Tuesday morning headlines

How bad are L.A. homes prices?: Well, they're not dropping quite as much as those in San Diego, Vegas and Detroit – but that's not saying much. The widely watched S&P/Case-Shiller home-price index shows that Los Angeles prices in November were down 12 percent from a year earlier (Vegas was down 13.2 percent). "We reached another grim milestone," said Robert Shiller, chief economist at MacroMarkets LLC, pointing out that 13 of the 20 metro areas in the index hit record price drops. Portland, Seattle and Charlotte, N.C. were the only markets showing slight gains. Here's the press release. But wait just a second - from the WSJ:

The Case-Shiller Index is now one of the most closely watched measures of home prices. But some economists argue that it paints an overly bleak picture. Columbia University economist Charles Calomiris has written, "Most obviously, it does not cover the entire U.S. market, and the omitted parts of the U.S. market seem to be doing better than the included parts."

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Rising home prices plus refinancing options and home-equity loans previously allowed homeowners to squeeze money out of their homes to finance their spending - an important trend because consumer spending fuels about 70% of economic growth. Economists now worry that falling home prices will prompt consumers to pull back on spending enough to slow growth or even tip the economy into recession. Nevertheless, people who bought their homes several years ago typically are sitting on sizable gains in most of the country.

Countrywide CEO misses forecast: Last fall, when the Calabasas mortgage lender reported a $1.2 billion third-quarter loss, Angelo Mozilo told analysts and investors that the company was well positioned to thrive. He also predicted a fourth-quarter profit. Oops. This morning Countrywide posted a $422 million quarterly loss. It's being acquired by Bank of America. From Bloomberg:

``We believe liquidity issues, not operational executive issues, backed Countrywide into a corner and forced the sale,'' Piper Jaffray analyst Robert Napoli said in a Jan. 16 report. ``The deal could be a big win for Bank of America, if Countrywide's credit losses remain within the parameters Bank of America built into the purchase price.'' Absent a merger, Countrywide would likely have been downgraded to non-investment grade status, Napoli said, reducing the value of the company's servicing business that he called ``its greatest asset.'' The servicing unit handles billing and collections for Countrywide as well as other mortgage holders and investors.

Big-time health fine: The Department of Insurance uncovered 133,000 alleged violations of state laws and regulations regarding payments for medical care involving Cypress-based PaciciCare. Each violation carries a maximum penalty of $10,000 for a possible total of $1.33 billion. There's no way it'll be that high by the time they get through the appeals process, but it's still a big deal. "If PacifiCare can't understand the ABCs of basic claims payment, maybe it will understand the dollars and cents of regulatory action," says Insurance Commissioner Steve Poizner. (LAT)

Health care plan dies: Not a huge surprise, given the slowing economy and a gaping state deficit. The plan had the backing of Gov. Arnold and Democratic legislators but a Senate health commiittee turned it down. Schwarzenegger says he's not taking no for an answer. From the SF Chronicle:

One of the key votes cast Monday against the plan was from San Francisco Democrat Leland Yee, who has said the plan was "fundamentally flawed" because of a mandate on all individuals to have insurance could prove too costly. "For the working poor, you are literally asking these individuals to jump in and purchase health care that they may not be able to afford," he said, adding that the sanctions the state might impose for not getting insurance could be wages garnished or property liens. The overhaul bill remains before the health committee and could be brought back for reconsideration.

Progress in writers talks: That's what the LAT is hearing. The Times reports that the writers and media companies have narrowed the gap between them in how much writers should earn when films and TV shows are distributed online. They're still apart on how much writers should be paid when their shows are streamed and on union jurisdiction over original content created for the Internet.

Talent managers get break: The California Supreme Court ruled that they could be entitled to compensation from their clients, even if they had violated the state's Talent Agencies Act. It seems kind of obscure, but it's an important decision in Hollywood circles because talent managers are central to guiding careers. Their roles often get confused with those of talent agents, who are licensed. As a result of the ruling, it will be harder for performers to sue managers. (LAT)

Milberg sentencing: Kickback mastermind Seymour Lazar was given six months home detention and two years probation. The feds say he was paid $2.6 million to be a professional plaintiff and help Milberg Weiss in its pursuit of the lawsuits. U.S. District Judge John F. Walter said he was outraged that the former attorney, now 80, could "flatly lie" as part of legal proceedings. Lazar was the first of the partners to be sentenced. (AP)

Marriott to try boutiques: It's a joint venture with hipster Ian Schrager, who designs the kinds of groovy hotels that guys like me are acutely uncomfortable in. They’ll be built and owned by third-party developers in several major cities and operated by Marriott. Schrager will create each hotel's concept and theme. They're expected to open hotels in downtown and Hollywood in about three years. Sure they will. (LAT)

Time for a vacation?: One of the reasons the French bank Société Générale didn't realize what Jérôme Kerviel was up to could involve his not taking any time off. Many of the big Western banks require traders to take vacation time for at least five workdays in a row, and often 10 (it's hard to keep a fraud going when an order book is being handled by someone else). From the WSJ:

Many bosses are lax about this guideline. Traders are temperamental, and they don't like to get too far from the markets. There is already a precedent that should have provided ample warning -- that of the Daiwa Bank bond trader who had losses of $1.1 billion in 1995. He didn't take an extended break for more than a decade. That case renewed discussions about requiring time off. Still, regulators don't mandate vacations.

Lacter on radio: This week's business chat with KPCC's Steve Julian covers lower gas prices, more location shooting in L.A., and concerns about the Grand Avenue project.