President-elect Barack Obama has pledged to spend billions on U.S. infrastructure as soon as he takes office in January, a welcomed light at the end of the tunnel for states and municipalities struggling with funding of public projects as a result of the credit crisis and recession. With few details known, news outlets are trying to guess where the infrastructure money would be deployed under the Obama administration. – Research Recap

————

1.  GMAC Rescue Plan Falters, Raising Bankruptcy Concern – Caroline Salas and David Mildenberg – … The lender’s $38 billion debt exchange didn’t lure enough bondholders, leaving GMAC shy of the $30 billion in regulatory capital demanded by the Federal Reserve for it to become a bank, GMAC said in a statement … – Bloomberg

2.  Japan Housing Agency to Drop Fannie, Freddie Model – Kathleen Chu and Mariko Yasu – Dec. 12 (Bloomberg) — The Japan Housing Finance Agency, with $429 billion in assets, said it needs a new business model after copying the failed practices of Fannie Mae and Freddie Mac. – Bloomberg

3.  BlackRock’s Fink Proposes Mortgage Purchases to Obama – … Under the plan proposed by BlackRock, the Treasury would buy new mortgages issued by Fannie Mae and Freddie Mac, with interest rates ranging from 4 percent to 4.5 percent, Fink said at a conference in New York today. The purchases would increase demand for housing and stem depreciation, Fink said.  … – Sree Vidya Bhaktavatsalam – Bloomberg

————

Recession to worsen, deflation a risk: report - Jim Christie – The “nasty” U.S. recession will tighten its grip next year as unemployment rises and weak home and stock prices imperil consumers, finance firms and debt-laden businesses, a UCLA Anderson Forecast report released on Thursday said. – Reuters

————

1.  Interest rate on US T-bills turns negative -  Michael Mackenzie  – Flight to safety helps Treasury sell $30bn – Nervous investors on Tuesday paid for the privilege of owning US government debt, pushing interest rates on three-month Treasury bills to negative levels for the first time in postwar history. – FT.com

2.  Increase in hard-to-value assets raises concerns – Hard-to-value assets at the biggest U.S. financial institutions reached $610 billion in the third quarter. Assets labeled as hard to value and hard to sell increased 15.5% in the three months that ended Sept. 30. The increase could mean that several large firms have hidden threats on their balance sheets. Financial Times 

————

Bill Frey’s radical ideas for how to fix the housing market – Posted by: Peter Coy – … But that’s not the end of Frey’s radical ideas. He’s been writing Congress about some ways to fix the housing market. He’s certainly not going to win any popularity contests with these suggestions, but the ideas seem to be grounded in common sense. … has 7 suggestions – read on at BusinessWeek

————

Mortgage rates hit 4 1/2 year low – … Rates dipped to 5.77% on a 30-year, fixed rate loan the day after the government’s announcement, down from the previous Monday’s 6.06% average, according to Keith Gumbinger, vice president of HSH Associates. And the downward trend has persisted. … – CNNMoney.com
————

We Need a Bailout Exit Strategy – Let’s not forget that free markets made America strong – CHRISTOPHER COX – Wall Street Journal Opinion 

————

GSEs Look to Follow FHA’s Lead on Streamlined Refis – Paul Jackson – In a twist of fortune, it appears the GSEs are — for once — looking to follow the lead of the Federal Housing Administration, with their regulator hinting Wednesday afternoon that a plan to allow for streamlined refinancings is under consideration … In particular, the GSEs are considering a plan to allow some borrowers to refinance without the use of an updated appraisal. – housingwire 

————

The January 2009 Chicago Fed Letter (Number 258) “Raising capital: The role of sovereign wealth funds” by Anna L. Paulson`   – This article describes what sovereign wealth funds do, where their funding comes from, and what drives their investment strategies. It also highlights some of the policy issues that their activities raise..
————

Cox: Accounting Is Not a Fiscal Policy Tool – In a speech today in Washington, SEC Chairman Cox dashed the hopes of those who sought a suspension of fair-value accounting. 12/8 – Tim Reason – CFO.com 

————

HUD Publishes New Reverse Mortgage Servicing FAQ – John Yedinak – The Department of Housing and Urban Development recently published a new FAQ document for servicing questions related to HECMs.  The FAQ includes 12 different questions that cover a range of topics. – Reverse Mortgage Daily

————

FDIC chief Sheila Bair sees housing pain into 2010 – The Associated Press – Google News

————

How We Got Here:  Capitalist Fools – Behind the debate over remaking U.S. financial policy will be a debate over who’s to blame. It’s crucial to get the history right, writes a Nobel-laureate economist, identifying five key mistakes—under Reagan, Clinton, and Bush II—and one national delusion. – by Joseph E. Stiglitz January 2009 -  Vanity Fair   – thanks Ira Artman