Anticipating eventual market pick-up, Wells Fargo is trading option ARMs for interest-only loans, while economists question whether it's an improvement.

While the Realtors and Home Builders and Mortgage Bankers all bask in the glow of the home buyer tax credit extension/expansion, we all need to turn our attention to the real drag on a housing recovery: Foreclosures.

From the : The unemployment rate rose from 9.8 to 10.2 percent in October, and nonfarm payroll employment continued to decline (-190,000), the U.S. Bureau of Labor Statistics reported today. The largest job losses over the month were in construction, manufacturing, and retail trade. Click on graph for larger image. This graph shows the unemployment rate and the year over year change in employment vs. recessions. Nonfarm payrolls decreased by 190,000 in October. The economy has lost almost 5.5 million jobs over the last year, and 7.3 million jobs 1 during the 22 consecutive months of job losses. The unemployment rate increased to 10.2 percent. This is the highest unemployment rate in 26 years. Year over year employment is strongly negative. The second graph shows the job losses from the start of the employment recession, in percentage terms (as opposed to the number of jobs lost). For the current recession, employment peaked in December 2007, and this recession was a slow starter (in terms of job losses and declines in GDP). However job losses have really picked up earlier this year, and the current recession is the worst recession since WWII in percentage terms, and 2nd worst in terms of the unemployment rate (only early '80s recession with a peak of 10.8 percent was worse). The economy is still losing jobs at about a 2.2 million annual rate, and the unemployment rate is finally above 10%. This is a very weak employment report - just not as bad as earlier this year. Much more to come ... 1 Note: The total jobs lost does not include the preliminary benchmark payroll revision of minus 824,000 jobs. (This is the preliminary estimate of the annual revision that will be announced early in 2010).

Members of the National Association of Insurance Commissioners (NAIC) approved a proposal this week to develop a new model for determining the regulatory treatment of residential mortgage-backed securities (RMBS). The new model will produce ratings designations for approximately 18,000 RMBS owned by U.S. insurers at the end of 2009.

Here’s another one of those stories that will make your blood pressure boil: Instead of moving forward with broad regulatory protections of economics system, we are undoing effective regulations that protect investors. Floyd Norris has the details. Under the guise of helping small businesses, the accounting requirements of Sarbanes-Oxley are being watered down to near nothing. So long economic collapse, hello accounting fraud: “Sarbanes-Oxley was passed, almost unanimously, by a Republican-controlled House and a Democratic-controlled Senate. Now a Democratic Congress is gutting it with the apparent approval of the Obama administration. The House Financial Services Committee this week approved an amendment to the Investor Protection Act of 2009 — a name George Orwell would appreciate — to allow most companies to never comply with the law , and mandating a study to see whether it would be a good idea to exempt additional ones as well. Some veterans of past reform efforts were left sputtering with rage. “That the Democratic Party is the vehicle for overturning the most pro-investor legislation in the past 25 years is deeply disturbing,” said Arthur Levitt, a Democrat who was chairman of the Securities and Exchange Commission under President Bill Clinton. “Anyone who votes for this will bear the investors’ mark of Cain.” Note that many of the problems that led to near systemic collapse involved special exemptions from existing legislation. The 5 banks that were exempted from leverage rules, the giant banks that pushed for exemptions from Glass Steagall. Even the CMFA was essentially a special exemption for an entire class of financial instruments — derivatives — that were to be treated differently than typical financial instruments. The aggressive lobbyists are pushing for less transparency, less accurate reporting, less accounting oversights. Consider: “This year, a subcommittee of the House Financial Services Committee held a hearing at which legislators sought no facts...

If you were curious about the recent news regarding Goldman Sachs' () and Warren Buffett’s () interest in acquiring the tax losses of Fannie Mae (), the details are in Fannie's 10-Q. This deal was agreed to and inked a month ago. It is still pending approval. So the information that was first reported by Bloomberg was a deliberate plant. A possible objective would have been to get a decision on the transaction before yesterday's release. Note that the Q provides an update of the deal’s status as of November 5. Someone was waiting to edit this section right up to the last minute. A tad unusual.