Japan central bank cuts economic growth forecasts

TOKYO (AP) — Japan's central bank cut its economic growth forecasts Thursday and kept interest rates near zero, as the export-reliant nation confronts a strong yen and waning overseas demand.

In its October outlook report, the Bank of Japan forecast the world's No. 3 economy to grow 2.1 percent in the year through March 2011 and 1.8 percent the following year. Its July assessment projected growth of 2.6 percent and 1.9 percent respectively.

The weaker U.S. economy was one of the main reasons for the downgrade, said Bank of Japan Gov. Masaaki Shirakawa.

The "outlook for the U.S. economy has turned pessimistic from optimistic," Shirakawa said at a press conference, according to Kyodo news agency.

The central bank also blamed the yen, which has risen to near historic highs versus the dollar, and the winding down of government stimulus measures.

Earlier in the day, the Bank of Japan left interest rates untouched and offered new details of a $61 billion asset purchase program intended to spur lending to companies.

In a widely expected decision, the nine-member policy board voted unanimously to keep its key interest rate at zero to 0.1 percent following a one-day meeting. The central bank at its last meeting earlier this month tweaked the interest rate for the first time since December 2008.

The meeting comes as Japan faces growing worries about its recovery, which is struggling in the face of a strong yen, persistent deflation and slowing growth in key overseas markets like the U.S. and China. Recent economic indicators point toward deteriorating exports — a key driver of Japan's economy — and slowing industrial output.

Japan last month intervened in currency markets for the first time in more than six years, but the effects were short-lived. Prime Minister Naoto Kan's Cabinet this week approved an extra budget to finance $63 billion in stimulus spending.

For the BOJ's part, its Gov. Masaaki Shirakawa announced a "comprehensive monetary easing policy" on Oct. 5 that consisted of the rate cut and a pledge to maintain the zero rate policy until prices start rising again.

It also included the creation of a temporary 5 trillion yen ($61 billion) fund to purchase financial assets such as government securities, commercial paper and corporate bonds in an attempt to stimulate the economy by lowering longer-term interest rates and risk premiums. The central bank will offer another 30 trillion yen through its loan program.

The Bank of Japan outlined details of the program Thursday. It will buy up to 3.5 trillion yen of Japanese government bonds and treasury discount bills. The rest will be used for commercial paper, corporate bonds, exchange-traded funds and Japan real estate investment trusts.

Corporate bonds need at least a BBB rating, which is a lower level than the central bank has previously accepted.

The central bank also moved up its next meeting from Nov. 15-16 to Nov. 4-5, a couple days after a Federal Reserve meeting. Markets expect the Fed to ease monetary policy through a plan to buy Treasurys.

"The change of the policy meeting schedule clearly indicates the (central bank) may react promptly once the Fed's decision has a significant impact on the markets, especially on accelerating the yen's appreciation," said Junko Nishioka, chief economist at RBS Securities Japan, in a note to clients.

"This apparently reflects the BOJ's stance, which continues to be behind the curve."

Investors have been anticipating the Fed would buy between $500 billion and $1 trillion in Treasurys to drive interest rates lower and encourage lending and spending. But a report in The Wall Street Journal said the Fed's bond purchases might amount instead to a few hundred billion dollars over several months, undershooting predictions.

The report helped the dollar climb Wednesday versus the euro and Japanese currency. It was trading above the 81-yen line Thursday after falling into the 80-yen range earlier this week.

(source:afp)

Wells Fargo to refile paperwork in 55,000 foreclosure cases

Wells Fargo & Co. said Wednesday it would refile paperwork in 55,000 foreclosure cases because of mistakes in some of the documents but said it wouldn't suspend efforts to seize borrowers' homes as some other mortgage firms have done.

Mike Heid, co-president of the San Francisco bank's home lending unit, said Wells had identified potential problems with the final sign-offs by bank employees and notaries on legal affidavits. That is the same problem reported by three major rivals in the mortgage customer-service business.

The paperwork is submitted to judges to justify foreclosures without trials in states in which courts authorize lenders to seize homes. Those states do not include California. Wells said it would file supplemental affidavits in foreclosures pending in those 23 states — about 55,000 in all.

Wells Fargo, the largest originator of home loans and a big player in servicing mortgages, wouldn't say how many improperly certified affidavits it had found. Heid said the paperwork had been handled correctly in most of the 55,000 cases in which supplemental affidavits are being filed.

A bank spokeswoman, Teri Schrettenbrunner, said the foreclosure timeline wouldn't be affected in most of the 55,000 cases because the supplemental affidavits will be completed before the judges hear summary judgment motions.

In a small minority of cases, Wells Fargo will ask judges to delay the proceedings until the affidavits are refiled, she said.

Bank of America Corp., JPMorgan Chase & Co. and servicer GMAC Mortgage have acknowledged that employees signed affidavits attesting to the facts underlying foreclosures without first reading the documents. Of the top five servicers, only Citigroup Inc. has yet to disclose such problems.

BofA, Chase and GMAC recently put foreclosures on hold in the 23 judicial foreclosure states, with Chase later expanding that halt to 41 states (not including California) and Bank of America to all 50 states. BofA has since begun pursuing foreclosures with revised affidavits in more than 100,000 cases in the judicial states, but is continuing a review of its procedures in states that don't require court orders.

(source:latimes.com)