William Black: Not With A Bang, But A Whimper: Bank Of America’s Derivatives Death Rattle

BofA Said to Split Regulators Over Moving Merrill Derivatives to Bank Unit

Winston-Salem/Forsyth County Schools (WSFCS) expended $38,400 of ESEA Title I funds on a program that included some expenses that appeared to constitute entertainment, a potentially unallowable use of these funds. WSFCS officials told us that the LEA paid ESEA Title I Recovery Act funds to the Housing Authority of Winston-Salem (HAWS) for a 2009 summer educational program for students entitled the “Summer Teaching Enrichment Program” (STEP). According to STEP officials, the ESEA Title I funds comprised the majority of STEP’s 2009 budget, which also included funding from a local corporation and the local police department. WSFCS and STEP officials described the program as providing remedial academic assistance in reading, math, science, and technology to help students retain educational gains over the summer months. Furthermore, the WSFCS Superintendent said that the district’s arrangement with the STEP program was to use district funds to pay only for teachers’ salaries, and that other sources of funds would be used to pay for noneducational activities. HAWS officials said that they were instructed by a WSFCS official to make sure that all of the children enrolled in the program attended ESEA Title I schools and that they obtained confirmation from the district that all of the children did so. In our review of documents, we found evidence that in addition to paying teachers a total of $17,270 in salaries, HAWS also used ESEA Title I funds to pay for STEP activities that included other salaries and field trip-related expenses, including tickets for movies, a water park, fast food, and other entertainment. The invoice that HAWS provided to WSFCS lacked supporting documentation for the full range of activities paid with ESEA Title I funds. Instead, payment was made at a rate of $800 per child attending the program, but no attendance records were provided in support of the invoice. WSFCS staff could not provide documentation to show that the district obtained multiple bids or price quotes for contracts for goods and services. WSFCS officials also could not provide us with documentation of the district having obtained multiple bids or price quotes for contracts for services. WSFCS officials also acknowledged that for at least one contract, they were not in compliance with WSFCS’s purchasing policy to solicit bids/price quotes for purchases of items costing more than $5,000 but less than $90,000.

GAO Review of LEA Controls over and Uses of Recovery Act Education Funds

http://www.gao.gov/products/GAO-10-747R

Probably the most egregious violation cited by the GOA was the purchase order provided by the Housing Authority of Winston-Salem was not signed off by a Title 1 ESEA Director (Title I of the Elementary and Secondary Education Act of 1965). Per the report, “A WSFCS official with signature authority acknowledged that the signatures on the purchase order were not in accordance with LEA practice.”

The report goes on citing no-bid contracts as well as failures to obtain price quotes prior to use of Recovery Funds which even the school system admitted in at least one case violated not just the Recovery Act but also the school system’s purchasing policies. The school system has since rectified most of not all the cited issues by moving the funding columns from one source to another, instead of using “stimulus funds” they used funds from within the schools budget or via budget amendments. Per Kerry G. Crutchfield, CFO for WSFC Schools:

“We received the final regulations on the more stringent advertising and bidding requirements for purchases and contracts AFTER we were required to submit our budgets in June of 2009 for the 2009-10 school year, Once we received those final regulations, it was our intent to transfer all purchase and contract expenditures to non-Recovery Act funding sources, but until we could process the budget amendments and expenditures transfers through the North Carolina Department of Public Instruction, we had to make expenditures from the sources of funds in our original budgets. The GAO auditors examined our records in the period of time while we were applying for the budget amendments that would transfer these budgets and expenditures to non-Recovery Act funds. After the auditors left and finished their report, the transfers were approved and completed.

The net result is that each expenditure questioned in their report is no longer funded through Recovery Act dollars, We complied with all state and federal regulations in advertising and bidding for those expenditures when not funded through Recovery Act dollars.”

The Justice Department claims that Wachovia traded well over $350 Billion with Mexican "casas de cambio” (currency- exchange houses) between 2004 and 2007. These exchange houses are used by “immigrants” to send money back to Latin American but prosecutors claim drug cartels also use these same facilities to laundry and transfer their own money. Prosecutors further claim Wachovia transferred over $4 Billion in bulk cash from foreign Latin exchanges to Wachovia accounts in the U.S.

Prosecutors claimed the Bank does not have proper controls in place to prevent the use of these money exchanges for illegal activity. The Lead Prosecutor in Miami U.S. Attorney Jeffrey H. Sloman actually stated Wachovia blatantly disregarded the banking laws:

"Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations by laundering at least $110 million in drug proceeds. Corporate citizens, no matter how big or powerful, must be held accountable for their actions."

The $160 million fine represents the biggest penalty ever imposed under the Bank Secrecy Act, which requires financial institutions to carefully track transactions to detect suspicious activity. Wachovia has agreed to pay $110 million which constitutes the profits from these transactions and $50 million in fines while the actual prosecution has been delayed for 12 months while Wachovia meets it’s obligations under the settlement.

In a few weeks, the Treasury Department’s czar of executive pay will have to answer this $100 million question: Should Andrew J. Hall get his bonus?

Mr. Hall, the 58-year-old head of Phibro, a small commodities trading firm in Westport, Conn., is due for a nine-figure payday, his cut of profits from a characteristically aggressive year of bets in the oil market.

There is little doubt that Mr. Hall is owed the money under his contract. The problem is that his contract is with Citigroup, which was saved with roughly $45 billion in taxpayer aid.

Corporate pay has become a live grenade in the aftermath of the largest series of corporate bailouts in American history. In March, when the American International Group, rescued at vast taxpayer expense, was to give out $165 million in bonuses, Congress moved to constrain the payouts, and protesters showed up at the homes of several executives.

As it happens, one can see some of those homes from Mr. Hall’s front lawn in Southport, not far from his office. But his case is more complex. Mr. Hall, raised in Britain and known for titanium nerves and a collection of pricey art, is the standout performer at an operation that has netted Citigroup about $2 billion over the last five years. If Citigroup will not pay him the huge sums he has long made, someone else probably will.

The added wrinkle is that Mr. Hall works in a corner of the trading world that appears headed for its own infamy. Regulators are pushing to curb the role of traders like Mr. Hall, whose speculation in the energy markets may have played a major role in the recent gyrations of oil prices.

That suggests that last summer, drivers paid more at the pump, at least in part, because of people like Andrew J. Hall. How do you hand $100 million to a guy who may have profited because gas hit $4 a gallon?

Whatever the answer, the case of Mr. Hall highlights the hazards of mixing the public interest with capitalism at its most unbridled, and it raises basic questions of fairness. There was outrage last week over a report by the New York attorney general that about 5,000 traders and bankers at bailed-out firms got more than $1 million each last year. So it could be politically untenable for a company like Citigroup to pay gargantuan sums even to those who generate gargantuan profits — the very people the company must retain if it is to recover.

Among those who believe the Phibro-Citigroup relationship is doomed by bailout politics is the $100 million man himself. People with knowledge of talks between Phibro and Citigroup say that Mr. Hall is quietly pushing for what is being called “a quiet divorce” from his parent company and that he has had preliminary talks with one possible suitor.

Wary of publicity and worried that he will become the next marquee villain of the financial collapse, he has discussed with Citigroup’s leadership a number of possibilities, including a spinoff.

Mr. Hall has plenty of sway over the fate of Phibro because much of its value is thought to flow from his expertise and track record. If he leaves, he could start another firm and bring colleagues with him.

History suggests that he is accustomed to getting his way. Two years ago, Mr. Hall waged a legal fight with the Historic District Commission of Fairfield over an 82-foot concrete sculpture that he had placed on the front lawn of his 7,300-square-foot Greek Revival mansion, where he lives with his wife, Christine. He thought he did not need permission to display the work, but because of his neighborhood’s preservation restrictions, the state Supreme Court ultimately ruled that he did.

“The strange part is that I think he would been approved if he’d asked for permission,” says Richard Hatch, who headed the commission at the time.

Mr. Hall lent this work to the Massachusetts Museum of Contemporary Art, though not because he lacks display space. A few years ago, he bought a medieval castle in Germany from the neo-expressionist painter Georg Baselitz, and he and his wife have turned the property, said to contain roughly 150 rooms, into a private museum for their collection.

“He has about 4,000 pieces in what could easily be described as one of the world’s finest collections of contemporary art,” said a New York dealer, Mary Boone. It includes pieces by Andy Warhol, David Salle, Bruce Nauman and Julian Schnabel.

The son of a British Airways employee who trained pilots, Mr. Hall was raised near London, and he graduated from Oxford University with a degree in chemistry. He moved to the United States in 1981 to work for British Petroleum. His trading there caught the eye of Phibro, a firm that started as Phillips Brothers early in the last century and which, in the 1970s, was the home of Marc Rich, the fugitive pardoned by President Bill Clinton.

By 1987, Mr. Hall was running Phibro. It is based today in a generic red building, part of a bucolic, 53-acre office park that was once a dairy farm. (Its former neighbors included the notorious AIG Financial Products division.) The trading floor is a modest room that was once the company’s kitchen, before it downsized about a decade ago.

Mr. Hall and his colleagues — there are about 55 in the Westport office, and handfuls in London and Singapore — specialize in a variety of hedging and arbitrage techniques.

Generally, Phibro looks for anomalies in the market and pounces, taking advantage of unusual spreads between the spot price of oil and the price of an oil futures contract.

The company, for example, often wagers that the price of oil will rise so fast during a particular period, say six months, that it can make money by storing oil in supertankers and floating it until the price goes up. (If the price rises by more than it costs to lease the tankers, he makes money.)

Other deals are more complex. Right before the first Gulf War, Phibro placed an elaborate bet that the price of oil would spike and then go down faster than others were anticipating. The company earned more than $300 million from the gamble.

“He’s got great memory, great focus,” says Philip Verleger, an author of books about oil markets and a friend of Mr. Hall. “He’s not as arrogant as other people who make the kind of money he makes. Of course, you make that kind of money and you’re going to be a little arrogant.”

A spokesman for Kenneth Feinberg, the Treasury’s pay czar, said the reviews of compensation figures were just starting and that pay levels must strike the right balance between discouraging excessive risk-taking and encouraging reward.

“We are not going to provide a running commentary on that process,” the spokesman, Andrew Williams, wrote by e-mail, “but it’s clear that Mr. Feinberg has broad authority to make sure that compensation at those firms strikes an appropriate balance.”

The mere specter of such review is already hurting Citigroup. A person familiar with its staffing travails says that for months it has been trying to fend off competitors who are calling employees and saying, in effect, “Come and work for a company that doesn’t have to contend with public scrutiny.”

James Forese, Citigroup’s co-head of global markets, says Mr. Hall’s pay-for-performance contract is the kind the pay czar will like. “We’re confident in the value these types of profit-sharing arrangements bring to the company and its shareholders,” Mr. Forese wrote in a statement, “as they directly align compensation with performance.”

Still, the company is an awkward spot, and it is hard to say which is worse: the inevitable public outcry if Mr. Hall is paid $100 million, or the risk that he might take his talents to a firm in which the public has no stake.

WASHINGTON – The recession is starving the government of tax revenue, just as the president and Congress are piling a major expansion of health care and other programs on the nation’s plate and struggling to find money to pay the tab.

The numbers could hardly be more stark: Tax receipts are on pace to drop 18 percent this year, the biggest single-year decline since the Great Depression, while the federal deficit balloons to a record $1.8 trillion.

Other figures in an Associated Press analysis underscore the recession’s impact: Individual income tax receipts are down 22 percent from a year ago. Corporate income taxes are down 57 percent. Social Security tax receipts could drop for only the second time since 1940, and Medicare taxes are on pace to drop for only the third time ever.

The last time the government’s revenues were this bleak, the year was 1932 in the midst of the Depression.

“Our tax system is already inadequate to support the promises our government has made,” said Eugene Steuerle, a former Treasury Department official in the Reagan administration who is now vice president of the Peter G. Peterson Foundation.

“This just adds to the problem.”

While much of Washington is focused on how to pay for new programs such as overhauling health care — at a cost of $1 trillion over the next decade — existing programs are feeling the pinch, too.

Social Security is in danger of running out of money earlier than the government projected just a few month ago. Highway, mass transit and airport projects are at risk because fuel and industry taxes are declining.

The national debt already exceeds $11 trillion. And bills just completed by the House would boost domestic agencies’ spending by 11 percent in 2010 and military spending by 4 percent.

For this report, the AP analyzed annual tax receipts dating back to the inception of the federal income tax in 1913. Tax receipts for the 2009 budget year were available through June. They were compared to the same period last year. The budget year runs from October to September, meaning there will be three more months of receipts this year.

Is there a way out of the financial mess?

A key factor is the economy’s health. The future of current programs — not to mention the new ones Obama is proposing — will depend largely on how fast the economy recovers from the recession, said William Gale, co-director of the Tax Policy Center.

“The numbers for 2009 are striking, head-snapping. But what really matters is what happens next,” said Gale, who previously taught economics at UCLA and was an adviser to President George H. W. Bush’s Council of Economic Advisers.

“If it’s just one year, then it’s a remarkable thing, but it’s totally manageable. If the economy doesn’t recover soon, it doesn’t matter what your social, economic and political agenda is. There’s not going to be any revenue to pay for it.”

A small part of the drop in tax receipts can be attributed to new tax credits for individuals and corporations enacted in February as part of the $787 billion economic stimulus package. The sheer magnitude of the tax decline, however, points to the deep recession that is reducing incomes, wiping out corporate profits and straining government programs.

Social Security tax receipts are down less than a percentage point from last year, but in May the government had been projecting a slight increase. At the time, the government’s best estimate was that Social Security would start to pay out more money than it receives in taxes in 2016, and that the fund would be depleted in 2037 unless changes are enacted.

Some experts think the sour economy has made those numbers outdated.

“You could easily move that number up three or four years, then you’re talking about 2013, and that’s not very far off,” said Kent Smetters, associate professor of insurance and risk management at the University of Pennsylvania.

The government’s projections included best- and worst-case scenarios. Under the worst, Social Security would start to pay out more money than it received in taxes in 2013, and the fund would be depleted in 2029.

The fund’s trustees are still confident the solvency dates are within the range of the worst-case scenario, said Jason Fichtner, the Social Security Administration’s acting deputy commissioner.

“We’re not outside our boundaries yet,” Fichtner said. “As the recovery comes, we’ll see how that plays out.”

The recession’s toll on Social Security makes it even more urgent for Congress to address the fund’s long-term solvency, said Sen. Herb Kohl, D-Wis., chairman of the Senate Aging Committee.

“Over the past year, millions of older Americans have watched their retirement savings crumble, making the guaranteed income of Social Security more important than ever,” Kohl said.

President Barack Obama has said he wants to tackle Social Security next year, after he clears an already crowded agenda that includes overhauling health care, addressing climate change and imposing new regulations on financial companies.

Medicare tax receipts are also down less than a percentage point for the year, pretty close to government projections. Medicare started paying out more money than it received last year.

Meanwhile, the recession is taking a toll on fuel and industry excise taxes that pay for highway, mass transit and airport projects. Fuel taxes that support road construction and mass transit projects are on pace to fall for the second straight year. Receipts from taxes on jet fuel and airline tickets are also dropping, meaning Congress will have to borrow more money to fund airport projects and the Federal Aviation Administration.

Last week, Congress voted to spend $7 billion to replenish the highway fund, which would otherwise run out of money in August. Congress spent $8 billion to replenish the fund last year.

Rep. Richard Neal, D-Mass., chairman of the House subcommittee that oversees fuel taxes, is working on a package to make the fund more self-sufficient. The U.S. Chamber of Commerce, which doesn’t back many tax increases, supports increasing the federal gasoline tax, currently 18.4 cents per gallon.

Neal said he hasn’t endorsed a specific plan. But, he added, “You can’t keep going back to the general fund.”

This application provides access to the DOT CARS system. When logged on to the CARS system, your computer is considered a Federal computer systems and is the property of the United States Government. It is for authorized use only. Users (Authorized or unauthorized) have no implicit expectation of privacy.

Any of all users of this system and all files on the system may be intercepted, monitored, recorded, copied, audited, inspected and discounted to authorized CARS, DOT, and law enforcement personnel, as well as authorized offices of other agencies, both domestic and foreign. By using this system, the user consents to such interception, monitoring, recording, copying, auditing, inspection, and disclosure at the discretion CARS or the DOT personnel.

Unauthorized or improper use of this system may result in administrative disciplinary action and civil and criminals penalties.

Unauthorized attempts to defect or circumvent security features, to use the system for other than intended purposes, to deny service to authorized users, to access, obtain, alter, damage, or destroy information, or otherwise to interfere with the system or its operation are prohibited. Evidence of such acts may be disclosed to law enforcement authorities and result in criminal prosecution under the Computer Fraud and Abuse Act of 1986 (Public Law 99-474) and the National Information Infrastructure Protection Act of 1996 (Public Law 104-294), (18 U.S.C. 1030), or other applicable criminal laws.

No one disputes the results of the “cash for clunkers” rebate program: It succeeded in blowing through nearly all its $1 billion in a week and can burn rubber at least through the weekend.

Congress is racing to infuse it with an additional $2 billion, but although supporters say the results prove the program has been an unqualified success, critics argue that it demonstrates the incompetence of the federal government.

The program was designed to encourage owners of pollution-spewing gas guzzlers to trade them in for new, more-efficient cars, helping the hard-pressed auto industry and the environment, too. Enticed by rebates of $3,500 to $4,500, car owners are jumping at the offer. It worked, almost too well.

Far more drivers signed up for the program, leaving dealers panicked over when or if the government would make good on the hefty rebates.

The House was first in what’s expected to be a fast pit stop, voting to pour in another $2 billion. The Senate has yet to act — it is expected to take up the measure next week — but the White House said weekend deals would count, no matter what.

President Obama said the program has “succeeded well beyond our expectations” and is pushing the Senate to pass the measure next week.

But Republicans are questioning the government’s readiness for wading deep into other private-sector strongholds, such as health care.

“If this is how the government is going to handle billion-dollar programs affecting all Americans, I ask, whatever will we do if this administration takes control of our health care?” Rep. Jerry Lewis, a California Republican, told the Wall Street Journal.

When asked how the administration and Congress could have underestimated the popularity of the program, White House spokesman Robert Gibbs skirted the question and simply said it’s a sign of success that there is concern that too many people are buying cars.

“I think you’ve seen a combination of people understanding the incentives,” he said, adding that he believes the success of the program benefits the economy and taxpayers “because the cars that they’re purchasing have a higher average fuel mileage than the car they’re trading in.”

“That’s good news down the road,” he said. “We think the program has been a success.”

But critics have a different view.

“This is not good for economic growth,” said Dan Mitchell, a senior fellow in economics at the Cato Institute. “You’re simply getting people to use existing income to spend on cars. Getting people to spend more of their money on cars mean they will have less money to spend on other things.”

Economic growth, Mitchell argued, is not getting people to spend more money on products, it’s getting them to have more income. Mitchell also believes the program is counterproductive for the auto industry down the road because the acceleration in car purchases will precede a “big downturn in the future.”

“Giving someone a shot of heroin is not good for their long term health,” he told FOXNews.com.

The program, Mitchell added, shows that the government is “incompetent.”

But Bruce Belzowski, an auto industry expert at the University of Michigan, disagrees.

“It’s hard to say they’re incompetent when the program is creating jobs, stimulating the overall economy and reducing emissions. Where’s the loss here?” he said. “You can say it’s not administered as well. But this is like picking at gnats when you look at the big picture.”

Belzowski told FOXNews.com the program was designed as part of the government’s energy policy and the volume of trade-ins are resulting in more fuel-efficient vehicles on the road.

“I don’t think it was meant to save the auto industry,” he said, adding that automakers are not complaining. “I think it was more of a way to test the waters to say if we get into this business of providing some type of rebate, how would it work out. This is their first foray.”

From the frenzied peak of the real estate boom in 2005-2006 to the recession’s trough earlier this year, home resales fell 38 percent and sales of new homes tumbled 76 percent. Construction of homes and apartments skidded 79 percent. And for the first time in more than four decades of record keeping, home prices posted consecutive annual declines.

A staggering $4 trillion in home equity was wiped out, and millions of Americans lost their homes through foreclosure.

Now take a deep breath and exhale. The worst is over.

By every measure, except foreclosures, the housing market has stabilized and many areas are recovering, according to a spate of data released in the past two weeks. Nationwide, home resales in June are up 9 percent from January, on a seasonally adjusted basis. Sales of new homes have climbed 17 percent during the same period. And construction, while still anemic, has risen almost 20 percent since the beginning of the year.

Even home prices, down one third from the top, edged up in May, the first monthly increase since June 2006.

“The freefall is over,” says Dean Baker of the Center for Economic and Policy Research.

The problem is that, Baker, like many economists, expects the housing market will “be bouncing around the bottom” for the second half of the year.

There are also real threats that could poison this budding recovery. The unemployment rate, which is 9.5 percent, is expected to surpass 10 percent, leaving even more homeowners unable to pay their mortgages. Mortgage rates could rise, making homeownership less affordable. And the federal tax credit for first-time homebuyers, which has lured many into the market, is set to expire on Nov. 30.

“As long as jobs are being lost, regardless of all the federal programs out there to help the borrowers, you’re still going to have problems in the housing market,” says Steve Cumbie, executive director of the Center for Real Estate Development at the University of North Carolina’s Kenan-Flagler Business School.

True, but when you’ve got bidding wars for foreclosures in places like Las Vegas, Phoenix and Los Angeles, it’s time to call the bottom.

• Northeast

Nobody knows the power of a dollar like New Yorkers.

After home on Long Island sat on the market for four months recently, the sellers’ real estate agent told them to drop the price from the mid-$600s to $599,000. The house sold the next weekend.

In Merrick, about 30 miles east of New York City, homes are starting to sell “as long as they’re priced right,” the agent said.

In January, with the ground and financial markets still frozen, few would have believed that the worst of the housing crisis in the Northeast would turn around within six months.

But the evidence is clear: home resales in the region in June hit a seasonally adjusted pace of 820,000, up 28 percent from the beginning of the year. Sales of new homes were also up slightly and construction in the region more than doubled.

Even the median sales price of $249,400 in June was up 10 percent from January and was off just 6 percent from year-ago levels, according to the National Association of Realtors.

“We certainly had our share of problems, but overall the severity of what happened here was far less” than what happened elsewhere, says Michael Lynch, an economist with IHS Global Insight.

Pittsburgh has the region’s strongest home market in terms of sales and prices because the city saw less of a housing bubble and the area has 7.7 percent unemployment rate that is below the national rate.

One of the weakest markets, by contrast, was Providence, R.I., where a jobless rate of 12 percent exacerbated the city’s foreclosure crisis. Too many residents took out risky subprime loans they couldn’t afford when the interest rates spiked within a few years. Today, more than one in 10 homeowners with a mortgage in the state is at least one month behind or in foreclosure.

The Northeast, more than any other region, felt the full force of the credit crisis that reshaped Wall Street. Manhattan’s real estate market, long immune from price declines, tanked this year as tens of thousands of people lost their jobs.

Prices of for-sale apartments plunged in the second quarter by the largest amount in decades. Prices have fallen, on average, between 13 and 19 percent, according to four reports published recently by real estate firms.

Northeast states: Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont

Data compares June vs. January and June vs. June 2008:

Home resales: up 28 percent; down 5 percent

Median price: $249,400, up 10 percent from January; down 6 percent

New home sales: up 3 percent; down 11 percent

New home construction: up 113 percent, down 68 percent

Mortgage delinquencies as of March: 10.4 percent

Regional outlook: The region should experience “a nice rebound in home construction” over the rest of the year, according to IHS Global Insight, an economic research firm. Sales for new and existing homes are likely to rise. Just don’t expect your home’s value to shoot up. Rising unemployment will lead to more foreclosures, and that will keep a lid on prices.

• South

The real estate market in the South remains one of extremes.

On one end, are oil-rich cities in Texas, Arkansas and Oklahoma that nearly skirted the housing recession altogether. Tipping the scale on the other side are foreclosure-ridden areas in Atlanta and swaths in Florida where prices are still falling annually by double digits.

Taken as a whole, home resales in the 17-state region rose 10 percent in the first half of this year on a seasonally adjusted basis, and are off just 4 percent from June of last year, according to the National Association of Realtors.

“Generally speaking, the rate of decrease, both in sales and prices, has started to bottom,” says the University of North Carolina’s Cumbie. “But that doesn’t mean it’s going to come roaring back.”

Mass layoffs at Bank of America and Wachovia, for example, have taken their toll in their home state of North Carolina. Home price declines in Charlotte accelerated this year, and home resales in June were off nearly 30 percent from last year.

Home and apartment construction, a key economic engine, will also vary widely across the region. Parts of the South, notably Florida and Atlanta, were vastly overbuilt during the housing boom. So construction in the region rose a meager 7 percent in the first half of the year, the lowest of the four regions, according to the Commerce Department.

There was little reason for builders to start laying new foundations. New home sales fell 2 percent from January to June, the only region in the country to post a decline.

“In the longer term, I’m confident that the real estate market is going to shift where buyers are coming out not only because of attractive interest rates and low prices, but because more people are getting jobs,” says Les Simmonds, president of L.G. Simmonds Real Estate Corp. in Longwood, Fla. an Orlando suburb. “But, as we speak, it’s not right. It’s going to take more time.”

Southeast states: Alabama, Arkansas, Delaware, D.C., Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia

Data compares June vs. January and June vs. June 2008:

Home resales: up 10 percent; down 4 percent

Median price: $163,200 up 14 percent; down 12 percent

New home sales: down 2 percent; down 34 percent

New home construction: up 7 percent; down 44 percent

Mortgage delinquencies as of March: 12.7 percent

Regional outlook: The southern market has several characteristics that could help it recover, Cumbie says. The population continues to grow and businesses continue to move into the region. But the weight of foreclosures and job losses stretching into next year could delay any meaningful recovery.

• Midwest

It’s no surprise that the housing market and the auto industry are intertwined in Detroit, though, this is the first time anybody can remember that you can buy a home for less than the price of a new car.

But step out of devastated towns in Michigan, Ohio and Indiana and the housing market in the Midwest is showing some of the strongest signs of recovery in the country.

Thanks to places like the Dakotas, Iowa and Nebraska, the median sales price in the region rose almost 20 percent to an affordable $157,000 in June from January levels.

Sales of new homes jumped almost 38 percent in the first half of the year, which encouraged builders to get out their hammers. Construction, which was at a standstill in some communities, rose 86 percent on a seasonally adjusted basis, which accounts for typical variations in weather and other factors.

“New construction has been a good indicator for us in the past of what the general market is doing,” says Chris Collins, president of the Kansas City Regional Association of Realtors. “Our new market is not what we’ve been used to but it’s substantially better than other parts of the country.”

The home resale market, however, remains weaker than the nation as a whole. That again can be blamed on the economy. The jobless rate in the Midwest is 10.2 percent compared with 9.5 percent nationally. And if you don’t have a job you are not buying a house.

William Strauss, a senior economist for the Federal Reserve Bank of Chicago, cautioned that job cuts are still high in the region, and loss of income is the No. 1 reason homeowners default.

“We never got as bad as (other) states but nonetheless we still took a hit,” he says, and the market remains “soft in the Midwest.”

Midwest states: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin

Data compares June vs. January and June 2008:

Home resales: up 7 percent, down 2 percent

Median price: $157,000, up 20 percent, down 9 percent

New home sales: up 38 percent, up 6 percent

New home construction: up 86 percent, down 21 percent

Mortgage delinquencies as of March: 11.5 percent

Regional outlook: “Before we can even talk about the housing sector materially improving, we’re going to have to see these job losses get down quite a bit,” said William Strauss, a senior economist for the Federal Reserve Bank of Chicago. Financial markets must also improve, he said, so more homebuyers can qualify for a mortgage.

• West

For years Las Vegas symbolized the boom, as mile after mile of desert gave way to three-bedroom homes and swimming pools. Then came the crash and it symbolized something else: a decade of speculation and excess.

Now, Las Vegas is one of the hottest housing markets in the region again. This city has always profited from others’ misfortune, and the same can be said of the current housing market.

In Clark County, Nev., home to Sin City, one in every 11 homes had received at least one foreclosure-related notice in June, according to RealtyTrac. The glut of deeply discounted foreclosures has almost doubled sales activity for most of this year.

“In January the market was busy, and since that time, it’s gone a little haywire,” says Brad Snyder, an agent with ZipRealty in Las Vegas. “There’s (sales) activity now that we haven’t seen even since ’04.”

The situation is similar in California’s Riverside, San Joaquin and San Bernardino counties, where one out of every 14 homes was in foreclosure.

After falling 18 percent in the second half of 2008, monthly home prices were flat in the first half of this year, on a seasonally adjusted basis, according to the National Association of Realtors.

Markets like these have seen a surge this year in all-cash buyers, many of them investors, scooping up the sharply discounted properties. It’s not uncommon to see multiple offers on a single property, and that’s helped slow the rate of price declines a little. The demand also has helped whittle down the inventory of homes for sale to the lowest level since the boom.

“We have seen such a steep decline in supply right now, that when a home comes on the market it’s first day there could be seven or eight or 10 people there in a matter of hours,” Snyder says.

To lure buyers away from foreclosures, homebuilders have slashed prices or are simply tearing down vacant homes. New home sales jumped almost 59 percent in the first half of the year, while construction in these grossly overbuilt markets slid 12 percent.

In the Pacific Northwest and states such as Utah, by contrast, housing markets are on a different timer than the rest of the West. Home sales and values held up better and longer while markets in the Southwest were already in decline. These markets also haven’t seen as many foreclosures wreaking havoc with home prices.

States in the region: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming

Data compares June vs. January and June 2008:

Home resales: down 1 percent, up 12 percent

Median price: $214,800, flat, down 25 percent

New home sales: up 59 percent, down 10 percent

New home construction: down 12 percent, down 42 percent

Mortgage delinquencies as of March: 12 percent

Regional outlook: The recession remains the region’s wild card. Unemployment is at 10.2 percent in the West, but that could go higher if the economy worsens. If that happens, expect more foreclosures and a slower turnaround.