Unstructured Finance

When (and where) the 1% talk about 99%

By Jennifer Ablan and Matthew Goldstein

The last place you’d think a group of Wall Street financiers and ex-politicians would convene to come up with a master plan for fixing the housing crisis is a luxury lodge overlooking the Golden Gate Bridge. But in November, during the height of the Occupy Wall Street protests, that’s where 30 rich and powerful people assembled to “do a good thing” for America.

The meeting at Cavallo Point in Sausalito, Calif., aimed to “hammer out a business plan and chart a course through 2012″ for an investment vehicle that intends to buy up troubled mortgages and help out the homeowners all the while making a 20 percent annual return. You can read the details here

The group is led by Phil Angelides, the California politician, land developer and most recently, the chairman of a federal commission who led investigations into why the financial markets collapsed. The Federal Crisis Inquiry Commission was criticized for failing to come up with any real proposals preventing another crisis. Yet it seems to have inspired Angelides (his tenure at the FCIC ended last February) and others to come up with a market-based solution to the housing debacle.

Now that may be part of the answer. But once again, it seems to be a case of the well-off and powerful talking to themselves. In a letter to potential investors of Angelides’s Gordian Sword LLC, there’s lots of talk about doing good for America and its disastrous housing market. What’s missing at times, however, is the focus on the people hurting the most: Millions of Americans are struggling to keep up on their mortgage payments.

Consider this self-congratulatory remark in the letter

This narrative ends with a restored community: home prices level off, labor is free to move, consumer confidence returns, and perhaps the recovery can commence. Everyone involved — local government agencies and politicians, Servicers and even Wall Street — can take credit for neighborhood recovery.

Deals wrap: J&J’s $21.6 billion orthopedic buy

A general view shows Swiss medical devices maker Synthes' headquarters in Oberdorf, April 25, 2011. Reuters/Christian Hartmann

Johnson & Johnson is to buy Swiss medical devices maker Synthes for $21.6 billion in its largest ever buy, giving J&J a leading position in equipment to treat trauma. Synthes, which posted sales of $3.7 billion in 2010, makes nails, screws and plates to fix broken bones, as well as artificial spine discs. “It is surprising the deal has been struck between cash and shares. The market consensus, and our view, was it would be all cash, so the quality of the take-out is slightly lower than we anticipated,” said Morgan Stanley analyst Michael Jungling.

Phone company CenturyLink is to buy Savvis for about $2.5 billion in cash and stock to beef up its data center business as it looks to meet the growing demand for cloud-based services. The deal comes at a time when regional phone companies like CenturyLink, which acquired rival Qwest for $10.6 billion last year, are looking at ways to boost their business as consumers continue to disconnect their home phones in favor of Internet services and cellphones.

The U.S. recession ends, but not for you

unclesambegsTalk about a disconnect.

Experts say U.S. economic growth has returned, signaling the end of the longest and deepest recession since the Great Depression.

But the good news for Wall Street — where shares have been running up — is showing no signs of trickling down to Main Street, where unemployment is flirting with 10 percent, foreclosures continue to rise and record numbers of families now depend on government-issued food stamps to make ends meet.

“For every person out of work, for every family facing foreclosure, for every small business facing a credit crunch, the recession remains alive and acute,” U.S. Treasury Secretary Timothy Geithner said in testimony to a congressional committee.

Wells Fargo’s Malibu mess

Partying bankers, a foreclosed mansion, Madoff victims and a ritzy Malibu neighborhood that’s home to Tom Hanks: Friday’s Los Angeles TImes story had a little something for everyone.

The paper reported that Cheronda Guyton, a Wells Fargo senior vice president responsible for foreclosed commercial properties, spent weekends at 106 Malibu Colony Road throwing “eye-catching” parties, one of which had guests arriving in a yacht.

Eyepopping pictures of the mansion are available on the realtor’s website.

Welcome to Wal-Mart country

bentonvillewmtoneReuters is attending Wal-Mart’s annual meeting this week and will be sending news, tweets and images from the event via Shop Talk.

Our tour will include visits to the company’s distribution center, a Sam’s Club warehouse store and a Walmart supercenter.

We’ll also get updates on the discounter’s plans for its international business, U.S. store remodels and, of course, send news from the annual meeting.

Shuttering Starbucks

starbuckscorona1Reuters checked out some of the stores that Starbucks is closing in California’s Inland Empire – an area well known for being a leader in home foreclosures.

Some of the coffee shop closures made sense, some didn’t and some had us wondering just what Starbucks was thinking.

This yet-to-be closed cafe, on the left, is in an upscale mall near a eerily quiet housing development — a no-brainer.