opinion piece, "It should be plain to everyone in the Valley by now that the courts are the worst place to make decisions about San Joaquin Valley water supplies. Without the settlement the litigation would resume and we would have to return to court and put control of our water into the hands of a federal judge whose previous rulings strongly indicate that he will send water down the river to re-establish a salmon fishery regardless of the cost to the Valley."The deal Feinstein announced means CVP "exchange contractors" won't see any decrease in their CVP contract deliveries, and they retain rights to divert from the San Joaquin if the canals dried up.Some farmers, and rightly so, don't like that. Judge Wanger, acting on behalf of threatened Delta smelt, has limited CVP and SWP pumping from the Delta for six months out of each year. Add to that the CVP practice of shorting Westside water deliveries during drought years, and you can understand the unease.It took courage for Feinstein to take the lead on this settlement. She's come a long way from being mayor of San Francisco. Central Valley farmers can thank her for caring. Also due thanks as the settlement bill moves forward are a bipartisan trio of congressmen: George Radanovich, a Republican, and Democrats Jim Costa and Dennis Cardoza.San Francisco ChronicleUC regents drop fee increases from budget plan...Patricia Yollinhttp://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/11/21/BA03148V1V.DTL&type=printableThe University of California Board of Regents decided on Thursday to remove student fee and tuition increases from its budget proposal for the 2009-10 school year.It was a decision that now puts the burden on the state Legislature to either provide funding that would avert the need for such increases or force those enrolled in the UC system to come up with the money themselves.The move - depending on who you talked to - was a strategic triumph, a bad idea or totally meaningless."For the first time in my recollection, the budget goes forward without student fee increases in it," said Lt. Gov. John Garamendi, the regent who led the push to remove $215 million in increases from the proposal the full board later approved. The budget calls for a $755 million jump in the UC system's core operating budget, or 14 percent, over this year.Higher fees had been included in a UC budget proposal the regents' finance committee voted for Wednesday, even though everyone agreed the board was not ready to formally act on such a volatile issue.Garamendi went well beyond that on Thursday by insisting that no hint of raising student fees should appear in the budget proposal, which the governor and state Legislature will deal with early next year."Student fees are too high and we shouldn't increase them," Garamendi said."It's an starting point for a critical issue," he added outside the meeting. "Are we going to tax students or not? It's important that you call upon the Legislature and governor to fund the university."D'Artagnan Scorza, a student regent from UCLA, agreed. "To start off with assuming student fee increases cuts off our legs," Scorza said.The assumption, in this case, was the amount of revenue that would be generated by a 9.4 boost in mandatory systemwide student fees - broken down into increases of 10 percent for tuition, 5 to 24 percent for professional schools and 4.2 percent in the registration fee, which covers student services ranging from the cafeteria to intramural sports. Enrollment growth would produce additional fees.Although UC President Mark Yudof voted to yank the higher fees from the budget proposal, he said he didn't think it mattered much one way or the other, given that it was only November."The odds are overwhelming that we will have an increase in fees," Yudof said. "We don't know the exact amount."Regent Judith Hopkinson tried to be equally pragmatic, which prompted her to disagree with the overwhelming sentiment in favor of taking student fees out of the equation. She said there was not a "snowball's chance" that the state would fund UC's entire budget proposal and provide money to stave off fee increases."If we reduce the fee amount, that's money the state is not going to give us," Hopkinson said.It was "appalling" for UC to be in a position to raise fees once again, said the regent, who urged a long-range solution to UC's budget crisis - one that is exacerbated by California's deepening fiscal nightmare and Gov. Arnold Schwarzenegger's proposal to cut $65.5 million in the near future from the current UC budget.The UC system raised undergraduate tuition this year to $6,571. It was $3,859 in the 2002-03 school year.Several regents said they hoped the issue of student fees increases would be resolved in a timely manner because parents must decide in only a few months where - or if - to send their children to college.It's a perennial dilemma: academic timetables are often at odds with the pace of legislative life."The political process rolls on irrespective of the real deadlines students have in their lives," Yudof said.Yudof, a lawyer from Philadelphia and former law professor, added: "I've been around a lot of legislators, and they're like many of my former law students. There was no doubt they'd accomplish their work in May or June - it would not occur in January or February."For that reason, he said, it will be hard to put off the fee question until UC's budgetary problems are resolved in Sacramento. The 10-campus system received $3.070 billion from the state this year and would like to get $3.809 billion for the 2009-10 school year.Thursday's session - the last in a three-day meeting at UCSF Mission Bay - started off with a spirited round of public comment, much like the day before.A roomful of angry people lobbied for everything from the rights of undocumented students to more diversity in medical schools.The low salaries of UC service workers, currently in negotiations with the university, dominated the session, which ended with the arrests of seven labor leaders from around the state. The seven chanted "No contract, no peace" for almost half an hour, prompting most regents to eventually leave the room and UC police to escort the protesters off the premises.UC police Capt. Jon Easterbrook said they were charged with two misdemeanors: trespassing and failure to disperse. By the time the meeting ended, all seven had been cited and released.San Francisco Supervisor Tom Ammiano, the first speaker of the day, urged the regents to treat the service workers fairly."When we talk about stimulus packages, we need to talk about people at the lower end of the economic scale," he said. "I implore you to respect the work these people do."Their situation also came up Monday night when Yudof appeared at the Commonwealth Club in San Francisco."We have significant concerns about our service employees," Yudof said. "Their pay is not very good."Los Angeles TimesBush angers environmentalists with last-minute rule changesMany of the 'midnight regulations' open wilderness for oil and gas drilling, and loosen environmental safeguards. President Bush has pushed 53 through in three weeks, researchers say...Jim Tankersleyhttp://www.latimes.com/news/science/environment/la-na-environmental-rules21-2008nov21,0,1277393,print.storyReporting from Washington — As the hour grows late, President Bush, like many chief executives before him, seems to hear the call of the wild.Honoring a tradition that dates at least to the Reagan administration, Bush is pushing through a bundle of controversial last-minute changes in federal rules -- many of them involving the environment, national parks and public lands in the West.President Clinton used his final weeks and months in office to strengthen a host of environmental rules and lock up federal lands with wilderness and other protective designations. Bush is using the same window of opportunity to open wilderness for oil and gas drilling, and to loosen safeguards for air, water and wildlife.In recent days, the Bush administration announced new rules to speed oil shale development across 2 million rocky acres in the West. It scheduled an auction for drilling rights alongside three national parks. It has also set in motion processes to finalize major changes in endangered species protection, allow more mining waste to flow into rivers and streams, and exempt factory farms from air pollution reporting.Researchers who track "midnight regulations" say Bush pushed 53 of them through the federal Office of Information and Regulatory Affairs in the last three weeks, nearly double the pace of Clinton at this point in his final year. Some of the most controversial rules deal with the environment -- a legacy-cementing area where Bush diverges sharply from Clinton and from President-elect Barack Obama.In the mid-1990s, when Clinton was in the White House, the GOP-controlled Congress established rules designed to rein in late-inning regulatory changes. But the move has had little effect.Outgoing presidents "have an incentive to push stuff that the next administration won't be in favor of," said Veronique de Rugy, a senior fellow at the Mercatus Center at George Mason University who tracks midnight regulations. "It's your last chance . . . to extend your influence into the future."White House officials say they've taken pains to avoid a late-term blitz. Spokesman Tony Fratto said that Bush is keeping roughly the same regulatory pace as last year, and that many rules won't be enacted because agencies missed a Nov. 1 deadline for final action, set earlier this year by Chief of Staff Joshua Bolten. Bolten's order allows exceptions for what are considered extraordinary circumstances. "It's unprecedented in the history of administrations to try to do something this way, and do it the right way," Fratto said. Environmental activists and government watchdogs, on the other hand, say Bush rushed several of the rules to completion so that Obama could not easily overturn them.Obama can summarily reverse anything not enacted by the time he takes office, a lesson Bush learned by blocking several of Clinton's last-ditch environmental measures, such as a ban on road-building in national forests. "The Bush administration is trying to prevent Obama from doing to it what it did to Clinton," said Matt Madia, a regulatory policy analyst for OMB Watch, a Washington-based watchdog group.Under federal rules, it takes 60 days to enact an economically "significant" regulation, which carries an estimated impact of $100 million or more. Other regulations take 30 days. Today is the deadline for "significant" regulation, though Fratto calls it "irrelevant to our process."The process moved especially quickly in the case of oil shale. In July, the administration proposed rules that would eventually lead to leasing 2 million acres of public land in Colorado, Utah and Wyoming for oil shale extraction, even though serious questions remain about how much power and water -- a particularly scarce resource on much of that land -- would be needed to make it work.The rules were finalized this week.The American Petroleum Institute praised the move as "an integral step" toward increased domestic energy production. "It lays the groundwork, lets investors know what they're going to face going forward," said Andy Radford, a senior policy advisor for the institute.Environmentalists cried foul. Sen. Ken Salazar (D-Colo.) said Bush had "fallen into the trap of allowing political timelines to trump sound policy." Activists also accuse Bush of disregarding public comments on a proposal to change how the Endangered Species Act guides federal projects. Currently, federal agencies must check with government species experts before building a dam or paving a road. Bush would allow the agencies to determine on their own if they were putting protected species in danger. The change would be "absolutely necessary if we're going to move projects forward," said William Kovacs, vice president of environment, technology and regulatory affairs at the U.S. Chamber of Commerce.Opponents say administration officials breezed through 250,000 public comments -- most of them criticizing the proposal -- in less than a week. "They've clearly made a predetermined decision to issue it no matter what the public comments say, which is not what we're supposed to do in this country," said Andrew Wetzler, director of the endangered species project at the Natural Resources Defense Council. The NRDC, the Sierra Club and other groups also oppose several rules not subject to the deadline and likely to be enacted soon, including eased restrictions on mountaintop mining near streams, reduced pollution reporting for large farms and weakened air quality controls near national parks. If those rules are approved, Obama would need to initiate a potentially cumbersome process to revise them."They wouldn't be able to just put out a notice and just overturn them the next day," said Karla Raettig, the legislative representative for wildlife conservation for the National Wildlife Federation. A little-used law from the 1990s might allow Congress to overturn many of the regulations.Lawyers who win public-interest lawsuits are entitled to payment, California Supreme Court rulesSuits that result in important rights being enforced typically target government agencies...Carol J. Williamshttp://www.latimes.com/news/local/la-me-public-interest21-2008nov21,0,373919,print.storyAttorneys who prevail in lawsuits brought in the public interest are entitled to compensation for their work, the California Supreme Court ruled in a unanimous decision Thursday.Both liberal and conservative lawyers had urged the state high court to award fees to three law firms whose attorneys spent years trying to get the state Department of Corrections and Rehabilitation to require private employers of prison labor to pay wages comparable to non-inmate workers' wages.The Prison Inmate Labor Initiative of 1990 created the comparable-wages requirement to prevent the use of prisoners as strikebreakers or to undercut law-abiding workers. The initiative also was intended to maximize prisoner earnings, about 80% of which the state collects for taxes, room and board and victim restitution and to support family members outside."When the state didn't insist on comparable wages, it shortchanged itself and shortchanged the restitution fund," said Robert Berke, lead attorney in the taxpayer action settled after the case went to court in San Diego four years ago."This makes sure the courthouse door is open to groups of lawyers and clients who have demonstrated that their involvement has served the public good," Berke said.The prison wage case was brought under the so-called private attorney general statute, under which a court may award attorney fees to the successful party in an action that has resulted in the enforcement of an important right affecting the public interest. Such lawsuits typically target government agencies.But prior rulings in cases where defendants changed behavior under threat of litigation but before suit was filed, known as catalyst cases, resulted in restrictions on when public interest attorneys could get paid for their work. The high court had ruled that lawyers had to show they'd made an attempt to resolve the dispute before litigating, "to discourage meritless suits motivated by the hope of fees."In the prison wage case, Vasquez vs. State of California, the high court concluded that the lawyers' success in pushing the state to adequately charge prisoner employers benefited the public. It ordered that $1.25 million in fees be paid to the firms involved in the nine-year effort.The office of state Atty. Gen. Jerry Brown had challenged the attorney fees award on the grounds that earlier rulings held that public interest lawyers needed to make an attempt at resolving the issue before suing, to show that litigation was necessary.Supervising Deputy Atty. Gen. Ed Weil said Brown's office had hoped the court would extend the need to show necessity for litigation to all such cases but expressed only mild disappointment that the justices "didn't go quite as far as we thought they should."California unemployment jumps to 8.2%, third-highest in the U.S.The state's unemployment rate is the highest in 14 years; it rose half a percentage point in October from the month earlier. In the past 12 months, more than 100,000 jobs have been lost...Marc Lifsher and Tiffany Hsuhttp://www.latimes.com/business/la-fi-caljobs22-2008nov22,0,2902145,print.storyReporting from Los Angeles and Sacramento — California's unemployment rate rose dramatically in October to 8.2%, its highest level in 14 years, the state Employment Development Department reported today.The figures were released at the same time that President George W. Bush signed into law a $6-billion extension of unemployment benefits that provides as many as 33 weeks of additional assistance for Californians, whose benefits would have run out.California's increase from 7.7% in September was larger than the national increase in joblessness; the U.S. unemployment rate jumped four-tenths of a point, to 6.5%, in a tally reported earlier this month. California's unemployment is the third-highest in the United States, exceeded only by Michigan and Rhode Island at 9.3% each.The state's economic picture "continues to be difficult," acknowledged Gov. Arnold Schwarzenegger in a statement. "As our state unemployment rate rises, my administration continues to work hard to generate jobs and help re-train people who have lost jobs in our hard-hit industries."The slowdown in the state's economy worsened in October as job losses spread from the hard-hit construction, real estate and financial services areas to retail sales, said Howard Roth, chief economist for the California Department of Finance. The monthly drop in payroll employment by 26,400 jobs was the worst since January"It looks like the grinch is stealing Christmas here," he said, looking ahead to what are expected to be weak holiday retail sales. Lackluster consumer spending is expected to worsen the state government's $11-billion-plus budget deficit and increase pressure on the governor and lawmakers to cut spending and increase taxes, he said.The meltdown of California's economy and the increasingly bleak jobs picture is taking its toll on Therese Gayetty, 47, of North Hills. The media designer has been job hunting in earnest since August but has yet to find even part-time work."It's very discouraging - I can see how people would just give up," she said. "I'm applying for anything and everything."Gayetty isn't alone. Seasonably adjusted unemployment rose 2.5% between October 2007 and October 2008, representing a loss of 101,300 jobs in the Golden State.California was one of 37 states that recorded over-the-month unemployment increases in October.Downey Financial could be next bank casualtyMortgage losses have weakened the S & L to the point that there's little hope it can win government bailout funds, observers say...E. Scott Reckardhttp://www.latimes.com/business/la-fi-downey21-2008nov21,0,6789456,print.storyReeling from mortgage loan losses, Downey Financial Corp. warned last week that its choices were stark: Raise capital or risk a government takeover.It's still waiting for that capital. And since today is Friday, the day when bank takeovers generally occur, industry observers will be watching again to see whether Downey turns the keys to its executive suite over to the Federal Deposit Insurance Corp."My little circle of banking friends has talked about it each Friday for the past few weeks: Is this the day that Downey gets taken over?" said Joe Garrett, a Berkeley banking and mortgage consultant with 30 years in the business, half of them operating federally insured banks. Downey executives didn't respond to requests for comment. The Newport Beach-based bank has said in the past that it is trying to comply with orders from the federal Office of Thrift Supervision to reduce soured loans, dispose of foreclosed properties, strengthen management and provide an updated business plan that no longer relies on revenue from risky mortgage loans.In its Nov. 10 filing with the Securities and Exchange Commission, however, Downey Financial said there was "substantial doubt" that it and subsidiary Downey Savings could "continue as going concerns." In the event of a government takeover, individual depositors are insured by the FDIC for up to $250,000.As part of its $700-billion bailout of financial companies, the government has been buying stakes in healthy banks, hoping the fresh capital will allow them to resume lending and stimulate the economy. But industry experts say there is little hope Downey is strong enough to win a federal investment, and the savings and loan has said there is "no assurance" it could tap federal funds.Investors appear to be betting that the bank won't survive. The shares have lost 99% of their value this year, falling 2 cents Thursday to 19 cents. A year ago, they traded over $40.With most economists saying the nation is in recession, Downey is far from the only lender in the region to be beaten up on Wall Street. The Inland Empire's PFF Bancorp, Vineyard National Bancorp and Temecula Valley Bancorp, for example, have seen their stocks punished especially hard by investors worried that their heavy emphasis on home construction loans will make it impossible to raise new capital or sell themselves.Garrett said he once was an investor in Temecula Valley, which at last count had more than $1.1 billion in loans -- 42% of them to the construction industry. Garrett said his stake quadrupled in value before loan troubles struck the bank. When he finally sold his shares last summer, he said, he wound up losing 70% of his initial investment."There's no future right now in construction lending," he said. "I cut my teeth in this business financing home builders, and when people stop buying new homes these guys just die."The Temecula bank lost $4.2 million in the first nine months of this year compared with a $12-million profit during the same period last year. Its stock closed down 17 cents Thursday at $1.31; from mid-2005 through early 2007 it had traded above $20 a share.Battered by losses on builder loans, Rancho Cucamonga-based PFF agreed in June to sell itself for $1.35 a share to Oak Park, Ill.-based FBOP Corp., parent company of California National Bank.The transaction was supposed to close by the end of the year, but PFF stock fell 39 cents to 56 cents a share Thursday -- an indication that investors were betting the deal would collapse, Garrett said.PFF Chief Executive Kevin McCarthy did not return a phone call; an FBOP spokesman said the bank still hoped to complete its purchase. Stock in Corona-based Vineyard was the lowest of all, having fallen 3 cents Thursday to just 12 cents a share. The bank has lost $109.8 million through the first nine months of this year, compared with net income of $17 million in the same period of 2007.Having spent much of this year in an unsuccessful attempt to raise capital, the bank said last week that its chairman, Douglas M. Kratz, would attempt to raise money from private investors to buy Vineyard National's main subsidiary, Vineyard Bank. That deal would yield current Vineyard shareholders as little as 10 cents a share. Vineyard Executive Vice President Donald H. Pelgrim didn't return a call for comment. Downey, coming off an $81.1-million third-quarter loss, said federal regulators have required it to maintain a higher-than-usual net worth as a cushion against loan losses. It said it was in compliance with the order as of Sept. 30 but was likely to be out of compliance by year's end. But it has struggled to maintain deposits. The FDIC engineered the takeovers of Washington Mutual Inc. and Wachovia Corp. earlier this year in part because of deposit outflows."If the government doesn't think that you're liquid enough, it doesn't matter how much you put into loss reserves," Garrett said.Washington PostNew Rule Would Discount Warming as Risk Factor for Species...Juliet Eilperinhttp://www.washingtonpost.com/wp-dyn/content/article/2008/11/20/AR2008112003465_pf.htmlThe Bush administration is finalizing changes to the Endangered Species Act that would ensure that federal agencies would not have to take global warming into account when assessing risks to imperiled plants and animals.The proposed rule changes, which were obtained by The Washington Post, are under review by the Office of Management and Budget and are close to being published in the Federal Register.The main purpose of the new regulations, which were first unveiled in August, is to eliminate a long-standing provision of the Endangered Species Act that requires an independent scientific review by either the U.S. Fish and Wildlife Service or the National Oceanic and Atmospheric Administration of any federal project that could affect a protected species. Under the administration's proposal, individual agencies could decide on their own whether a project would harm an imperiled species.The latest version of the rule goes further than the language Interior Secretary Dirk Kempthorne issued in August by explicitly excluding climate change from the factors that would trigger an interagency consultation. The move is significant because the administration has listed polar bears as a threatened species under the act on the grounds that their sea-ice habitat is shrinking, but Kempthorne has repeatedly argued that this move should not trigger a federal curb on greenhouse gas emissions linked to the melting of sea ice.The rule states: "Federal agencies are not required to consult on an action when . . . the effects of such action are manifested only through global processes and (i) cannot be reliably predicted or measured at the local scale, or (ii) would result at most in an extremely small, insignificant local impact, or (iii) are such that the potential risk of harm to species or habitat are remote."John Kostyak, director of wildlife conservation and global warming at the National Wildlife Federation, said not only would the rule block federal officials from considering a carbon cap to help preserve the polar bear's habitat, "you have to question whether this is going to stop us from looking at the loss of snowpack and its impact onsalmon."The interagency consultations matter, Kostyak argued, because they sometimes avert federal projects that might have a devastating effect on vulnerable species, as in the case of a limestone mine that was blocked in 2004 because it would have harmed the Florida panther's habitat."The agencies that are pushing these projects through are inherently biased, because they want to get these projects through at a minimal cost and they don't like delays associated with endangered species," he said.Interior Department spokeswoman Tina Kreisher said the administration is close to issuing a final rule but is still reviewing the language for potential changes. Interior has classified the proposal as "a minor rule," which means the government has determined that it would not have a major economic impact. It will take effect 30 days after being published in the Federal Register.Citigroup Seeks to Reassure Investors, Stabilize Stock Price...Binyamin Appelbaumhttp://www.washingtonpost.com/wp-dyn/content/article/2008/11/21/AR2008112100529_pf.htmlCitigroup executives are scrambling to convince investors that concerns about the New York financial giant's health are greatly overstated, even as the company's board meets today to discuss options including the possible sale of business units.The price of Citigroup stock has fallen 57 percent this week to trade around $4 this morning amid rising investor concern that the company must raise more money in order to survive massive projected losses on a wide range of problematic investments.Executives say that the company is under assault by investors seeking to profit from the decline in its share price.Citigroup, the company said in a statement, "has a very strong capital and liquidity position and a unique global franchise. We are focused on executing our strategy, including our targeted expense and legacy asset reductions, and we believe the benefits will be seen over time."Federal regulators are watching the situation and are in contact with the company's executives but as of last night were not taking an active role.Analysts said Citigroup was in a much stronger position financially than banks that have recently collapsed."It would take a depression every bit as large and long as the 1930s debacle to shake this company's viability," Richard Bove, a banking analyst with Ladenburg Thalmann, wrote in a research note to clients.But the growing gap between insiders and investors is forcing the company to consider major steps to restore confidence in its health.The company's board will meet today to discuss options, including the sale of business units, according to people familiar with the situation. The board also could decide to sit tight and hope that market conditions improve, those sources said on the condition of anonymity because they are not authorized to talk publicly about the matter.Citigroup is also pushing regulators to suspend short-selling, the practice of betting on a decline in a company's stock price, which can create its own momentum as investors drive down prices to win their bets. The company has the support of the Financial Services Roundtable, a trade group for the largest financial companies, but people familiar with the regulators' thinking say that a ban is unlikely.The Securities and Exchange Commission banned short-selling on a wide range of financial stocks for several weeks this fall. But regulators are reluctant to impose another ban because the initial effort was counterproductive, the source said. The last ban led several large hedge funds and other investors to leave the market, undermining the stated purpose of shoring up stock prices.New York TimesCitigroup Tries to Stop the Drop in Its Share Price...Eric Dash and Louise Storyhttp://www.nytimes.com/2008/11/21/business/21finance.html?ref=business&pagewanted=printFor months, the nation’s largest banks have struggled to regain investors’ trust. In the center of the vortex is Citigroup, whose precipitous stock-market plunge accelerated on Thursday, sending shock waves through the financial world.The shares slumped 26 percent Thursday; the bank has lost half its value in just four days. The chief executive, Vikram S. Pandit, will hold a meeting for senior managers Friday to update them on the bank’s condition. Investors and analysts have long pressured the bank to consider ways to lift its stock price, including splitting the company or selling pieces. While a few also say the company should consider selling itself outright, there is no certainty that any change would happen soon. Senior executives say the company is financially strong and has ample financing options. Moreover, there are few buyers who would be willing to pay a price that Citigroup would want for its most valuable assets.Citigroup executives are seeking to stabilize the stock price, but at this point they are not actively exploring selling or splitting up the company, according to two people with direct knowledge of the discussions. The bank has posted four consecutive quarters of losses, caused by billions in write-downs. Nine of its investment funds have cratered this year. And now the bank could face a tsunami of new losses in its once-lucrative consumer loan business as the global economy weakens. Within the bank’s Manhattan offices, television screens have stopped displaying the company’s stock price. Traders have begun making jokes comparing Citigroup to the Titanic.But there is a wide gap between what Wall Street investors and Citigroup’s executives believe about the company’s financial condition. Senior executives feel that Mr. Pandit has followed through on plans to aggressively shrink the company and control costs. The bank has sold tens of billions of dollars’ worth of risky assets, improved its capital position and announced plans to eliminate 52,000 jobs by next June. “We are entering 2009 in a strong position, much stronger than we entered in 2008,” Mr. Pandit said in a speech to employees this week. “We will be a long-term winner in this industry.”Yet as the drumbeat of bad news about the bank grows louder, investors remain unconvinced. Even a decision by Prince Walid bin Talal of Saudi Arabia, who bailed out Citicorp in the 1990s, to raise his stake to 5 percent Thursday failed to restore confidence in the bank. Two senior Citigroup executives said the bank had not approached him about raising his investment. The Saudi prince’s initial investment soared as Citigroup turned out record profits, only to evaporate over the last year.“The earnings power is there,” said Charles Peabody, a financial services analyst at Portales Partners. “It’s a question of getting through the credit issues.”Other big banks, like Bank of America and JPMorgan Chase, also tumbled Thursday as the broad stock market sank again, wiping out more than a decade’s worth of gains. And Goldman Sachs, once the most sterling American investment bank, fell below the $53 price at which it went public in 1999.Investors have long feared that the bad news for banks will get worse as the economy slows. But this latest rout in financial shares, which are now plumbing their lowest depths since the economic crisis broke out, reflects growing concern that banks like Citigroup will require vast sums of additional capital, possibly from the government, to cope with the pain to come.Home mortgages, credit card loans, commercial real estate debt — all are likely to deteriorate further now that a recession is at hand. Banks that have already lost billions of dollars could lose billions more.“All the danger signs are flashing red,” said Simon Johnson, a professor at the Sloan School of Management at the Massachusetts Institute of Technology. Much of the fear centers on the unknowable. It is unclear just how bad banks’ losses on consumer loans, credit cards and mortgages will be as the economy weakens. Commercial real estate loans are deteriorating, and it is unclear whether banks have sold the worst of their holdings. Then there are all the investments that lurk off of banks’ balance sheets, in the so-called shadow banking system. And a new uncertainty has leapt to the forefront as the automotive industry teeters, sending investors scrambling to calculate how much banks are exposed to these loans.Several big banks hit record lows. Bank of America fell 13.86 percent to $11.25, JPMorgan slid 17.88 percent to $23.38 and Goldman Sachs slumped 5.76 percent to close at $52. Morgan Stanley neared a record low, closing down 10.24 percent at $9.20, while Wells Fargo fell 7.66 percent to $22.53.In a bid to calm nerves, Citigroup officials are meeting with other large shareholders. Last week, Citigroup’s chairman, Winfried Bischoff, traveled to Dubai and met with Sheik Ahmed bin Zayed al-Nahyan, the director of the Abu Dhabi Investment Authority, according to two executives briefed on the situation.The renewed assault on financial stocks led the Financial Services Roundtable, an influential lobby group for the industry, to press regulators Thursday for another ban on short-selling, a strategy in which investors bet against declines in a share price.The current rout appeared to have gained momentum after Treasury Secretary Henry M. Paulson Jr. announced last week that the government would abandon its original plan to purchase troubled bank assets. That sent prices of commercial mortgage bonds and other loans into a nosedive. Mr. Paulson also said the Treasury would let the incoming administration determine how to deploy the remaining $350 billion left in the program. Yet investors have grown increasingly nervous about the appearance of a leadership vacuum in Washington as the financial markets burn, and some have begun saying that President-elect Barack Obama should move more rapidly to release a plan. “We really need somebody to step in and show leadership,” said Wilbur L. Ross Jr., chairman of WL Ross and Company, an investment firm that has been looking for bargains in the banking sector. “Every day that’s wasted and that we stay in freefall is going to make the recession that much deeper and longer.”That has workers in the financial industry bracing for more pain. “Major financial institutions have been taking write-downs all year, and what do you do next? You lay people off, and that decreases your need for office space,” said Harold Bordwin of the real estate group at KPMG Corporate Finance. “It’s very scary.” CNN MoneyFDIC OKs backing U.S. bank debt, depositsAgency to guarantee up to $1.4 trillion in banks' debt for more than 3 years, to add up to $500 billion to FDIC-backed deposits.http://money.cnn.com/2008/11/21/news/economy/FDIC_bankdebt.ap/index.htm?postversion=2008112115WASHINGTON (AP) -- The FDIC will guarantee up to $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan.The directors of the Federal Deposit Insurance Corp. voted Friday to approve the plan, which is meant to break the crippling logjam in bank-to-bank lending.The FDIC will provide temporary insurance for loans between banks - except for those for 30 days or less - guaranteeing the new debt in the event of payment default by the issuing bank.The FDIC also will guarantee deposits in non-interest-bearing "transaction" accounts by removing the current $250,000 insurance limit on them through the end of next year. That could add as much as $500 billion to FDIC-backed deposits.Citigroup plunges as bank mulls next moveExecutives of the besieged bank met Friday as shares finish 20% lower; possible sale said to be considered...David Wllishttp://money.cnn.com/2008/11/21/news/companies/citigroup/index.htm?postversion=2008112116NEW YORK (CNNMoney.com) -- Shares of Citigroup suffered another steep decline Friday, falling 20%, despite effort by the company's top management to assure the firm's survival.Executives of the bank met Friday morning to discuss, among other things, the massive plunge in Citigroup (C, Fortune 500) stock, according to a person familiar with the matter. Shares have fallen more than 60% so far this week, including a 25% drop in midday trading Friday.The stock finished Friday at $3.77. Shares hit a low of $3.05 at one point Friday but bounce back along with the broader market following reports that President-elect Barack Obama will tap New York Federal Reserve President Timothy Geithner as his nominee for Treasury Secretary.Both The Wall Street Journal and The New York Times reported late Thursday that board members were considering selling off pieces of the company, or the entire bank itself.A Citigroup spokesperson would not comment on the reports but the company reiterated its commitment to its previously announced restructuring plan in a statement Friday."We are focused on executing our strategy, including our targeted expense and legacy asset reductions, and we believe the benefits will be seen over time," the company said.Friday's selloff capped what has been a rough week for the New York City-based bank. The company announced Monday that it would be cutting more than 50,000 workers in an attempt to trim expenses.After losing nearly a quarter of its value Wednesday, Citigroup stock plunged 26% Thursday to $4.71, its lowest level in more than a decade, even though the bank's largest individual shareholder, Saudi Prince Alwaleed Bin Talal, said he would increase his stake in Citigroup to 5%. There has been some speculation that short sellers, who bet that a company's stock will go down, could be to blame for the ongoing selloff. Citigroup, along with a number of other financial companies, are lobbying the Securities and Exchange to enact a temporary ban of the short selling of financial services stocks, a representative of the Financial Services Roundtable told CNN Thursday.Large institutional investors may have also contributed to the selloff by ditching their holdings in Citigroup as the company's stock price moved lower this week.Certain institutional investors, such as pension funds, are not allowed to hold stocks that are priced below $5 per share."That may have added some unique pressure as it traded through that level," said Lawrence Creatura, a fund manager at Clover Capital Management in Rochester, New York.Sizing up its next moveCitigroup has been one of the hardest hit financial firms since the mortgage market first started to unravel in the fall of 2007. Over the past four quarters, the company has recorded close to $21 billion in losses.And with the stock continuing to fall, analysts and investors have begun to speculate about what could be next for the 196-year-old firm. One rumor making the rounds on Wall Street is that Citigroup could break up the bank, with some suggesting that Citigroup could sell its Smith Barney wealth management arm. But according to a Citigroup source, CEO Vikram Pandit denied such speculation during a conference call with senior managers Friday morning.Stuart Plesser, an equity analyst for Standard & Poor's, warned that a breakup could be costly. He argued that by doing so, the company would probably have to settle for a distressed price and would also risk losing lucrative revenue streams."It just can't be haphazard," said Plesser.A possible tie-up with a peer, such as Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500), has also been mentioned as a potential end game for Citigroup. But despite the plunge in Citigroup's stock, the company still has a market value of more than $20 billion and operations in more than 100 countries. That would make the bank a difficult acquisition to digest, said Marshall Front, chairman of Front Barnett Associates, a money management firm, in Chicago. It is also doubtful that any other financial institution is strong or willing enough, for that matter, to shoulder such a massive undertaking."The question is who would have the capacity and the energy at this point in the cycle to be able to acquire, integrate and run effectively the kind of organization that would eventually emerge," said Front, whose firm oversees approximately $600 million in assets and owns Citigroup.A different fate?In many ways, the decline of Citigroup's stock price is eerily reminiscent of what happened to Lehman Brothers and Bear Stearns in the days leading up to their ultimate demise, where market fears of a collapse eventually turned into reality.But analysts have been quick to draw distinctions between Citigroup and its two fallen peers.Deutsche Bank analyst Mike Mayo indicated in a research note Friday that the company has approximately a $100 billion cushion against losses, which includes the $25 billion in capital that was injected into Citigroup in October as part of the U.S. government's bank rescue program.Richard Bove, a veteran banking analyst for Ladenburg Thalmann, told clients in a report late Thursday that the only way Citigroup would be pushed to the brink would be if loan losses were so overwhelming that it choked off cash flow. That seemed far-fetched, he said."It would take a Depression every bit as large and long as the 1930s debacle to shake this company's viability," Bove wrote.Given the fallout that ensued after Lehman Brothers failed in mid-September, it is widely believed that the U.S. government would not let another major financial institution fail.The collapse of a bank the size of Citigroup, which boasts more than $2 trillion in assets as of the end of the third quarter, would certainly deliver another blow to the credit markets and the already fragile psyche of investors.It also stands to reason that the government would act in order to protect its investment in Citigroup. The Treasury Department invested $25 billion in the bank in October in exchange for an equity stake.But keeping Citigroup alive could involve another major government investment in the bank, as was the case with insurer AIG. Such a move would certainly leave common shareholders holding the proverbial bag."It is hard to imagine that if the government stepped in that shareholders would come out whole," said Plesser. "They are at peril it seems."