•  Bank of America has decided to settle claims by state's attorney generals regarding certain risky loans by Countrywide.  The settlement covers nearly 400,000 borrowers.  "With this settlement, we have the first of its kind mandatory loan modification program," said Illinois Attorney General Lisa Madigan, who filed a civil lawsuit alleging Countrywide had engaged in unfair and deceptive practices.

•  MetFund has never used Countrywide as a lending source nor produced a loan which was a "high cost loan".

To move forward sometimes it’s wise to look back and understand the past.

In 1791, Alexander Hamilton, then Secretary of Treasury, made a deal to support his Bank project.  The result was the First Bank of the United States.  Modeled after the Bank of England it differed from today’s central banks as it was partly owned by foreigners.  This bank was only 20% responsible for the money supply.

Thomas Jefferson and James Madison were bitterly opposed as they saw it as an engine for speculation, financial manipulation and corruption.  In a letter to Thomas Jefferson in 1787, John Adams wrote: "All the perplexities, confusion, and distress in America arise, not from defects of the Constitution, not from want of honor or virtue, so much as from downright ignorance of the nature of coin, credit and circulation."  Those were two shrewd men.

During Andrew Jackson’s administration the destruction of Second Bank of the United States became a defining moment in dual party politics with the Democrats opposed to its continuation and the Whigs (later the Republican party) supporting the bank.

Another financial crisis prevailed during the Civil War and the result was the National Banking Act which required all national banks to back up their notes with Treasury securities.  As described by Gresham’s Law, soon bad money from state’s banks drove out the new, good money.

Bad money is money that has a substantial difference between its commodity value and its market value, where market value is lower than exchange value, or the actual value is lower than the market value.  Good money is money that shows little difference between its nominal value (i.e., the face value of the coin) and its commodity value (i.e., the actual rate at which the coins are exchanged for bullion versions of the commodity).  By this definition, our dollars are now bad money as they are no longer linked to any commodity but are instead based on the full faith and credit of the United States (i.e. its ability to tax us).

•  Still chuckling over Allen Greenspan's "shocked disbelief"...

•  PNC Financial Services is expecting big losses from National City purchase.

•  Surprise: Existing Single-Family Home Sales Rise 6.2% in September to highest level in more than a year.

•  Rising delinquencies in the second home market?

•  FDIC controlled Indy Mac mails 15,000 loan modification proposals to its borrowers.

•  Treasury Dept is eyeing the FDIC proposal which includes using credit enhancements as a tool to encourage loan modifications.

•  Foreclosure filings up 71% in 3rd quarter from 2007's third quarter.

•  Another investment banker gets a TARP Position:  the current Export-Import Bank chief is named interim chief investment officer.

•  The FHFA says home prices for 'Pacific' states have fallen 19.4% over the past year.

•  Bless their hearts - the MBA calls for extending the 'temporary' hike in Fannie Mae and Freddie Mac loan limits.

•  Yay!  Rates are starting to react to the lower than expected inflation (i.e. energy markets) and the weak housing market.  Mortgage rates have been heading lower.

Remembering back to this past spring, who would have thought that we would see gas at less than $3 per gallon this soon again (or perhaps ever).  It was evident today as I drove into Vienna along Maple Avenue and then along Lee Highway to the post office in Merrifield.  And even though mortgage rates haven’t quite reached the lows of 2003, the prime rate is close, making home equity lines of credit and consumer loans less expensive.

Kiplinger’s has developed a list of the 10 things that are going right.  You can find it on Yahoo! here.  And even though we are all enjoying the lower energy prices I hope that we don’t stop the rapid search and development for alternatives to foreign oil.  And with all due respect to the list here are some of my favorites:

1.  Americans are tuned in now and listening carefully to what has been happening and what will likely occur in the near future.  Politics, finance and international events have captured our attention and we want answers and accountability.

2.  The current economic chaos has many of us rethinking our financial outlook and plans.  And if we haven't already, more of us will turn from crass consumerism to saving more of our income and living less on credit.

3.   Things are cheaper especially real estate.  If you are currently renting a home in Northern Virginia or Montgomery County, Maryland, and plan on being in the area for a while you may have to consider purchasing.  Likewise, if you have had your eye on a larger home or a new home in Vienna, now could be your moment.

•  TARP = Troubled Asset Relief Program

•  Only 18% of the US adults polled this past spring could answer all of the following questions correctly:
    1.  Who has the majority in the US House of Representatives?
    2.  Who is the US Secretary of State?
    3.  Who is the prime minister of Great Britain?

•  The 10 year T-Bill has once again bid a 4% plus yield and looks to go higher with any stock market resurgence.  Big money leaves bonds and flows into equities.

•  Veterans will find it easier to refinance out of subprime loans into VA backed loans due to a new law recently enacted.

•  Could there be a democratic led 90 day moratorium on foreclosures?  Depends on election results.  Be sure to cast your ballot!  It counts and it matters.

•  JP Morgan Chase's charge-offs of their home equity lines of credit (HELOCs) triple from year ago quarter!  Wells Fargo is reporting home equity deterioration.  Will the HELOC market be the next shoe to drop?

•  In a global, coordinated move with other central banking authorities, the Federal Reserve cut the overnight lending rate by a half percentage point from 2.0% to 1.5%.

•  Look for lower rates on your home equity lines of credit (HELOC).

•  Be aware that long term rates (.e. fixed rated mortgages) may move in the opposite direction.  Rick Santelli, on-air editor for CNBC, suggests that with the Fed's move yesterday to guarantee higher yielding corporate paper, there will be less investor interest in treasury bills and bonds.  This could have the perverse affect of sending their yields higher.

•  By a vote of 263 to 171 the House passes the revised bailout package.  The dollar drops in value and rates are up.

•  New kid on the block: Wells Fargo lures Wachovia from the grasp of Citigroup.

•  Freddie Mac reports a "positive" response from a pilot program geared to getting hard-to-reach borrowers who are headed toward foreclosure to consider a loan modification.