Banking
Sore ARMs? A Peek Inside Potential Mortgage Troubles: WSJ, 8/10
California isn't the best place to go looking for canaries -- unless they're metaphorical ones.The state has one of the frothiest housing markets, and banks have been enablers. Investors looking for early warnings of trouble in the mortgage industry should give Downey Financial's numbers a look. Two weeks ago, I wrote about the rising popularity of option adjustable-rate mortgages, especially in the land of Schwarzenegger. Option ARMs give borrowers the ability to make a minimum monthly payment that results in the balance of what's owed going up. Lots of people are doing that, seemingly oblivious to the risk: Interest rates are rising, and if housing prices fall, homeowners could end up unable to afford the monthly nut on a home they'd have to sell at a loss.But, as I noted, investors haven't been able to gauge banks' exposure adequately because the disclosure generally is poor, though that problem has improved a bit recently. At Downey, disclosure is good; it's the exposure that's bad. A small Newport Beach, Calif., bank with a stock-market value of $2 billion, Downey writes option ARMs like Californian plumbers write screenplays.
http://online.wsj.com/article/0,,SB112363601457609394,00.html?mod=home_whats_news_us

Telecommunications
FCC Rules Telcos Need Not Share DSL Lines With Competitors: Potomac Tech, 8/9
The Federal Communications Commission (FCC) has ruled that telephone companies that provide DSL Internet access no longer have to lease their high-speed broadband lines to competitors. Some analysts believe that the FCC's 4-0 vote could force many smaller Internet service providers out of business, while others like EarthLink and AOL could be forced to pay more to telephone companies to use their lines. The ruling won't go into effect for one year, so that ISPs can inform customers of the changes and make preparations. The FCC's DSL ruling follows a recent Supreme Court decision that similarly said that cable TV providers do not have to open their high-speed networks to competition. FCC chairman Kevin Martin called the ruling "an explicit recognition that the telecommunications marketplace that exists today is vastly different from the one governed by regulators over 30 years ago." Consumer groups worried the ruling will lead to higher broadband prices.

http://hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-260433A1.doc