As anticipated:

AP News (Yahoo): The impact on existing common and preferred shares, which have slumped in value in the last year, will depend on how investors react to Paulson's assertion that they must absorb the cost of further losses first.

The Federal Reserve and other federal banking regulators said in a joint statement Sunday that "a limited number of smaller institutions" have significant holdings of common or preferred stock shares in Fannie and Freddie, and that regulators were "prepared to work with these institutions to develop capital-restoration plans."

So, if I read this correctly, individual investors will take it in the shorts and the government will make banks whole on shares they hold?

Anyway, according to the article, the plan will immediately transfer $5 billion of mortgage backed debt to the Treasury, meaning it's added on to the already staggering national debt. The Treasury will also buy $1 billion of worthless stock in the companies.

Money quote:

Paulson said that it would be up to Congress and the next president to figure out the two companies' ultimate structure and the conflicting goals they operated under — maximizing returns for shareholders while also being required to encourage home buying for low- and moderate-income Americans.

Emphasis added. Yet another example of how free markets and the profit motive solve every problem and meet every policy need, as long as the profits are privatized and the risks are socialized. Somebody ought to go to jail.

News reports confirm a story by the Wall Street Journal yesterday saying that the federal government is poised to take over mortgage backers Fannie Mae and Freddie Mac. Forbes has more details. It could cost taxpayers tens of billions of dollars, and will virtually wipe out the value of stockholder shares.

These government-sponsored, publicly traded companies back half the mortgages in the U.S. and have made it possible for average people to participate in the American dream of home ownership. John McCain's economic advisor Phil Gramm is the mastermind behind turning that dream into a nightmare for millions of Americans, who are facing the worst foreclosure crisis since the Great Depression.

In related news, a Nevada bank is the 11th bank failure this year. According to this Bloomberg report, the rate of bank failure in John McCain's "mental recession" is at a 14 year high. John McCain's son was on the board of directors of Silver State Bank, the latest failure, until his resignation in July.

Flashback: The Keating Five scandal, and how John McCain skated.

The U.S. Department of Energy's Energy Information Agency (EIA) projects that such drilling would add some 200,000 barrels of oil per day at peak oil production in about 20 years. This is about 0.2 percent of world production, and the EIA describes this as too small to have any significant affect on oil prices.

Check out the press release and report here at the Center for Economic Policy and Research.

This report attributes media reporting (or lack thereof) to American's opinions that off-shore drilling will lower gas prices, which is not true. The CEPR report shows, in Table 2, that of 267 major television news broadcasts mentioning oil drilling only one (less than 1/2 of 1%) mentioned EIA data refuting the claim that gas prices would be significantly affected.

Once again the media is manipulating public opinion. The media will possibly manipulate the outcome of this election.

When will we learn? What can be done?

Sony is recalling thousands of Vaio laptop computers due to an overheating concern. In the US Sony is recalling 74,000 machines and 440,000 worldwide.

The company said the recall is for its VGN-TZ100, VGN-TZ200, VGN-TZ300 and VGN-TZ2000 series.

US Consumer Product Safety Commission announcement:

Remedy: Consumers should stop using the recalled notebook computers immediately and contact Sony to determine if their notebook is affected. The firm will arrange for an inspection and repair, if needed.

Consumer Contact: For additional information, contact Sony toll-free at (888) 526-6219 anytime, or visit the firm’s Web site at www.sony.com/support

A friend told me that in the past few weeks he has encountered two restaurants in town where he paid with a debit card and had the entire account number and expiration date printed on the receipt. His attorney provided him with a copy of TCA 47-18-126 which he presented to the cashier at the second establishment. The man was astonished and called his boss.

Oddly enough, the 'customer copy' met the requirement of the law. The cashier offered to keep that copy and give my friend the 'business copy.'

Ed McMahon, the development issues expert, not the professional sidekick, returns to East Tennessee this week with a symposium on sustainable development Thursday at the Knoxville Convention Center.

The event starts at 4 p.m. and is open to the public. I urge you to turn out. McMahon's a great speaker and a font of good information.

Regular KnoxViews readers will recall that McMahon spoke about development last year in Blount County, an event covered extensively by Randy here and here.

The Sunday roundup of Tennessee liberal bloggers is here. Go check out what everyone's been saying this week.

Something to look forward to:

The federal utility announced today a double-digit increase in its power rates this fall. The exact increase will be disclosed later this month, but it is expected to be the largest since TVA launched its fuel cost adjustment program in 2006. The program is set up to allow the power provider and its utilities to pass fuel price fluctuations on to customers.

TVA President and CEO Tom Kilgore said Wednesday in a conference call that customers could expect increases in electricity rates similar to those experienced by other utilities nationwide, citing a percentage range in the "mid-teens to mid-20s."

The higher rates will go into effect Oct. 1.

Someone should notify the Congressional Republicans, so they can give speeches before an empty chamber. Undoubtedly, such a protest would drive electricity prices down.

TDOT reaffirms its plans for the extension of the "Orange Route" east into Jefferson County, as per a blog a few days ago: Link...

A blogger posted that nobody would care until TDOT had it in its plans. In announcing that the Orange Route will not be a toll road (because of local citizen opposition!), TDOT makes it pretty clear that it has every intention of building the "Green Route" and, in so doing, forever destroying a huge part of east Knox and Sevier and Jefferson Counties. See:http://www.knoxnews.com/news/2008/aug/05/tdot-nixe s-toll-parkway/

As TDOT Commissioner Nicely put it: "We simply will not further consider tolling as a funding mechanism for this project nor for a possible extension of the parkway on to I-40 East."

Maybe all this will go away because TDOT will not find the money without tolls, or maybe TDOT will give up paving the state and spend money on railroads and maybe the Tooth Fairy will Rule. But I doubt it. There is too much money to be made "developing" and paving the state for people who care about sprawl and the ruination of east TN to stay indifferent.

The Knoxville News Sentinel reports that officials are rethinking the Technology Corridor, which has not been as successful as hoped and is not being actively promoted and marketed. There's discussion of opening it up for mixed use development that allows for residential, retail, and general office space.

There's no mention of the root problem. High tech companies aren't going to move to an area that doesn't support education and only graduates people qualified to work in call centers.

Michael Silence has the rumor...

Blogging bakers are bemoaning the demise of their beloved White Lily flour. According to the Cleveland Plain Dealer:

Lately, some customers have been buying five and six bags at a time, hoarding it out of fears that the specialty flour is changing. The recent closing of the original White Lily mill in Knoxville, Tenn., has them wringing their flour-dusted hands over the idea that White Lily is now being milled exclusively by Yankees in northwest Ohio.

Outraged bakers have been blaming the J.M. Smucker Co., the Orrville jam and jelly maker that bought the White Lily brand two years ago. Convinced that an Ohio company couldn't possibly appreciate a flour that touts itself as "a Southern tradition since 1883," they have trash-talked Smucker and threatened to boycott its products on their blogs.

Not so fast, says the J.M. Smucker Co.

AP

Exxon Mobil Corp. reported second-quarter earnings of $11.68 billion Thursday, the biggest quarterly profit ever by any U.S. corporation...

That's about three billion gallons of gas! But it wasn't enough and shareholders wanted more, so their stock is off this morning.

Short review: This thing rocks!

The local paper is running a misleading ad that offers "CERTIFICATE OF DEPOSIT - 6.00% APY - FDIC INSURED."

Nowhere in the ad does it mention that the company offering the "CD" is not a bank and is not FDIC insured, or that the CD is not a traditional CD as you would find at a bank.

Apparently FPL only used 25% of the money customers voluntarily paid for renewable energy projects on anything related to renewable energy. Most of that was spent on out of state renewable energy credits. The majority of the money was spent on administrative, marketing and management expenses.

After allowing the company to collect over $11 million in just less than five years, the State of Florida decides to do an audit. Florida will now decide whether the customers are due a refund or if FPL gets a second chance to invest in renewable energy projects.

This is just one reason I am wary to make a donation through a business. You can pay money to a local utility to help the less fortunate pay their bills. You can add a dollar or more at your local grocer to donate to a variety of charities. You can drop a dollar in a can to help a local cause. How do you ever know where your money goes? Is it just a feel good moment gone bad?

Is a job at the VW plant in Chattanooga really worth $250,000.00 in public support? See Link...
ssee-subsidy-deal-are-taxpayers-being-taken-for-a-ride/

for the start of an analysis that I have not seen initiated by any media around here.

I'm setting up a new notebook PC (more on that later) and thought I'd try out some of the remote home/office computer access services. I tried WebEx PCNow and GoToMyPC. My report follows...

Science Applications International Corporation is establishing a worldwide corporate "shared services center" in Oak Ridge and consolidating "transaction-based functions associated with human resources, finance, and corporate purchasing" from San Diego and McLean, VA at the new facility.

The shared services center, located in an existing SAIC facility on Laboratory Road, will create more than 150 new jobs in the Oak Ridge area through 2009, bringing SAIC's total Oak Ridge employment to nearly 900.

Senior SAIC executive Leo Hazlewood will head up the center. Hazlewood said, "We were drawn to the Oak Ridge area because of its stable work force, modern telecommunications infrastructure, favorable business environment and attractive quality of life. We've developed a great deal of respect for the business and social environment by virtue of our presence in the area for the past 30 years."

Recruiting for positions at the SSC will begin in the fall and interested candidates can visit http://www.saic.com/career for more information.

WATE

Bridgeview Grill, located on Neyland Drive in Knoxville, will close July 25, University of Tennessee officials confirmed Friday.

The pilots union for US Airways said Wednesday the airline is pressuring pilots to use less fuel than they feel is safe in order to save money.

I think pilots should get the fuel they request. They are the ones flying the planes. They are the ones responsible once in the air. Give them, and us, a break.

Did you know? "...an average roundtrip flight costs about $299 worth of fuel per passenger, company officials said." How can an airline sell tickets for less than that?

Back to back commercials on MSNBC Countdown Monday evening, unedited except to trim for length. Be sure to watch the last 10 seconds.

YouTube video...

That's the apparent almost confirmed rumor at TennesseeTicket.com

As a follow up to Brian's post, banks and credit unions are required by law to file quarterly "call reports" with the FDIC (in the case of banks and savings and loans) and the NCUA (in the case of credit union) to report their financial condition.

You can look up your bank or credit union at the following links to a) make sure they are insured, and b) check their financial statements and ratio reports, which are a quick snapshot of their performance.

• FDIC bank/thrift lookup

• NCUA credit union lookup

If you can't locate your financial institution, call them and ask for their FDIC certificate number (bank or savings and loan) or their NCUA charter number (credit union). If they don't have one, you should probably be concerned. (Just ask former customers of the SIBC.)

The easiest way to check your bank's health is to use BankRate.com's Safe & Sound® ratings. They comb through the call report data to rate banks, savings and loans, and credit unions on peer performance, industry standards, and key benchmarks.

Here are some example ratings for area banks and credit unions of interest:

CBBC: *****
Home Federal: ****
Tennessee State Bank: ****
Bank of America NA: ***
SunTrust: ***
Regions Bank: ***
First Tennessee: **
TVA Credit Union: ****
UT Credit Union: ***
ORNL Credit Union: ***

BankRate.com also provides a narrative report on their findings and how they arrived at the ratings (find your bank, select the "memorandum" option).

For all of these report and ratings, keep in mind that call reports are filed quarterly and it takes a while for the data to make its way into the databases (they are currently available through March 2008). As we have seen, a lot can happen in one quarter!

Bank and savings and loan deposits are insured up to $100,000 per depositor ($250,000 for certain retirement accounts) by the FDIC. Credit union deposits are insured for like amounts by the National Credit Union Association.

(Joint accounts are divided to calculate liability, so for example a husband and wife can have combinations of joint and/or individual accounts up to $200,000 insured. Here's more info from the FDIC on how that works.)

Thanks to the "mental recession," I suspect scenes like this will be repeated across the country in the coming months.

A number of regional banks are in trouble. Shares of First Horizon National Corp., parent of First Tennessee Bank, fell 24% today.

If you have an amount deposited in a bank account (any bank) in excess of the FDIC-insured $100,000, I recommend you withdraw it and place it elsewhere. Immediately.

From the inbox, here's a document filed with the bankruptcy court handling the Goody's bankurptcy by a company who says they are owed $78,822 for three shipments of "Ladies Pants."

The company, Kane Apparels Ltd. of Sri Lanka, made three shipments in March of this year. The price per pair of ladies pants was $6.78 for the first shipment, $6.75 for the second, and $6.95 for the third.

They submitted as evidence an email sent to Goodys demanding payment. The email states that the company "employs nearly 1000 Poor Employees ... most of whom are young women."

NOTE: Kane Apparels is a "certified Garments Without Guilt" manufacturer. Garments Without Guilt is a Sri Lanka garment industry group "protecting worker's rights, creating opportunities for education and personal growth, and helping to alleviate poverty in our communities."

In two weeks the federal minimum wage will go from $5.85/hr to $6.55/hr. Unless, of course, you are a worker with disabilities, full-time student, under the age of 20, a worker that receives tips, or a student learner.

According to 2007 data, approx. 1.7 million workers earn at or below minimum wage. That is approx. 1.3% of all wage and salary workers. Almost half of minimum wage workers are under the age of 25.

"About three-fifths of all workers paid at or below the Federal minimum wage were employed in this industry [leisure and hospitality], primarily in the food services and drinking places component. For many of these workers, tips and commissions supplement the hourly wages received."

As of January 1, 2008, Eight states have either no minimum wage laws (5) or minimum wage rates lower than the federal rates (3). All five states with no minimum wage laws are in the South.

It appears California ($8.00/hr), Massachusetts ($8.00/hr), and Washington ($8.07/hr)have the highest minimum wage. Liberals!

Steve & Barry's has a cash problem. The credit market and "generally poor environment for apparel retailers" has forced them to file for bankruptcy.

Don't know how this will affect their existing stores. The one in SoKno has only been open a year or so.

Check out our review of the Hum-Dinger Drive-In in Maryville.

City of Knoxville Mayor Bill Haslam, along with Knox County Mayor Mike Ragsdale, have a plan to end chronic homelessness. Part of this plan is to make the old Flenniken School in SoKno (on Flenniken Ave., near the Martin Mill Pike and Chapman Hwy intersection close to town) a permanent, supportive facility for the homeless.