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October 23rd, 2009
12:47 PM ET

Financial Dispatch: Home sales spike

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2009/CRIME/09/01/bernanke.id.theft/art.ben.bernanke.cnn.jpg caption="Fed Chairman Ben Bernanke urges Congress to enact reforms."]

Andrew Torgan
CNN Financial News Producer

Sales of previously-owned homes rebounded sharply last month to their highest level in two years, getting a strong boost from first-time homebuyers.

Existing home sales jumped 9.4% in September after falling for the first time in four months in August, according to the National Association of Realtors. Year over year, sales were up 9.2% in September.

NAR chief economist Lawrence Yun said much of the buying momentum came from people hoping to take advantage of an $8,000 first-time buyer tax credit, which is set to expire at the end of November.

Early information from a NAR report to be released next month suggests first-time homebuyers accounted for more than 45% of home sales over the past year.

The report was not all good news, however. The median price of homes sold in September was $174,900, a decline of 8.5% from a year earlier. The drop in prices has been led by an influx of distressed properties, which accounted for 29% of sales in September and include foreclosures and short sales.

Bernanke urges Congress to enact reforms

Fed chief Ben Bernanke says that the turmoil in the financial system is "abating", but urged lawmakers to enact comprehensive reforms to help prevent future crises.

In a speech to central bankers in Massachusetts this morning, Bernanke said legislative action is needed to ensure that banks have sufficient capital reserves, and to limit the risks that financial institutions can take.

He also called on Congress to create new mechanisms to deal with the systemic risks posed by financial institutions deemed "too big to fail."

Bernanke’s remarks came one day after the Federal Reserve proposed a review of pay practices at 28 of the nation's largest banks to make sure employees are not tempted to make the kinds of risky bets that helped sink firms such as Lehman Brothers.

Three AIG execs get their bonuses

We told you yesterday that the White House launched its biggest offensive yet against Wall Street pay practices, outlining a series of drastic pay cuts for 136 top executives at the nation's biggest bailed-out companies, including AIG, Citigroup and Bank of America.

But the cuts were not as extensive as had been expected as “pay czar” Kenneth Feinberg gave a special exemption to three AIG executives – letting them keep their large bonuses.

AIG lobbied hard, telling Feinberg that three executives, who were entitled to large retention payments, were particularly critical to the company's long-term financial success and as such should be able to keep their bonuses.

Feinberg said Thursday that he relented in the case of AIG even though he was able to pare down similar pay clauses at the other six companies in his purview.

Five evil things credit card companies can (still) do

Finally, CNNMoney.com has a helpful - albeit infuriating - gallery of the ways that credit issuers are trying to boost their profits in the wake of new measures intended to help cash-strapped customers.

They include hiking interest rates to as much as 36%, doubling minimum monthly payments and adding new annual fees.

Follow the money… on Twitter: @AndrewTorganCNN


Filed under: AIG • Andrew Torgan • Finance • Housing Market
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