Wall Street Journal-Ahead of the Tape

Economists expect to see the jobless rate tick higher to 5.6% and payrolls shrink by 65,000 jobs, the seventh consecutive month of losses.

What isn’t so clear is how much pain will reach beyond the sectors most brutalized during this downturn: manufacturing, construction and retail. That threesome has shed 658,200 jobs so far this year. All other private sectors combined have added 94,200 jobs. It is an echo of the bifurcation in corporate profits, where sectors outside of financials, housing and retail have held up OK.

Wall Street Journal-Former Bear Stearns CEO  Leaves JP Morgan

About two months after completing the shotgun-marriage sale of Bear Stearns Cos. to J.P. Morgan Chase & Co., former Bear Chief Executive Alan Schwartz has decided to leave the combined company.

Wall Street Journal-Heard on the Street

For investors, it would be best to avoid lenders with heavy exposure to home-equity loans written by outside mortgage brokers and other third parties that often employ lax underwriting standards. Instead, stick with banks that made their own loans during the real-estate surge.

Using this stance, investors should use caution when it comes to First Horizon National. According to a Goldman analysis, 15% of First Horizon’s home-equity loans, or 5% of all its loans, were made by outside parties. Outsider-written loans represented 22% of Fifth Third Bancorp’s portfolio, or 3% of its total loans. And 14% of Wells Fargo‘s home loans, or 3% of total loans, were written by third parties.

These three banks also have a relatively high number of home-equity loans that are at least 90% of the value of the underlying houses, which is worrisome. Some investors also are concerned about E*Trade, which also was a big buyer of home-equity loans.

Wall Street Journal-Wachovia Chief Risk Officer Leaves

Wachovia Corp. said its chief risk officer, Donald Truslow, intends to retire, marking the second high-profile departure at the bank in the last week and another sign that new Chief Executive Officer Robert K. Steel is shaking up the struggling bank’s executive suite.

Reuters-Housing Bill Creates Problems for the MBS Market

The ramifications of the U.S. housing market legislation passed by Congress last week are causing unintended stress in the $4.5 trillion mortgage bond market, a key source of money for U.S. residential loans.

Denver Post-Home Prices to Keep Falling According to Former Fed Chair Alan Greenspan

Former Federal Reserve Chairman Alan Greenspan said falling U.S. home prices are “nowhere near the bottom” and the resulting market turmoil isn’t showing signs of abating.

While the odds of a recession are 50-50, achieving stable markets will “take awhile,” Greenspan said Thursday in a CNBC interview.

Bloomberg.com-Treasury Secretary Expects Stimulus Package to Boost Economy

Treasury Secretary Henry Paulson said he expects the government’s fiscal stimulus plan will boost economic growth in the second half of the year, offsetting a housing downturn and high energy prices.

“While our economy faces substantial difficulties that will continue to be a drag on growth in the short term, it is important to remember our long-term fundamentals are strong,” Paulson said in a speech at the Exchequer Club in Washington today. “I expect our economy to continue growing this year although at a moderate pace.”

LA Times-Jobless Rate Rises to 4 Year High of 5.7%

Payroll cuts, however, weren’t nearly as deep as the 72,000 economists were forecasting. And, job losses for both May and June were smaller than previously reported.

July’s reductions marked the seventh straight month where employers eliminated jobs. So far, this year, the economy has lost a total of 463,00 jobs.

Washington Post-’Serious Times’ For Fannie Mae , Freddie Mac’s New Regulator

“These are very serious times for the mortgage market,” James B. Lockhart III, director of the nascent Federal Housing Finance Agency, or FHFA, said in an interview after briefing more than 400 employees at a meeting in the Mayflower Hotel in downtown Washington. “We [will] need more people, not less.”

President Bush created FHFA this week when he signed a sweeping housing rescue bill into law. The agency merges three existing federal entities into a new, tougher regulator for Fannie Mae and Freddie Mac. The agency will also oversee the nation’s 12 Federal Home Loan Banks, which, like Fannie Mae and Freddie Mac, were chartered by Congress to improve the nation’s housing capacity.

FHFA combines the Office of Federal Housing Enterprise Oversight (OHFEO), which has been overseeing Fannie Mae and Freddie Mac, with the Federal Housing Finance Board, which regulates the home loan banks and a small unit of the Department of Housing and Urban Development.

Authority over Fannie Mae and Freddie Mac has been greatly expanded. Lockhart, the director of OHFEO, became the head of FHFA when the president signed the housing bill Tuesday morning. Bush can now nominate a new director of FHFA and ask the Senate to confirm him or her to a five-year term. But congressional observers don’t expect any change at the top until a new president takes office next year.

The existing employees of the three agencies will be formally transferred to the FHFA no later than July 30, 2009. But Lockhart said that is likely to happen much sooner, perhaps this fall.

Washington Post-Economy Grows on Impact of Stimulus

The economy grew at a respectable pace this spring, despite the financial crisis, soaring fuel prices and moribund housing market. But as the impact of government stimulus payments fades and a boom in exports levels off, the economy is likely to face deepening challenges in the months ahead, economists said.

Consumers spent their economic stimulus checks and exporters shipped more goods abroad in the second quarter, according to a report from the Commerce Department yesterday, leading to a 1.9 percent annual growth rate in gross domestic product. That is not far below the nation’s long-term growth potential.

LA Times-IndyMac Bancorp to File for Chapter 7 Banruptcy

IndyMac Bancorp, the California mortgage insurer seized last month by the Federal Deposit Insurance Corp., says it will file for Chapter 7 bankruptcy protection.

In a filing with the Securities and Exchange Commission, Indymac says it expects the court will appoint a bankruptcy trustee promptly.

Upon the takeover of IndyMac Bank by the FDIC, it became the largest regulated thrift, a type of bank that focuses largely on mortgages and consumer loans, to fail.

Wall Street Journal-Hank Paulson’s Fannie Gamble

Lawerence Lindsey, former assistant to President Bush for economic policy, assaults the politics and the economic soundness of the recentley signed Housing and Economic Recovery Plan. In his Wall Street Journal OpEd he lays out this stimulus package as “Paulson’s Fannie Gamble.”