5-27-09
5-27-09
Modesto Bee
Public comment period extended...Bee Staff Reports
http://www.modbee.com/local/v-print/story/718994.html
The public has two extra months to say what it thinks about controversial power lines proposed for Stanislaus County and points north.
The Transmission Agency of Northern California, which includes the Modesto and Turlock irrigation districts, had set a Sunday deadline for comments on the first phase of the project's environmental impact study.
The deadline has been moved to July 30, after complaints that affected landowners were not given enough time to comment.
The agency proposes to build or upgrade about 600 miles of high-capacity wires to improve the reliability of the grid and tap potential renewable energy sources in Lassen County.
Some of the new lines would run from the Tracy area to south of Oakdale, then to the east side of Modesto and to Denair. A branch also would run up Highway 108-120 to New Melones Dam.
Critics have said the lines would mar the landscape and interfere with farming and wildlife habitat, among other impacts.
The agency is studying several 1,000-foot-wide corridors for the lines, but only 200 feet eventually would be needed.
Comments can be e-mailed to TTPEIS@wapa.gov. They also can be sent to David Young, NEPA document manager, Western Area Power Administration, Sierra Nevada Region, 114 Parkshore Drive, Folsom 95630. The fax number is 916-353-4772.
For more information on the project, call 916-353-4777 or visit www.tanc.us.
It's Target vs. Wal-Mart...Anne D'Innocenzio, The Associated Press
http://www.modbee.com/local/v-print/story/718919.html
Target Corp. is going bananas to keep up with Wal-Mart Stores Inc.
The discounter, known for stylish towels and jeans, has long sold groceries. But it is barely holding onto its customers, while its chief rival, Wal-Mart, is rapidly picking up new shoppers as its low-cost message resonates in the recession. So, Minneapolis-based Target plans to stock more fresh food — including bananas — and play up its low prices.
Meanwhile, Wal-Mart, the world's largest retailer, is expanding its selection of nonessentials such as home furnishings, while improving the quality of its store-brand food such as thin-crust pizza and ice cream.
Activist shareholder William Ackman has for several months been using Target's struggle with Wal-Mart as ammunition to push Target shareholders to change its board at their meeting Thursday in Waukesha, Wis. Ackman has said his five picks, including himself, would provide fresh perspective, increase profitability and re-energize the stock, which has dropped 42 percent from its high of $70 in July 2007, though it has rallied since March.
Tim Jasinski, 51, said he rarely goes to Target anymore. When he was employed, he said, he would go to Wal-Mart only when he wanted DVDs or other electronics at discount prices. But he's been shopping at Wal-Mart for just about everything since he was laid off from his job as a machinist.
"Sure, they have some better things," Jasinski said of Target. "But money is more important."
About 37 percent of Target's revenue comes from necessities such as paper towels and food. For Wal-Mart, that figure is about 60 percent.
Facing criticism from Wall Street analysts who believe it's been late to respond to the recession, Target — which is about one-sixth the size of Wal-Mart — is becoming more vulnerable. But New York-based retail consultant Walter Loeb is not convinced that Ackman should get involved.
Loeb said Target has "plenty of opportunities to get better," particularly in groceries, and is making the right moves.
For the past decade, Target's stock performance has bested that of Wal-Mart and the Standard & Poor's 500 index. Wal-Mart's stock suffered from 2005 to late 2007 as its zigzag between upscale and discount goods slowed sales growth. The shares also took a beating from union-funded groups.
But Target's cheap chic mantra — its advantage in boom times — became a drag in late 2007 as the recession began and shoppers focused on basics. At the same time, Wal-Mart, based in Bentonville, Ark., found a balance of merchandise and marketing to enhance its renewed focus on price.
Target's same-store sales — the comparison of sales at stores open at least a year and a key indicator of a retailer's health — have lagged Wal-Mart's since late 2007. In the most recent quarter, sales at established Target stores dropped 3.7 percent, while the indicator rose 3.7 percent at Wal-Mart, excluding fuel.
"Consumers are buying what they need to have, so Target is stuck where they are, because that's the mouse trap they built," said Howard Davidowitz, chairman of retail consulting and investment banking firm Davido-witz & Associates. "Wal-Mart is pounding away at its price message relentlessly."
Target is turning to groceries, including the introduction at some stores late last year of prepackaged perishables such as bananas and bagged lettuce. It plans to expand the concept to 100 new or remodeled stores by year's end and to most of its new or remodeled stores in the next three years.
Target also is testing a "low-price" promise in advertising for certain locations, which will match competitors' local advertised prices on identical items. It's also relaunching its store-label Target Brand as Up & Up to span 40 basics such as health and beauty items by summer, when new marketing begins.
But Wal-Mart keeps rolling out new programs, too. Wal-Mart relaunched its Great Value food brand in March with an improved selection and reformulated recipes, and it is revamping its electronics aisles and adding exclusive home furnishing brands.
While Wal-Mart has made big strides, Target's apparel is far more stylish, analysts say, and it retains another advantage: a better shopping experience, said Davidowitz.
Tricia Dobbertin, 34, a business analyst from Hartland, Wis., described herself as a faithful Target shopper who rarely goes into Wal-Mart. She said she could have gotten the same items at Wal-Mart but prefers Target.
"I never like shopping there," she said of Wal-Mart. "I can never find what I want."
AT A GLANCE
According to the companies' recent annual reports, here's a breakdown of sales by merchandise categories for the latest fiscal year:
WAL-MART
· Revenue for year ended Jan. 31: $405.6 billion
· Groceries: 49 percent
· Entertainment: 13 percent
· Furniture and electronics: 12 percent
· Apparel: 11 percent
· Health and wellness: 10 percent
· Home: 5 percent
TARGET
· Revenue for year ended Jan. 31: $64.9 billion
· Consumables, including groceries and health and wellness: 37 percent
· Electronics, entertainment, sporting goods and toys: 22 percent
· Apparel and accessories: 20 percent
· Home furnishings and décor: 21 percent
Patterson Irrigator
Wal-Mart rep addresses public concerns at Rotary meeting…James Leonard
http://pattersonirrigator.com/pages/full_story?article-Wal-Mart%20rep%20addresses%20public%20concerns%20at%20Rotary%20meeting-%20=&page_label=home&id=2622957-Wal-Mart+rep+addresses+public+concerns+at+Rotary+meeting-&widget=push&instance=home_news_lead_story&open=&
Wal-Mart is likely close to two years away from coming to Patterson even if it skates through the city approval process, but its public relations push continued at full speed last week when a company representative spoke at a Patterson Rotary Club meeting.
Marko Mlikotin — president of River City Communications, a public relations firm hired by Wal-Mart — spoke for a few minutes and answered several pointed questions from Rotary members on Wednesday, May 20. The topics addressed ranged from the store’s pricing to its employment and hiring practices.
Mlikotin began by showing artists renderings of what the proposed 158,000-square-foot supercenter on the southwest corner of Ward and Sperry avenues would look like.
In his opening remarks, Mlikotin emphasized Wal-Mart’s commitment to advancing green technology and being energy efficient, rebuffed concerns about the retail giant’s treatment of its employees — 95 percent have health care, he said — and cited company-sponsored studies that have shown communities typically benefit economically when Wal-Mart comes to town.
Mlikotin also spoke to Wal-Mart’s new philosophy on community relations. Wal-Mart has found, Mlikotin said, that public resistance to new stores generally subsides when the company is more active in promoting a positive image of itself.
“The more the public knows about the process, and the more they hear from us, the more comfortable they are about Wal-Mart,” he said.
Among the highlights from the question-and-answer portion of the lunchtime meeting:
• Mlikotin said there are no plans for the Patterson Wal-Mart to include tire or auto repair departments.
• In response to a question about inconsistencies in pricing between Wal-Mart stores in Stockton and Modesto, Mlikotin said that while fluctuations do occur from store to store, “I think you’ll be very pleased with the prices” when it comes to Wal-Mart and its competitors.
• Asked if there could be any way of ensuring that Patterson residents are hired at the Patterson store, Mlikotin said the company cannot legally discriminate against out-of-town people but that it’s only natural for local people to wind up working at a local store.
• Mlikotin said that Wal-Mart is planning on purchasing the land if the project is ultimately approved.
• Regarding the approval process, Mlikotin said the first step will be an environmental impact review, which will include an analysis of the economic impact the store would have on local businesses. Including a public review period and time to implement public concerns, plus the subsequent city approvals of the EIR, he estimated it would be a little more than a year before construction could begin. The construction itself would take around 10 months, he said.
• Another member asked how Patterson could support a Wal-Mart when smaller stores like Target have resisted coming here because the population is too small. Mlikotin said the company looks not just at Patterson’s population but also at neighboring towns that would likely also contribute to its business.
“Wal-Mart would not make such a large investment here unless it thought it would work,” he said.
Sacramento Bee
My View: University of California can't afford to compete with private industry...Jill Duman is a journalist, parent and part-time playground attendant.
http://www.sacbee.com/opinion/story/1893611.html
First and foremost, the University of California is a public institution, created and paid for by the people of California. Its mission statement includes the promise of offering undergraduate programs to all "eligible California high school graduates and community college transfer students" and creating "an educated workforce that keeps the California economy competitive." Public money – from the state general fund – last year supported the university to the tune of $3.3 billion, providing 60 percent of the university's core revenues. It's our resource, our dream for our children.
Unfortunately, this week, the latest budgetary news for our local UC Davis has gone from bad to worst, and the campus faces a possible cut in state funds and a budget cut of $29.3 million.
Linda Katehi, a University of Illinois provost who was hired this month to lead our local UC Davis, comes on board at a time when staff salaries throughout the entire University of California system are frozen.
Yet, she will make $400,000 – $85,000 more than her predecessor, 15-year veteran Larry Vanderhoef, who was promoted to his post from within the UC Davis campus following 10 years as executive vice chancellor and provost.
Katehi will make $44,000 more than she did at her previous post. She'll also get free housing, $100,000 in relocation expenses, and an annual car allowance of close to $9,000 – slightly more than the annual fees UC students will be asked to pay to attend school next year.
UC President Mark Yudof defended the new chancellor's compensation package as a hedge against private industry, which "would eat her up in a minute and hire her" should UC fail to lure her to take the Davis post. Yudof also pointed out that Katehi, who he said holds 16 patents, and new UCSF Chancellor Susan Desmond-Hellmann, the former president of product development at Genentech, will be paid less than their colleagues at private universities. Katehi herself told The Bee that she had seen many capable people move from public to private institutions.
But should we, the little people, the taxpayers who fund the University of California, be in the business of matching the competition? As an engineer, and former professor of engineering, university dean, provost and expert in electronic circuit design, Katehi could probably make a boatload of money doing something else.
That's an argument that's been used to justify the multimillion dollar salaries of researchers, executives and professors at some private colleges as reported in February for the 2006-07 year by the Chronicle of Higher Education. It's been used to explain why at our own publicly funded University of California, we pay the leaders of all our campuses handsomely – ($320,000 to $400,000, according to the Chronicle of Higher Education, plus car allowances, rental homes and retirement). That's in addition to the even bigger package we paid out to the president of the entire University of California system, who collected $434,000 in compensation last year.
It is certainly in the interest for the University of California to seek qualified leaders, but at our public university, it may be time to re-examine what that means.
It may mean that private institutions like Stanford or any of the Ivy Leagues can make different decisions about hiring, based on the preferences and finances of their own private boards and donors.
It may also mean hiring a UC chancellor with a track record of leadership and enthusiasm for the job, even if he or she isn't an expert in a field most of us don't understand.
When it comes to bidding wars with private industry and private colleges, maybe it's time for the public to bow out.
Over in Washington, D.C., we've hired a smart guy with a flair for leadership and a passion for change. He's working for $200,000.
Stockton Record
Study examines needs, future of Altamont Pass...Staff and wire reports
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090527/A_NEWS/905270303/-1/A_NEWS
MODESTO - A new regional transit study calls for a more unified San Joaquin Valley in seeking transportation projects and funding while urging commuters to embrace a range of options in finding ways to work.
The San Joaquin Valley Express Transit Study also predicts the number of Valley-to-Bay Area workers using the Altamont Pass will rise from 42,000 in 2000 to 74,000 by 2030.
The study further says commuter rail is the ideal transportation option, but given the current economic conditions, vanpooling is described as a more realistic alternative.
The findings also call for a "unified Valley" in seeking an upgrade to the Altamont Commuter Express and the ACE connection with the Bay Area Rapid Transit system. ACE already carries 3,500 passengers a day.
Consultant Bonnie Nelson says the Valley's eight counties should work together to secure long-range transportation funding while working in the short term on air-quality rules that favor ride-sharing. Nelson warned against competing for state or federal transportation funding.
Travel alternatives include vanpooling, carpooling, interregional bus connections and rail transportation.
The study warned that rail projects, requiring time and money, are in the distant future. A line from Merced to Stockton could cost $200million, and extending it to Sacramento could add $75million to that cost.
"When the whole Valley bands together, does things in unison and recognizes that what benefits part of the Valley benefits the whole Valley, you have a whole lot more clout, a whole lot more power," Nelson told The Modesto Bee.
The study was conducted by Nelson/Nygaard Consulting Associates. Transportation agencies across the Valley contributed to its $200,000 cost.
Board fires away at canal supporter
S.J. supervisors also oppose bill they say would hurt farming...Zachary K. Johnson
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090527/A_NEWS/905270312/-1/A_NEWS
STOCKTON - County policy-makers stepped into the ever-changing maelstrom of water-related bills Tuesday long enough to debate a peripheral canal proponent before voting officially to oppose one piece of developing legislation in Sacramento.
County officials have never been shy about voicing opposition to any plan to build a canal to divert water bound for the Sacramento-San Joaquin Delta to pumps sending water to points across the state, but at their meeting Tuesday, members of the San Joaquin County Board of Supervisors were able to deliver their disapproval directly to a representative of a group promoting such a canal.
They listened to Karla Nemeth, a spokeswoman for the Bay-Delta Conservation Plan, lay out her presentation, including her take that the fragile estuary would sustain less damage if exported water were diverted around the Delta instead of being sucked out at pumps along with nutrients and fish. The Bay-Delta Conservation Plan proposes to balance ecological needs of the Delta with the needs of the 25million Californians who use the estuary as a source of water.
"It's a major challenge to restore an ecosystem in an environment like the Sacramento-San Joaquin Delta," she said. Rough estimates say the plan could restore at least 55,000 acres of wetlands, she said.
But county supervisors noted any canal would do nothing to create new sources of water for an increasingly thirsty state, and they were concerned a peripheral canal would harm the county's water quality and the livelihoods of farmers who use that water.
"There's another terrestrial species not listed here, and that's farmers," Supervisor Ken Vogel said, referring to Nemeth's list of aquatic and land animals covered in the plan.
And like the other five counties adjoining the Delta, San Joaquin County has not been given an important enough role by the state in plotting the Delta's future, supervisors said.
If these counties feel ignored, they will fight, Supervisor Larry Ruhstaller said. "If we go to war, we go to war."
Later in the meeting, the board unanimously opposed one bill in Sacramento that all the Delta counties would oppose, according to San Joaquin County officials.
Senate Bill 12 would give a newly created panel authority to review the general plans of Delta counties and their cities.
"It could clearly impact farming practices in the Delta," said Terry Dermody, a former San Joaquin County counsel who is the county's water attorney.
That bill was one of 60 water-related bills on a list Dermody gave the board.
He also said he was concerned that water issues will be in play when the Legislature meets to attempt to balance the state budget.
It's difficult to see where developments concerning water issues are headed, because significant changes are happening quickly, Ruhstaller said.
"There's so much chaff in the air, you cannot see or acquire the true target."
San Francisco Chronicle
Time for the governor to wade into the delta...William K. Reilly. William K. Reilly is a member of the Governor's Delta Vision Blue Ribbon Task Force and served as administrator of the U.S. Environmental Protection Agency under President George H.W. Bush.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/27/EDCP17R69A.DTL&type=printable
Clean, abundant water is something most people take for granted. Yet, with California in its third year of drought, that nonchalance is no longer justified. Across the state, there is a growing consensus that we cannot go on as before, and that we need serious change in the way in which we view and use water. Gov. Arnold Schwarzenegger has taken on some of the fearsome challenges California faces on his watch. But he has yet to meet the water challenge.
The Sacramento-San Joaquin River Delta is ground zero in the water debates currently taking place at the state Capitol. The delta provides water for more than 25 million Californians and 3 million acres of agriculture, supporting a $400 billion economy. But the delta's ecosystem is crashing, portending a water crisis for the entire state.
Schwarzenegger has called for a 20 percent reduction in statewide water use, a notably bold recognition that excessive water use and population increase are doubly threatening to our water future. But he and legislative leaders have not acknowledged that the critical missing ingredient in water management in the delta is governance.
More than two years ago, the governor appointed the Delta Vision Blue Ribbon Task Force, of which I was a member, to develop a plan for an environmentally sustainable delta and a reliable water supply for California. We met for two days a month for two years. We took testimony from water users in the cities, in agriculture, localities in the delta, scientists, academic experts, environmentalists and bureaucrats.
We tried to come to grips with some stunning realities: The delta water's average annual flow is overcommitted to users by more than eight times! Even in the wettest years, the water is overcommitted by three times! The fact that some 200 federal and state agencies share power over governance of water in the delta explains how this grotesque incongruity between realistic supply and entitlement could have come to be.
In addition, potential abuses - like that of the state's Environmental Water Account, where water in Kern County was purchased from the state and then traded back to the account for a higher price - are more prevalent under the current system.
So, the task force proposed an integrated set of recommendations to break the deadlock surrounding water policy in California. Although our work concluded with the release of our Delta Vision Strategic Plan, our commitment continues under the banner of the Delta Vision Foundation.
On Monday, we will come together for a public meeting in Sacramento to announce one of the first products of this new, independent organization: a report card to rate the progress that state policymakers are achieving in resolving the delta's problems. Fair warning: The results are disappointing.
The good news is that the delta is a top priority on the state's legislative agenda. But when we looked at how recent policy proposals compare with the Delta Vision Strategic Plan, there is one serious gap.
The Delta Vision Strategic Plan is a comprehensive and inclusive roadmap for California's water future, and most key stakeholders engaged with water issues around the state are supportive of the plan's recommendations. But without creating a new governance entity for the delta, the center will not hold. The many recommendations aiming both to ensure a reliable water supply for the state and restore the delta ecosystem won't be effective. Our strategic plan recommends a five-member statewide commission appointed by the governor and confirmed by the state Senate. The commission would oversee actions of various state and federal agencies in the delta by requiring consistency with a California Delta Plan, which the commission would develop and adopt.
I watched President George H.W. Bush break a 12-year stalemate on clean air and propose a daring cap-and-trade system with an ambitious goal of taking 10 million tons of sulfur dioxide out of the air, thus solving the acid-rain crisis. Cap-and-trade is now the gold standard for efficient cost-effective pollution control.
Leadership on the creation of a new governing entity for the delta could cut through the cacophony of competing bodies and provide leadership in reforming California's water management. A single, unified governance is the most controversial of our proposals. Governance is the one issue everybody tries to ignore. Achieving it requires brave leadership and heavy lifting. It requires leadership by the governor.
State lawmakers seek to rein in UC system...Jim Doyle
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/05/27/BAV917RGDU.DTL&type=printable
State lawmakers expect to introduce legislation today for a constitutional amendment that would strip the University of California of its immunity from regulation by the state Legislature.
The Senate and Assembly bills have Republican and Democratic co-sponsors who say they are fed up with what they call the exorbitant salaries and perks paid to UC executives at a time of budget crisis and the university's resistance to public disclosure, feedback and accountability.
If approved by two-thirds of the Assembly and Senate, the proposed amendment would be put before the voters - its outcome decided by a simple majority vote.
As proposed, it would remove the autonomy of the UC Board of Regents and allow the Legislature to enact statutes affecting UC policy - similar to the Legislature's oversight of the larger California State University system.
Even though the state provides funding to UC, the university's president and governing Board of Regents have sole authority to conduct daily operations and set policies with limited public oversight.
State Sen. Leland Yee, D-San Francisco, said Tuesday that the UC regents and executives have been acting "absolutely above the law."
"Enough is enough," said Yee, a graduate of UC Berkeley and a frequent critic of those running the university system.
"Their arrogance and autocratic attitude has got to stop. This is a public institution, it's not a private club for anyone. We're leaving it to the regents to run the UC, but it ought to be responsive to the people and the state Legislature."
Richard Blum, a member of the Board of Regents, dismissed the value of the Legislature's input.
"So are we led to believe that the state government being run in Sacramento is an example of how we're going to make the university even better? I don't think so," Blum said. "The university is better run today under President Mark Yudof than any time in the recent past. ...
"Our forefathers back in the 1860s had a great vision when they decided to make the University of California an independent land grant institution that was basically there to deliver the best public education for the students of our state," Blum said. "The system has grown to where it is the envy of the world."
He cited UC's superior academic rankings, its national prominence as a research institution, and its accessibility to low-income students.
"The problem is that California has consistently underfunded the UC system," Blum said. "If you look at it on a constant dollar basis, the amount of contribution for each student by the state has dropped in half and has been made up by us having to raise tuitions."
Yee and Roy Ashburn, R-Bakersfield, are co-authors of the Senate bill. Assemblymen Brian Nestande, R-Palm Desert (Riverside County), and Anthony Portantino, D-La Cañada Flintridge (Los Angeles County), are sponsors of a similar bill in the Assembly.
Ashburn said, "It's obvious that leaders of the University of California are out of touch with the real world. ... While California's families and businesses are cutting back, UC paychecks are getting fatter," he said in a written statement.
Portantino, chairman of the Assembly Higher Education Committee, said the measure would provide for "greater accountability and oversight of the UC Board of Regents ... by making the regents directly accountable to the public."
The four lawmakers behind the constitutional amendment said they were stunned to learn recently that the new chancellors at UC Davis and UCSF received salaries that were significantly higher than their predecessors. Yudof has defended both salaries of $400,000 or more as necessary to hire the best candidates.
"At a time when the University has raised student fees and is considering cutting the pay of its lowest-paid workers, it is simply wrong to be giving the two new chancellors more gold-plated benefits," Nestande said in a statement. "If students have to tighten their belts, then everyone in the UC system must also tighten theirs."
Los Angeles Times
April existing home sales rise by 2.9 percent...Associated Press
http://www.latimes.com/business/la-fi-homes28-2009may28,0,2840008,print.story
WASHINGTON -- Sales of previously occupied homes rose modestly from March to April as buyers who were brave enough to dive into the market took advantage of prices that were 15.4 percent below year-ago levels.
The National Association of Realtors said today that home sales rose 2.9 percent to an annual rate of 4.68 million last month, from a downwardly revised pace of 4.55 million in March.
The results slightly beat economists' forecasts. Sales had been expected to rise to an annual pace of 4.66 million units, according to Thomson Reuters.
The median sales price plunged to $170,200, down from $201,300 in the same month last year. That was the second-largest price drop on record after January, when prices fell 17.5 percent.
The number of unsold homes on the market at the end of April rose almost 9 percent from a month earlier to nearly 4 million. That's a 10-month supply at the current sales pace.
"We still need a continuing and consistent rise in home sales to get the inventory down," said Lawrence Yun, the group's chief economist. Only then, economists say, will prices stabilize and eventually recover.
Another big problem, Yun noted, is the lack of activity at the higher-end of the housing market, among properties priced at $750,000 or higher.
Interest rates are much higher for loans above $730,000 that cannot be purchased by Fannie Mae or Freddie Mac. And that's sapping demand for expensive properties.
"It's just stalled. completely stalled," Yun said. The Realtors group is pushing for the Federal Reserve to start buying up those loans, even if they are not backed by Fannie and Freddie. It also wants the higher loan limits to apply to the whole country, not just expensive areas like California and New York.
Many modified mortgages will default again, Fitch Ratings projects
Most nontraditional home loans -- especially subprime mortgages -- may become delinquent within a year anyway, study says...E. Scott Reckard
http://www.latimes.com/business/la-fi-home-loan27-2009may27,0,7495436,print.story
Modifying nontraditional mortgages will succeed for many people, but most such modifications will end up in default within a year, a major ratings company predicts.
The Fitch Ratings study examined subprime mortgages, jumbo loans and little-documented home loans that Wall Street bundled up to back mortgage bonds from 2005 through 2007. Those were the last years of the housing frenzy before delinquencies skyrocketed, home prices plummeted and investors' appetite for such "private-label" securities evaporated.
In the study released Tuesday, Fitch projected that 55% to 65% of these loans that are being reworked to avoid foreclosures may end up at least 60 days delinquent anyway within 12 months. For the subprime loans -- the mortgages for the riskiest borrowers, with credit dings, bankruptcies and outsized debt loads -- the projected 60-day delinquent rate was 65% to 75%.
Fitch based its projection partly on "shrinking disposable income, escalating job losses and possibly some deceptive practices on the part of the borrowers themselves," the New York company said.
The estimate comes as lenders and regulators, along with the Obama administration's $75-billion Making Home Affordable program, step up efforts to get mortgage terms modified to stem soaring foreclosures.
"Loan modifications hold clear value for many homeowners provided the modified payments are sustainable, but more often than not, reducing the home payments to an affordable level may not be enough to rescue borrowers who are overextended on other credit and expenses," said Diane Pendley, a managing director at Fitch.
The study said borrowers who are current on their loans are angry that others who took on too much debt and missed payments are benefiting from lowered interest rates, extended repayment terms and other modifications. There is also evidence that some able borrowers are choosing not to honor their obligations, the study said.
About 7% of U.S. home loans packaged into securities without government support were modified through April, including 18% of subprime loans, Fitch said. It expects the pace of modifications to increase.
The study excluded loans guaranteed or owned by Freddie Mac and Fannie Mae, the giant government-controlled mortgage firms, and home loans held on the books of lenders.
About 22% of the nearly $10 trillion in U.S. mortgages currently outstanding are held in the private-label mortgage pools that Fitch studied.
Washington Post
Feds won't step in to southern water dispute...GREG BLUESTEIN, The Associated Press
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/27/AR2009052701980_pf.html
ATLANTA -- Interior Secretary Ken Salazar said Wednesday the federal government won't try to broker a solution to a bitter three-state battle over water rights, but he urged Georgia, Alabama and Florida to seek a compromise outside of the courtroom.
"At the end of the day, the three states have got to come together and have got to figure out a way forward with a compact agreement between the three states," Salazar said shortly after taking a helicopter tour of north Georgia's reservoirs with Gov. Sonny Perdue.
The approach is in contrast to that of previous Interior Secretary Dirk Kempthorne, who convened meetings between the three states at the height of a severe drought in the region in late 2007. The governors broke off the negotiations last year after saying they could not resolve the complex battle that began almost 20 years ago. There have been no formal talks since.
And while severe drought conditions have largely subsided across the region, the litigation hasn't. A federal judge in Florida heard arguments earlier this month by lawyers for Alabama and Florida, who are challenging how the U.S. Army Corps of Engineers parcels out water from north Georgia reservoirs among the three states.
Perdue said Wednesday he'd prefer an agreement with his counterparts to a continued court battle.
"Ultimately, one litigation leads to another litigation to another appeal," Perdue said. "The ultimate solution is a mutual agreement among the three affected states."
Messages seeking comment weren't immediately returned by the offices of Florida Gov. Charlie Crist and Alabama Gov. Bob Riley. All three men are Republicans.
The fast-growing Atlanta region relies on the lakes for drinking water, while Florida and Alabama depend on healthy flows downstream for commercial fisheries, farms, industrial users and cities. The corps also is required to release adequate flows to ensure the survival of endangered species downstream.
The dispute began in the early 1990s and intensified during the historic drought that withered crops and sent water levels plummeting in the lake that supply Atlanta with most of its water.
Salazar, a former Colorado attorney general who helped hash out an agreement to a lengthy water fight between Colorado, Kansas and Nebraska, said drawn-out litigation over water rights usually leaves all sides upset. But he said it will be up to the states to broker a deal.
"I do not see us as playing the role of coming in and hammering heads, trying to get the deal done," he said. "It really is something that has to come from the three respective states, and if we can play a facilitating role in that, we will be happy to help."