Tony Sasso responds

Click title for story link. Check out comments to the story on the site. October 30, 2008 A few months ago, the Orlando Sentinel endorsed me in the February special election saying, "Mr. Sasso has the experience and command of the issues facing the district. . . . He's been a champion of managed growth . . ."While I wasn't surprised that the Sentinel endorsed my developer opponent for Florida House District 32, it is my belief that the issue of commuter rail, as now proposed, was the deciding factor in the endorsement. I am a proponent of How Shall We Grow, which includes commuter rail. And while I made this clear, I also said we should consider going back to the table to make sure we get the best deal for everyone, not just for CSX.There are many issues that are as important, or more important, to the citizens of District 32, including education, jobs, taxes, insurance and the environment.In seven months as a representative, I have been an independent voice, often crossing party lines, working for my constituents, not lobbyists. As a freshman, I received awards from the teachers, League of Conservation Voters, Association of Counties and the Marine Resources Council. I have been endorsed by the NRA, police and fire organizations, teachers, nurses, aerospace workers and the Sierra Club. These are citizen groups that know that I listen to and work for the public.

DCA wants Haven to rethink SR 60 growth amendment

Click title for story link. State planning officials at the Florida Department of Community Affairs have finally weighed in on Winter Haven's latest major growth map amendment. I wrote last month that regional planners thought this was probably intense enough to be considered a DRI whenever development is proposed for the property on either side of SR 60 (the idea that Winter Haven extends that far south still seems surreal) as spinoff from the CSX project actually materializes. None of the comments from state planners, to which Winter Haven officials are supposed to respond by the end of the year, was surprising.

Residents contribute suggestions for growth plan

Click title for story link. By Shelly GodefrinNews Chief staff Published: Friday, November 14, 2008 at 4:01 a.m. Last Modified: Friday, November 14, 2008 at 8:05 a.m. WINTER HAVEN - Residents had a chance to help plan the future of Winter Haven at a community meeting Thursday morning. The information received during this and other meetings will be used in preparation for the city's Evaluation and Appraisal Report and a new comprehensive plan. The comprehensive plan, which is created about every 10 years, will be used for the city's growth through 2020. Senior Planner Sean Byers said the purpose the meetings is to look at what has worked and what hasn't worked in the past.

FDOT District One Rail Traffic Evaluation

The Florida Department of Transportation (FDOT) District One Rail Traffic Evaluation study team will hold a second workshop on Wednesday, December 10, 2008. The purpose of this workshop will be to review the work accomplished to date and receive feedback from the public. Meeting time, place and agenda are as follows: Wednesday, December 10, 2008 5:30 p.m. to 7:30 p.m. (Presentation at 6:30 p.m.) The Lakeland Center Lake Hollingsworth Room 701 West Lime Street Lakeland, Florida 33815-1509 Park in the red parking lot. The workshop will involve an open house component and a formal presentation. Attend the event any time between 5:30 p.m. and 7:30 p.m. to speak with the study team and view project materials. At 6:30 p.m., the study team will give a formal presentation. The presentation will be given only once during the workshop. Following the presentation there will be an opportunity for public comment. For directions to The Lakeland Center, visit their web site's directions and parking page by clicking the link below or by copying and pasting the link into your internet browser: http://www.thelakelandcenter.com/x_evt_info/directions-n-parking.aspx. You may also contact the center by phone: (863) 834-8144. This workshop is being held in compliance with Title VI of the Civil Rights Act of 1964 and related statutes. Public participation is solicited without regard to race, color, national origin, sex, age, religion, disability or family status. Persons who require special accommodations under the Americans with Disabilities Act or persons who require translation services (free of charge) should contact Ms. Arlene Barnes at 863-519-2349 or Arlene.Barnes@dot.state.fl.us at least seven (7) days prior to the meeting date. Following the workshop, presentation materials will be posted on the District One Rail Traffic Evaluation Study Web Site. You may visit the project web site by clicking this link: http://www.fdotrailtrafficevaluation.com/ The web site has been updated to include a Frequently Asked Questions (FAQs) document as well as the first issue of the project newsletter. For your convenience, a copy of the newsletter is attached to this email. Thank you for your continuing interest and participation in the District One Rail Traffic Evaluation Study.

ALL ABOARD!!!

Click title for story link. Can the insane people of the City of Winter Haven be stopped? This is ridiculous. Meeting in special session, Mayor Nathaniel Birdsong, convened a special meeting of the Winter Haven City Commission for the purpose of holding the final public hearing on the development order for the Evansville Western inter-modal rail terminal to be built on 318 acres of land south of Winter Haven and north of Highway 60. Commissioners held a public hearing taking input from the municipalities of Lakeland and Lake Wales, Polk County Commission, Central Florida Regional Planning Council, Greater Winter Haven Chamber of Commerce and interested citizens. The meeting began at 9:00 a.m. and just prior to 11 a.m. Commissioners voted unanimous approval for the development order for the project. The Commission then entertained a motion to approve a development agreement with Evansville Western to begin the project. A public hearing was held with no public comment presented regarding the development agreement. The public hearing was then closed and the Commission unanimously approve the motion.

Why Is The State Paying CSX Based on 2005-2006 Land Values?

Click title for story link. Very brief point to ponder, and I’ll come back to it later. No one seems to know exactly how much the state is paying CSX and for what in the rail realignment deal. It all depends on how you define it. But figures I’ve heard range from $491 million to almost $700 million. All of those numbers are bound up in one way or another with the value of the 61 miles of land and track the state plans to buy from CSX. That value was tabulated in 2005 or 2006 as the secret negotiations unfolded. So let me ask you: Is your house worth as much now as it was in late 2005? Maybe our friend Jane Healy, late of the Orlando Sentinel editorial page, can explain to us why state taxpayers, at the bottom of a historically severe recession, should pay CSX based on boomtime 2005-06 land values. Jane?

Critics grow louder about rail cost

Click title for story link Nov. 13, 2008By Isaac Babcock Observer Staff Critics of Winter Park's entry into the commuter rail system argued for a re-examination of the costs of the project at Monday's City Commission meeting, citing that it would be the most expensive system per mile in the country's history. The new angle of attack came as part of a prolonged push from City Commissioner Beth Dillaha and some city residents, who said the city is rushing too quickly into a deal to become part of a proposed commuter rail system before understanding the financial implications. "It is the biggest project we will have ever taken on," Dillaha said. "I think there is always wisdom in re-examining a project." She said the system would cost $10.5 million per mile — a record for U.S. rail systems. "It's the most expensive rail project in the history of the United States," she said.

BNSF Railway looking at new technologies to reduce air pollution

Click title for story link. Winter Haven dismissed cancer concerns, but other parts of the nation do not look the other way when the health and welfare of it's residents is at jeapordy!!! Andrew Edwards, Staff Writer Article Launched: 11/10/2008 01:55:40 AM PST SAN BERNARDINO - Experimental exhaust filters, locomotives with multiple engines, and diesel engines with built-in brains are among the technologies that government officials and BNSF Railway executives are considering to reduce air pollution. BNSF has received serious criticism from Westside residents after environmental regulators announced earlier this year that people living near the 168-acre rail yard face elevated cancer risks. The danger, in the eyes of the California Air Resources Board, is the diesel pollution emitted by trucks and locomotives. The obvious imperative is to reduce diesel pollutions. One method that BNSF executives are already using to cut back on pollution is using engines that automatically shut down when left idling. Tom Ison, a BNSF executive who oversees hub operations from St. Paul, Minn., to Los Angeles said new diesel engines come equipped with an "electronic control module" that monitors how much fuel engines are consuming. "On a low idle, when it's not being used, it senses that," he said.

Amtrak weighs return of direct route to Miami

Click title for story link. It would use Florida East Coast Railway tracks paralleling I-95. By LARRY HANNAN, The Times-Union It's a little early to get nostalgic for 2001, but Amtrak officials have begun talking about turning back the clock and taking a second crack at a passenger train route from Jacksonville to Miami. Amtrak offers passenger service from Jacksonville to Miami on its Silver Star and Silver Meteor trains, but the Silver Meteor takes nine hours and goes to Orlando, while the Silver Star takes almost 11 hours and goes to Tampa on tracks owned by CSX. Using the Florida East Coast tracks would create a quicker route down the east coast of Florida while also allowing stops in cities like St. Augustine, Daytona Beach, Fort Pierce, West Palm Beach and Fort Lauderdale.

Amtrak seeks arbitration over delays on Union Pacific tracks

Click title for story link. More than a year after a breakthrough deal was reached to help Amtrak trains operate on schedule, the passenger railroad is seeking arbitration to resolve disputes with the Union Pacific Railroad, officials said Monday. Freight disruptions and slow zones on track owned by the Union Pacific are severely delaying Amtrak trains, including on routes through Illinois.

Calif. voters approve $10B bond for bullet trains

Click title for story link. Nov 5, 5:44 PM (ET)By DON THOMPSON LOS ANGELES (AP) - California voters are green-lighting the nation's most ambitious high-speed rail system, approving a nearly $10 billion bond to put speeding bullet trains capable of topping 200 mph between the state's major metropolitan areas. The measure, which passed with 52 percent support Tuesday, will fund the first phase of what is projected to be a $45 billion, 800-mile project built with state, federal, local and private money. Backers sold the proposal as an innovative alternative to soaring airfares and gas prices. In the closing weeks of the campaign, they touted estimates that it would create nearly 160,000 construction-related jobs and 450,000 permanent jobs.

Mass. To Acquire Some CSX Rail Assets

Posted Oct 2, 2008> TRANSPORTATION> > Mass. to acquire some CSX rail assets> > > By Susan A. Baird> PBN Web Editor> > BOSTON – A multi-year rail-transportation agreement between the> Commonwealth of Massachusetts and intermodal transportation giant CSX> Corp. “significantly increases options for commuters and lays the> groundwork for improving the flow of product shipments,” state and> company officials said in a statement today.> > The agreement will expand commuter-rail service to Worcester by the> end of the month and help speed completion of the South Coast Rail> project. (READ MORE) Financial details were not disclosed.> > Commuter rail “is an important part of the governor’s statewide> transportation plan to relieve congestion,” Mass. Transportation> Secretary Bernard Cohen said in a statement today. “Reaching> agreement on important terms for four strategic rail assets,> including the CSXT-owned portion of the lines to the South Coast,> moves a top priority – South Coast Rail – one step closer to> reality.”> > The agreement – the product of nearly four years of talks between> CSX and state and federal officials, including the Massachusetts Bay> Transportation Authority (MBTA) – calls for the addition of five> commuter trains to serve Worcester, plus possible additional trains> “as rail capacity is created,” the parties said today. It also> “will facilitate the Patrick-Murray administration’s plan to> extend commuter-rail service to New Bedford and Fall River; provide> the potential for even more commuter service for Worcester; and> create the ability of area companies to ship or receive products on> double-stack rail cars,” helping reduce truck traffic on the> region’s crowded highways.> > “This is an historic day for all of Massachusetts, and most> especially for Worcester and the South Coast,” said Lt. Gov. Timothy> P. Murray, who led the state negotiating team. Joining him for> announcements today at South Station in Boston and Union Station in> Worcester were, among others, U.S. Sen. John F. Kerry, U.S. Rep.> James P. McGovern and CSX Chairman, President and CEO Michael J. Ward.> > Kerry described the pact as “a milestone in the public> transportation history of Massachusetts – a history which, for the> people of Central and Southeastern Massachusetts had been marked by> decades of insufficient rail service.” The deal “is the result of> months of intense negotiations between CSXT and federal and state> officials,” he added, “and it has the potential to provide an> economic boost to the entire commonwealth.”> > “Thanks to our partners, Senator Kerry and Congressman McGovern,> we’ve reached an agreement that increases commuter options and> ultimately could make Worcester the new rail hub of New England,”> said Murray, who has been working to expand regional commuter-rail> service in the state since his tenure as Worcester’s mayor. “We> appreciate CSXT staying at the table and making this agreement a> reality.”> > The “main elements” of the deal, as laid out in today’s> announcement, are:> > • By Oct. 27, the MBTA will extend five Framingham-Boston commuter> trains to Worcester, via CSX Transportation Inc.’s Boston Line.> > At a future date, the commonwealth intends to purchase CSXT’s rights> in the line, “increasing the potential for additional commuter> service, while also taking control of dispatching and maintenance.”> > • As soon as possible, the commonwealth and CSXT will “begin> increasing the vertical clearances of bridges along the railroad main> line between I-495 and the New York state line,” to make it possible> to accommodate double-stack freight trains along the full length of> that line. “The commonwealth will assume responsibility for raising> highway bridges, while CSXT will be responsible for lowering tracks.”> > • By June 2009, Massachusetts will buy CSXT’s New Bedford-Fall> River Line, along with the company’s rights in the Boston Terminal> Running Track and West First Street Yard in South Boston, and the> Grand Junction secondary line from Beacon Park Yard to Cambridge, Mass.> > • To expand commuter-rail capacity over time, the state “is> investigating whether it can help CSXT to relocate the company’s> locomotive service facility out of Boston, in the near term.> Ultimately … CSXT also plans to move its operations out of Beacon> Park,” the parties added. (The sites to which those facilities would> move have yet to be determined.)> > “We salute the vision and perseverance of Massachusetts leaders at> every level of government,” said Ward, the CSX chief executive.> > “The entire nation is recognizing the benefits of freight railroads> to the environment, the economy and traffic conditions on our> highways,” he added. “One train can carry the load of 280 trucks,> and is three to four times more fuel efficient.> > “The Massachusetts plan turns existing freight-rail infrastructure> into a 21st-Century solution for both commuters and businesses.”> > Additional information about transit projects in the Bay State is> available from the Mass. Executive Office of Transportation & Public> Works at www.eot.state.ma.us.> > The Massachusetts Bay Transportation Authority – established by> state legislation in 1964, to replace the former Metropolitan Transit> Authority (MTA) – traces its history back to the establishment of a> public ferry in 1631. Additional information, including schedules for> MBTA bus, trolley, subway, boat and commuter-rail service, is> available at www.mbta.com.> > CSX Corp., based in Jacksonville, Fla., is a leading provider of> rail, intermodal and rail-to-truck trainload services. It is the> parent of CST Transportation Inc. (CSXT), which took over part of the> Conrail system in 1999. Additional information is available at> www.csx.com.

CSX deal will help SouthCoast rail plan

Click for story link October 24, 2008 5:25 PM A comprehensive multi-year rail transportation agreement for the $100 million purchase of CSX Corp. rail lines across the state, including tracks needed to bring commuter trains to Fall River and New Bedford, was announced recently by state officials. "This is an historic day for all of Massachusetts, and most especially for Worcester and the SouthCoast," said Lieutenant Governor Timothy P. Murray, who led the negotiations with CSXT.

CFDC approves commuter rail resolution

Click title for news link The Central Florida Development Council has approved a resolution supporting commuter rail. The resolution was approved Monday. The County Commission will be approached next month by Orlando and Tampa business leaders to support a resolution, perhaps the same one CFDC considered.

Federal Bail Out And Rail Profits

Yes... We taxpayers are asked to bail out our Nation's financial system .... but our rail system doesn't seem to have any problems at all ..... see the rail financial news below. But Orlando City Hall, Winter Haven City Hall, and our Tallahassee State House still seem to think the State's taxpayers need to pay extortion to CSX Railroad at the expense of many good statewide public services just to get a few public benefits for Orlando.... Read one Conservative Congressman's crystal clear perspective on the "financial bail out" below ..... then ask yourself if we will not have the same crystal clear historical record after the fact in just a few short years or even months .... as to just how bad for Florida's taxpayers the negotiations were between FDOT and CSX if the "deal" is allowed to stand as is? Now also ask yourself how railroads can have record earnings when the economy is so "depressed" for everyone else .... is it because it is the most fuel efficient mode of transportation we have and they have no real competition to keep freight rates down? Why does everything in the grocery store cost more now than it did just a few short weeks and months ago? So again .... why is it we need to give the rail industry corporate welfare .... when they don't seem to care about the public's welfare? 10/22/2008 NS sets five financial records, drops operating ratio below 70 for first time How’s this for quarterly financial results: Norfolk Southern Corp. set five records and posted a sub-70 operating ratio in the third quarter.Railway operating revenues increased 23 percent to a record $2.9 billion, income from operations jumped 31 percent to an all-time-high $894 million, net income soared 35 percent to a record $520 million, diluted earnings per share rose 41 percent to a record $1.37 and NS’ operating ratio improved 2 points to a best-ever 69.1.“It was an exceptional quarter for our company,” said NS Chairman, President and Chief Executive Officer Wick Moorman during the Class I’s earnings conference this morning. “It’s a confirmation of the strength of our diversified business portfolio and ability to offset volume declines in the housing-related and automotive sectors.”Although coal demand was strong and NS handled record coal tonnage, continued weakness in the automotive and housing-related industries contributed to a 1 percent year-over-year traffic volume decline to 1.9 million units. Automotive volume fell 30 percent to 86,639 units vs. third-quarter 2007’s total. General merchandise revenue increased 13 percent to $1.5 billion despite a 6 percent volume decline, coal revenue jumped 52 percent to $876 million as volume rose 6 percent and intermodal revenue increased 16 percent to $560 million against flat volumes. Revenue per unit jumped 24 percent to $1,527 compared with third-quarter 2007’s total.Revenue gains primarily can be attributed to rate increases and higher fuel surcharges, said Executive Vice President and Chief Marketing Officer Don Seale.Meanwhile, railway operating expenses jumped 20 percent to $2 billion compared with third-quarter 2007’s expenses. The main culprit: fuel costs, which soared 64 percent to $474 million as the average price per gallon shot up 65 percent.Skyrocketing fuel costs have been a “consistent theme in 2008,” said EVP-Finance and Chief Financial Officer James Squires.— Jeff Stagl LETTER FROM CONGRESSMAN GENE TAYLOR OF MISSISSIPPI 4TH TO CONSTITUENT October 16, 2008 Dear David: Thank you for expressing your opposition to the Bush Administration's request to allow the Secretary of the Treasury to spend $700 billion to bail out investment losses by Wall Street firms. I voted against the Emergency Economic Stabilization Act (the bailout bill) when it was defeated in the House by a vote of 205 to 228 on September 29. I voted against it again on October 3, but this time the House passed it by a vote of 263 to 171. The bill that passed Congress was badly flawed. It will expose taxpayers to hundreds of billions of dollars of debt and yet would do almost nothing to solve the underlying problems in the economy. The second bill actually was worse than the first bill. The only changes were to add $150 billion in special interest tax breaks, and increase FDIC insurance from $100,000 to $250,000 per account with no increase in the premiums paid by banks. The amount of federally-insured deposits will increase by $670 billion, from $4.46 trillion to $5.13 trillion. Our nation is facing a severe economic crisis caused primarily by the greed of Wall Street investment firms and the government's failure to protect taxpayers and the public from the excesses of financial speculators. Mortgage brokers, investment banks, and speculators created a housing boom that turned into a credit bubble and now has ended in a devastating bust that affects all sectors of the economy. On September 18, Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke met with Congressional leaders to request broad authority to purchase bad investments in order to get those losses off the books of Wall Street firms. Two days later, Secretary Paulson sent a 2½ page bill requesting absolute authority to spend up to $700 billion to buy bad mortgage-backed debt from investment firms and then eventually try to sell them. Over the next week, Congressional leaders negotiated some improvements to the plan. The agreement would require companies that dump their bad assets on the government to give the government warrants for company stock. If the companies recover and their stock prices rise, the government could sell the stock to repay some of the bailout cost. Congressional negotiators also got the Administration to agree that companies bailed out by taxpayers would have limits on the pay, bonuses, and 'golden parachutes' of their executives. The deal would set up an independent oversight board and a special inspector general to guard against fraud and corruption. Finally, the Treasury would get the $750 billion in three installments rather than all up front. I appreciate that the Congressional negotiators improved the Administration's proposal, but it is still a bad bill based on the same very bad idea. Secretary Paulson would still have up to $700 billion with broad discretion to decide what bad assets to buy, who to buy them from, how and when to sell them, and who to hire to handle all the transactions. This is very dangerous authority to give to any person or agency. There is enormous potential for insiders to game the system at taxpayer expense and for the process to expose taxpayers to many more liabilities. I do not know if the Secretary of the Treasury reads his own agency's financial reports, but the federal government does not have $700 billion. In order to buy $700 billion in bad investments, the Treasury would have to sell $700 billion in U.S. Treasury securities. The Chinese, Japanese, and other Asian and European banks and investors would take several hundred billion dollars out of their current investments and loan that money to the U.S. government. The net effect to U.S. taxpayers would be to substantially increase our debt and interest payments owed to foreign countries, institutions, and investors in order to gamble on bad Wall Street investments. The net effect to the global economy would be to take $700 billion that currently is in relatively good investments and launder that money through the Treasury into bad investments in order to take losses off the books of a few Wall Street firms. For the past three decades, Wall Street has lectured us about the efficiency of markets. They said it was good for the country when plants relocated to Mexico, or China, or Malaysia, or when loyal workers were forced to take early retirement or wage and benefit cuts. Now that Wall Street is facing the consequences of its own greed, we are told that big financial firms are too important to let the market determine their fates. Even if I could get past the fact that all the money would be borrowed, I have zero confidence that the Administration's scheme would improve the national economy. Buying up bad debts will not restore confidence to the financial system. Putting the burden on taxpayers will not eliminate the consequences of the past decade of unwise and excessive credit and investment practices. I am afraid that all of these bad investment losses will have to be absorbed, and I believe they should be absorbed primarily by the people who are responsible for them rather than by the taxpayers. The only way the government can restore confidence to the markets is to establish proper protections and oversight of financial transactions. The risky investment strategies were products of the unregulated or poorly regulated sectors of the financial industry. Federally regulated mortgages guaranteed by FHA and VA did not offer subprime loans and have not had significant default or foreclosure problems. Most depository institutions regulated by FDIC did not make or purchase subprime or other risky loans. That activity was driven by the unregulated investment firms and mortgage brokers. The Bush Administration, the Federal Reserve, and the Securities and Exchange Commission refused to perform adequate oversight while investment banks infected the national economy with risky, complicated securities. The Republican-majority Congress helped to cause the problem by weakening federal regulation of financial markets. In 1999, Congress enacted the Gramm-Leach-Bliley Act, which repealed the Glass-Steagall Act, a Depression-era law that had prohibited banks from engaging in securities investment and insurance. I voted against Gramm-Leach-Bliley and predicted at the time that it would put banks and depositors at risk. The Glass-Steagall Act was enacted in 1933 after investigations showed that some bank failures during the Great Depression had been caused by fraud in the securities and investment activities of the banks. Glass-Steagall enacted a common-sense separation of the core functions of a bank - account deposits and lending - from the risks of investment speculation. After Glass-Steagall was repealed, banks, insurance companies, and investment firms merged under large holding companies. The entrance of large banks into the investment market encouraged the unregulated investment firms to engage in riskier investments in order to attract investors with the possibility of higher returns. In 2000, the Republican Congress also snuck through legislation that prohibits regulation of derivatives, which are complex and risky transactions that bet on the future of other financial instruments. The 2000 financial deregulation package also included the 'Enron loophole,' which exempted Enron's energy trading from federal regulation. That provision was written by Enron lobbyists and was pushed by Sen. Phil Gramm of Texas. The deregulation package was added to a large must-pass funding bill a few days before Christmas in 2000, with no separate vote allowed on the regulation exemptions. Over the past decade, the mortgage industry relaxed loan standards and made it very easy for people to buy homes. The increase in home purchases and a construction boom of larger new homes caused housing prices to rise rapidly. Many people who had affordable mortgages were enticed to refinance their homes or take second mortgages to spend the equity in their homes. Over three years, from 2001 through 2003, 45% of U.S. households with a first mortgage refinanced their homes. The mortgage industry was so confident in rising home values that they started issuing low-document loans without verifying the buyers' incomes, and subprime loans to people with poor credit histories and little income. The banks, mortgage brokers, and investors did not care if buyers borrowed more than they could pay because the homes themselves were still increasing in value. In fact, overextended home buyers created demand for new mortgages, either through refinancing or through sales to new buyers. The mortgage and investment industries invented new ways to make money from mortgages. Investment firms bought mortgages from banks and brokers, and then bundled them together into mortgage-backed securities (MBS). They sold the MBS to investors and used that money to buy more mortgages. Wall Street firms designed an elaborate scheme of interlocking financial products that they believed would insure their investments, so they did not have to hold reserves to cover potential losses. Investment banks that held mortgage-backed securities created collateralized debt obligations (CDOs) to sell the cash flow from mortgage payments. The mortgages would be sliced into several 'tranches,' (French word for slice) with the top rated mortgages in the tranche that pays first but at a lower interest rate. Investors holding the lowest rated mortgages receive higher interest payments but have a much higher chance of default. Wall Street created another financial instrument to try to hedge against that risk of default. Credit default swaps (CDS) are contracts that work something like insurance. The owner of an investment could pay a premium to insure the risk of default. If the investment defaults, the seller of the CDS has to cover the loss. However, because credit default swaps are exempt from regulation, anyone can buy a CDS for anything if he can find a willing seller. There is no requirement that the purchaser of a CDS actually owns the financial instrument that he is insuring from default. As a result, investors could use CDS to 'insure' against the default of someone else's property. With so many ways to cash in on mortgages, Wall Street firms, investors, and mortgage brokers funded boiler room operations to push subprime mortgages, interest-only mortgages, and other risky loans. Some mortgage lenders engaged in fraud to inflate both the appraisal of homes and the incomes of the buyers. Many subprime lenders engaged in predatory lending practices, such as mortgages with low teaser rates and then large balloon payments. These mortgages forced borrowers to refinance, but they were charged prepayment penalties when they did so. Boiler room lenders increasingly included yield spread premiums (YSP) in subprime mortgages. A yield spread premium is essentially a kickback to the mortgage broker for selling a mortgage with a higher interest rate than the borrower could have received. Fannie Mae and Freddie Mac did not cause the mortgage crisis, but they contributed to it and became victims of it. Fannie Mae and Freddie Mac are government sponsored enterprises (GSEs) owned by stockholders, but are chartered by the federal government to serve the mortgage finance industry. They buy mortgages from banks and other mortgage lenders so that those lenders have funds to make additional loans. Fannie Mae and Freddie Mac bundle the mortgages together into mortgage backed securities that they sell to investors so that the GSEs have funds to buy more mortgages. Fannie Mae and Freddie Mac did not buy subprime loans directly from banks. The commercial banks and savings and loans that are regulated by the federal government also did not make subprime loans. The GSEs did make unwise investments in mortgage-backed securities issued by investment banks that included subprime mortgages. No government agency or policy required any lender to make subprime loans. The current financial difficulties of Fannie Mae and Freddie Mac are largely due to the fact that they are not diversified. They only invest in mortgages, so their fortunes are completely dependent on a healthy housing market. When housing sales stalled last year, new mortgages stopped coming in, and investors reduced their holdings of securities and stocks tied to housing loans. The Bank of China sold $4.6 billion of Fannie Mae and Freddie Mac securities in July and August. The loss of investment capital caused short-term cash flow problems. The Federal Housing Finance Agency recently put Fannie Mae and Freddie Mac in conservatorship and replaced their CEOs. The Treasury has agreed to purchase up to $100 billion of preferred stock from each of the GSEs in order to give Fannie and Freddie sufficient funds to buy new mortgages from lenders. The flaw that burst the housing and credit bubble was the simple fact that, over the long run, housing prices cannot keep rising much faster than incomes. In 2006 and 2007, housing prices stopped increasing. In some communities with struggling economies, housing prices fell dramatically. A few months later, the number of mortgage delinquencies and defaults grew because borrowers who got behind in their payments could no longer refinance or resell their homes. Over the past year, more and more low subprime loans and adjustable rate mortgages have become delinquent. These mortgage defaults threaten the mortgage-backed securities (MBS), the collateralized debt obligations (CDO), and the credit default swaps (CDS) that were backed by those mortgages. There are so many of these MBS, CDOs, and CDS everywhere in the financial and investment system, that the uncertainty about their value has frozen the credit markets. The Bush Administration's proposal would purchase the worst of these investments in order to open up the traditional lending market. I strongly oppose the authority for the Treasury Secretary to purchase credit default swaps or collateralized debt obligations that are based on mortgages. If the government buys mortgages, at least we get real estate collateral that could be sold to repay some funds to taxpayers. The derivative contracts, especially the credit default swaps, are not covered by whole mortgages or other assets that the government could expect to sell. Investment banks issue and sell securities to governments, corporations, and institutional investors. They also provide financial advice and services for their corporate clients, including help with mergers and acquisitions. Investment banks are different than commercial banks, which primarily handle deposits and make loans. Although the Gramm-Leach-Bliley Act removed the wall between commercial banks and investment activities, banks that hold deposits that are insured by the federal government are required to maintain sufficient capital reserves. Investment banks are not regulated by FDIC. At the beginning of the year, Wall Street had five big investment banks: Goldman Sachs, Morgan Stanley, Lehman Brothers, Bear Stearns, and Merrill Lynch. All five have been substantially changed because of their holdings of questionable mortgage-backed securities and derivatives. Bear Stearns was purchased by J.P. Morgan Chase after the Federal Reserve agreed to take $30 billion of Bears Stearns' bad investments. Merrill Lynch was purchased by Bank of America. Lehman Brothers declared bankruptcy. Goldman Sachs and Morgan Stanley have decided to become regulated bank holding companies so they will be eligible to borrow funds from the Federal Reserve. The market has punished the big Wall Street investment banks for making bad business decisions. That is as it should be. I do not believe the taxpayers should absorb their losses or the losses of their investors. I am very bothered by the Treasury's action to bail out AIG, an enormous insurance company. The insurance subsidiaries of AIG are in good financial condition because they are required to maintain access to enough capital to cover their insurance liabilities. However, the parent holding company was heavily invested in mortgage-backed securities and overextended in risky credit default swaps. Investors lost confidence in the parent company and the stock price plummeted. Secretary Paulson decided that AIG was 'too big to fail,' and agreed to give AIG up to $85 billion in exchange for warrants to purchase 80% ownership of the company. This action is particularly infuriating to me because the Bush Administration sent a Treasury official to Congress last year to oppose my bill to allow the National Flood Insurance Program to offer wind and flood coverage in one policy to avoid disputes over the cause of damage. The Treasury official said that 'Federal government interference in the wind insurance market will displace private markets, promote riskier behavior, be unfair to taxpayers, and be economically costly.' Now, the same Department of Treasury of the same Administration has decided to bail out a big private insurance company, an action that certainly displaces private markets, promotes risky behavior, is unfair to taxpayers, and is economically costly. We now can conclude that the Administration's opposition to hurricane insurance reform was not based on any principle or conviction. They simply modify their positions to serve the interests of the insurance industry and Wall Street firms. Thank you again for sharing your views about this bill. If I may be of any further assistance to you, please do not hesitate to ask. Sincerely, GENE TAYLOR Member of Congress GT:jad

The Impact Project

Click title for site link. What is THE Impact Project? The Trade, Health & Environment Impact Project (THE Impact Project) is a collaboration of community and university partners focused on reducing the impacts of trade, ports and goods movement activities on health and community life. The collaborative is funded by The California Endowment.

Rail/Road Math

Click title for story link. Same song and dance, different company. October 20, 2008 Rail/Road Math Jim Young, chair of Union Pacific, was interviewed in a "Q&A" in Sunday's Oregonian (if it's online, I haven't found it). Here's an interesting exchange on Commuter Rail: Q: Do you see Union Pacific getting into the business of passenger rail with the new emphasis on mass transit? A: There's an infrastructure challenge on the highways. We are approached by city leaders who want to put commuter rail on the freight rail. That's a complete mistake. The last thing we want to do is take freight off to make room for commuters. That freight just ends up on the highway. For example, a load of lumber moving out of the Pacific Northwest displaces two to three trucks. Capacity is so tight, it wouldn't be a good thing for the environment or the country. I can understand the community's perspective. But what I have to protect is the freight business.

Art The Plumber Supports Thompson

The comments within this story are very enlightening. Click title for story link. Contributed by Bill Rufty - Posted: October 17, 2008 6:16:11 PM There has been a lot of ink and Internet time devoted to "Joe The Plumber," who the Republican presidential campaign team has adopted as their battle cry signifying what they say is their concern for the "little guy." But Art The Plumber is supporting a Democrat, at least in a competitive race for state senator in Senate District 17, which includes the southern half of Polk and neighboring counties.

Rail Traffic Evaluation

I've copied and pasted the email message sent out yesterday from FDOT representitives. The Florida Department of Transportation District One Rail Traffic Evaluation Website is up and running. You may visit the website by clicking on this link: http://www.fdotrailtrafficevaluation.com/. Please note that some applications cannot open a web page directly from an email link. If this happens to you, open your internet browser application (Internet Explorer, America Online, Firefox, etc.), copy the address from this email and then paste it into the browser's address bar. The website includes an overview of the project, downloadable presentations and materials from previous public workshops, links to related municipal and transit-oriented resources, and contact information for the project. The website will be updated with new information as the project moves forward. Thank you very much for your interest and participation in the District One Rail Traffic Evaluation project.

Transportation at a Crossroads."

Click the title above to link to the story site. Turn on your speakers and watch part II. It is informative.