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    Daily Digest 1/27 – Bear Stearns May Have Cheated Clients, Social Security to Run Permanent Deficits, Shelters Could Close

    by DailyDigest

    Thursday, January 27, 2011, 4:00 PM

  • E-mails Suggest Bear Stearns Cheated Clients Out of Billions
  • CBO: Social Security To Run Permanent Deficits
  • Inflation? No Problem … If You Avoid Food
  • Majority of Shelters Could Close with Proposed Budget
  • Arizona Seeks Waiver To Cut 280K From Medicaid Rolls
  • Quinn Calls for Borrowing Plan
  • In U.S., One in Four Unemployed Adults in Financial Distress

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Economy

E-mails Suggest Bear Stearns Cheated Clients Out of Billions (stephen)



According to the lawsuit, the Bear traders would sell toxic mortgage securities to investors and then sell back the bad loans with early payment defaults to the banks that originated them at a discount. The traders would pocket the refund, and would not pass it on to the mortgage trust, which was where it should have gone to be distributed to the investors who owned the bonds. The Marano-led traders also cut the time allowed for early payment defaults, without telling the bond investors. That way, Bear could quickly securitize defective loans, without leaving enough time for investors to do their own due diligence after the bonds were sold and put-back any bad loans to Bear.

CBO: Social Security To Run Permanent Deficits (david)



The Congressional Budget Office said Wednesday that Social Security will pay out $45 billion more in benefits this year than it will collect in payroll taxes, further straining the nation’s finances. The deficits will continue until the Social Security trust funds are eventually drained, in about 2037.

Inflation? No Problem … If You Avoid Food (jeff)



Some food and beverage companies have already reacted to higher commodity costs with price hikes while others are discussing the possibility of raising prices. Starbucks (SBUX, Fortune 500), for example, has boosted the price of some drinks. And the chief financial officer of McDonald’s (MCD,Fortune 500) hinted in an earnings conference call with analysts Monday that the company may “raise prices where it makes sense” in reaction to higher prices of beef and other commodities.

Majority of Shelters Could Close with Proposed Budget (Georgia)

Domestic violence shelters will face major state cuts if the Georgia Department of Human Resources’ proposed budget gets approved. Shelter advocates say a majority of state shelters could close if this happens. The state currently spends about $4.5 million on family violence services. In the DHR’s proposed budget they’re either looking to slash funding by nearly 70 percent or getting rid of funding entirely. 


Arizona Seeks Waiver To Cut 280K From Medicaid Rolls

Confronting a $1.1 billion budget shortfall, the Arizona Legislature has given the go-ahead to apply for a federal waiver to drop 280,000 residents from the Medicaid rolls, reports Healthcare Finance News.
If approved, the waiver would save Arizona about $540 million per year, but would also drastically reduce the Grand Canyon State’s opportunity to receive federal matching funds.


Quinn Calls for Borrowing Plan

Governor Pat Quinn says he backs a plan to borrow money to pay the state’s bills. 
The state’s plan involves creating general obligation restructuring bonds, which would allow the state to pay off its current obligations to health and human service providers and schools… Illinois has over $8 billion in unpaid bills. 


In U.S., One in Four Unemployed Adults in Financial Distress

About one in four unemployed adults in the United States today, 26%, reports they are either falling behind on their bills or facing more serious financial difficulties such as bankruptcy or foreclosure. This compares with 21% of underemployed Americans and 8% of adults who are neither unemployed nor underemployed.


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