Tuesday morning headlines

Fed clamping down: The temptation is to shout "Too late!" but Chairman Ben Bernanke says the Federal Reserve will issue new lending rules next week to restrict exotic mortgages and high-cost loans for people with weak credit. Bernanke said that the troubles at Bear Stearns highlight weaknesses in the financial system - stuff like poorly underwritten mortgages, regulatory gaps, and insufficiently capitalized financial institutions. He also said that the Fed might extend a program of low-cost overnight loans. From the NYT:

The decision to consider extending the Fed’s Wall Street credit program, which provides overnight loans to the 20 largest investment banks who serve as “primary dealers” and trade Treasury securities directly with the Fed, suggested that the Fed is coming to believe that the crisis that has been plaguing financial markets may spill into next year.

IndyMac's backstory: The LAT's Scott Reckard lays out some of the reasons why the Pasadena-based mortgage company got into so much trouble. It wasn't so much the original loan, but the refinancings that came after that. When housing prices kept rising, there was no problem. When prices stalled and went south, homeowners were trapped.

"When all was said and done, IndyMac had specialized in a category of loans -- option ARMs, alt-A, home equity -- that were used by borrowers to strip equity out of homes and live on it, especially from 2004 to 2007," said Frederick Cannon, an analyst at Keefe, Bruyette & Woods. "When home prices began falling, these borrowers lost their income -- the appreciation in their homes -- and their ability and interest in paying back their loans," Cannon said. Critics contend that IndyMac and other lenders, backed by Wall Street firms that bought loans to create mortgage bonds, brought about their own downfall by encouraging loan agents and independent brokers to promote unconventional financing features to get borrowers into loans they ultimately couldn't afford.

Higher property assessments: Amid all the turmoil, the total assessed value of properties in L.A. County has actually increased, to $1.1 trillion. Assessor Rick Auerbach cites Proposition 13, which imposes a 2 percent annual cap on the amount of increase in assessed values. Many homes bought in the past are not assessed anywhere near their market value. That means total assessments keep rising, even though some homes are dropping in value. From the Daily News:

The largest increases in assessed values in the county occurred in the higher-end residential markets. Beverly Hills experienced a 12 percent increase; Santa Monica, 11 percent; Pasadena, 10 percent; Hidden Hills, 10 percent; West Hollywood, 10 percent; and Malibu, 10 percent. Assessed values in Los Angeles jumped 8 percent. "The city of Los Angeles has a lot of commercial development and we have not seen the same reductions with commercial real estate as we've seen with residential properties," Auerbach said.

Will Maguire be sold?: This is getting too complicated for words. Two major investors seem interested in a deal: Third Point and JMB Capital Partners. Pacific Office Properties, a Santa Monica real estate investment trust, reportedly offered about $20 a share, but the offer was withdrawn. Third Point, however, said that the offer could be renewed. The company itself isn't saying anything. Good luck sorting out all of the above. (LAT)

AFTRA voting ends: Results of the contract ratification vote could come as early as tonight, at which point leaders of the larger Screen Actors Guild must decide whether there's any support to keep fighting on for a better contract. Both actors unions have been waging major campaigns for and against the AFTRA deal. Ratification is very likely - the question is by how much. (Variety)

Tourism woes in Carmel: The picturesque coastal town is quite a distance from the Big Sure wildfires, but businesses are taking a hit anyway. With sometimes gunky air and limited access to Highway 1, there's not much appeal as a tourist destination. Besides, the national news makes it seem as if the entire state is on fire. From the WSJ:

Worried tourists have been bombarding Carmel hotels with phone inquiries about the fire and air quality, said Carrie Theis, president of the Carmel Innkeepers Association. The hotels have assuaged most visitors by reporting clear blue skies for the past week, she said, but dozens have canceled reservations. "People come to Carmel expecting to see Big Sur," said Nancy Slade, general manager of the Cypress Inn, which is partially owned by actor Doris Day.

Thai Airlines cuts LAX service: The carrier will reduce the number of flights to Bangkok to five a week from seven. It's also eliminated service between NY and Bangkok. Long flights in general are under scrutiny by the airlines because they require more jet fuel than can be made up in air fares. The timing is especially bad, what with Airbus rolling out those wide-wing A-380s that can carry hundreds of people for more than 18 hours on routes that previously required at least one stop. From the WSJ:

A passenger on a 15-hour flight uses more fuel for each mile of the trip than someone on an eight-hour trip, but the airfare per mile generally doesn't rise proportionally. When fuel is cheap and traffic strong, airlines can absorb the difference. A few years ago, airlines hyped marathon flights as the industry's next big thing. Australia's Qantas Airways Ltd. promised "hub-busting" flights that would eliminate annoying stopovers. Boeing and European Aeronautic Defence & Space Co.'s Airbus predicted that the sheer range of their new planes would open lucrative markets. Instead, the promise remains unfulfilled and super-long flights are a tiny niche. Among the hundreds of intercontinental routes world-wide, barely two dozen are longer than 15 hours.

Overhaul for Theme Building: Airport Commissioners signed off on a $9.3 million contract to replace the plaster exterior of the LAX landmark. The construction and restoration project, which has cost the airport nearly $15 million, stems from a stucco slab that fell from one of the upper arches and crashed into the structure's main platform in 2007. (Daily Breeze)

Lacter on radio: This morning's business chat with KPCC's Steve Julian looks at how “staycations” are helping the local economy, where Starbucks may be closing its stores, and the Indymac situation. Also available at kpcc.org or on podcast.