EMERITUS NEWS FINANCIAL-PENSIONS

STATES FACE DEADLINE FOR SETTLEMENT ON MORTGAGE LAWSUITS

More from this article in the Washington Post, click here- 02/06/2012

OBAMA PROPOSES EXPANSION OF HOME REFINANCING TO INCLUDE MORTGAGES OWNED BY INVESTORS

More from the Emeritus Newsroom - In addition to helping home owners with Freddie Mac and Fannie Mae backed mortgages, President Obama today proposed expansion of the administration's refinancing programs along with a home owners "Bill of Rights".

Obama told and audience at the James Lee Community Center in Falls Church, Virginia, this morning,

"....the programs that we put forward haven’t worked at the scale that we hoped.  Not as many people have taken advantage of it as we wanted.  Mortgage rates are as low as they’ve been in half a century, and when that happens, usually homeowners flock to refinance their mortgages -- so a lot of people take advantage of it and save a lot of money.  But this time too many families haven’t been able to take advantage of the low rates, because falling prices lock them out of the market.  They were underwater; made it more difficult for them to refinance.Then you’ve got all the fees involved in refinancing.  And a lot of people just said, you know what, even though I’d like to be, obviously, cutting down my monthly payment, the banks just aren’t being real encouraging.So last year we took aggressive action that allowed more families to participate.  And today we’re doing even more.  This is the main reason I’m here today. As I indicated at the State of the Union last week, I am sending Congress a plan that will give every responsible homeowner in America the chance to save about $3,000 a year on their mortgage by refinancing at historically low rates.  (Applause.)  No more red tape.  No more runaround from the banks. And a small fee on the largest financial institutions will make sure it doesn’t add to our deficit. I want to be clear:  This plan, like the other actions we’ve taken, will not help the neighbors down the street who bought a house they couldn’t afford, and then walked away and left a foreclosed home behind.  It’s not designed for those who’ve acted irresponsibly, but it can help those who’ve acted responsibly.  It’s not going to help those who bought multiple homes just to speculate and flip the house and make a quick buck, but it can help those who’ve acted responsibly. What this plan will do is help millions of responsible homeowners who make their payments on time but find themselves trapped under falling home values or wrapped up in red tape". 

Specifics of the President's plan include,  

Broad Based Refinancing to Help Responsible Borrowers Save an Average of $3,000 per Year: The President’s plan will provide borrowers who are current on their payments with an opportunity to refinance and take advantage of historically low interest rates, cutting through the red tape that prevents these borrowers from saving hundreds of dollars a month and thousands of dollars a year. This plan, which is paid for by a financial fee so that it does not add a dime to the deficit, will: 

o Provide access to refinancing for all non-GSE borrowers who are current on their payments and meet a set of simple criteria.
o Streamline the refinancing process for all GSE borrowers who are current on their loans.
o Give borrowers the chance to rebuild equity through refinancing.

• Homeowner Bill of Rights: The President is putting forward a single set of standards to make sure borrowers and lenders play by the same rules, including:

o Access to a simple mortgage disclosure form, so borrowers understand the loans they are taking out.
o Full disclosure of fees and penalties.
o Guidelines to prevent conflicts of interest that end up hurting homeowners.
o Support to keep responsible families in their homes and out of foreclosure.
o Protection for families against inappropriate foreclosure, including right of appeal.

• First Pilot Sale to Transition Foreclosed Property into Rental Housing to Help Stabilize Neighborhoods and Improve Home Prices: The FHFA, in conjunction with Treasury and HUD, is announcing a pilot sale of foreclosed properties to be transitioned into rental housing.

• Moving the Market to Provide a Full Year of Forbearance for Borrowers Looking for Work: Following the Administration’s lead, major banks and the GSEs are now providing up to 12 months of forbearance to unemployed borrowers.

• Pursuing a Joint Investigation into Mortgage Origination and Servicing Abuses: This effort marshals new resources to investigate misconduct that contributed to the financial crisis under the leadership of federal and state co-chairs.

• Rehabilitating Neighborhoods and Reducing Foreclosures: In addition to the steps outlined above, the Administration is expanding eligibility for HAMP to reduce additional foreclosures, increasing incentives for modifications that help borrowers rebuild equity, and is proposing to put people back to work rehabilitating neighborhoods through Project Rebuild.

As for the home owners "Bill of Rights" Obama referred to, the President explained it as being, " one straightforward set of common-sense rules of the road that every family knows they can count on when they’re shopping for a mortgage.  No more hidden fees or conflicts of interest.  No more getting the runaround when you call about your loan.  No more fine print that you used to get families to take a deal that is not as good as the one they should have gotten.  New safeguards against inappropriate foreclosures.  New options to avoid foreclosure if you’ve fallen on hardship or a run of bad luck.  And a new, simple, clear form for new buyers of a home". 

Obama also proposed turning more foreclosed homes into rental housing. And he said, We’re working to make sure people don’t lose their homes just because they lose their jobs.  These are steps that can make a concrete difference in people’s lives right now". 

Earlier this week, there was more evidence home values continue downward in most metropolitan areas. Analysts blame the lingering downward conditions on unemployment, foreclosures, bureaucratic obstacles and unstable credit markets. The Case-Shiller Index of U.S. home prices, showed declines of 1.3`% for both the 10- and 20-City Composites in November over October 2011. See Story from 01/31/2012 below.

President Obama, speech text, click here. President's outline of specifics in plan, click here. 02/01/2012

FEDERAL DEFICIT IN QUICK DECLINE

More from the Emeritus Newsroom- The Congressional Budget Office (CBO) projects a $1.1 trillion federal budget deficit for fiscal year 2012 if current laws remain unchanged. Measured as a share of the nation’s output (gross domestic product, or GDP), that shortfall of 7.0 percent is nearly 2 percentage points below the deficit recorded in 2011, but still higher than any deficit between 1947 and 2008. Over the next few years, projected deficits in CBO’s baseline decline markedly, dropping to under $200 billion and averaging 1.5 percent of GDP over the 2013–2022 period.

Outlays in CBO’s baseline projections decline modestly relative to GDP over the next several years before turning up again later in the decade. The modest declines are the result of an expanding economy and statutory caps on discretionary appropriations. The aging of the population and rising costs for health care drive increases in spending in later years.

Projected spending in CBO’s baseline averages 21.9 percent of GDP over the 2013–2022 period. That figure is less than the 23.2 percent CBO estimates for 2012, but it remains elevated by historical standards. As a share of GDP, discretionary spending is projected to decline to its lowest level in the past 50 years by 2022, but that decline will be partially offset by increases in spending for mandatory programs, which are projected to climb from 13.3 percent of GDP in 2013 to 14.3 percent in 2022. Driven by higher interest rates and additional accumulation of debt, net interest costs will grow significantly—from 1.4 percent of GDP this year to 2.5 percent in 2022.

Full text of CBO budget report (PDF 165 pages), click here. Summary of CBO report, click here. 01/31/2012

HOME VALUES CONTINUE TO SINK IN MOST METRO AREAS

More from the Emeritus Newsroom- Data through November 2011, released today by S&P Indices for its
S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed declines of 1.3`% for both the 10- and 20-City Composites in November over October. For a second consecutive month, 19 of the 20 cities covered by the indices also saw home prices decrease. The 10- and 20-City Composites posted annual returns of -3.6% and -3.7% versus November 2010, respectively. These are worse than the -3.2% and -3.4% respective rates reported for October. In addition to both Composites, 13 of the 20 MSAs saw their annual returns decrease compared to October’s data. New York and Tampa saw no change in annual returns in November; while Charlotte, Cleveland, Denver, Minneapolis and Phoenix saw their annual rates improve. At -11.8% Atlanta continued to post the lowest annual return. Detroit and Washington DC were the only two cities to post positive annual returns of +3.8% and +0.5%, respectively, in November. While positive, both cities saw these annual rates fall versus October’s data.

“Despite continued low interest rates and better real GDP growth in the fourth quarter, home prices
continue to fall. Weakness was seen as 19 of 20 cities saw average home prices decline in November over
October,” says David M. Blitzer, Chairman of the Index Committee at S&P Indices. “The only positive for
the month was Phoenix, one of the hardest hit in recent years. Annual rates were little better as 18 cities and both Composites were negative. Nationally, home prices are lower than a year ago. The 10-City Composite was down 3.6% and the 20-City was down 3.7% compared to November 2010. The trend is down and there are few, if any, signs in the numbers that a turning point is close at hand.

Full text of Case-Shiller press release, click here - 01/31/2012

PENSION BENEFIT GUARANTY CORPORATION BLASTS AMERICAN AIRLINES FOR MISINFORMING EMPLOYEES ABOUT PENSIONS

More from the Emeritus Newsroom-The Pension Benefit Guaranty Corporation pushed back on misleading statements it claims, American Airlines has made to employees. The PBGC says American Airlines management is telling their workers and retirees not to worry, but they should," said J. Jioni Palmer, PBGC's director of communications.

A recent letter to employees from management downplayed the serious consequences of what could happen if the company terminated its pension plans, Palmer said. The letter ignored that PBGC doesn't insure retiree health benefits, which are usually canceled when companies terminate pension plans.

The American letter also downplayed the pension cuts that would occur if American's plans are terminated and PBGC benefits are substituted. Although the figure appears nowhere in the management letter, the airline itself estimates that some 13,000 current or retired employees will have their pensions cut.

American's recent statements, through its lead bankruptcy counsel and in employee communications, have signaled the airline's intent to dump its retirement obligations on the PBGC. "American said nothing's been decided yet, but didn't even bother to pretend that it was trying to preserve its employees' pensions," Palmer said.

Since the airline sought Chapter 11 protection on Nov. 29, 2011, the agency has been working to try to preserve American's pension plans. PBGC has repeatedly stated that the airline must be preserved, but that if it can do so while preserving its plans, that would be better both for PBGC and American's employees. PBGC noted that other airlines had reorganized successfully without terminating their plans.

In an Associated Press article from earlier this month, it was reported American Airlines contributed only $6.5 million of the $100 million that it was supposed to pay into employee pension plans. The underpayment raised tensions between the company, which filed for bankruptcy protection in November, and federal pension-protection officials.

"This is a disturbing development, as the airline has more than $4 billion in cash," said J. Jioni Palmer, a spokesman for the Pension Benefit Guaranty Corp., which insures certain types of retirement plans. "American's actions hurt the financial health of the pension plans, and undermine the retirement security of American's workers and retirees". More in this article from the Sacramento Bee, click here.

PBGC press release, click here. 01/28/2012

MORE SIGNS ECONOMY WILL BE SLOW CLIMB IN 2012

More from the Emeritus Newsroom- Weekly initial jobless claims continue to average below 400,000, despite a rise the past week. Orders for durable goods, products expected to last three years or longer, rose 3 percent last month, according to the Commerce Department today. Orders for core capital goods, which are viewed as a good measure of business investment, rose 2.9 percent in December, to a record month of $68.9 billion. The Conference Board said its index of leading economic indicators rose 0.4 percent last month (7 of 10 indicators were up), following a revised 0.2 percent increase in November and a revised 0.6 percent gain in October.

In the week ending January 21, the advance figure for seasonally adjusted initial claims was 377,000, an increase of 21,000 from the previous week's revised figure of 356,000. The 4-week moving average was 377,500, a decrease of 2,500 from the previous week's revised average of 380,000. The advance seasonally adjusted insured unemployment rate was 2.8 percent for the week ending January 14, an increase of 0.1 percentage point from the prior week's unrevised rate.

Weekly jobless claims press release, click here. Commerce Department orders report, click here. Conference Board leading economic indicators, click here. 01/26/2012

INTERNATIONAL MONETARY FUND PREDICTS TOUGH WORLD WIDE ECONOMY FOR 2012

More from the Emeritus Newsroom- As promised, the International Monetary Fund released their World Economy 2012 projections. In short, the projections include,

Overall, according to the IMF, activity in the advanced economies is now projected to expand by just 1.2 percent in 2012—a downward revision of ¾ percentage points relative to the forecast last September—picking up to a still tepid 1.9 percent the next year. The global growth outlook for this year is 3.3 percent.

“Given the depth of the 2009 recession, these growth rates are too sluggish to make a major dent in very high unemployment,” the IMF said.

Despite a substantial downward revision of ¾ percentage point, developing Asia is still projected to grow most rapidly at 7½ percent on average in 2012–13.

Economic activity in the Middle East and North Africa is expected to accelerate in 2012-13, driven mainly by the recovery in Libya and the continued strong performance of other oil exporters. Most oil-importing countries in the region face muted growth prospects due to longer than expected political transition and an adverse external environment.

The impact of the global slowdown on sub-Saharan Africa has to date been limited to a few countries, most notably South Africa, and the region’s output is expected to expand by about 5½ percent in 2012.

The adverse spillover effects are expected to be the largest for central and eastern Europe, given the region’s strong trade and financial linkages with the euro area economies.

The impact on other regions is expected to be relatively mild, as macroeconomic policy easing is expected to largely offset the effects of slowing demand from advanced economies and rising global risk aversion. For many emerging and developing economies, the strength of the forecasts also reflects relatively high commodity prices.

Full IMF article on projections, click here. IMF YouTube video of announcement below. 01/24/2012

INTERNATIONAL MONETARY FUND HEAD SAYS WORLD ECONOMY COULD HAVE A "1930'S MOMENT", IF EUROPE DOES NOT SOLVE FINANCIAL PROBLEMS

More from the Emeritus Newsroom- The most serious warning about potential economic disaster ahead, came today from Christine Lagarde, Managing Director of the International Monetary Fund. Speaking to a foreign affairs meeting in Berlin today, Lagarde said the IMF will lower growth forecasts for most parts of the world, but cautioned, "Even these lower forecasts assume a constructive policy path that is by no means assured".

Lagarde sees Europe as the sticking point to worldwide recovery this year, claiming that Germany will have to invest more in the region.

Lagarde warned, "...what we must all understand is that this is a defining moment. It is not about saving any one country or region. It is about saving the world from a downward economic spiral. It is about avoiding a 1930s moment, in which inaction, insularity, and rigid ideology combine to cause a collapse in global demand. The longer we wait, the worse it will get. The only solution is to move forward together. Our collective economic future depends on it".

Full text of Lagarde address, click here. Video of Lagarde speech, below (60 Minutes). 01/23/2012

STUDY FINDS BLACK BANKRUPTCY FILERS DISPROPORTIONATELY FILE CHAPTER 13 & ARE LEFT WITH MOUNTING DEBT

More from the Emeritus Newsroom- A survey by three researchers finds race is a determining factor in determining whether bankruptcy filers receive total forgiveness of their debt or whether they are required to repay it either partially or in full.

The study, by Jean Braucher, University of Arizona; Dov Cohen, University of Illinois and Robert M .Lawless
University of Illinois, says black filers are more likely to be urged by attorneys to select Chapter 13 bankruptcy, as opposed to Chapter 7 or Chapter 11. The authors say Chapter 13 offers some legal advantages that can be used to allow debtors to keep possession of property such as a home or an automobile. It is widely believed among consumer bankruptcy specialists that a client’s desire to save a home is the most common reason for filing Chapter 13, because Chapter 13 offer certain advantages such as the ability to make up arrearages over time (Porter, 2011). A second reason that Chapter 13 might be preferred is that, although the attorney’s fees are higher, the fees can be paid over time through the Chapter 13 plan whereas lawyers usually require that clients come up with cash in advance for the fees for a chapter 7 case. The study also found that those filing Chapter 13 are less likely to complete the process, leaving them with mounting debts, which filers have a better chance of eliminating in a Chapter 7 filing.

Chapter 13 bankruptcy filings are much more popular in the south and have been for 150 years, according to the study, which traces the trend back to economic patterns following the civil war, when banks and businesses were trying to get debtors to pay, spinning the concept as a moral choice, to HONOR their debts under court structured enforcement. The study also leans to legal culture in areas where Chapter 13 is most popular. Also, Chapter 13 is viewed more favorably by attorneys and bankruptcy judges in those areas. Ultimately, the study suggests, it is attorney influence with the client, as the biggest reason why Chapter 13 is more popular in certain federal bankruptcy court districts, mostly the south.

Full text of study, click here. 01/21/2012

KODAK FILES BANKRUPTCY / WILL KEEP OPERATING / TRYING TO SHED $245+ MILLION IN PENSION COSTS

More in this article from Dealbook, click here - 01/19/2012

WHY MITT ROMNEY'S UNRELEASED TAX RETURNS ARE A BIG DEAL

More in this article written by Phil Rucker and Jia Lynn Yang, click here- 01/17/2012

CBO REPORT SAYS RAISING SOCIAL SECURITY ELIGIBILITY AGE WILL BOOST ELDERLY HEALTH CARE COSTS

More from the Emeritus Newsroom- The Congressional Budget Office says raising the eligibility age for Social Security would help the federal budget, but could be devastating for seniors.

In its summary, the CBO says raising the ages at which people can collect Medicare and Social Security would reduce federal spending and increase federal revenues by inducing some people to work longer. However, raising the eligibility ages for those programs also would reduce people's lifetime Social Security benefits and cause many of the people who would otherwise have enrolled in Medicare to face higher premiums for health insurance, higher out-of-pocket costs for health care, or both.

A CBO graphic lys out the basic impact according to policy options.

The CBO report projects that inducing people to work longer and raising any of the ages of eligibility would increase the size of the workforce and the economy. Although the magnitude of those effects is difficult to predict, CBO estimates that:

• Raising Social Security's early eligibility age to 64 or the full retirement age to 70 would, in the long term, boost the size of the workforce and the economy by slightly more than 1 percent.
• Raising Medicare's eligibility age to 67 would also boost the size of the workforce and the economy, but by a much smaller amount.

Full text of CBO report and summary, click here. 01/14/2012

PEW SURVEY FINDS MORE AMERICANS SEE INEQUALITY BETWEEN RICH AND POOR

More from the Emeritus Newsroom- A new Pew Research Center survey of 2,048 adults finds that about two-thirds of the public (66%) believes there are “very strong” or “strong” conflicts between the rich and the poor—an increase of 19 percentage points since 2009.

Not only have perceptions of class conflict grown more prevalent; so, too, has the belief that these disputes are intense. According to the new survey, three-in-ten Americans (30%) say there are “very strong conflicts” between poor people and rich people. That is double the proportion that offered a similar view in July 2009 and the largest share expressing this opinion since the question was first asked in 1987.

As a result, in the public’s evaluations of divisions within American society, conflicts between rich and poor now rank ahead of three other potential sources of group tension—between immigrants and the native born; between blacks and whites; and between young and old. Back in 2009, more survey respondents said there were strong conflicts between immigrants and the native born than said the same about the rich and the poor

While the survey results show a significant shift in public perceptions of class conflict in American life, they do not necessarily signal an increase in grievances toward the wealthy. It is possible that individuals who see more conflict between the classes think that anger toward the rich is misdirected. Nor do these data suggest growing support for government measures to reduce income inequality.

In fact, other questions in the survey show that some key attitudes toward the wealthy have remained largely unchanged. For example, there has been no change in views about whether the rich became wealthy through personal effort or because they were fortunate enough to be from wealthy families or have the right connections.

A 46% plurality believes that most rich people “are wealthy mainly because they know the right people or were born into wealthy families.” But nearly as many have a more favorable view of the rich: 43% say wealthy people became rich “mainly because of their own hard work, ambition or education,” largely unchanged from a Pew survey in 2008.

Full text of Pew press release, click here. 01/11/2012

GAO SAYS TROUBLED ASSET RELIEF PROGRAM (TARP) ADMINISTRATIVE COSTS ONLY HALF OF $70 BILLION APPROVED BY CONGRESS

More from the Emeritus Newsroom- A report from the Government Accountability Office shows administrative costs for the Troubled Asset Relief Program (TARP) will be about half of what congress approved. The agency says many TARP programs continue to be in various stages of unwinding and some programs, notably those that focus on the foreclosure crisis, remain active.

Also, the GAO claims some of the programs that the Department of the Treasury continues to unwind, such as investments in American International Group, Inc. (AIG), require Treasury to actively manage the timing of its exit as it balances its competing goals. For other programs, such as the Capital Purchase Program (CPP)—which was created to provide capital to financial institutions—Treasury’s exit will be driven primarily by the financial condition of the participating institutions. Consequently, the timing of Treasury’s exit from TARP remains uncertain.

Full text of GAO summary, click here. 01/09/2012

RICHEST AND POOREST MEMBERS OF CONGRESS / WEALTH GAP BETWEEN CONGRESS AND THEIR CONSTITUENTS GROWS

More from the Emeritus Newsroom- According to the group, OpenSecrets.org, 250 members of congress are millionaires, which fits the criticism that only the wealthy can afford to run for office. Unfortunately, in its original calculations, the The Center for Responsive Politics, which supports OpenSecrets, mistakenly estimated Sen. Herb Kohl, (D-WI) , to have a negative net worth. Realizing their error, the group recalculated to find that Sen. Kohl was, in fact, the fifth richest member of congress, worth more than $173 million and certainly, one of the most liberal.

The group claims that Rep. Darrell Issa (R-Calif.) ranks as the wealthiest member of the 112th Congress, according to the Center's analysis of 2010 financial disclosures. Issa's minimum estimated net worth in 2010 was $195 million, while his maximum estimated net worth was more than $700 million. That gives Issa an average net worth of $448 million.

Meanwhile, Rep. Jared Polis (D-Colo.) ranks as the wealthiest House Democrat. Polis, who has spent about $7 million of his own money on his campaigns since 2007, has an average estimated net worth of $143 million.

That's not good enough to rank him as the No. 2 wealthiest member of Congress though. In fact, it only ranks him as No. 6* wealthiest current lawmaker.

Rep. Michael McCaul (R-Texas), Sen. John Kerry (D-Mass.), Sen. Mark Warner (D-Va.) and Sen. Herb Kohl (D-Wis.),* the owner of the Milwaukee Bucks NBA team, all rank higher.

McCaul's average estimated net worth in 2010 stood at $380 million, while Kerry's stood at about $232 million, Warner's at about $193 million and Kohl's at about $174 million.

Kerry's sizeable net worth is thanks, largely, to the assets of his wife Teresa Heinz Kerry.

OpenSecrets says all members of Congress are required to report not only their own holdings but also that of their spouses and any dependents. However, calculating the exact value of many of their investments is impossible.

The top bracket of assets held by senators' spouses is simply "more than $1 million," so many lawmakers' families' net worth are likely undervalued. For instance, some estimate that Heinz Kerry's net worth may exceed $1 billion.

Notably, Sen. Bob Corker (R-Tenn.), who places as the No. 13* richest member of Congress with an average estimated net worth of about $60 million, ranks as the wealthiest Senate Republican.

OpenSecrets reports, at the other end of the spectrum, a handful of members of Congress are definitely in debt.

No matter how you slice the information on the congressional disclosure forms for Sen. Debbie Stabenow (D-Mich.), for instance, her net worth is below zero. Her maximum net worth is a negative $15,000, while her minimum net worth is a negative $50,000.

A similar predicament afflicts Reps. Mario Diaz-Balart (R-Fla.), John Conyers (D-Mich.), Louis Gohmert (R-Texas), Steve Fincher (R-Tenn.) and Alcee Hastings (D-Fla.).

Notably, Hastings, whose minimum estimated net worth is $7.3 million in debt and whose maximum estimated net worth is $2.1 million in debt, ranks as the poorest member of Congress, by the Center's tally.

That said, members of Congress might be more financially well off than we can see. The annual filings do not include the values of government retirement accounts, personal property -- such as cars or artwork -- that not for investment or any non-income-generating property, such as their primary residences.

Moreover, because of the forms' broad ranges for assets and liabilities, it's impossible to know whether some members of Congress are in the black or in the red.

Full text of OpenSecrets press release click here. Complete listings as chart, click here. ALSO, THIS MUST READ ARTICLE FROM WASHINGTON POST ON THE WEALTH GAP BETWEEN CONGRESS AND THEIR CONSTITUENTS, CLICK HERE. 12/31/2011

LATEST STATS ON WORKER PAY AND BENEFITS FROM LABOR DEPARTMENT / PLUS! RATED MUST READ! FORMER OBAMA ADMINSTRATION ECONOMIST JARED BERNSTEIN, "MIDDLE CLASS FAMILIES WERE LOSING GROUND EVEN WHEN THE ECONOMY WAS GOOD"

More from the Emeritus Newsroom- Survey results released today by the Department of Labor's, Bureau of Labor Statistics, shows government workers continue to get lower pay, as a percentage of their total compensation, but do better than workers in the private sector when benefits are included.

Employer costs for employee compensation averaged $30.11 per hour worked in September 2011, the U.S. Bureau of Labor Statistics reported today.  Wages and salaries averaged $20.91 per hour worked and accounted for 69.4 percent of these costs, while benefits averaged $9.21 and accounted for the remaining 30.6 percent.  Total employer compensation costs for private industry workers averaged $28.24 per hour worked in September 2011. 

Employer Costs for Employee Compensation (ECEC), a product of the National Compensation Survey, measures employer costs for wages, salaries, and employee benefits for nonfarm private and state and local government workers.

Below is the statistical table for comparison.

Relative importance of employer costs for employee compensation, September 2011

Compensation                           Civilian       Private      State and local

component                               workers        industry       government

Wages and salaries                      69.4%          70.5%            65.2%

Benefits                                30.6           29.5             34.8

   Paid leave                            6.9            6.7              7.4

   Supplemental pay                      2.4            2.8              0.8

   Insurance                             8.9            8.1             12.0

     Health benefits                     8.4            7.6             11.6

   Retirement and savings                4.6            3.6              8.4

     Defined benefit                     2.8            1.6              7.6

     Defined contribution                1.8            2.0              0.8

   Legally required                      7.8            8.3              6.1

Former Obama administration economist Jared Bernstein, in an article published online today, claims the consistent stagnation of wages and benefits earned by the middle class in recent years, have only amplified the income gap between the top 1% of wage earners and the remaining 99%. Bernstein article, click here.

Full text of BLS survey, click here. 12/07/2011

WHY A COLLEGE DEGREE DOESN'T MEAN A MIDDLE CLASS LIVING

More in this article from the New York Times, click here- 12/02/2011

FEDERAL RESERVE SAYS ECONOMY HAS IMPROVED SLOWLY/MODERATELY

More from the Emeritus Newsroom- The Federal Reserve's Beige Book report, released today concludes, overall economic activity increased at a slow to moderate pace since the previous report across all Federal Reserve Districts except St. Louis, which reported a decline in economic activity. District reports indicated that consumer spending rose modestly during the reporting period. Motor vehicle sales increased in a number of Districts, and tourism showed signs of strength. Business service activity was flat to higher since the previous report. Manufacturing activity expanded at a steady pace across most of the country. Overall bank lending increased slightly since the previous report, and home refinancing grew at a more rapid pace. Changes in credit standards and credit quality varied across Districts. Residential real estate activity generally remained sluggish, and commercial real estate activity remained lackluster across most of the nation. Single family home construction was weak and commercial construction was slow. Districts mostly reported favorable agricultural conditions. Activity in the energy and mining sectors increased since the previous report.

The Fed also says hiring was generally subdued, although some firms with open positions reported difficulty finding qualified applicants. Wages and salaries remained stable across Districts. Overall price increases remained subdued, and some cost pressures were reported to have eased.

All the Federal Reserve districts reported wages and salaries remained stable, although some exceptions were noted. In Cleveland, wage pressures emerged for truck drivers as the pool of available drivers shrank relative to job openings. Manufacturing wage growth strengthened in Richmond, while hiring stabilized and the average workweek was unchanged. Some wage growth was noted among the highly skilled trades in Atlanta. In Minneapolis, wages increased sharply at some fast food restaurants in western North Dakota. Kansas City reported that some energy and information technology firms raised wages for skilled workers; Dallas reported the same for airlines and a few construction-related manufacturers. San Francisco noted persistent upward pressure on benefit costs, especially for employee health care.

Full Beige Book text, click here- 11/30/2011

LATEST CBO REPORT SAYS STIMULUS ACT WAS MORE EFFECTIVE AGAINST RECESSION THAN EARLIER ESTIMATES

More from the Emeritus Newsroom- A Congressional Budget Office report confirms earlier estimates that the American Recovery and Reinvestment Act, was effective, preventing the recession from deepening. The report also provides a more defined picture that ARRA was more effective than first thought. The agency has compiled several reports, since the act was passed, to provide analysis on the positive and negative effects, each quarter.

The CBO, in its report released Tuesday, claims, that ARRA’s policies had the following effects in the third quarter
of calendar year 2011 compared with what would have occurred otherwise:
 They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.3 percent and 1.9 percent,
 They lowered the unemployment rate by between 0.2 percentage points and 1.3 percentage points,  They increased the number of people employed by between 0.4 million and 2.4 million, and  They increased the number of full-time-equivalent jobs by 0.5 million to 3.3 million. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers.) The effects of ARRA on output peaked in the first half of 2010 and have since diminished, CBO estimates. The effects of ARRA on employment are estimated to lag slightly behind the effects on output; CBO estimates that the employment effects began to wane at the end of 2010 and have continued to do so throughout 2011. Still, CBO estimates that, compared with what would have occurred otherwise, ARRA will raise real GDP in 2012 by between 0.1 percent and 0.8 percent and will increase the number of people employed in 2012 by between 0.2 million and 1.1 million.

Full text of CBO report on ARRA, click here- 11/23/2011

RISING TREND OF YOUNG ADULTS REMAINING/MOVING BACK WITH PARENTS

More from the Emeritus Newsroom- Between 2005 and 2011, the proportion of young adults living in their parents’ home increased, according to the U.S. Census Bureau. The percentage of men age 25 to 34 living in the home of their parents rose from 14 percent in 2005 to 19 percent in 2011 and from 8 percent to 10 percent over the period for women. These statistics come from America’s Families and Living Arrangements: 2011, a series of tables from the 2011 Current Population Survey providing a look at the socioeconomic characteristics of families and households at the national level. 

      “The increase in 25 to 34 year olds living in their parents’ home began before the recent recession, and has continued beyond it,” said the author, Rose Kreider, a family demographer with the Fertility and Family Statistics Branch.  

      Similarly, 59 percent of men age 18 to 24 and 50 percent of women that age resided in their parents’ home in 2011, up from 53 percent and 46 percent, respectively, in 2005. It should be noted that college students living in a dormitory are counted in their parents’ home, so they are included in these percentages.

In general, the percent of all households that contain just one person has risen over the last half of the 20th century and into the 21st century. The percentage of such households rose from 13 percent in 1960 to 28 percent in 2011. While the percentage may not differ significantly from one year to the next, the overall trend has been an upward one. The percentage did decline, however, from 2008 to 2010.

 Of the 74.6 million children younger than 18 in 2011, most (69 percent) lived with two parents, while another 27 percent lived with one parent and 4 percent with no parents. Of those children who lived with two parents, 92 percent lived with two biological or two adoptive parents.  

 Among the children who lived with one parent, 87 percent lived with their mother.

 Of the children living with no parents present, 57 percent lived with at least one grandparent. 

 In 2011, 10 percent of children under 18 lived with at least one grandparent. Seventy-eight percent of these children also lived with at least one parent. 

 Of the 67.8 million opposite sex couples who lived together, 89 percent were married couples, while the remaining 11 percent were unmarried. 

In 2011, there were about 7.6 million unmarried couples living together.

In 2011, married couples with children made up 20 percent of all households, half what they were in 1970 (40 percent). (See Figure 3.)

In 2011, 23 percent of married couple family groups with children younger than age 15 had a stay-at-home mother. This proportion decreased in the last few years during the recession. In 2007 — before the recession began — the corresponding figure was 24 percent. Full text of report, click here. 11/03/2011

HOME OWNERS WHO SUSPECT WRONGDOING IN THEIR FORECLOSURES CAN ASK FED FOR REVIEW

More from the Emeritus Newsroom- Home owners who suspect their foreclosures to have been fraudulent can submit their case for federal review. The Office of the Comptroller of the Currency will be in charge of the review. Home owners who had foreclosure actions filed against them between January 1, 2009 and December 31, 2010 are scheduled to receive letters from their mortgage servicers, required by an agreement between federal investigators and 14 of the largest servicers, last April. The letters are to be sent this month and next. If home owners suspect fraud in their case, but did not receive a letter, they can make contact with independent consultants at no charge, by calling 1-888-952-9105 or through a special website, www.independentforeclosurereview.com . The deadline for home owner review requests is April 30th, 2012.

If the independent consultant finds wrongdoing in a home owner's foreclosure case, the homeowner will receive compensation as determined by the review.

Full text of the review process press release from the Office of Comptroller of the Currency, click here. 11/02/2011

FEDERAL INVESTIGATORS: $700-$900 MILLION IN CUSTOMER ACCOUNTS MISSING AS M-F GLOBAL FILES BANKRUPTCY

More from the New York Times, click here- 11/01/2011

FEDS MOVE TO PREVENT COMPANIES FROM ABANDONING PENSIONS

More from the Emeritus Newsroom- The Pension Benefit Guaranty Corporation has announced it is suing Bendix Commercial Vehicle Systems LLC for $16.6 million to cover pension debt from the closing of its Frankfort, Ky., plant. the PBGC says federal law requires companies to provide financial protection when more than 20 percent of a pension plan's members lose their jobs in a shutdown. All the Frankfort plant's 63 workers were displaced after it closed in December 2007.

"Bendix continues to ignore its legal responsibility to these workers," said PBGC Director Josh Gotbaum. "We've tried to work with them in good faith, but now we have no choice except to take them to court. Make no mistake: PBGC will use every legal means to protect pensions."

PBGC filed its lawsuit in the US District Court in Cleveland on Sept. 16, 2011 after Bendix declined to meet its obligations. The action against Bendix is the first time PBGC has had to go to court to compel a company to cover pension obligations from a plant closing. Until now, companies that closed plants have worked with PBGC to settle their pension debts. Since 2007, PBGC has obtained more than $1 billion in additional protection for pension plans covering more than 120,000 workers and retirees. PBGC is hopeful the issue will be resolved soon without further court action. Bendix, which supplies brakes and vehicle control systems for trucks and commercial vehicles is headquartered in Elyria, Ohio, and owned by Knorr-Bremse AG of Munich, Germany.

The agency also is fighting efforts by Friendly's to end the pensions of its almost 6,000 workers and retirees in bankruptcy.

Based in Wilbraham, Mass., Friendly Ice Cream Corp. filed for bankruptcy protection on Oct. 5. The company also announced it was closing 63 restaurants. Friendly's is owned by Sun Capital Partners. Sun Capital intends to use the bankruptcy process to abandon the pension plan, but keep its ownership of Friendly's.

"It looks like Friendly's and Sun Capital are trying to make their employees and retirees bear the brunt of the company's restructuring; the employees deserve better," said PBGC Director Josh Gotbaum.

If the bankruptcy court allows Friendly's and its owners to abandon the pension plan, PBGC will pay pension benefits to Friendly's employees. However, because of limits set by federal law, retirees might get reduced pensions.

Gotbaum said PBGC works to preserve both businesses and their pensions. Many companies have gone through bankruptcy with their pensions ongoing. In fact since 2009, PBGC has worked with some 40 companies to preserve the pensions of more than 300,000 Americans.

"Time after time, PBGC has worked successfully with companies and their creditors to make sure that the bankruptcy process recognizes the rights of pensioners, too," Gotbaum said. "We want to make sure that Friendly's employees and retirees don't get left out."

PBGC statement on Bendix, click here. PBGC statement on Friendly's, click here. 10/28/2011

ECONOMY DOUBLES EXPANSION IN THIRD QUARTER

More from the Emeritus Newsroom- According to the Bureau of Economic Analysis,Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.5 percent in the third quarter of 2011 (that is, from the second quarter to the third quarter) according to the "advance" estimate.  In the second quarter, real GDP increased 1.3 percent. The Bureau emphasized that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3).  The"second" estimate for the third quarter, based on more complete data, will be released on November 22, 2011. The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and federal
government spending that were partly offset by negative contributions from private inventory investment and state and local government spending.  Imports, which are a subtraction in the calculation of GDP, increased.

      The acceleration in real GDP in the third quarter primarily reflected accelerations in PCE and in
nonresidential fixed investment and a smaller decrease in state and local government spending that were partly offset by a larger decrease in private inventory investment.

Full text of BEA estimate, click here. 10/27/2011

FEDERAL HOUSING FINANCE AGENCY ANNOUNCES NEW PROGRAM FOR UNDERWATER HOME OWNERS / VIDEO OF STORY

More from the Emeritus Newsroom- The FHFA, effective today, has changed eligibility requirements of it's the Home Affordable Refinance Program (HARP), one of several under the Making Home Affordable Program initiative introduced in 2009, as part of the Troubled Asset Relief Program (TARP), to cut foreclosures due to homeowner sowing more than their homes were worth. Effective today, there is no cap on how much a homeowner owes on his mortgage to qualify, thereby removing a cap that such mortgages had to be 25% more the worth of the home. However, it has been able to help only a fraction of homeowners facing foreclosure, or those likely to be in that category. A March 2010 Inspector General report, found a year into the program, only 168,708 modifications became permanent out of more than one million trial modifications. The total number of homeowners saved from foreclosure on various programs, including HARP, remains less than a million.

The new rules, announced today by FHFA, will,

 Eliminate certain risk-based fees for borrowers who refinance into shorter-term
mortgages and lowering fees for other borrowers;
 Remove the current 125 percent current loan-to-value (LTV) ratios ceiling for fixed-rate mortgages backed by
Fannie Mae and Freddie Mac;
 Waive certain representations and warranties that lenders commit to in making loans
owned or guaranteed by Fannie Mae and Freddie Mac;
 Eliminate the need for a new property appraisal where there is a reliable AVM
(automated valuation model) estimate provided by the Enterprises; and
 Extend the end date for HARP until Dec. 31, 2013 for loans originally sold to the
Enterprises on or before May 31, 2009.

The agency claims, as of August 31, 2011, nearly 894,000 borrowers had refinanced through HARP. Four to five million homeowners are estimated to be in or soon will be facing foreclosure. HARP is the only refinance program that enables borrowers who owe more than their home is worth to take advantage of low interest rates and other refinancing benefits. This program will continue to be available to borrowers with loans sold to the Enterprises on or before May 31, 2009 with current loan-to-value (LTV) ratios above 80 percent.

The Inspector General for TARP suggested, in their July 2011 Quarterly Report, that in light of the unusually high degree of long-term unemployment that has marked this financial crisis, more than one year ago, in its April 2010 Quarterly Report to Congress, the Treasury reconsider the length of the minimum term of its unemployment forbearance program known as the Home Affordable Unemployment Program (“UP”). As of June 30, 2011, UP provided payment forbearance for a minimum of three months for unemployed borrowers with the amount forborne added to the balance of the mortgage. The basis for SIGTARP’s recommendation was a concern that UP’s three-month minimum forbearance term would not go far enough to assist the average unemployed homeowner effectively. The average length of unemployment at the time of SIGTARP’s recommendation, according to the Bureau of Labor Statistics, was 31.2 weeks, the longest recorded since its measurement began in 1948. Nearly 43% of unemployed workers had been out of work for 27 weeks. Since that time, the average length of unemployment has increased to 39.9 weeks, as reported in June 2011, with 42% of unemployed workers out of work for 27 weeks.

Adding to homeowners fears about the program are widely reported fraud schemes involving home refinancing. One of the most notable involves a lawsuit in New Jersey against CitiMortgage. The suit, filed by Juan and Elizabeth Silva, claims that CitiMortgage intentionally set up its loan modification program to fail, and that Citimortgage instituted its HAMP program in order to feign compliance with TARP's conditions, although it never had any intention to allow widespread loan modifications for homeowners. 

July 2011 Inspector General Report on TARP, click here. Full text of FHFA announcement, click here. SCRBD download of Silva lawsuit filing, click here. Below, YouTube playback of Voice of America story.10/24/2011

CITGROUP AGREES TO PAY $285 MILLION IN BOGUS MORTGAGE BACKED SECURITIES SCANDAL

More from the Emeritus Newsroom- After years of negotiations the Securities and Exchange Commission reached agreement with Citigroup's U.S. broker-dealer subsidiary to settle charges of defrauding investors of about $1 billion in collateralized debt obligation (CDO) tied to the U.S. housing market. Citigroup then bet against those same investors, who bought the CDOs, as the housing market showed signs of distress. The CDOs defaulted within months, leaving investors with losses while Citigroup made $160 million in fees and trading profits.

The SEC alleges that Citigroup Global Markets structured and marketed a CDO called Class V Funding III and exercised significant influence over the selection of $500 million of the assets included in the CDO portfolio. Citigroup then took a proprietary short position against those mortgage-related assets from which it would profit if the assets declined in value. Citigroup did not disclose to investors its role in the asset selection process or that it took a short position against the assets it helped select.

Citigroup has agreed to settle the SEC’s charges by paying a total of $285 million, which will be returned to investors.

Full text of SEC statement, click here. 10/19/2011

SOCIAL SECURITY RECIPIENTS TO GET 3.6% RAISE

More from the Emeritus Newsroom- The Social Security Administration announced this morning that recipients will be getting a raise for the first time since 2009.

Monthly Social Security and Supplemental Security Income (SSI) benefits for more than 60 million Americans will increase 3.6 percent in 2012, according to SSA.

The 3.6 percent cost-of-living adjustment (COLA) will begin with benefits that nearly 55 million Social Security beneficiaries receive in January 2012.  Increased payments to more than 8 million SSI beneficiaries will begin on December 30, 2011.

Some other changes that take effect in January of each year are based on the increase in average wages.  Based on that increase, the maximum amount of earnings subject to the Social Security tax (taxable maximum) will increase to $110,100 from $106,800.  Of the estimated 161 million workers who will pay Social Security taxes in 2012, about 10 million will pay higher taxes as a result of the increase in the taxable maximum. 

Information about Medicare changes for 2012, when announced, will be available at www.Medicare.gov.  For some beneficiaries, their Social Security increase may be partially or completely offset by increases in Medicare premiums. 

The Social Security Act provides for how the COLA is calculated.  To read more, please visit www.socialsecurity.gov/cola.  10/19/2011

WORKERS REAL EARNINGS CONTINUE TO STAGNATE/DROP

More from the Emeritus Newsroom- Wage stagnation is being overcome by inflation in the latest report from the Bureau of Labor Statistics. The BLS says real average hourly earnings for all employees fell 0.1 percent from August to September, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. A 0.2 percent increase in average hourly earnings was more than offset by a 0.3 percent increase in the Consumer Price Index for All Urban
Consumers (CPI-U).Real average weekly earnings rose 0.2 percent over the month, as a result of the 0.3 percent increase in the average workweek and the decrease in real average hourly earnings. Since reaching a recent peak in
October 2010, real average weekly earnings have fallen 2.0 percent.

Real average hourly earnings fell 1.9 percent, seasonally adjusted, from September 2010 to September
2011. This decrease combined with a 0.3 percent increase in average weekly hours resulted in a 1.7
percent decrease in real average weekly earnings during the same period.Real average hourly earnings for production and nonsupervisory employees fell 0.2 percent from August to September, seasonally adjusted. A 0.2 percent increase in average hourly earnings was more than offset by a 0.4 percent increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).Real average weekly earnings rose 0.1 percent over the month, as a result of the 0.3 percent increase in the average workweek and the decrease in real average hourly earnings. Since reaching a recent peak in October 2010, real average weekly earnings have fallen 2.2 percent.Real average hourly earnings fell 2.4 percent, seasonally adjusted, from September 2010 to September 2011. The decrease in real average hourly earnings combined with a 0.3 percent increase in average weekly hours resulted in a 2.0 percent decrease in real average weekly earnings during this period.

Full text of BLS press release, click here. 10/19/2011

AMERICANS INCOME WON'T REACH PRE-RECESSION TILL 2021

More from the Emeritus Newsroom- A Wall Street Journal survey of economists projects Americans' income levels won't reach those of pre-recession till 2021. The survey found that from 2000 to 2010, median income in the U.S. declined 7% after adjusting for inflation, according to Census data. That marks the worst 10-year performance in records going back to 1967. On average, the economists expect inflation-adjusted incomes to rise over the next decade, but the 5% projected gain isn't enough to reach pre recession levels.

“Standards of living in the U.S. will continue to decline as we de leverage and emerging markets make over as the growth engine of the global economy,” says Julia Coronado of BNP Paribas.

The WSJ survey also shows Incomes are being held down by persistently high unemployment and tepid economic growth, and the situation isn’t expected to improve much in the foreseeable future. “What might be the locomotive?” asks Edward Leamer of UCLA Anderson Forecast. Typical drivers of economic recovery haven’t been robust. Housing remains stuck at recessionary levels with home prices expected to be nearly flat next year while construction is stuck at recessionary levels. Manufacturing and consumer spending have improved over the course of the recovery but haven’t been rising at levels that would lead to vigorous expansion. Meanwhile, growing global concerns could depress export markets.

Link to WSJ article, click here. 10/14/2011

REAL INCOME DOWN MOST AMONG SINGLE PARENT FAMILIES

More from the Emeritus Newsroom- A report from two former Census Bureau researchers examines household income trends during the recent recession lasting from December 2007 to June 2009, and two full years of the “economic recovery” beginning in June 2009 up through June 2011. The reports show there has been no recovery in terms of household income. To the contrary, it shows that median household income has continued to decline up through June 2011.

A breakdown of the changes by groups shows a more significant effect among single parent households.

During this period income declined for all but a few groups in the population, and some of the largest declines occurred for groups with incomes well below the overall median annual household income.
Highlights of the income declines between June 2009 and June 2011 include the following:
 Real median annual household income for family households with a male or female head and no spouse present (many with children in the household) declined by 7.3 percent (from $39,321 to $36,465) compared to a decline for married-couple households of 4.5 percent (from $76,783 to $73,324).
 Real median annual household income for households with a head under 25 years old declined by 9.5 percent (from $32,123 to $29,060) compared to a decline for households with a head 45 to 54 years old of 5.5 percent (from $65,911 to $62,315).
 Real median annual household income for households with a head looking for work or on layoff (unemployed) declined by 18.4 percent (from $41,037 to $33,487) compared to a decline for households with a head working full-time of 5.1 percent (from $72,104 to $68,454).
 Real median annual household income for households with a Black (not Hispanic) head declined by 9.4 percent (from $35,072 to $31,784) compared to a decline for households with a White (not Hispanic) head of 4.7 percent (from $59,111 to $56,320). The decline for households with a Hispanic head was 4.9 percent (from $41,945 to $39,901).

Full text of report summary, click here. 10/10/2011

DEFICIT FOR PRIVATE PENSION FUNDS HITS 50 YEAR HIGH

More from the Emeritus Newsroom- Personnel consulting firm, Mercer, says its latest survey of private pension plans sponsored by S&P 1500 companies shows the funding deficit increased by $134 billion during September, from a deficit of approximately $378 billion as of August 31, 2011, to $512 billion as of September 30.

According to Mercer, this deficit corresponds to an aggregate funded ratio of 72% as of September 30, compared to a funded ratio of 79% at August 31, 2011 and 81% at December 31, 2010. Mercer believes that the end-of-month pension funding levels for the S&P 1500 are at a post-World War II low. The previous low point for funding was August 31, 2010 when the aggregate funded ratio was 71% but the deficit at that point of $507 billion has grown as liabilities have increased. 

The decline in funded status was driven by a 7.0% drop in equities, and a fall in yields on high quality corporate bonds during the month. Discount rates for the typical US pension plan decreased approximately 30-40 basis points during the month. Mercer’s analysis indicates the S&P 1500 funded status peaked at 88% at the end of April, and has since seen a 16% decline.

“The end of September marks the largest deficit since we have been tracking this information,” said Jonathan Barry, a partner in Mercer’s Retirement Risk and Finance business.   “Over the past 3 months, we have seen nearly $300 billion of funded status erode.   This will have significant consequences for plan sponsors.   It will be particularly painful for organizations with September 30 fiscal and/or plan year ends. 

“With no expectation for a quick recovery, plan sponsors should evaluate the effects of the recent turmoil on their future cash requirements, as well as the impact on their P&L and balance sheet,” said Mr. Barry.  “For some sponsors, the recent drop could result in falling below certain funding level thresholds under PPA which could lead to restrictions on lump sum payments and at the more extreme end, could result in a total freeze of benefit accruals.”   

Full text of statement from Mercer, click here. 10/07/2011

CENSUS BUREAU SAYS HOME OWNERSHIP STILL AT SECOND HIGHEST LEVEL DESPITE WORST DROP SINCE 1940

More from the Emeritus Newsroom - As the Census Bureau continues to vet more information from the years in recession, revealing more interesting facts about home ownership.

First, according to the agency, home ownership rate is the second highest on record, behind only 2000, since home ownership data collection began in 1890.  However, the rate decreased by 1.1 percentage points to 65.1 percent between 2000 and 2010.

Second, the decrease amounts to the largest since the period from 1930 to 1940.

The Census Bureau report shows the national housing inventory increased by 15.8 million units, or 13.6 percent, from 2000 to 2010. The housing inventory increased in all states during the decade but grew faster in the South and West than in the Midwest and Northeast. The South grew 17.9 percent to 50.0 million units and the West grew 17.3 percent to 28.6 million units. In contrast, the Midwest grew by 9.3 percent to 29.5 million units and the Northeast grew by 6.6 percent to 23.6 million units.

All of the states with the largest percentage increases in housing units were in either the West or the South: Nevada (41.9 percent), Arizona (29.9 percent), Utah (27.5 percent), Idaho (26.5 percent), Georgia (24.6 percent), Florida (23.1 percent), North Carolina (22.8 percent), Colorado (22.4 percent), Texas (22.3 percent) and South Carolina (21.9 percent).

No states in either the Midwest or the Northeast experienced a percentage change in housing inventory greater than the national increase of 13.6 percent. In the Northeast, housing units in Pennsylvania (6.0 percent), New York (5.6 percent) and Rhode Island (5.4 percent) increased less than both the nation and the Northeast as a whole (6.6 percent). West Virginia had the lowest percentage increase of any state at 4.4 percent.

Full text of Census Bureau report, click here. 10/06/2011

LARGEST INCREASE IN MODERN HISTORY OF AMERICANS MOVING IN WITH EXTENDED FAMILY

More from the Emeritus Newsroom- It has been established for months that increasing numbers of the unemployed are moving in with other family members. Now a study from the Pew Research Center has established the problem has reached its worst point in modern times.

In general terms, according to Pew, between 2007-2009, the number of Americans living in multi-generational households, spiked from 46.5 million to 51.4 million.

The study found the potential benefits of living in multi-generational households are greatest for the groups that have been most affected by the Great Recession. Among the unemployed, the poverty rate in 2009 was 17.5% for those living in multi-generational households, compared with 30.3% for those living in other households. Members of other economically vulnerable groups -- young adults, Hispanics and blacks -- who live in extended families also experience sharply lower poverty rates than those in other households.

The largest increase was among adults ages 25 to 34 who live with their parents.In 2009, a record 51.4 million Americans lived in a multi-generational household. These households included one-in-six Americans (16.7%) and more than one-in-five (21.1%) adults ages 25 to 34.

The share of Americans living in multi-generational households has grown by a third since 1980, when it was 12.1%. The growth, chronicled in a previous report by the Pew Research Center, represents a sharp reversal of the pattern from 1940 to 1980.

From 2007 to 2009, the number of Americans living in multi-generational households grew by nearly 5 million, a 10.5% increase at a time when the overall population grew only 1.8%. About half of the increase since 2000 in the number of Americans living in multi-generational households took place from 2007 to 2009. The rate of growth was also twice the rate that had prevailed from 1980 to 2006.

By contrast to the sharp increase in multi-generational households, the number of Americans who live in households that are not multi-generational—such as those including a parent and a child younger than 25, married couples with or without children younger than 25, unrelated adults or someone living alone—grew less than 1% from 2007 to 2009.

Full text of Pew study summary with links to full text of report, click here. 10/05/2011

THOSE WHO HAVE JOBS ARE PUTTING MORE IN THEIR 401K

More from the Emeritus Newsroom- Mercer, a business consulting firm, is out with it's latest Workplace Survey, which shows a complicated link between how workers think about their economic future, and what they are saving. According to the survey, "...US benefit plan participants are dramatically more pessimistic about their economic expectations than just one year ago.

“In 2010, most participants saw the economy improving but not their own personal situation – a highly unusual divergence,” said Suzanne Nolan, Partner and Director of Marketing and Communications for Mercer’s US Outsourcing business. “This year’s results reflect a stunning reversal in terms of a highly negative view of the economy but a renewed commitment to and accountability for their own retirement planning.”

The Mercer survey also found that the percentage of participants expecting a recession has nearly doubled (42% versus 23% in 2010, see Table 1).  Participants have internalized this gloomy economic outlook with a record number of participants fearing job loss (45%, up from 36% in 2010) and planning to delay retirement (44% up from 35% in 2010).

Strangely, according to the survey, over the past year, 41% of participants claimed to have increased their 401(k) contribution rate (up from 31%), 40% reallocated existing portfolios (up from 33%) and 38% reallocated their future contributions (up from 29%).* In the coming year, participants also plan to contribute more to their 401(k) plans and a slightly higher percentage expect to contribute the tax-deferred maximum (11%, up from 8% in 2010).

Full text of Mercer survey, click here. 09/30/2011

MORE THAN $600 MILLION WASTED ON PAYMENTS TO DEAD RETIREES FROM OFFICE OF PERSONNEL MANAGEMENT

More from the Emeritus Newsroom- An Inspector General's report for the Office of Personnel Management (OPM) says it presented their findings, " ... to demonstrate the need to stop the flow of improper payments from the Federal Government’s Civil Service Retirement and Disability Fund (CSRDF) to deceased annuitants and survivors (annuitants), averaging $120 million annually over the last five years. While we are concerned with all post-death improper payments, our paramount concern is with the improper payments resulting when an annuitant’s death is not reported or detected and payments continue, sometimes for many years".

As one of the more noteworthy cases of overpayment, the IG's probe found a dead beneficiary's son who continued to receive benefits until 2008, 37 years after his father’s death in 1971. The improper payment in this case exceeded $515,000 and was reported to OPM when the son, who fraudulently received the payments, died. The improper payment was not recovered.
When compared to other Federal benefits programs, the improper payment rate is arguably low; however, the amount of post-death improper payments is consistently $100-$150 million annually, totaling over $601 million in the last five years. In addition, the balance due the Government related to these improper post-death payments during the last five years has risen much faster (70%) than total annuity payments (19%), and stronger steps must be implemented by OPM to identify and recover improper payments.

Proposed solutions in the report include,

*Death Master File Match- Retirement Services committed to performing, in addition to the weekly match, an annual computer match between its annuity roll and the Social Security Administration’s (SSA) death records. The annual match was performed in 2005, 2009, and 2010, and is scheduled to be performed again in the Fall of 2011;

*Over 90 Project.- OPM sampled the annuity roll population over 90 years old (Over 90 Project) in September 2009, which at that time totaled 125,000, to confirm that the annuitants are still alive and appropriately receiving an annuity from the CSRDF. The sample consisted of 4,400 annuitants. Of this sample, six were determined to be deceased but were not identified during prior computer matches with SSA. In addition, as of the December 2010 report on this project, 144 annuitants in the sample had not responded to letters of inquiry from OPM and their annuities were placed in a suspended payment status. OPM is determining how best to proceed on these cases.

*Improved Death Reporting- To improve the timeliness of death reporting, OPM enhanced communications with annuitants and their family members through changes to mass mailings, the creation of video messages for the OPM Website, and recorded telephone messages activated while placed on hold by OPM Call Center representatives.

Full PDF text of IG report, click here 09/23/2011

FEDERAL RESERVE APPROVES LOWER LONG TERM INTEREST RATES TO STIMULATE ECONOMY

More from the Emeritus Newsroom- With tools to stimulate the economy sparingly used so as not to increase inflation, the Federal Reserve announced today it would be buying another $400 billion of U-S Treasury securities by the end of June 2012. The Fed, in a statement today says it is making the move to put downward pressure on longer-term interest rates and help make broader financial conditions more accommodative. The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.

The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013.

The Fed sized up the current economy saying, "Recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated. Household spending has been increasing at only a modest pace in recent months despite some recovery in sales of motor vehicles as supply-chain disruptions eased. Investment in nonresidential structures is still weak, and the housing sector remains depressed. However, business investment in equipment and software continues to expand. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee continues to expect some pickup in the pace of recovery over coming quarters but anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate. Moreover, there are significant downside risks to the economic outlook, including strains in global financial markets. The Committee also anticipates that inflation will settle, over coming quarters.

Full text of Fed statement, click here. 09/21/2011

MORE YOUNG FAMILIES FORCED INTO POVERTY

More in this article from the New York Times, click here- 09/20/2011

POVERTY IN U-S STRETCHES CHARITIES

More in this YouTube video from Voice of America, click here- 09/19/2011

HOW ELECTRONIC TRADING CONTINUES TO CHANGE STOCK MARKETS - VOICE OF AMERICA REPORT (4 MINUTES)

Click here for YouTube playback- 09/16/2011

NUMBER OF AMERICANS IN POVERTY, WITHOUT HEALTH INSURANCE, RISES

More from the Emeritus Newsroom- The Census Bureau, this week, has released an avalanche of evidence documenting the rise of Americans in poverty, including the working poor, and the escalation of those without health insurance amid a decline in those covered by employer plans.

Highlights of the Census Bureau report are startling.

 The U.S. Census Bureau announced today that in 2010, median household income declined, the poverty rate increased and the percentage without health insurance coverage was not statistically different from the previous year.

     Real median household income in the United States in 2010 was $49,445, a 2.3 percent decline from the 2009 median.

     The nation's official poverty rate in 2010 was 15.1 percent, up from 14.3 percent in 2009 ─ the third consecutive annual increase in the poverty rate. There were 46.2 million people in poverty in 2010, up from 43.6 million in 2009 ─ the fourth consecutive annual increase and the largest number in the 52 years for which poverty estimates have been published.

     The number of people without health insurance coverage rose from 49.0 million in 2009 to 49.9 million in 2010, while the percentage without coverage −16.3 percent - was not statistically different from the rate in 2009.

     This information covers the first full calendar year after the December 2007-June 2009 recession.

Income

• Since 2007, the year before the most recent recession, real median household income has declined 6.4 percent and is 7.1 percent below the median household income peak that occurred prior to the 2001 recession in 1999. The percentages are not statistically different from each another.

Race and Hispanic Origin (Race data refer to people reporting a single race only. Hispanics can be of any race.)

• Among race groups, real median income declined for white and black households between 2009 and 2010, while changes for Asian and Hispanic-origin households were not statistically different. Real median income for each race and Hispanic-origin group has not yet recovered to the pre-2001 recession all-time highs. (See Table A.)

Regions

• Households in the Midwest, South and West experienced declines in real median income between 2009 and 2010. The apparent change in median household income for the Northeast was not statistically significant. (See Table A.)

Nativity

• Median income for households maintained by native-born householders declined between 2009 and 2010 in real terms. The change in the median income of all foreign-born households was not statistically significant. (See Table A.)

Earnings

• In 2010, the earnings of women who worked full time, year-round were 77 percent of that for men working full time, year-round, not statistically different from the 2009 ratio. The 2010 real median earnings of these men and women were not different from the 2009 earnings.

• Since 2007, the number of men working full time, year-round with earnings decreased by 6.6 million and the number of corresponding women declined by 2.8 million.

Income Inequality

• Based on the Gini Index, the change in income inequality between 2009 and 2010 was not statistically significant, while the changes in shares of aggregate household income by quintiles showed a slight shift to more inequality. The Gini index was 0.469 in 2010. (The Gini index is a measure of household income inequality; zero represents perfect income equality and 1 perfect inequality.)

Poverty

• The poverty rate in 2010 was the highest since 1993 but was 7.3 percentage points lower than the poverty rate in 1959, the first year for which poverty estimates are available. Since 2007, the poverty rate has increased by 2.6 percentage points.

• In 2010, the family poverty rate and the number of families in poverty were 11.7 percent and 9.2 million, respectively, up from 11.1 percent and 8.8 million in 2009.

• The poverty rate and the number in poverty increased for both married-couple families (6.2 percent and 3.6 million in 2010 from 5.8 percent and 3.4 million in 2009) and female-householder-with-no-husband-present families (31.6 percent and 4.7 million in 2010 from 29.9 percent and 4.4 million in 2009). For families with a male householder no wife present, the poverty rate and the number in poverty were not statistically different from 2009 (15.8 percent and 880,000 in 2010).

Thresholds

• As defined by the Office of Management and Budget and updated for inflation using the Consumer Price Index, the weighted average poverty threshold for a family of four in 2010 was $22,314.
  (See <http://www.census.gov/hhes/www/poverty/data/threshld/index.html> for the complete set of dollar value thresholds that vary by family size and composition.)

Race and Hispanic Origin (Race data refer to people reporting a single race only. Hispanics can be of any race.)

• The poverty rate for non-Hispanic whites was lower in 2010 than it was for other racial groups. Table B details 2010 poverty rates and numbers in poverty, as well as changes since 2009 in these measures, for race groups and Hispanics.

Doubled-Up Households

• Doubled-up households are defined as households that include at least one "additional" adult: a person 18 or older who is not enrolled in school and is not the householder, spouse or cohabiting partner of the householder. In spring 2007, prior to the recession, doubled-up households totaled 19.7 million. By spring 2011, the number of doubled-up households had increased by 2.0 million to 21.8 million and the percent rose by 1.3 percentage points from 17.0 percent to 18.3 percent.

• In spring 2011, 5.9 million young adults age 25-34 (14.2 percent) resided in their parents' household, compared with 4.7 million (11.8 percent) before the recession, an increase of 2.4 percentage points.

• It is difficult to precisely assess the impact of doubling up on overall poverty rates. Young adults age 25-34, living with their parents, had an official poverty rate of 8.4 percent, but if their poverty status were determined using their own income, 45.3 percent had an income below the poverty threshold for a single person under age 65.

Age

• The poverty rate increased for children younger than 18 (from 20.7 percent in 2009 to 22.0 percent in 2010) and people 18 to 64 (from 12.9 percent in 2009 to 13.7 percent in 2010), while it was not statistically different for people 65 and older (9.0 percent).

• Similar to the patterns observed for the poverty rate in 2010, the number of people in poverty increased for children younger than 18 (15.5 million in 2009 to 16.4 million in 2010) and people 18 to 64 (24.7 million in 2009 to 26.3 million in 2010) and was not statistically different for people 65 and older (3.5 million).

Nativity

• The 2010 poverty rate for naturalized citizens was not statistically different from 2009, while the poverty rates of native-born and noncitizens increased. Table B details 2010 poverty rates and the numbers in poverty, as well as changes since 2009 in these measures, by nativity.

Regions

• The South was the only region to show statistically significant increases in both the poverty rate and the number in poverty -- 16.9 percent and 19.1 million in 2010 -- up from 15.7 percent and 17.6 million in 2009. In 2010, the poverty rates and the number in poverty for the Northeast, Midwest and the West were not statistically different from 2009. (See Table B.)

Health Insurance Coverage

• The number of people with health insurance increased to 256.2 million in 2010 from 255.3 million in 2009. The percentage of people with health insurance was not statistically different from 2009.

• Between 2009 and 2010, the percentage of people covered by private health insurance declined from 64.5 percent to 64.0 percent, while the percentage covered by government health insurance increased from 30.6 percent to 31.0 percent. The percentage covered by employment-based health insurance declined from 56.1 percent to 55.3 percent.

• The percentage covered by Medicaid (15.9 percent) was not statistically different from 2009.

• In 2010, 9.8 percent of children under 18 (7.3 million) were without health insurance. Neither estimate is significantly different from the corresponding 2009 estimate.

• The uninsured rate for children in poverty (15.4 percent) was greater than the rate for all children (9.8 percent).

• In 2010, the uninsured rates decreased as household income increased from 26.9 percent for those in households with annual incomes less than $25,000 to 8.0 percent in households with incomes of $75,000 or more.

Race and Hispanic Origin (Race data refer to those reporting a single race only. Hispanics can be of any race.)

• The uninsured rate and number of uninsured in 2010 were not statistically different from 2009 for non-Hispanic whites and blacks, while increasing for Asians. The number of uninsured Hispanics was not statistically different from 2009, while the uninsured rate decreased to 30.7 percent. (See Table C.)

Nativity

• The proportion of the foreign-born population without health insurance in 2010 was about two-and-a-half times that of the native-born population. The 2010 uninsured rate was not statistically different from the 2009 rate for native-born, the foreign-born overall and noncitizens but rose for naturalized citizens. Table C details the 2010 uninsured rate and the number of uninsured, as well as changes since 2009 in these measures, by nativity.

Regions

• The Northeast and the Midwest had the lowest uninsured rates in 2010. Between 2009 and 2010, there were no statistical differences in uninsured rates for any of the regions. The number of uninsured increased in the Northeast, while there were no statistically significant changes for the other three regions. (See Table C.)

MUST SEE PBS NEWSHOUR VIDEO SEGMENT ON STOCK MARKET RESPONSE TO U-S CREDIT DOWNGRADE AND POTENTIAL SOLUTIONS

Click here for YouTube playback of PBS Newshour video (12 Minutes) - 08/08/2011

PRESIDENT SPEAKS TO CALM UNSTABLE MARKETS

More from the Emeritus Newsroom- Trading on stock markets around the world opened with an acute case of nervousness, as expected. Even with assurances from President Obama this afternoon, the markets still continued to lose, though to a lesser degree. By the time Obama spoke this afternoon, the market had already lost more than 500 points, and continued to lose another hundred points after he finished.

The President held his news conference to answer concerns about the U-S credit rating in the wake of Friday’s downgrading by Standard and Poor’s. (See August 5th story)

“Our problems are imminently solvable. Warren Buffet thinks that if there were a quadruple a rating the u-s would have it. Most of the best investors in the world agree with him. What this does require is common sense and compromise. The bipartisan fiscal commission that I set up put forth good proposals”, the President said.

The President spoke of political will needed to find bi-partisan solutions to solve problems in the country's interest rather than promoting ideologies. “ I hope Friday’s news will give us a new sense of urgency. I assure you will stay on it until we get the job done".

Obama said congress should move quickly to extend the payroll tax cut to give workers more money next year. He wants to extend unemployment insurance benefits for those slated to lose it at the end of the year. and he warned that if congress fails to act on those issues it will likely mean the end of a million jobs since unemployment benefits make a quick cycle into the economy.

“These are not big government proposals, they are generally those that Republicans agreed to in the past and there's no reason they could not be agreed to now”, added Obama.

He finished his comments on the economy saying, “There will always be economic factors we can’t control. How we respond to those tasks is up to us. I have faith in America to shoulder these burdens together".

After the President’s address, the markets continued the day's downward spiral. A few minutes after the President's speech the markets were down 562 points and eventually ended the day down 635 points, to close at 10,810, a 5.6% loss. The news was a bit worse at the NASDAQ, which was off 175 points or 6.9%.

Another big loser today was oil, which dropped $5.87 to close at $81.31 a barrel.

Click here for YouTube playback of Obama speech (10 Minutes). Click here for Voice of America story YouTube playback ( 4 Minutes) . 08/08/2011

LEGAL OBSTACLES MOUNT FOR BANK OF AMERICA / MAJOR LAWSUITS ADDED IN AUGUST INCLUDING REPAYING CUSTOMERS FOR RIGGED OVERDRAFT CHARGES / STOCK LOSES 30% IN A WEEK

More from the Emeritus Newsroom- It has been a really rough month for Bank of America's legal teams. The bank is still battling fallout from the mortgage mess, which included bogus mortgage filings, foreclosures and the actions of subsidiaries, such as Countrywide Mortgage. It also has to repay customers for rigged overdraft charges dating back to 2001.

The rigged overdraft charges were the focus of class action lawsuits pending in numerous states, which could pay a refund for nearly every single Bank of America customer, using a debit car, since 2001. Bank of America agreed to set up a $410 million account to pay the refunds, because of the company's policy of processing debit card transactions based on the size of the transaction, rather than when the purchases occurred.. Click here. for MUST READ A-P article with more on the lawsuit.

Today, it was announced that bailed out financial giant , A-I-G, would be suing Bank of America over $28 billion in failed mortgage backed securities losses, for which A-I-G hopes to recover, at least $10 billion. A-I-G is also reported to be considering lawsuits against other financial institutions, which A-I-G claims, contributed to its downfall during the financial meltdown of 2008. Click here for New York Times story.

Last Friday, Washington Attorney General Rob McKenna announced that his office is suing ReconTrust Company, a subsidiary of Bank of America, for conducting illegal foreclosures on thousands of homeowners in the state of Washington.

“ReconTrust ignored our warnings, repeatedly broke the law and refused to provide information requested during our investigation,” McKenna said. “ReconTrust’s illegal practices make it difficult, if not impossible, for borrowers who might have a shot at saving their homes to stop those foreclosures.”ReconTrust is a foreclosure trustee that is legally required to act as a neutral party on behalf of both the lender and the borrower while conducting foreclosure proceedings in good faith and in accordance with the law. Click here for Attorney General's press release and video.

The New York Attorney General has filed a lawsuit to stop an $8.5 billion settlement between Bank of New York and Bank of America over B of A's Countrywide subsidiary's handling of mortgage backed securities sold to investors. According to the lawsuit, Countrywide misled investors about the content of the investments, whereas, Bank of America stands to gain from as the settlement that represents only a fraction of investors actual losses. Click here for lawsuit SCRIBD filing. Click here for New York Times Story.

Also last week, a group of investors, BlackRock funds, T. Rowe Price Group Inc., TIAA-CREF and several pension funds including the California Public Employees' Retirement System, who had been shareholders of Countrywide Mortgage, accused the company of hiding financial irregularities and problems, before its collapse. The parties filed the suit in Los Angeles after rejecting a proposed settlement of nearly $625 million. Click here for Bloomberg-BusinessWeek story.

And, according to the online financial service, MarketWatch, Bank of America disclosed last week, in a Securities and Exchange Commission filing, that claims from government-sponsored firms like Fannie Mae FNMA -11.53%   and Freddie Mac FMCC -15.93%  over bad mortgages were on the increase. Read more on B. of A. mortgage claims.

As of this posting, Monday at noon, Bank of America Stock had lost more than 15% of its value after losing 16% last week. 08/08/2011

S & P ADMITS ACCOUNTING MISTAKE / STILL BACKS ITS DOWNGRADE OF U-S CREDIT

More from the Emeritus Newsroom- Standard and Poor's admitted this weekend that it made an accounting error of two trillion dollars, in its debt projections for the U-S government. However, S & P defended its downgrade of the U-S credit status from AAA to AA+. The company claims, it's more than just money causing the problem. An S & P statement explains, "There are two things that we should emphasize. One is that the political discourse has diminished the credit standing of the United States. The other is a fiscal analysis."

The Friday night downgrade and subsequent accounting error correction, has only inflamed the relationships between the Standard and Poor's, the Federal Reserve and the Treasury Department.

In a terse response to the S & P announcement, the Treasury Department wrote,

"Standard and Poor’s (S&P) presented a judgment about the credit rating of the U.S. that was based on a $2 trillion mistake. After Treasury pointed out this error – a basic math error of significant consequence – S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one.

S&P has said their decision to downgrade the U.S. was based in part on the fact that the Budget Control Act, which will reduce projected deficits by more than $2 trillion over the next 10 years, fell short of their $4 trillion expectation for deficit reduction. Clearly, in that context, S&P considers a $2 trillion change to projected deficits to be very significant. Yet, although S&P's math error understated the deficit reduction in the Budget Control Act by $2 trillion, they found this same sum insignificant in this instance.

In fact, S&P’s $2 trillion mistake led to a very misleading picture of debt sustainability – the foundation for their initial judgment. This mistake undermined the economic justification for S&P’s credit rating decision. Yet after acknowledging their mistake, S&P simply removed a prominent discussion of the economic justification from their document.

In their initial, incorrect estimates, S&P projected that the debt as a share of GDP would rise rapidly through the middle of the decade, and they cited this as a primary reason for a downgrade.

In S&P’s corrected estimates – which lowered S&P's projection of future deficits by $2 trillion over 10 years and lowered S&P's estimate of debt as a share of GDP in 2021 by 8 percentage points - public debt is much more stable", said the Treasury.

The Friday night downgrade and subsequent accounting error correction, has only inflamed the relationships between the Standard and Poor's, the Federal Reserve and the Treasury Department.

Paul Krugman, writing in the New York Times, does much more than take a dig at S&P. He labels the downgrade an "outrage", recalling that S&P was one of the rating agencies who gave triple-A status to the securities backed by sub prime debt that plunged the world into the financial crisis in the first place.

"On one hand, there is a case to be made that the madness of the right has made America a fundamentally unsound nation... On the other hand, it's hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated sub prime-backed securities are now declaring that they are the judges of fiscal policy? Really?"

In fact, most stock market pundits opined over the weekend on various newscasts and online articles, that this will mostly blow over, since there was no default and won't be for the foreseeable future.

What will linger much longer is debate over how a faction of the Republican party, managed to get much of what it wanted, though it did not see it that way. Much of the complaining among Tea Party members of congress, about the final agreement, seemed to substantiate Standard and Poor's expectations that the U-S government will be less governable as more critical issues come before it.

08/7/2011

WHAT THE U-S CREDIT DOWNGRADE MEANS TO YOU

A MUST READ article from Time, click here - 08/06/2011

S & P ADMITS ACCOUNTING MISTAKE / STILL BACKS ITS DOWNGRADE OF U-S CREDIT

More from the Emeritus Newsroom- Standard and Poor's admitted this weekend that it made an accounting error of two trillion dollars, in its debt projections for the U-S government. However, S & P defended its downgrade of the U-S credit status from AAA to AA+. The company claims, it's more than just money causing the problem. An S & P statement explains, "There are two things that we should emphasize. One is that the political discourse has diminished the credit standing of the United States. The other is a fiscal analysis."

The Friday night downgrade and subsequent accounting error correction, has only inflamed the relationships between the Standard and Poor's, the Federal Reserve and the Treasury Department.

In a terse response to the S & P announcement, the Treasury Department wrote,

"Standard and Poor’s (S&P) presented a judgment about the credit rating of the U.S. that was based on a $2 trillion mistake. After Treasury pointed out this error – a basic math error of significant consequence – S&P still chose to proceed with their flawed judgment by simply changing their principal rationale for their credit rating decision from an economic one to a political one.

S&P has said their decision to downgrade the U.S. was based in part on the fact that the Budget Control Act, which will reduce projected deficits by more than $2 trillion over the next 10 years, fell short of their $4 trillion expectation for deficit reduction. Clearly, in that context, S&P considers a $2 trillion change to projected deficits to be very significant. Yet, although S&P's math error understated the deficit reduction in the Budget Control Act by $2 trillion, they found this same sum insignificant in this instance.

In fact, S&P’s $2 trillion mistake led to a very misleading picture of debt sustainability – the foundation for their initial judgment. This mistake undermined the economic justification for S&P’s credit rating decision. Yet after acknowledging their mistake, S&P simply removed a prominent discussion of the economic justification from their document.

In their initial, incorrect estimates, S&P projected that the debt as a share of GDP would rise rapidly through the middle of the decade, and they cited this as a primary reason for a downgrade.

In S&P’s corrected estimates – which lowered S&P's projection of future deficits by $2 trillion over 10 years and lowered S&P's estimate of debt as a share of GDP in 2021 by 8 percentage points - public debt is much more stable", said the Treasury.

The Friday night downgrade and subsequent accounting error correction, has only inflamed the relationships between the Standard and Poor's, the Federal Reserve and the Treasury Department.

Paul Krugman, writing in the New York Times, does much more than take a dig at S&P. He labels the downgrade an "outrage", recalling that S&P was one of the rating agencies who gave triple-A status to the securities backed by sub prime debt that plunged the world into the financial crisis in the first place.

"On one hand, there is a case to be made that the madness of the right has made America a fundamentally unsound nation... On the other hand, it's hard to think of anyone less qualified to pass judgment on America than the rating agencies. The people who rated sub prime-backed securities are now declaring that they are the judges of fiscal policy? Really?"

In fact, most stock market pundits opined over the weekend on various newscasts and online articles, that this will mostly blow over, since there was no default and won't be for the foreseeable future.

What will linger much longer is debate over how a faction of the Republican party, managed to get much of what it wanted, though it did not see it that way. Much of the complaining among Tea Party members of congress, about the final agreement, seemed to substantiate Standard and Poor's expectations that the U-S government will be less governable as more critical issues come before it.

08/7/2011

WHAT THE U-S CREDIT DOWNGRADE MEANS TO YOU

A MUST READ article from Time, click here - 08/06/2011

S&P DOWNGRADES U-S CREDIT RATING / FED SAYS U-S WILL STILL BACK ALL ITS SECURITIES

More from the Emeritus Newsroom- The Federal Reserve said tonight the U-S government will still back all its securities despite tonight's downgrading by the Standard and Poor's. This is the first time the U-S credit rating has been downgraded by Standard and Poor's in the firm's history.

In a statement released by the Fed, the agency said,

"Standard & Poor's rating agency lowered the long-term rating of the U.S. government and federal agencies from AAA to AA+. With regard to this action, the federal banking agencies are providing the following guidance to banks, savings associations, credit unions, and bank and savings and loan holding companies (collectively, banking organizations). For risk-based capital purposes, the risk weights for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities will not change. The treatment of Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies, and government-sponsored entities under other federal banking agency regulations, including, for example, the Federal Reserve Board's Regulation W, will also be unaffected".

In an overview of their decision,. Standard and Poor's summarized their reasons for the action, which included the political stalemate and the future course of the U-S congress.

· We have lowered our long-term sovereign credit rating on the United
States of America to 'AA+' from 'AAA' and affirmed the 'A-1+' short-term
rating.
· We have also removed both the short- and long-term ratings from
CreditWatch negative.
· The downgrade reflects our opinion that the fiscal consolidation plan
that Congress and the Administration recently agreed to falls short of
what, in our view, would be necessary to stabilize the government's
medium-term debt dynamics.
· More broadly, the downgrade reflects our view that the effectiveness,
stability, and predictability of American policymaking and political
institutions have weakened at a time of ongoing fiscal and economic
challenges to a degree more than we envisioned when we assigned a
negative outlook to the rating on April 18, 2011.
· Since then, we have changed our view of the difficulties in bridging the
gulf between the political parties over fiscal policy, which makes us
pessimistic about the capacity of Congress and the Administration to be
able to leverage their agreement this week into a broader fiscal
consolidation plan that stabilizes the government's debt dynamics any
time soon.
· The outlook on the long-term rating is negative. We could lower the
long-term rating to 'AA' within the next two years if we see that less
reduction in spending than agreed to, higher interest rates, or new
fiscal pressures during the period result in a higher general government
debt trajectory than we currently assume in our base case.

Full PDF download of report from Standard and Poor's, click here. Federal Reserve statement, click here. 08/05/2011

WEALTH GAP BETWEEN WHITES-MINORITIES, HITS RECORD

More from the Emeritus Newsroom- Pew Research Center today released survey results showing the wealth gap most pronounced between white and minorities, especially Hispanics. A summary from the center shows the median wealth of white households is 20 times that of black households and 18 times that of Hispanic households, according to a Pew Research Center analysis of newly available government data from 2009.

These lopsided wealth ratios are the largest since the government began publishing such data a quarter century ago and roughly twice the size of the ratios that had prevailed between these three groups for the two decades prior to the Great Recession that ended in 2009.

The Pew Research Center analysis finds that, in percentage terms, the bursting of the housing market bubble in 2006 and the recession that followed from late 2007 to mid-2009 took a far greater toll on the wealth of minorities than whites. From 2005 to 2009, inflation-adjusted median wealth fell by 66% among Hispanic households and 53% among black households, compared with just 16% among white households.

As a result of these declines, the typical black household had just $5,677 in wealth (assets minus debts) in 2009, the typical Hispanic household had $6,325 in wealth and the typical white household had $113,149. Moreover, about a third of black (35%) and Hispanic (31%) households had zero or negative net worth in 2009, compared with 15% of white households. In 2005, the comparable shares had been 29% for blacks, 23% for Hispanics and 11% for whites.

Full text of Pew survey summary, click here. 07/26/201

MASSACHUSETTS ATTORNEY GENERAL SUSPECTS BANKS STILL SUBMITTING BOGUS MORTGAGE DOCUMENTS / REJECTS POSSIBLE DEAL

More from the Emeritus Newsroom- Massachusetts Attorney General Martha Coakley today announced she would not sign a global agreement between banks and all states attorneys general, until she finishes her probe of mortgage filings. Meanwhile, a statement from MERS today claims Coakley's position is "without merit". Media reports have cited concerns among various county officials throughout the state, that the problem of "robo- signing" of documents may be continuing and that the proper submission of property transaction documents to each county remains a problem. The later relates to the, still to be resolved problem, with filings from MERS, Mortgage Electronic Filing Systems.

The delay in reaching an agreement between the states and major banks has hurt financial stocks as the banks were hoping to shed all liability in the scandal through a global settlement with a final payment. But, several state attorneys general, feel the depth of the problem remains unknown as more local officials claim "robo-singing" continues on documents, by people with no direct knowledge of the filings.

In addition, a settlement with MERS filing system, the fact it does not comply with law in numerous states, in apparent violation of a cease and desist order in April, from the Office of Comptroller of the Currency.

the Office of the Comptroller of the Currency, announced formal enforcement actions against eight national bank mortgage servicers and two third-party servicer providers for unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing.

The eight servicers are Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank, and Wells Fargo. The two service providers are Lender Processing Services (LPS) and its subsidiaries DocX, LLC, and LPD Default Solutions, Inc.; and MERSCORP and its wholly owned subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS).

A MERS statement, released today, pointed out several rulings in defense of their mortgage filings. They are:

• In re Marron
• Kiah v. Aurora Loan Services
• In re Lopez

MERS Vice President Janis Smith said, "We will cooperate with the investigation and look forward to the opportunity to respond to the Massachusetts Attorney General's request. The use of MERS has been litigated in Massachusetts courts, and judges have upheld the legality of the MERS business model in the Commonwealth".

But a Massachusetts Supreme Court ruling, in January, voided two mortgages. The court said the mortgage documents were NOT legal. In an article in the Boston Globe , Massachusetts Supreme Court Justice Ralph D. Gants wrote that the court agreed that the banks "failed to make the required showing that they were the holders of the mortgages at the time of foreclosure." In a concurring opinion, fellow Justice Robert J. Cordy took issue with what he called "the utter carelessness" with which the banks documented their own property rights. Click here for Globe article.

Full text of Coakley letter , click here. MERS response, click here. 07/25/2011

WELLS FARGO TO PAY $85 MILLION IN FINES FOR FALSIFIED MORTGAGE FILINGS

More from the Emeritus Newsroom- The Federal Reserve has announced it has issued a cease and desist order against Wells Fargo & Company of San Francisco, a registered bank holding company, and Wells Fargo Financial, Inc., of Des Moines.

The order addresses allegations that Wells Fargo Financial employees steered potential prime borrowers into more costly sub prime loans and separately falsified income information in mortgage applications. In addition to the civil money penalty, the order requires that Wells Fargo compensate affected borrowers.

According to the Fed, these practices were allegedly fostered by Wells Fargo Financial's incentive compensation and sales quota programs and the lack of adequate controls to manage the risks resulting from these programs. These deficiencies allegedly constitute unsafe and unsound banking practices and unfair or deceptive acts or practices that are prohibited by the Federal Trade Commission Act and similar state laws. In agreeing to the order, Wells Fargo did not admit any wrongdoing. The order requires Wells Fargo to compensate borrowers affected by these practices. To identify prime-eligible borrowers with cash-out refinancing loans who were subject to improper steering, Wells Fargo is required to reevaluate the qualifications of all borrowers who took out a sub prime, cash-out refinancing loan between January 2006 and June 2008 to account for certain specific steering techniques. To identify Wells Fargo Financial borrowers whose income information was falsified without their knowledge, Wells Fargo is required to set up a procedure for potentially affected borrowers to show that their actual income at the time did not qualify them for the loans they were granted. Wells Fargo is required to provide notice of this procedure to all borrowers who obtained cash-out refinancing loans between January 2004 and June 2008 at a Wells Fargo Financial office where there is evidence that sales personnel at that office altered or falsified borrowers' income information.

Full text of Federal Reserve statement on Wells Fargo order, click here. 07/21/2011

COUNTRYWIDE MORTGAGE AGREES TO $108 MILLION SETTLEMENT WITH F-T-C FOR FEE OVERCHARGES

More from the Emeritus Newsroom- The fallout from irregularities at Countrywide Mortgage continued today with the Federal Trade Commission announcement of a settlement for overcharges against customers who were behind on their payments. According to the FTC, the agency is mailing 450,177 refund checks worth almost $108 million to homeowners who were allegedly overcharged by Countrywide Home Loans, Inc. As part of the FTC’s efforts to protect financially distressed homeowners, the FTC reached a settlement with Countrywide last year over allegations that the company collected excessive fees from borrowers who were struggling to keep their homes.

“It’s astonishing that a single company could be responsible for overcharging more than 450,000 homeowners,” FTC Chairman Jon Leibowitz said. “Countrywide’s unconscionable behavior harmed American consumers on a massive scale and we are proud to be getting every single dollar back to hundreds of thousands of struggling consumers who can least afford to lose the money.”

The FTC’s June 2010 settlement order required Countrywide, which is now owned by Bank of America, to pay $108 million to be used for refunds and barred the company from taking advantage of borrowers who have fallen behind on their payments. The refunds are being distributed to consumers whose loans were serviced by Countrywide between January 1, 2005, and July 1, 2008, and who were subject to the company’s allegedly unlawful practices.

According to the FTC, homeowners who were in default on their loans were charged excessive fees for services such as property inspections, lawn mowing, and other services meant to protect the lender’s interest in the property. Rather than simply hire third-party vendors to perform the services, Countrywide used subsidiaries to hire the vendors. The subsidiaries allegedly marked up the price of the services charged by the vendors – often by 100 percent or more – and Countrywide then charged the homeowners the marked-up fees. The FTC complaint alleges that the company’s strategy was to increase profits from default-related service fees in bad economic times.

Also, in servicing loans for borrowers trying to save their homes in Chapter 13 bankruptcy proceedings, the FTC alleged that Countrywide made false or unsupported claims to borrowers about amounts owed or the status of their loans, and added fees and escrow charges to their mortgage accounts without notice.

An administrator working for the FTC will send out refunds to consumers who were overcharged for property inspections, maintenance services, title searches, and foreclosure trustee services, and to those who were in Chapter 13 bankruptcy, and were charged fees or escrow charges without being notified.

Consumers who receive the checks should cash them by September 19, 2011. The amount of each check will vary from less than $500 to as much as several thousand dollars. The FTC never requires consumers to pay money or provide information before redress checks can be cashed. Former Countrywide customers with questions should call the redress administrator, Gilardi & Co., LLC at 1-888-230-3196 or visit the FTC’s Countrywide settlement webpage.

Full text of FTC statement, click here. 07/20/2011

CONSUMER FINANCIAL PROTECTION OFFICE TO BE HEADED BY FORMER OHIO ATTORNEY GENERAL

More from the Emeritus Newsroom - In a posting to the White House website by Elizabeth Warren, the White House has announced that former Ohio Attorney General Richard Cordray has been nominated to serve as the first Director of the Consumer Financial Protection Bureau. Since Republicans have threatened to block anyone they see as being "Anti-Business", Cordray's nomination is likely to get the same response which was expected if Warren had been nominated. Warren is expected to head back to Harvard this fall and could run, in 2012, for the Senate seat now held by Scott Brown (R-MA), once held by the late Senator Edward Kennedy.

Warren's posting on the White House website says that Cordray will be nominated today by President Obama.

On Thursday, according to Warren, the CFPB makes its transition from a start-up to a real, live agency with the authority to write rules and to supervise the activities of America's largest banks.

"Rich will be a strong leader for this agency", writes Warren." He has a proven track record of fighting for families during his time as head of the CFPB enforcement division, as Attorney General of Ohio, and throughout his career. He was one of the first senior executives I recruited for the agency, and his hard work and deep commitment make it clear he can make many important contributions in leading it. Rich is smart, he is tough, and he will make a stellar Director. I am very pleased for him and very pleased for the CFPB".

Since Warren helped set up the agency before it's effective start, this week, She claims, "The DNA of the new consumer agency is well established. Our mission is clear: No one should be tricked in any financial transaction. Prices and risks should be clear. People should be able to make apples-to-apples comparisons. Fine print should be mowed down, not used to hide nasty surprises. And, everyone -- even trillion dollar banks -- should follow the law".

Warren details specific priorities that the new agency is prepared to take over. " We are working through a much-simplified mortgage disclosure form. We are designing a new consumer complaint process, with the first piece coming on line this week. We have set up a strong Office of Servicemember Affairs that reaches out to military families and is already working on problems they face. And, on Thursday, we will have cops on the beat -- making our first contacts with the 111 largest financial institutions in the country so we can monitor their compliance with the law. We have hired the people and built the systems to make all this work. And, to cap it all off, we got a strong evaluation from the Inspector General last Friday about our efficient and drama-free set up period.

And Warren cautions that the start of the agency, by no means, will bring assurance of its role. "There's lots of good news, but make no mistake: this agency still has enemies in Washington, D.C. And they have a plan. In May, forty-four Republican Senators wrote a letter saying that they will block anyone from serving as CFPB Director. Many of them don't like the agency or the ideas that led to its creation. They lost that fight last summer in a straight-up vote, but they say they will use a filibuster over a Director nomination to undercut the agency. Without a Director, however, the agency's authority over payday lenders, debt collectors and other non-bank financial companies can be challenged. The Republicans say that they will permit a Director only if the agency is amended to make it less independent and less likely to act. I remain hopeful that those who want to cripple this consumer bureau will think again and remember that the financial crisis -- and the recession and job losses that it sparked -- began one lousy mortgage at a time. I also hope that when those Senators next go home, they ask their constituents how they feel about fine print, about signing contracts with terms that are incomprehensible, and about learning the true costs of a financial transaction only later when fees are piled on or interest rates are reset. I hope they will ask the people in their districts if they are opposed to an agency that is working to make prices clear or if they think budgets should be cut for an agency that is trying to make sure that trillion-dollar banks follow the law. I hope they will ask their constituents if they are opposed to the confirmation of someone who saved $2 billion for retirees, investors, and business owners as Ohio Attorney General and who has worked hard on the front lines fighting against fraudulent foreclosures and abusive lending practices".

Despite not being nominated to head the agency she created, Warren was thankful for her supporters, who helped bring the agency to its current status. "This week is the culmination of two years of hard battles. The President put the consumer agency in his first outline of financial regulatory reform, and he never wavered in his support for it. The agency was declared dead several times, and weak versions and lousy bargains were offered again and again, but he stood fast. When he signed Dodd-Frank into law, creating the new agency, he offered me the chance to stand it up -- something for which I will always be grateful. The fights continued, and again, the President never wavered in his support. In fact, just last week he issued a veto threat if the Republicans try to move the agency's funding to the political process, and I know that in the future he won't allow opponents of reform to succeed in weakening the CFPB".

And she pledged her support for nominee Cordray. "The agency has stepped out in the right direction. The work is good. But this agency needs to have its full powers right now, and that means we need Rich in place as Director. Today, I'm celebrating -- but I'm not taking my eye off those who want to cripple this agency. We got this agency by fighting, we stood it up by fighting, and, if takes more fighting to keep it strong and independent, then we can do it".

Full text of Elizabeth Warren's statement, click here. 07/18/2011

FBI STEPS UP PROBE OF INTERNATIONAL ATM BANK CARD DATA THEFT SYNDICATES

More from the Emeritus Newsroom - The FBI says international groups have accelerated their sophisticated efforts to steal card holders information at ATM's and other card reading devices at retailers. According to a statement from the FBI, ATM skimming is a favorite activity of Eurasian crime groups, so they sometimes investigate skimming—often partnering with the Secret Service—as part of larger organized crime cases.  

Some recent case examples:

• In Miami, four Romanians were charged with fraud and identity theft after they made and placed skimming devices on ATMs throughout four Florida counties … all four men eventually pled guilty. More
• In Atlanta, two Romanians were charged and pled guilty to being part of a criminal crew that stole account information from nearly 400 bank customers through the use of skimming equipment they installed on ATMs in the Atlanta metro area. More
• In Chicago, a Serbian national was arrested—and eventually pled guilty—for attempting to purchase an ATM skimming device, hoping to steal information from ATM users and loot their bank accounts. More
• In New York, a Bulgarian national referenced at the top of this story was sentenced yesterday to 21 months in prison for his role in a scheme that used sophisticated skimming devices on ATMs to steal over $1.8 million from at least 1,400 customer accounts at New York City area banks. More

ATMs aren’t the only target of skimmers. The FBI says the devices have also shown up at gas pumps and other point-of-sale locations where customers swipe their cards and enter their PIN. Tips to avoid being skimmed and Full text of FBI statement, click here. 07/14/2011

FORECLOSURES REMAIN DOWN FROM LAST YEAR / OBAMA ADMINISTRATION COMES UP WITH PAYMENT DELAY PLAN FOR UNEMPLOYED

More from the Emeritus Newsroom- RealtyTrac says foreclosures in June were down from a year ago, but up 4% over May 2011. Since there are more indications of elevated foreclosures to continue for possibly the next two or three years, the Obama Administration is starting a program that would make mortgage payments for some unemployed homeowners.

RealtyTrac reports June was the ninth straight month where  foreclosure activity decreased on a year-over-year basis. Default  notices, scheduled  auctions and REOs were all up on a month-over-month basis but down  on a year-over-year basis in June. Foreclosure filings were reported on 608,235 U.S. properties  during the second quarter, a decrease of nearly 11 percent from the first  quarter and a decrease of 32 percent from the second quarter of 2010. The  second quarter total was the lowest quarterly total since the fourth quarter of  2007. All categories of foreclosure were down both on quarterly basis and  annual basis in the second quarter.

“It would be nice to  report that foreclosure activity is dropping as a result of improvements in the  economy or the housing market,” said James J. Saccacio, chief executive officer  of RealtyTrac. “Unfortunately, with unemployment rates inching back up,  consumer confidence weak and home sales and prices continuing to languish, this  doesn’t appear to be the case.

“Processing and  procedural delays are pushing foreclosures further and further out – we  estimate that as many as 1 million foreclosure actions that should have taken  place in 2011 will now happen in 2012, or perhaps even later. This casts an  ominous shadow over the housing market, where recovery is unlikely to happen  until the current and forthcoming inventory of distressed properties can be  whittled down to a manageable number.”

Nearly 5 percent of all Nevada housing  units (one in 21) received at least one foreclosure filing in the first half of  2011, giving Nevada the nation’s highest foreclosure rate during the six-month  period despite continued decreases in foreclosure activity. A total of 53,217 Nevada properties  received a foreclosure filing from January to June, a decrease of 17 percent  from both the previous six months as well as from the first six months of 2010.  Overall Nevada  foreclosure activity decreased on a year-over-year basis for the fifth straight  month in June despite a 19 percent year-over-year spike in REO activity.

Arizona registered the nation’s second highest state foreclosure rate in the first half  of 2010, with 2.82 percent of its housing units (one in 36) receiving a  foreclosure filing, and California registered the nation’s third highest state foreclosure rate, with 1.96 percent  of its housing units (one in 51) receiving a foreclosure filing during the six  months.

Other states with  foreclosure rates ranking among the nation’s 10 highest were Utah  (1.65 percent), Georgia  (1.50 percent), Idaho (1.49 percent), Michigan (1.34 percent), Florida  (1.28 percent), Colorado (1.19 percent), and Illinois (1.15 percent).

High unemployment is viewed as the primary reason for the elevated rate of foreclosures. In the latest proposal from the Obama administration to help unemployed homeowners, the plan states mortgage servicers for FHA-insured loans will be required to allow qualified homeowners to miss up to 12 months of payments as unemployed borrowers look for new jobs.

The administration also is making it easier for unemployed homeowners to qualify for the assistance, removing what it called some "upfront hurdles" involving screening for employment and payment history.

In addition, mortgage servicers participating in the administration's mortgage modification program will be required "whenever possible" to extend the minimum period that eligible unemployed homeowners can miss payments to 12 months.

The missed payments would be added to the mortgage balance and made up by the homeowner, though in some cases those debts could be forgiven by the lender, Donovan said.

But like the other government attempts to aid homeowners, the new effort has limitations. Only about 10% of some 50 million mortgage loans outstanding nationwide are backed by the FHA. And less than a quarter of the approximately 4.6 million homeowners who are behind on their mortgages qualify for the HAMP program.

IN ADDITION, A JULY 22D DEADLINE IS APPROACHING FOR EMERGENCY ASSISTANCE WORTH TWO YEARS OF MORTGAGE PAYMENTS OR $50,000. According to a statement from the Department of Housing and Urban Development, The Emergency Homeowners’ Loan Program (EHLP) , launched by the U.S. Department of Housing and Urban Development (HUD) in conjunction with NeighborWorks® America in June, is designed to help homeowners who are at risk of foreclosure in 27 states across the country and Puerto Rico. The program assists homeowners who have experienced a reduction in income and are at risk of foreclosure due to involuntary unemployment or underemployment, due to economic conditions or a medical condition. Under EHLP guidelines eligible homeowners can qualify for an interest free loan which pays a portion of their monthly mortgage for up to two years, or up to $50,000, whichever comes first. Click here for Housing and Urban Development press release on program.

Full text of RealtyTrac press release, click here. Housing and Urban Development press release, click here. 07/14/2011

TAXES ON THE RICH HAVE LITTLE TO DO WITH JOB CREATION

More in this essay from Michael Linden of the Center for American Progress, click here - 07/01/2011

PBGC TAKES OVER FAILING PENSIONS FROM LANDAMERICA FINANCIAL GROUP

More from the Emeritus Newsroom- The Pension Benefit Guaranty Corporation will pay pensions to almost 4,500 employees and retirees of bankrupt LandAmerica Financial Group, Inc., a real estate services firm based in Glen Allen, Va.

PBGC, which safeguards the pensions of 44 million Americans, took over the plan from LandAmerica which is liquidating. PBGC will pay all pension benefits earned by LandAmerica retirees up to a legal maximum of $51,750 a year for a 65-year-old.Further information is available at the PBGC Web site, www.pbgc.gov, or by calling toll-free 1-800-400-7242. TTY/TDD users should call the federal relay service toll-free at 1-800-877-8339 and ask for 800-400-7242.LandAmerica retirees who get their pension from PBGC may be eligible for the federal Health Coverage Tax Credit. For more information, see http://www.pbgc.gov/wr/benefits/hctc/hctc-faqs.html.PBGC expects few retirees will experience benefit reductions as the agency will cover substantially all of the LandAmerica plan's funding shortfall.

Full text of PBGC press release, click here. 07/01/2011

POSTAL SERVICE ANNOUNCES IT WILL NO LONGER PAY ON ITS DEFINED PENSION PLANS

More from the Emeritus Newsroom- The United States Postal Service has announced it will no longer contribute to its defined pension plans. The USPS statement, issued today, explains the postal service will stop payments to the Federal Employees Retirement System (FERS) to conserve cash and preserve liquidity. The statement also explains,

“We will continue to transmit to OPM employees’ contributions to FERS and also will continue to transmit employer automatic and matching contributions and employee contributions to the Thrift Savings Plan,” said Anthony Vegliante, chief human resources officer and executive vice president.

The Postal Service pays about $115 million every other week to OPM for the FERS annuity. Suspension of payments, effective June 24, will free about $800 million in the current fiscal year.

The Postal Service continues to cut costs significantly with initiatives to reduce the size of its labor force, the number of mail processing facilities and administrative overhead. Over the last four fiscal years, the Postal Service has reduced its size by 110,000 career positions and saved $12 billion in costs.

The Postal Service also is generating new revenue by opening cost-effective new retail locations in places where people already shop, including grocery stores, drug stores and office supply stores, and introducing other new product and pricing initiatives.

Despite significant cost reductions in areas within its control, and even with this emergency action, the Postal Service needs Congress to enact legislation that would do the following to return the Postal Service to financial stability:

• Eliminate the current mandates requiring retiree health benefit pre-payments.
• Allow the Postal Service to access Civil Service Retirement System and FERS overpayments.
• Give the Postal Service the authority to determine the frequency of mail delivery.

The Postal Service receives no tax dollars for operating expenses, and relies on the sale of postage, products and services to fund its operations.

The Postal Service has a FERS account surplus valued at $6.9 billion.

The announcement has prompted firestorm responses from postal employees, their unions, an lawmakers. The American Postal Workers Union issued a response today. The union's statement explains, "...is working fervently to make certain that the Postal Service’s decision to suspend employer contributions to FERS does not negatively affect the nation’s postal employees.

President Cliff Guffey wrote members, “We will take every step necessary to ensure that retirement benefits are protected. We are currently evaluating the best course of action.”

[Click here to view a USPS "mandatory stand-up talk" and answers to frequently asked questions on this topic. - PDF]

There is a solution to the Postal Service’s financial crisis, Guffey noted:

• The USPS has over funded its FERS and CSRS retirement accounts by billions of dollars;
  
  
• It is the only employer — public or private — that is required to pre-fund the healthcare benefits of future retirees. This obligation drains more than $5 billion annually from the USPS budget, and is the principal cause of the Postal Service’s dire financial circumstances.

“Congress must act now to correct these inequities,” Guffey said. “It can start by passing H.R. 1351, which would allow the Postal Service to apply pension overpayments to the pre-funding obligation. This bill would provide the USPS relief from its financial crisis at no cost to taxpayers.

The Postal Service’s financial predicament is the result of flawed legislation (the Postal Accountability and Enhancement Act of 2006) that Congress can and must correct, the union president added.

“Postal workers did not cause USPS financial problems and their retirement benefits should not be jeopardized to solve them.”

The Chairman of the House Oversight and Government Reform Committee, Rep. Darrell Issa, (R-CA) issued the following statement:

"The United States Postal Service, our nation's second largest employer, is now past the brink of insolvency. This would not be tolerated in a private company. Incredibly, the unprecedented action to suspend these payments will only offer USPS an additional $800 million through the end of the year in liquidity, not even 10 percent of their projected deficit of $8.3 billion. USPS needs fundamental structural and financial reforms to cut costs and protect taxpayers from an expensive bailout".

Full text of USPS press release, click here. Rep. Issa statement, click here. Postal Workers Union statement, click here. 06/22/2011

HOUSE COMMITTEE CONSIDERS PENSION LOSSES BY NON-UNION AUTO WORKERS

More from the Emeritus Newsroom- Bankruptcies and bailouts in the auto industry have left some non-union auto workers with "less than" pensions. In 1999, Delphi, formerly called Delco, separated from GM to become a separate company. In 2005, Delphi filed bankruptcy. In 2009, the Pension Benefit Guaranty Corporation (PBGC) took over the Delphi pension plan, which was failing due to insufficient contributions from the company (See PBGC special webpage on Delphi pension takeover, click here). Non-Union Delphi workers and pensioners claim the formula used to determine their benefits amounts to less than the promised amounts, not reflective of GM's actual financial involvement with the company, even after Delphi was spun off in 1999. Delphi was still in bankruptcy 2009 along with GM when deals were cut with the feds reducing pension benefits for thousands of non-union Delphi workers.

Today the House Oversight and Government Reform Committee heard testimony from some of those workers involved.

Story to be updated after today's hearing. 06/22/2011

RENT OUTPACING INCOMES FOR THOSE ON DISABILITY BENEFITS

More from the Emeritus Newsroom- A survey from the Technical Assistance Collaborative claims those on SSI and other government benefits as their only incomes, are being prices out of rental housing, as rental demand increases, in part , due to the foreclosure crisis. The major findings from TAC's "Priced Out in 2010" study include the following:

• People with disabilities who receive SSI payments continue to be the nation’s poorest citizens. In 2010, the annual income of a single individual receiving SSI payments was $8,436 – equal to only 18.7% of the national median income for a one-person household and over 20% below the 2010 federal poverty level of $10,830. Since the first Priced Out study was published in 1998, the value of SSI payments compared to median income has declined precipitously – from
24.4% of median income in 1998 to 18.7% in 2010 – while national average rents have risen over 50% during the same time period.

• In 2010, 218 housing market areas across 42 states had one-bedroom rents that exceeded 100% of monthly SSI, including 30 communities with rents over 150 percent. Six entire states and the District of Columbia had rents that exceeded 100% of monthly SSI and four additional states had only a handful of rural areas with rents below 100% of monthly SSI.

• In 2010, as a national average, a person receiving SSI needed to pay 112% of their monthly income to rent a modest one bedroom unit. In the 12 years since the first Priced Out was published, the amount of monthly SSI income needed to rent a modest one-bedroom unit has increased an astonishing 62 percent. People with disabilities were also priced out of smaller studio/efficiency units, which averaged 99% of monthly SSI.

• In 2010, 21 states provided discretionary state SSI supplements to people with disabilities receiving SSI payments living independently in the community. However, these supplements had little impact on the housing affordability crisis experienced by people with disabilities. Even in Alaska – which had the highest state SSI supplement of $362 and a total monthly SSI payment of $1,036 – people with disabilities receiving SSI still needed to pay over 80% of their
monthly income to rent a modest one bedroom unit. Since 1998, the number of states choosing to provide optional SSI
supplements has declined and the average supplement has decreased 5 percent. During this same time period the average rent for a modest one-bedroom unit increased 51 percent.

In pursuing solutions, according to TAC, " Priced Out in 2010" , can be used to prove that people with disabilities receiving SSI payments cannot afford rental housing without an ongoing rental subsidy – such as a Housing Choice Voucher – or deeply subsidized affordable housing.Most federal programs that are administered at the state or local level rely on strategic plans to document how the federal resources will be used to meet local needs. For example, before local and state community development officials can distribute or spend HOME Investment Partnerships Program funds they are required to submit a plan, including data about housing needs and a description of how the funds will be utilized. There are four significant federally-required housing and homeless plans: the Consolidated Plan; the Public Housing Agency Plan; the Continuum of Care; and the Qualified Allocation Plan.

Full PDF text of TAC survey, click here. 06/21/2011

AARP REFUTES MEDIA REPORTS IT CHANGED POSITION ON SOCIAL SECURITY

More from the Emeritus Newsroom- A flurry of news reports today implied AARP had changed it position, accepting that cuts would have to be made to Social Security benefits. AARP officials later in the day, said those reports were "misleading" and that the group has not changed its position on Social Security or its opposition to privatization.

In a statement released today, AARP CEO Barry Rand responded,

“Let me be clear – AARP is as committed as we’ve ever been to fighting to protect Social Security for today’s seniors and strengthening it for future generations.  Contrary to the misleading characterization in a recent media story, AARP has not changed its position on Social Security.

“First, we are currently fighting some proposals in Washington to cut Social Security to reduce a deficit it did not cause.  Social Security should not be used as a piggy bank to solve the nation’s deficit.  Any changes to this lifeline program should happen in a separate, broader discussion and make retirement more secure for future generations, not less.

“Our focus has always been on the human impact of changes, not just the budget tables.  Which is why, as we have done numerous times over the last several decades, AARP is engaging our volunteer Board to evaluate any proposed changes to Social Security to determine how each might – individually or in different combinations – impact the lives of current and future retirees given the constantly changing economic realities they face.

“Second, we have maintained for years – to our members, the media and elected officials – that long term solvency is key to protecting and strengthening Social Security for all generations, and we have urged elected officials in Washington to address the program’s long-term challenges in a way that’s fair for all generations.

“It has long been AARP’s policy that Social Security should be strengthened to provide adequate benefits and that it is sufficiently financed to ensure solvency with a stable trust fund for the next 75 years.  It has also been a long held position that any changes would be phased in slowly, over time, and would not affect any current or near term beneficiaries. 

“AARP strongly opposed a privatization plan in 2005, and continues to oppose this approach, because it would eliminate the guarantee that Social Security provides and reduce benefits, and we are currently fighting proposals to cut Social Security to pay the nation’s bills.

“Social Security is a critically important issue for our members, their families and Americans of all ages, especially at a time when many will have less retirement security than previous generations with fewer pensions, less savings and rising health care costs.  And, as we have been for decades, we will continue to protect this bedrock of lifetime financial security for all generations of Americans". Full text of AARP response, click here. See AARP new You Tube TV ad below. HuffPost story on ad campaign, click here. 06/17/2011

INTERNATIONAL MONETARY FUND ISSUES STARK WARNING TO U-S, EUROPE / SAYS WORLD DEBT SHAKY

More from the Emeritus Newsroom- With civil unrest in some countries, including Greece, the International Monetary Fund sounded a warning today that worldwide markets may not stand for much more . In the IMF's April 2011 Global Financial Stability Report (GFSR), the analysts claim financial risks have risen for three reasons.

"First, while a multi-speed global recovery remains the base case, downside risks to this baseline have increased. Second, concern about debt sustainability and support for adjustment efforts in Europe’s periphery is leading to market pressures and worries about potential contagion. Political risks are also raising questions about medium term fiscal adjustment in a few advanced countries, notably, the United States and Japan. Third, notwithstanding some recent pullback in risk appetite, the prolonged period of low interest rates may push investors into riskier assets in a “search for yield.” This trend has the potential to build financial imbalances for the future, particularly in some emerging markets. Against these tensions, deep-seated challenges remain. Although there has been progress, improvements in financial system robustness have been insufficient so far. Markets may lose patience and become disorderly if political developments derail momentum on fiscal consolidation and financial repair and reform. Given these risks, policymakers need to accelerate actions to address long-standing financial vulnerabilities as outlined in the GFSR, before the window of opportunity to do so closes".Full text of IMF summary and link to full report, click here. See IMF video below.

In expectation of additional downgrades expected for U-S financial growth, for the year, many New York area financial houses are expected to pick up the pace of layoffs, including Goldman-Sachs. See this article from the New York Times, click here. 06/17/2011

THOUSANDS MORE CITIBANK CARD HOLDERS DATA STOLEN THAN PREVIOUSLY ANNOUNCED

More from the Emeritus Newsroom- Citigroup now admits thousands more accounts were affected by a data theft incident, than originally announced last week. According to the company,

"...internal fraud alerts and enhanced monitoring were placed on all accounts deemed at risk. Simultaneously, rigorous analysis began to determine the precise accounts and type of information accessed. The majority of accounts impacted were identified within seven days of discovery. By May 24, we confirmed the full extent of information accessed on 360,069 accounts. An additional 14 accounts were confirmed subsequently. To determine the cardholder impact required analysis of millions of pieces of data. The customers' account information (such as name, account number and contact information, including email address) was viewed. However, data that is critical to commit fraud was not compromised: the customers' social security number, date of birth, card expiration date and card security code (CVV). While the investigation was underway, preparations began to notify customers and, as appropriate, replace affected customers' credit cards. As of May 24, we began the process of developing notification packages including customer letters and manufacturing replacement cards, as well as preparing our customer service teams. Notification letters were sent beginning June 3, the majority of which included reissued credit cards. Citi has implemented enhanced procedures to prevent a recurrence of this type of event. We have also notified law enforcement and government officials. For the security of our customers, and because of the ongoing law enforcement investigation, we cannot disclose further details regarding how the data breach occurred. Our customers are not liable for any unauthorized use of their accounts. We encourage our customers to review their account statements and to report any suspicious or unauthorized charges to us. Citi also offers free personalized identity theft solutions to assist our customers in taking appropriate steps if they believe they are a victim of identity theft".

The latest number of affected accounts is nearly twice the amount stated by Citigroup last week.

Full text of Citigroup statement including state by state listings of affected accounts, click here. 06/16/2011

HOUSTON BROKERAGE HOUSE FRAUD VICTIMS TO GET MILLIONS IN SETTLEMENT WITH THE S-E-C

More in this article from the Houston Chronicle, click here- 06/16/2011

PBGC WANTS $25 MILLION FROM MORGAN STANLEY FOR ST. VINCENT HEALTH CENTER PENSION LOSSES

More from the Emeritus Newsroom- The Pension Benefit Guaranty Corporation, which monitors private sector employee pension plans, is seeking $25 million in damages from Morgan Stanley Investment Management Inc. over risky pension investments it made for New York's Saint Vincent Catholic Medical Centers' pension plan and its participants.In 2007 and 2008, Morgan Stanley invested the assets of Saint Vincent's pension plan in mortgage-backed securities. The PBGC, which is now responsible for paying benefits to Saint Vincent's 9,500 workers and retirees, believes that Morgan Stanley knew those financial instruments were too risky, and that investing in them violated the plan's guidelines.

Saint Vincent raised the issue last year in a U.S. District Court, but the medical center's lawsuit was dismissed.

PBGC's appeal argues that the district court got it wrong by misreading the complaint and overlooking key facts about the high concentration of investments in mortgage-backed securities in 2007 and 2008, even while the firm was aware those investments were risky and contrary to Saint Vincent's instructions.

PBGC filed its brief May 26 in the U.S. Court of Appeals for the Second Circuit in Manhattan. http://www.pbgc.gov/documents/lfad/2d-Circuit-Brief-Morgan-Stanley-Inv-Mgmt.pdf

The agency wants the Second Circuit to overturn the ruling and require the district court to hear the case on its merits. If that happens, the agency will seek $25 million in damages from Morgan Stanley on behalf of Saint Vincent's pension plan and its participants.

PBGC was created by the Employee Retirement Income Security Act of 1974 to provide a safety net for monitoring and insuring private-sector defined benefit pension plans. Full text of PBGC statement, click here. 06/09/2011

NEW HOME LOAN CONSUMER PROTECTION RULES GO INTO EFFECT JULY 30 2011

More in this article from the LA Times, click here. 06/08/2011

FEDS PROPOSE STRONGER RULES FOR HOME LOANS / SURVEY SHOWS FEWER HOMEOWNERS UNDERWATER

More from the Emeritus Newsroom- Federal officials are planning to limit the amount of debt potential homeowners can have, in order to qualify for conventional loans , WHICH ARE NOT backed by the federal government. The new federal rule, according to the FHA, would restrict potential borrowers to no more than 36% of their total gross income going for debt payments, including their home, when qualifying for a conventional mortgage. Their mortgage payment can be no more than 28% of their gross income. A federal estimate claims as many as three in five borrowers last year (2010) would not qualify for a loan, if such a rule were in place last year. For federally backed loans, according to the FHA, The FHA allows you to use 29% of your income towards housing costs and 41% towards housing expenses and other long term debt. FHA income to debt ratio statement, click here.

The mortgage analysis firm, CoreLogic, today released a survey showing 0.9 million, or 22.7 percent, of all residential properties with a mortgage were in negative equity at the end of the first quarter of 2011, down slightly from 11.1 million, or 23.1 percent, in the fourth quarter. An additional 2.4 million borrowers had less than five percent equity, referred to as near-negative equity, in the first quarter. Together, negative equity and near-negative equity mortgages accounted for 27.7 percent of all residential properties with a mortgage nationwide. In the fourth quarter, these two categories stood at 27.9 percent. the company says, negative equity, often referred to as “underwater” or “upside down,” means that borrowers owe more on their mortgages than their homes are worth. Negative equity can occur because of a decline in value, an increase in mortgage debt or a combination of both. CoreLogic qualified the results by adding, the slight decline in the national negative equity share was primarily due to slight improvements in the hardest hit states, which include Nevada (-2.7 percentage points), Arizona (-1.3 percentage points) and Florida (-1.3 percentage points), the majority of states either remained unchanged or had minor increases.

Full text of CoreLogic statement, click here. 06/08/2011

PBGC SAVES PENSIONS FOR 2,700 HARRY AND DAVID EMPLOYEES AND RETIREES

More from the Emeritus Newsroom- The Pension Benefit Guaranty Corporation says it will prop up the pension plan established by Harry & David, a Medford, Ore.-based marketer of specialty gift baskets, due to its bankruptcy.  The company has claimed that it can't reorganize unless it terminates its pension plan.

However, PBGC's financial analysis shows that the company will be able to emerge from bankruptcy without cutting off its workers' pensions.  The bankruptcy court will hold a hearing on the issue on July 22, 2011. 

If the pension plan is terminated, PBGC will pay pension benefits to Harry & David employees.  However, because of limits set by law, some retirees might get reduced pensions, and PBGC does not insure health benefits at all. 

"Time after time, PBGC has worked successfully with companies and their creditors to make sure that the bankruptcy process recognizes the rights of pensioners, too," Gotbaum said. "We know that Harry & David can reorganize successfully.  We'd just like to make sure that their employees and retirees share in that success.  Preserving a plan is almost always better for employees."

Full text of PBGC press release, click here. 06/07/2011

THE REASON WHY FORECLOSURE PREVENTION PROGRAMS ARE NOT WORKING

More in this article from the New York Times, click here - 06/05/2011

HOME PRICES HIT NEW LOW

More from the Emeritus Newsroom- The Standard and Poors Case-Shiller report on the nation's home prices reflected another downturn, in the latest monthly report, showing home prices being the worst of the recession and providing confirmation of a double dip in the housing market in some cities.. Data through March 2011, released today by Standard & Poor’s for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, show that the U.S. National Home Price Index declined by 4.2% in the first quarter of 2011, after having fallen 3.6% in the fourth quarter of 2010. The National Index hit a new recession low with the first quarter’s data and posted an annual decline of 5.1% versus the first quarter of 2010. Nationally, home prices are back to their mid-2002 levels.

The report also showed that 19 of the top 20 metro areas in the survey showed a decline, with Washington D-C showing the only increase. Full text of Case-Shiller report, click here. 05/31/2011

OIL EXECUTIVES OFFER UNABASHED DEFENSE OF THEIR BIG PROFITS AND TAX BREAKS

More in this article from the LA Times, click here- 05/12/2011

EMPLOYEE PRIVATE PENSION PARTCIPATION ONLY 50%

More from the Emeritus Newsroom- A Government Accountability Office report finds growth stagnating for employee private pension plans. The agency also claims that the pension plans now offered by employers largely favor higher paid workers. Once dominant, "Defined Benefit Plans", totally funded by companies are now only about 8% of defined plans with "Defined Contribution Plans", those matched or not matched by employer contributions, now claiming 92 % . According to the GAO, net new plan formation in recent years has been very small, with the total number of single employer private pension plans increasing about 1 percent from about 697,000 in 2003 to 705,000 in 2007.

The agency's press release also explains, employers created almost 180,000 plans over this period. However, this formation was largely offset by plan terminations or mergers. About 92 percent of newly formed plans were defined contribution (DC) plans, with the rest being defined benefit (DB) plans. New plans were generally small, with about 96 percent having fewer than 100 participants. Regarding the small percentage of new DB plans, professional groups such as doctors, lawyers, and dentists sponsored about 43 percent of new small DB plans, and more than 55 percent of new DB plan sponsors also sponsored DC plans. The low net growth of private retirement plans is a concern in part because workers without employer-sponsored plans do not benefit as fully from tax incentives as workers that have employer-sponsored plans. Furthermore, the benefits of new DB plans disproportionately benefit workers at a few types of professional firms. Most individuals who contributed at or above the 2007 statutory limits for DC contributions tended to have earnings that were at the 90th percentile ($126,000) or above for all DC participants, according to our analysis of the 2007 SCF. Similarly, consistent with findings from our past work, high-income workers have benefited the most from increases in the limits between 2001 and 2007. Finally, we found that men were about three times as likely as women to make so-called catch-up contributions when DC participants age 50 and older were allowed to contribute an extra $5,000 to their plans. We found that several modifications to the Saver's Credit--a tax credit for low-income workers who make contributions to a DC plan--could provide a sizeable increase in retirement income for some low wage workers, although this group is small. For example, under our most generous scenario, Saver's Credit recipients who fell in the lowest earnings quartile experienced a 14 percent increase in annual retirement income from DC savings, on average. The long-term effects of the financial crisis on retirement income are uncertain and will likely vary widely. For those still employed and participating in a plan, the effects are unclear. Data are limited, and while financial markets have recovered much of their losses from 2008, it is not fully known yet how participants will adjust their contributions and asset allocations in response to market volatility in the future. In contrast, although data are again limited, the unemployed, especially the long-term unemployed, may be at risk of experiencing significant declines in retirement income as contributions cease and the probability of drawing down retirement accounts for other needs likely increases. The potential troubling consequences of the financial crisis may be obscuring long standing concerns over the ability of the employer-provided pension system in helping moderate and low-income workers, including those with access to a plan, save enough for retirement. GAO press release on private pensions, click here. 05/04/2011

US ATTORNEY, L-A CITY ATTORNEY SUE DEUTSCHE BANK FOR FRAUDULENT MORTGAGE PRACTICES

More from the Emeritus Newsroom- The U-S Attorney's Office in New York City has filed suit against Deutsche Bank, requesting more than $386 million dollars in damages. Investigators claim the bank violated the federal False Claims Act for repeated false certifications made to HUD in connection with the residential mortgage origination and sponsorship practices of their subsidiary, MORTGAGEIT. To date, FHA has paid insurance claims on more than 3,100 failed mortgages, totaling $386 million, for mortgages endorsed by MORTGAGEIT. Manhattan U.S. Attorney PREET BHARARA said: "As alleged, MortgageIT and Deutsche Bank ignored every type of red flag and breached every duty of due diligence before underwriting thousands of federally insured mortgages. While the homes the defendants issued loans for may have been built on solid ground, the defendants' lending practices were built on quicksand.
Ultimately, prudence was trumped by profit, and good faith took a back seat to good fees. This is exactly the kind of misconduct that our Civil Frauds Unit was created to combat". According to the Complaint, MORTGAGEIT repeatedly made false certifications to HUD to obtain approval of mortgages that MORTGAGEIT underwriters wrongfully endorsed for FHA insurance. These mortgages were not eligible for FHA insurance under HUD rules. notwithstanding the mortgages' ineligibility, underwriters at MORTGAGEIT endorsed the mortgages by falsely certifying that they had conducted the due diligence required by HUD rules when, in fact, they had not. By endorsing ineligible mortgages and falsely certifying compliance with HUD rules, MORTGAGEIT wrongfully obtained approval of these ineligible mortgages for FHA insurance, thereby putting millions of FHA dollars at risk. Full PDF text of U-S Attorney filing in federal court, click here.

Also, the L-A City Attorney's Office is suing Deutsche Bank for much the same practices, calling the bank the city's biggest, "Slum Lord". Click here for article from the LA Times. 05/04/2011

BERNANKE SAYS FED MUST BALANCE UNEMPLOYMENT WITH INFLATION / CONFIDENT U-S ECONOMY WILL RECOVER

More from the Emeritus Newsroom- Federal Reserve Chairman, Ben Bernanke says the Fed is very aware of the long term unemployment problem, labeling it as the "worst since the Depression" of the 1930's. He says the Fed faces the dual role of balancing the need to keep inflation low and stimulus for increased employment. The Chairman says the Fed will be ending its buying of securities to free money for the private sector, feeling the nation's economy is in a "moderate" growth period. Bernake's news conference followed release earlier in the day, of the Federal Reserve Open Market Committee's assessment of the nations economic report card for March 2011. The Fed's statement notes that,

"...The Committee decided today to continue expanding its holdings of securities as announced in November.  In particular, the Committee is maintaining its existing policy of reinvesting principal payments from its securities holdings and will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter.  The Committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability.

The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels for the federal funds rate for an extended period. 

The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to support the economic recovery and to help ensure that inflation, over time, is at levels consistent with its mandate".

During his news conference, Bernanke says the Fed believes the positives from having news conferences after meetings such as the one today, by the Open Market Committee, will only help the public understanding of the Fed and its actions and downplayed talk that such media scrutiny would have any significant adverse market reactions.

The Fed's overview of the current economic picture is that, "... the economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually.  Household spending and business investment in equipment and software continue to expand.  However, investment in nonresidential structures is still weak, and the housing sector continues to be depressed.  Commodity prices have risen significantly since last summer, and concerns about global supplies of crude oil have contributed to a further increase in oil prices since the Committee met in March.  Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability.  The unemployment rate remains elevated, and measures of underlying inflation continue to be somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.  Increases in the prices of energy and other commodities have pushed up inflation in recent months.  The Committee expects these effects to be transitory, but it will pay close attention to the evolution of inflation and inflation expectations".

Text of Fed statement on economy, click here. Video of Bernanke news conference below RATED A MUST SEE (58 Minutes). Voice of American story, click here for You Tube playback. 04/27/2011

FAMILIES WITH CHILDREN MORE LIKELY TO BE POOR

More from the Emeritus Newsroom- families with young children are more likely to be poor than at any time in the past. The international group, Organization for Economic Co-operation and Development surveyed its member nations, finding that in nearly all those countries, families with children were increasingly headed toward poverty. The findings are contained in the the group's report, called, "Doing Better for Families . The report also underlines the fact that families with children are more likely to be poor today than in previous decades, when the poorest in society were more likely to be pensioners.

The share of children living in poor households has risen in many countries over the past decade, to reach 12.7% across the OECD. One in five children in Israel, Mexico, Turkey, the United States and Poland live in poverty. (The OECD defines poor as someone living in a household with less than half the median income, adjusted for family size). 

“Family benefits need to be well designed to maintain work incentives, but they need to be effective in protecting the most vulnerable, otherwise we risk creating high, long-term social costs for future generations” said OECD Secretary-General Angel Gurría.

The OECD recommends that governments should:

• Ensure that work pays for both parents, including through assistance with childcare costs.
• Help families combine work and care commitments, through an integrated set of leave, care and workplace support for parents of young children.
• Design parental leave systems that encourage more fathers to take and share leave and promote their engagement with homecare responsibilities.
• Start investing in family policies during the early years and sustain investment throughout childhood.
• Ensure high-quality childcare services are linked to improved cognitive development, especially for children from poor households.
  

“More family-friendly workplaces, equal career prospects for men and women, and a better sharing of care responsibilities not only make economic sense, they are a moral and political imperative,” said Mr. Gurría.

Key family facts for 34 countries, and short country notes for 17 countries (in national languages), are available from www.oecd.org/social/family/doingbetter. Full text of summary with links to full report, click here. 04/27/2011

PEW STUDY SHOWS STATE PENSION FUNDS SHORT $1.26 TRILLION / 20 STATES HAVE NO ASSETS TO COVER PENSION PAYMENTS

More from the Emeritus Newsroom- A report completed by Pew Center for the States, shows most states are short of the funds needed for promised pensions to state workers. The gap between the promises states have made for public employees’ retirement benefits and the money set aside to pay for them grew to at least $1.26 trillion in fiscal year 2009—a 26 percent increase in one year—according to the Pew report.

Based on data from 2009 and 2010, the Pew Center on the States found:

• In 2000, just over half the states had fully funded pension systems. By 2006, that number had shrunk to six states. By 2008, only four—Florida, New York, Washington and Wisconsin—could make that claim.

• In eight states—Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia—more than one-third of the total pension liability was unfunded. Two states—Illinois and Kansas—had less than 60 percent of the necessary assets on hand.

• Nine states were deemed solid performers, having enough assets to cover at least 7.1 percent—the 50-state average—of their non-pension liabilities. Only two states—Alaska and Arizona—had 50 percent or more of the assets needed.

• Forty states were classified as needing improvement, having set aside less than 7.1 percent of the funds required. Twenty of these have no assets on hand to cover their obligations.

Pew researchers analyzed the funding performance of 231 state-administered pension plans and 159 state-administered retiree health care and other non-pension benefit plans, which include some localities’ and teacher plans.  

The Pew report also lists potential solutions and their effects. Potential solutions include, reducing benefits and increasing age qualifications, plans that share risk with employees, increasing employee contributions and improving oversight of pension fund investments. Full text of study summary with direct links to other information, click here. Graphic summary of Pew report, click here. Full PDF text of actual Pew report, click here. 04/26/2011

DROPPING CORPORATE TAX RATES / THE HISTORY WITH MORE ON THE WAY

More from the LA Times, click here - 04/20/2011

EVICTION PROTESTERS BATTLE BANKS FOR HOMEOWNERS

More from the Emeritus Newsroom- They have been successful delaying evictions and foreclosures as well as providing solutions for low income property owners in default on their mortgages. Called , Vida Urbana, City Life, the Boston area group links troubled homeowners to legal and financial help. In some cases, they conduct protests a at homes where the banks have ordered residents out, or be evicted. the video below, shows such a protests in Boston's Hyde Park section, where a family of immigrants from Jamaica wanted to refinance their home, after defaulting on their mortgage, due to the recession. Aurora Bank foreclosed on the family's home, but allowed them to rent the home until they could come up with refinancing. A community financial consortium offered to buy the home for current market value but Aurora Bank refused, demanding payment for the value of the home at the time the mortgage was signed, before the real estate value collapse. So the St. Simon family was evicted on April 6, 2011. This is video of the protests, the arrest of protesters and the movers arriving to take the family's belongings. Emeritus News Video, Click on You Tube playback below. .04/17/2011

NEARLY HALF OF FAMILIES PAY NO FEDERAL INCOME TAX

More from Associated Press, click here- 04/17/2011

BANKS AND MORTGAGE ELECTRONIC REGISTRATION SYSTEMS SERVED WITH "CEASE AND DECIST"ORDERS OVER BOGUS FORECLOSURE PROCESSING

More from the Emeritus Newsroom- The federal government is cracking down on major banks and the Mortgage Electronic Registration System (MERS). In MERS case, the mortgage records conglomerate may owe billions in record filing fees in cases where deeds to properties were not properly filed, making it difficult, if not impossible, to get the legal documents necessary, in hundreds of cases, to legally complete a foreclosure. In a statement released by the Office of the Comptroller of the Currency, the agency announced formal enforcement actions against eight national bank mortgage servicers and two third-party servicer providers for unsafe and unsound practices related to residential mortgage loan servicing and foreclosure processing.

The eight servicers are Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank, and Wells Fargo. The two service providers are Lender Processing Services (LPS) and its subsidiaries DocX, LLC, and LPD Default Solutions, Inc.; and MERSCORP and its wholly owned subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS).

"These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations," said acting Comptroller of the Currency John Walsh. "These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance and the loan modification process and address financial harm to borrowers. Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward."

The enforcement actions require the servicers to promptly correct deficiencies in residential mortgage loan servicing and foreclosure practices that examiners identified in reviews conducted during the fourth quarter of 2010. The actions require the servicers to make significant improvements in practices for residential mortgage loan servicing and foreclosure processing, including communications with borrowers and dual-tracking, which occurs when servicers continue to pursue foreclosure during the loan modification process. The enforcement actions require the servicers to ensure that foreclosures are not pursued once a mortgage has been approved for modification and to establish a single point of contact for borrowers throughout the loan modification and foreclosure processes. In addition, the actions require servicers to establish robust oversight and controls pertaining to their third-party vendors, including outside legal counsel, that provide default management or foreclosure services.

The OCC's actions also require each servicer to engage an independent firm to conduct a multi-faceted review of foreclosure actions between January 1, 2009, and December 31, 2010. This requirement includes a comprehensive "look back" to assess whether foreclosures complied with federal and state laws, whether foreclosures occurred when grounds for foreclosure were not present, such as when loans were performing, and whether any errors, misrepresentations or other deficiencies resulted in financial injury to borrowers. The actions also require each servicer to establish a process for borrowers who believe they have been financially harmed by such deficiencies to make submissions to be considered for remediation. Each servicer must also submit a plan to remediate all financial injury to borrowers caused by any errors, misrepresentations, or other deficiencies identified in the independent consultant's findings.

The OCC based its enforcement actions on the findings of examinations conducted as part of the interagency horizontal reviews undertaken by the federal banking regulators in the fourth quarter of 2010. Examinations of these eight national bank servicers identified significant weaknesses in mortgage servicing and foreclosure governance that resulted in unsafe and unsound practices. The scope and degree of these practices differed among the servicers; however, based on the sample of files reviewed by OCC examiners, borrowers in the sample were seriously delinquent at the time of foreclosures and servicers held the notes and documents required to foreclose. A summary of the findings of the interagency reviews is available in the Interagency Review of Foreclosure Policies and Practices, which was produced by the OCC, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision.

Full text of Comptroller fo the Currency statement, click here. 04/14/2011

PRODUCER PRICE INDEX SHOWS SOME COMPANIES GETTING HIGHER MARGINS REGARDLESS OF COSTS /

More from the Emeritus News- The nitty gritty details of the Producer Price Index hardly make for recreational reading. What the index lacks in enjoyment, it more than compensates with economic illumination. Take the report released today by the Bureau of Labor Statistics. What is revealed in today's report tells a story of companies making money even the the raw or crude prices of materials for finished products stay the same or drop. When it comes to traditional service industries, a far different picture. The overall economic picture is this...The Producer Price Index for finished goods rose 0.7 percent in March, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed a 1.6-percent increase in February and a 0.8-percent gain in January. At the earlier stages of processing, prices received by manufacturers of intermediate goods climbed 1.5 percent in March and the crude goods index declined 0.5 percent. On an unadjusted basis, prices for finished goods moved up 5.8 percent for the 12 months ended March 2011, the largest year-over-year gain since a 5.9-percent advance in March 2010.

The Producer Price index for the net output of total traditional service industries was unchanged in March after decreasing 0.2 percent in the previous month. In March, higher prices received by investment bankers and securities dealers and by the accommodation sector were offset by lower prices received by the industries for commercial banking and offices of certified public accountants.

By contrast, The Producer Price Index for the net output of transportation and warehousing industries climbed 2.4 percent in March, the third straight increase. Over forty percent of the March advance is attributable to prices received by the scheduled air transportation industry group, which rose 6.2 percent. Higher prices received by the truck transportation sector and line-haul railroads also were major factors in the increase in the transportation and warehousing industries index. This despite the fact that the index for crude energy materials fell 0.5 percent in March. For the 3 months ended in March, crude energy prices rose 2.4 percent compared with a 24.0-percent jump for the 3 months ended December 2010. In March, the decrease in prices for crude energy materials was the result of an
11.7-percent decline in the natural gas index.

However, the BLS says the index for intermediate energy goods increased 2.9 percent in March, the
eighth straight advance. Prices for jet fuel, which rose 8.4 percent, contributed significantly to the March
increase. Higher prices for gasoline and lubricating oil base stocks also were major factors in the rise in
the intermediate energy goods index. Then consider the BLS Prices for finished energy goods category rose 2.6 percent in March, the sixth consecutive monthly advance. Over eighty percent of the March increase can be attributed to the gasoline index, which climbed 5.7 percent. Higher prices for liquefied petroleum gas and home heating oil also were factors in the rise in the finished energy goods index. As you can see, a lot happens on the way to finished energy goods. Consumers pay more, but there is a clear disconnect between lower crude energy prices and the margins from higher prices someone is taking in the middle.

Also consider another interesting tidbit, The Producer Price Index for the net output of total trade industries moved up 1.1 percent in March following a 1.5-percent increase in the prior month. (Trade indexes measure changes in margins received by wholesalers and retailers.) Over half of the March advance can be traced to a 14.0-percent jump in margins received by department stores. Higher margins received by wholesale trade industries and by motor vehicle and parts dealers also contributed significantly to the rise in the total trade industries index.

It's interesting to see who is benefiting the most during these trying times. It certainly is not the consumer. 04/14/2011

NINTH CIRCUIT DEALS BLOW TO WINKLEVOSS TWINS / SUED FACEBOOK CREATOR MARK ZUCKERBERG CLAIMING HE STOLE THEIR IDEA, THEN UNDERPAID IN SETTLEMENT

More from the Emeritus Newsroom- The a high profile case, which became part of the movie," Social Network", the Winklevoss twins, Cameron and Tyler, have lost an appeal of their original settlement. In a decision handed down today, the Ninth Circuit Court of Appeals ruled the pair are not entitled to additional compensation besides their original settlement with Mark Zuckerberg for $65 million. The Winklevoss suit claimed Zuckerberg hid the true worth of Facebook when they agreed to the settlement, but the three judges on the Ninth Circuit disagreed.

Writing the unanimous opinion for the court, Appeals Chief Judge Alex Kozinski stated,

"...the Winklevosses’ securities fraud claims fail on the merits. The Winklevosses make two related claims: that Facebook led them to believe during the settlement negotiations that its shares were worth $35.90, even though Facebook knew that its shares were, in fact, worth only $8.88; and that Facebook failed to disclose material information, namely the $8.88 tax valuation, during the negotiations".

"The Winklevosses are not the first parties bested by a competitor who then seek to gain through litigation what they
were unable to achieve in the marketplace. And the courts might have obliged, had the Winklevosses not settled their
dispute and signed a release of all claims against Facebook. With the help of a team of lawyers and a financial advisor,
they made a deal that appears quite favorable in light of recent market activity".

According to the court decision, a district court in California eventually dismissed the Winklevosses from that case for lack of personal jurisdiction. It then ordered the parties to mediate their dispute. The mediation session included ConnectU, Facebook and the Winklevosses so that the parties could reach a global settlement. Before mediation began, the participants signed a Confidentiality Agreement stipulating that all statements made during mediation were privileged, non-discoverable and inadmissible “in any arbitral, judicial, or other proceeding.” After a day of negotiations, ConnectU, Facebook and the Winklevosses signed a handwritten, one-and-a-third page “Term Sheet & Settlement Agreement” (the Settlement Agreement). The Winklevosses agreed to give up ConnectU in exchange for cash and a piece of Facebook. The parties stipulated that the Settlement Agreement was “confidential,” “binding” and “may be submitted into evidence to enforce [it].” The Settlement Agreement also purported to end all disputes between the parties. The settlement fell apart during negotiations over the form of the final deal documents, and Facebook filed a motion with 4902 FACEBOOK v. CONNECTU, INC. the district court seeking to enforce it. ConnectU argued that
the Settlement Agreement was unenforceable because it lacked material terms and had been procured by fraud. The
district court found the Settlement Agreement enforceable and ordered the Winklevosses to transfer all ConnectU shares to Facebook. This had the effect of moving ConnectU from the
Winklevosses’ to Facebook’s side of the case.

Full text of court decision from the Ninth Circuit, click here. 04/11/2011

WHY THE REP. RYAN BUDGET PLAN MEANS LESS TAXES FOR THE RICH AND MORE FOR MIDDLE CLASS / CRITICS SAY DETAILS REVEAL WHAT RYAN DOESN'T TALK ABOUT

More in this article from the Center for American Progress, click here- 04/11/2011

JOHNSON AND JOHNSON AGREES TO PAY $60 MILLION IN FOREIGN GOVERNMENTS BRIBERY SCHEMES

More from the Emeritus Newsroom- The U-S Justice Department has announced settlements with Johnson and Johnson, totaling $60 million dollars for violating federal laws in connection with alleged bribery schemes involving officials of foreign countries. According to the FBI, the agreement settles a case filed by the Department of Justice to resolve improper payments by J&J subsidiaries to government officials in Greece, Poland, and Romania, in violation of the Foreign Corrupt Practices Act (FCPA). The agreement also resolves kickbacks paid to the former government of Iraq under the United Nations Oil for Food Program.

J&J is headquartered in New Brunswick, N.J., and is listed on the New York Stock Exchange. The company manufactures and sells medical devices, pharmaceuticals, and consumer health care products.

“Today, Johnson & Johnson has admitted that its subsidiaries, employees, and agents paid bribes to publicly employed health care providers in Greece, Poland, and Romania, and that kickbacks were paid on behalf of Johnson & Johnson subsidiary companies to the former government of Iraq under the United Nations Oil for Food program,” said Principal Deputy Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division. “Johnson & Johnson, however, has also cooperated extensively with the government and, as a result, has played an important role in identifying improper practices in the life sciences industry. As today’s agreement reflects, we are committed to holding corporations accountable for bribing foreign officials while, at the same time, giving meaningful credit to companies that self-report and cooperate with our investigations.”

According to the agreement, J&J has acknowledged responsibility for the actions of its subsidiaries, employees, and agents who made various improper payments to publicly employed health care providers in Greece, Poland, and Romania in order to induce the purchase of medical devices and pharmaceuticals manufactured by J&J subsidiaries. J&J also acknowledged that kickbacks were paid on behalf of J&J subsidiary companies to the former government of Iraq under the United Nations Oil for Food Program in order to secure contracts to provide humanitarian supplies. A criminal information, filed in U.S. District Court in the District of Columbia in connection with the deferred prosecution agreement, charges J&J subsidiary DePuy Inc. with conspiracy and violations of the FCPA in connection with the payments to public physicians in Greece.

The agreement recognizes J&J’s timely voluntary disclosure, and thorough and wide-reaching self-investigation of the underlying conduct; the extraordinary cooperation provided by the company to the department, the SEC and multiple foreign enforcement authorities, including significant assistance in the industry-wide investigation; and the extensive remedial efforts and compliance improvements undertaken by the company. In addition, J&J received a reduction in its criminal fine as a result of its cooperation in the ongoing investigation of other companies and individuals, as outlined in the U.S. Sentencing Guidelines. J&J’s fine was also reduced in light of its anticipated resolution in the United Kingdom. Due to J&J’s pre-existing compliance and ethics programs, extensive remediation, and improvement of its compliance systems and internal controls, as well as the enhanced compliance undertakings included in the agreement, J&J was not required to retain a corporate monitor, but it must report to the department on implementation of its remediation and enhanced compliance efforts every six months for the duration of the agreement.

In a related matter, J&J reached a settlement today with the U.S. Securities and Exchange Commission under which it agreed to pay more than $48.6 million in disgorgement of profits, including pre-judgment interest.

This case is being prosecuted by Trial Attorney Kathleen M Hamann of the Criminal Division’s Fraud Section with assistance from the FBI’s Washington Field Office’s dedicated FCPA squad. The Criminal Division’s Office of International Affairs provided assistance in this matter.

The Justice Department acknowledges and expresses its appreciation for the significant assistance provided by the authorities of the 8th Ordinary Interrogation Department of the Athens Court of First Instance and the Athens Economic Crime Squad in Greece; the 5th Investigation Department of the Regional Prosecutor’s Office in Radom, Poland; the Fraud Squad of the West Yorkshire Police Department in the United Kingdom; and the SEC’s Division of Enforcement, as well as the coordination and cooperation with the authorities of the United Kingdom’s Serious Fraud Office.

Full text of FBI press release, click here. 04/08/2011

IRS PROMISES LESS ADVERSARIAL TAX COLLECTION

More from the Emeritus Newsroom- Changes being proposed by the Internal Revenue Service will ease some of the rules on tax liens, used for taking possession of property in lieu of tax debt and its offer in compromise settlement program. More in this article from the Washington Post, click here. 04/03/2011

MILITARY TAX DEADLINE EXTENDED / NATIONAL DEADLINE FOR ALL TAXPAYERS EXTENDED TO APRIL 18

More from the Emeritus Newsroom- All U-S taxpayers will get a three day extension from the normal April 15th deadline due to Emancipation Day, which is celebrated in Washington D-C. Some filers, who are in military service, get an additional extension. Defense Department officials say service members serving outside of the United States -- including those supporting operations in Libya and Japan -- will receive an automatic two-month tax filing extension this year. Deployed service members already receive an automatic 180-day extension from the last day served in the deployed location, plus the number of days remaining to file before entering that location, officials said. This extension includes filing taxes or paying them, and interest doesn't accrue on any taxes owed. However, several operations don't qualify for the 180-day extension, officials said, including Operation Tomodachi in Japan and operations in Libya. Instead, service members supporting these operations are entitled to receive a two-month extension, pushing the tax filing deadline to June 15. Also eligible are service members serving outside of the United States, and U.S. citizens and residents living and working outside of the United States. Service members and their spouses who file a joint return both qualify for the extension, but if filing separately, each spouse must qualify separately.

Taxpayers eligible for the extension should keep in mind that the extension applies to filing and paying taxes, officials said. If taxes are owed, they still will accrue interest from the April 18 deadline. People who qualify for the two-month extension are still eligible even if physically present in the United States or Puerto Rico on April 18, officials added.To use the extension, people must attach a statement to their return explaining which situation qualifies them for an extension, officials said. If filing at a military tax center, the tax preparer can enter the explanation on the electronic return.

All taxpayers can request a six-month extension to file if they can't file by the April 18 due date by filing a Form 4868, which is available on the Internal Revenue Service website at http://www.irs.gov. They'll have until Oct. 17 to file, but must pay any owed tax by April 18 or face penalties and interest charges.

People who qualify for the automatic two-month extension but need more time to file also may request an additional four months to file by filing a Form 4868 and checking Block 8: "Out of the country." They'll also have until Oct. 17 to file, but payment is still due on June 15, and if taxes are owed, the interest will accrue from April 18.

Full text of Defense Department report from Elaine Sanchez, click here. 04/01/2011

HOME PRICE SLIDE RECORDED IN MOST OF U-S METRO AREAS

More from the Emeritus Newsroom- The Standard and Poor's Case Shiller Index shows the housing market reflecting the drag from high unemployment. According to the January index report, released today,in 13 of the 20 MSAs and the 10- and 20-City Composites compared to the December 2010 report. The 10-City Composite was down 2.0% and the 20-City Composite fell 3.1% from their January 2010 levels. San Diego and Washington D.C. were the only two markets to record positive year-over-year changes. However, San Diego was up a scant 0.1%, while Washington DC posted a healthier +3.6% annual growth rate. The same 11 cities that had posted recent index level lows in December 2010, posted new lows in January.

“Keeping with the trends set in late 2010, January brings us weakening home prices with no real hope in
sight for the near future” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor's.
“With this month’s data, we find the same 11 MSAs posting new recent index lows. The 10-City and 20-
City Composites continue to decline month-over-month and have posted monthly declines for six
consecutive months now.
“These data confirm what we have seen with recent housing starts and sales reports. The housing market
recession is not yet over, and none of the statistics are indicating any form of sustained recovery. At most,
we have seen all statistics bounce along their troughs; at worst, the feared double-dip recession may be
materializing. A few months ago we defined a double-dip for home prices as seeing the 10- and 20-City
Composites set new post-peak lows. The 10-City Composite is still 2.8% above and the 20-City is 1.1%
above their respective April 2009 lows, but both series have moved closer to a confirmed double-dip for six
consecutive months. At this point we are not too far off, and that is what many analysts are seeing with
sales, starts and inventory data too".

“Looking across some of the markets, we see that with a January 2011 index level of 99.59, Atlanta has
joined Cleveland, Detroit and Las Vegas as markets where average home prices are now below their
January 2000 levels. Washington DC appears to be the only market that has weathered the recent storm.
While it was up only 0.1% for the month of January, it’s annual rate was a relatively healthy +3.6%, it is
still +10.7% above its March 2009 low, and ranks number one among the 20 markets as its average value is
almost 85% above its January 2000 level".

Continuing the trend set late last year, we witnessed 11 MSAs posting new index level lows in January
2011, from their 2006/2007 peaks. These cities are Atlanta, Charlotte, Chicago, Detroit, Las Vegas,
Miami, New York, Phoenix, Portland (OR), Seattle and Tampa. These same 11 cities had posted lows
with December’s report, as well.

Full text of PDF download of Case Shiller Index report, click here. 03/29/2011

SLOW ECONOMY, LOW INFLATION BRING ANOTHER LEAN YEAR FOR SOCIAL SECURITY BENEFITS

More from the Emeritus Newsroom- Indications are that Social Security beneficiaries may face another year with little no cost of living (COLA) raises. The nation's inflation rate remaining low, the barometer for any COLA, has little chance of providing enough money for beneficiaries to offset increases expected in Medicare premiums. That means a potential step backward for beneficiaries.The inflation rate this year is forecast to be 2.1%, only .6% more than last year, mostly due to increases in food and fuel prices. More on this story from the Chicago Tribune, click here. 03/27/2011

FEDERAL RESERVE MAKES RECORD $82 BILLION ON PAYMENTS FROM BAILOUT LOANS AND AID PROGRAMS

More from the Emeritus Newsroom- The Federal Reserve Bank today had some good news for taxpayers. It returned a record net $79 billion to the Treasury Department. Total Reserve Bank assets as of December 31, 2010, were $2.428 trillion, which represents an increase of $193 billion from the previous year. The composition of the balance sheet changed notably. Holdings of U.S. Treasury securities increased $261 billion and holdings of federal agency and government-sponsored enterprise (GSE) mortgage-backed securities (MBS) increased $86 billion. These increases were partly offset by a $96 billion decrease in loans to depository institutions and a $23 billion decrease in loans extended under the Term Asset-Backed Securities Loan Facility, largely due to early repayments by borrowers.

The Reserve Banks' comprehensive income increased $28 billion over the previous year to $82 billion for the year ended December 31, 2010. The increase was primarily attributable to an increase of $24 billion in interest earnings on the federal agency and GSE MBS holdings. Full text of Federal Reserve press release, click here. 03/22/2011

REMEMBER, YOU WILL NOT GET A PAPER TAX FORM IN THE MAIL AGAIN / THINGS TO WATCH OUT FOR THIS YEAR

More in this article from the Wall Street Journal, click here- 03/21/2011

PBGC SAVES PENSIONS FOR WORKERS AT BELL AND HOWELL / ERVING INDUSTRIES

More from the Emeritus Newsroom- Workers from two firms, Bell and Howell, now owned by now bankrupt European data systems giant Böwe, and those with Erving Industries, will have their pension plans taken over by the Pension Benefit Guaranty Corporation.

According to the PBGC, the agency will cover the retirement benefits of nearly 800 employees and retirees of Böwe Bell + Howell Co., a maker of high-speed postal inserting and sorting systems based in Wheeling, Ill.  Böwe Bell + Howell's parent company, Böwe Systec AG of Augsburg, Germany, is selling all its assets in bankruptcy.  Following the sale, the pension plan will be abandoned, leaving PBGC to pay about $21 million in unfunded benefits.By taking action before the sale, the agency can more easily recover assets from the company and its units to help pay benefits to members of Böwe Bell + Howell's retirement plan.In general, PBGC will pay the benefit that a retiree would earn if they retired at age 65. However, there is a legal maximum, $54,000 per year for a 65-year-old, and lower for people who retire before age 65 or choose survivor benefits. In addition, certain early-retirement payments and recent benefit increases are generally not covered.

The PBGC will also take over the pensions for almost 900 workers and retirees of Erving Industries, Inc., a manufacturer of tissue paper based in Erving, Mass. The company could not emerge from bankruptcy without terminating its three pension plans.

"Erving Paper Industries employs 125 people and is an important part of the region's economy," said Congressman John W. Olver (D-Mass.1). "Over the past few years, the harsh economic climate revealed that certain pensions of past and current employees of Erving Paper were in jeopardy. The Pension Benefit Guaranty Corp. has taken responsibility for three underfunded pension plans covering a total of 877 current or former Erving employees. I am pleased that, thanks to the PBGC, both former and current employees can now retire with peace of mind."

Full text of Bell and Howell press release, click here. Full text of Erving press release, click here. 03/17/2011

MORGAN STANLEY FACES INVESTIGATION OVER HOME FORECLOSURES AGAINST MILITARY PERSONNEL

More in this article from the New York Times, click here- 03/12/2011

WHY SPENDING CUTS ARE NOT ENOUGH / SIX BIPARTISAN SENATORS SAY REFORMS ARE "MUST" FOR MEDICARE AND SOCIAL SECURITY

More in this article from the Washington Post, click here- 03/08/2011

HOW DID WE GET SO DEEP INTO THE PENSION MESS? / RESEARCHERS TRYING TO MAP WAY OUT

More from the Emeritus Newsroom- Financial analysts and retirement researchers seem to agree on how the pension mess reached its depths. The financial collapse of 2008, over optimistic expectations on investment returns, and a failure to more closely watch pension money that was invested and squandered. Differences emerge over ways to get out of the abyss and who should be held accountable.

When it comes to state and other governmental units, taxpayers are on the hook for more than $1.5 trillion in public pension liabilities. The scary part is that, by some research, including that from the Center for Retirement Research at Boston College, pension funds are short about 35%-40% of what they will need to make payments to pensioners. Add the fact that the Pension Benefit Guaranty Corporation, a quasi government agency that insures private pension plans, is already more than $23 billion in the red from private plan failures, under funding, poor management and theft. Raising private pension insurance premiums is already underway. However, higher premiums may not be enough to offset the shortfall, which in large part, came as corporations which were sold, bankrupt or for other reasons, may not have been able to make their scheduled payments. There have been several plans taken over by the PBGC, where the company officers embezzled money from the pension fund, which may never be recovered. Though the officers have been ordered to repay by the court, it remains to be seen what assets they may have left after legal settlements.

As for potential solutions, analysis by Center for Retirement Research analysts Alicia H. Munnell, Jean-Pierre Aubry, and Laura Quinby, suggest annual required pension contributions beginning in 2014 under three scenarios: 1) amortizing the unfunded liability valued at an 8-percent discount rate over the next 30 years; 2) amortizing the un funded liability valued at 5 percent over the next 30 years; and 3) continuing to pay contributions at current levels until the trust fund is exhausted and then paying benefits on a pay-as-you go basis.

While these formulas may not restore the funds to their pre-2008 levels, they do present alternatives for the growing pension fund shortfall facing state and local governments, as well as their taxpayers.

Center for Retirement Research- Pension Impact on State Government Borrowing, click here. Center for Retirement Research- Impact of Pensions on State Budget, click here. More in this article from the Washington Post, click here03/03/2011

FEDERAL RESERVE REPORTS ECONOMY GROWING AT SLOWER PACE

More from the Emeritus Newsroom- The Beige Book Report from the Federal Reserve finds the nation's economic growth slowing. According to the Fed, overall economic activity continued to expand at a modest to moderate pace in January and early February. Both Kansas City and San Francisco noted that their economies expanded further. Boston and Philadelphia cited conditions as improving. New York, Cleveland, Richmond, Atlanta, and St. Louis described activity as modestly improving, while Minneapolis and Dallas experienced moderate growth. Chicago reported that although there was an increase in activity, it was at a pace not quite as strong as during the previous reporting period.

Retail sales increased in all Districts, except Richmond and Atlanta, although Boston, New York, Philadelphia, Atlanta, and Kansas City noted that severe snowstorms had a negative impact on merchant activity. Retail inventory levels were described as desirable in New York, Cleveland, Dallas, and San Francisco. Tourism improved in Richmond, Atlanta, and San Francisco, while New York and Kansas City noted a slowdown in activity as hotel occupancy rates declined. Some Districts reported a slight increase in the level of residential real estate activity, although all Districts maintained that the overall level of home sales and construction remained low. Several Districts indicated improvements in commercial real estate sales and leasing activity, including Boston, Richmond, Chicago, Kansas City, Dallas, and San Francisco. Most reports characterized nonresidential construction as weak.

All Districts, except St. Louis, experienced solid growth in manufacturing production, and new orders improved for Philadelphia, Atlanta, Chicago, Kansas City, and San Francisco. Most regions observed an increase in non financial services. Boston, Philadelphia, and San Francisco reported that sales advanced for services related to information technology, while Kansas City noted softer sales of IT services.

PBGC SAVES PENSION FOR 7,000 TERMINATED WORKERS AND RETIREES AT CLOSED HOSPITAL IN YOUNGSTOWN, OHIO

More from the Emeritus Newsroom- The Pension Benefit Guaranty Corporation will pay the pensions of almost 7,000 workers and retirees of Forum Health, a hospital in Youngstown, Ohio. PBGC, which safeguards the pensions of 44 million Americans, stepped in because the hospital has gone out of business.“PBGC is America’s retirement safety net,” said Director Josh Gotbaum. “When companies fail, we keep their pensions going.”Forum Health retirees will continue to receive their monthly benefit without interruption, and other workers will receive their pensions when they are eligible to retire. Within the next several weeks, PBGC will send notification letters to all participants in the Forum Health plan.In general, PBGC will pay the benefit that a retiree would earn if they retired at age 65. However, there is a legal maximum, $54,000 per year for a 65-year-old, and lower for people who retire before age 65 or choose survivor benefits. In addition, certain early-retirement payments and recent benefit increases are generally not covered.“The PBGC trusteeship is a very important protection for the future of these pensions,” said Congressman Tim Ryan (Ohio-17). “Retirement security is one of the fundamental concerns we all share throughout our lives, and I hope today’s announcement alleviates any uncertainty of the pension plan’s future for these retirees. I especially appreciate the cooperation of our local labor unions in working with hospital management to secure this agreement.”

Full text of PBGC statement, click here. 02/28/2011

WELLS FARGO MAY FACE MORE THAN $1.2 BILLION PAYOUT FOR FRAUDULENT FORECLOSURE CASES

More in this article from the Washington Post, click here- 02/27/2011

FBI NABS NEW MEXICO MAN WANTED IN $76 MILLION PONZI SCHEME

More from the Emeritus Newsroom- A federal Grand jury has indicted an Albuquerque man for running a $76 million dollar Ponzi scheme with more than 600 investors. According to the FBI, Douglas F. Vaughan, 63, was charged with a 30 count indictment. which claims that, between 2005 and 2010, Vaughan operated a promissory note investment program, which he marketed as a means of generating revenue to grow his real estate business, as a Ponzi scheme. It further alleges that Vaughan owed more than $76 million in unpaid principal and interest payments to approximately 600 investors when the fraudulent scheme collapsed in early 2010. According to the indictment, Vaughan was the chairman, chief executive officer, president, and majority shareholder of Vaughan Company Realtors (VCR), a business that operated primarily as a residential real estate brokerage and was at one time the largest independent residential brokerage in New Mexico. In spring 1993, Vaughan allegedly began a promissory note investment program (Promissory Note Program) to generate revenue to grow VCR's business. The typical note had a three-year term, an interest rate ranging from 8 percent to 40 percent per year, and provided for interest to be paid in monthly installments. At the end of the note's term, Vaughan either paid off the principal or offered the investor the opportunity to "roll over" the principal into a new note. Vaughan allegedly signed each promissory note on behalf of VCR.

The indictment alleges that Vaughan led investors to believe that their investments in the Promissory Note Program were actually or virtually risk-free because they were guaranteed by VCR, Vaughan's personal guarantee, and a $2.5 million deed of trust on certain real estate. Vaughan allegedly marketed his Promissory Note Program by representing that the invested funds would be used to purchase real estate and to acquire smaller real estate companies. Instead, Vaughan used the Promissory Note Program funds primarily for three undisclosed purposes: (i) to pay the interest and principal on promissory notes taken out by earlier investors; (ii) to pay himself, under the guise of salary, bonuses, or some other personal transfers; and (iii) to subsidize the operation of VCR, which was generating insufficient "legitimate" revenues to sustain itself.

FBI press release, click here. 02/25/2011

FEWER LARGE PRIVATE PENSION PLANS FAILING IN 2011

More from the Emeritus Newsroom- Private pension failures and near failures have kept the Pension Benefit Guaranty Corporation busy this year. However, the number of private pensions requiring the agency's intervention this year are about half those last year at this time. By February 23d, PBGC has intervened to take over or shore up 6 private pension plans, compared with 12 at the same time last year. The most recent pension requiring intervention is that from Chicken of the Sea International pension for about 2,300 workers and retirees at a closed plant in American Samoa. According to the PBGC, the company will pay $3.7 million to the Retirement Plan for COS Samoa Packing Company Production Employees over the next three years. The payments exceed the company’s required plan contributions.

“Our agency is always ready to help companies improve the financial footing of the pensions they sponsor,” said PBGC Director Josh Gotbaum. “We hope more companies will follow Chicken of the Sea’s example in helping to shore up retirement income for their employees.”

Chicken of the Sea, headquartered in San Diego, Calif., specializes in tuna and seafood.

Also, the Obama administration has proposed increasing insurance premium payments for under funded pension plans because the PBGC's under funded pension fund is now $23 billion in the red. More in this story from Pensions and Investments, click here. Full text of PBGC press release, click here. 02/23/2011

BERNANKE CAUTIONS UNEVEN WORLDWIDE INVESTMENT HURTS RECOVERY

More from the Emeritus Newsroom- Complicated international investment imbalances, which helped cause the crash of 2008, are still a problem in recovery, according to Federal Reserve Chairman, Ben Bernanke. Bernanke, said in a speech in Paris today at the Banque de France Financial Stability Review Launch Event, that higher growth emerging countries are putting more investment dollars into more advanced economic countries such as the US, exacerbating recovery worldwide. Bernanke says the prospects of higher returns in more advanced economies preserve currency under valuation in emerging countries, and promote more debt problems in advanced economies. The crash in 2008, according to Bernanke, escalated when the investments in advanced economies were undermined by overrated securities of questionable or little value.

Bernanke used, as another example, worldwide economic history from the 1920's to early 1930's when, "...the U.S. dollar and French franc were undervalued, with the result that both countries experienced current account surpluses and strong capital inflows. Under the unwritten but long-standing rules of the gold standard, those two countries would have been expected to allow the inflows to feed through to domestic money supplies and prices, leading to real appreciations of their currencies and, with time, to a narrowing of their external surpluses. Instead, the two nations sterilized the effects of these capital inflows on their money supplies, so that their currencies remained persistently undervalued. Under the constraints imposed by the gold standard, these policies in turn increased deflationary pressures and banking-sector strains in deficit countries such as Germany, which were losing gold and foreign deposits. Ultimately, the unwillingness of the United States and France to conduct their domestic policies by the rules of the game, together with structural vulnerabilities in financial systems and in the gold standard itself, helped destabilize the global economic and financial system and bring on the Great Depression".

Full text of Bernanke Speech, click here. 02/18/2011

FEDERAL AGENCIES PREPARE FOR CRACKDOWN ON 14 LARGE BANKS FOR FORECLOSURE VIOLATIONS

More from the Emeritus Newsroom- During a hearing today before the Senate Banking Committee, Comptroller of the Currency, John Walsh, says a multi agency task force will be taking action against 14 banks. According to Walsh, the banks violated state and federal laws by illegally foreclosing on some properties, not properly foreclosing on homes where banks did file legitimate claims, and lack of due diligence working with delinquent homeowners to avoid foreclosure. The Senate Banking Committee is trying to streamline rules for foreclosure, which can vary widely from state to state, leaving banks and regulators alike, confused about what can be enforced. During his prepared testimony before the committee, Walsh said:

"In addition, the agencies conducted interagency examinations10 of MERSCORP and wholly owned subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS), and Lender Processing Services (LPS), which provide significant services to support mortgage servicing and foreclosure processing across the industry. The primary objective of the examinations was to evaluate the adequacy of controls and governance over bank foreclosure processes, including compliance with applicable federal and state law. Examiners also evaluated bank self assessments and remedial actions as part of this process, assessed foreclosure operating procedures and controls, interviewed bank staff involved in the preparation of foreclosure documents, and reviewed approximately 2,800 borrower foreclosure cases11 in various stages of foreclosure. Examiners focused on foreclosure policies and procedures, organizational
structure and staffing, vendor management including use of third parties, including foreclosure attorneys, quality control and audits, accuracy and appropriateness of foreclosure filings, and loan document control, endorsement, and assignment. When reviewing individual foreclosure files, examiners checked for evidence that servicers were in contact with borrowers and had considered alternate loss mitigation efforts, including loan modifications, in addition to foreclosure".

The focus of the hearing concerned the effectiveness and problems in the new Dodd-Frank Consumer Financial Protection Act . Federal Reserve Chairman Ben Bernanke told the committee that,

"The transfer of the Federal Reserve’s consumer protection responsibilities specified in the act to the new Bureau of Consumer Financial Protection (CFPB) is well under way. A team at the Board, headed by Governor Duke, is working closely with the staff at the CFPB and at the Treasury to facilitate the transition. We have provided technical assistance as well as staff members to the CFPB to assist it in setting up its functions. We have finalized funding agreements and provided initial funding to the CFPB".

Text of Walsh testimony, click here. Text of Bernanke testimony, click here. Video playback of Senate Banking Committee archived webcast, click here. 02/17/2011

ELDERLY ADVOCATES SAY OBAMA'S BUDGET WILL NOT HURT SOCIAL SECURITY / SAY CUTS TO HEATING PROGRAM DISPROPORTIONATELY HURT ELDERLY

More from the Emeritus Newsroom- Advocates for Social Security believe President Obama's proposed budget for 2012 will preserve funding for benefits as well as the necessary administrative staff to eliminate the backlog of processing and payments. The National Committee to Preserve Social Security and Medicare released a statement stating,

The President's FY 2012 budget does not target Social Security as a means of reducing the deficit . In fact, the President, in the budget, acknowledges that Social Security does not face an immediate crisis and is not driving either the short-term deficit or long-term debt. We agree with the President and we also agree that Social Security should be strengthened for the long-term. We also believe that initiatives to improve and strengthen Social Security must be made based only on what is good for Social Security - not what's good for reducing the deficit.

The budget includes a number of legislative proposals that would strengthen the Social Security Administration's (SSA's) ability to administer the Social Security program. Among them are proposals to allow SSA to develop and test improvements to the disability insurance program and to improve services to disabled children. Others would provide SSA with access to data that would make program administration more efficient and reduce erroneous payments.

SSA will process over 4.6 million applications for retirement benefits in FY 2012, and administer $621 billion in benefit payments to over 45 million beneficiaries. The agency will also have funding to help reduce backlogs in disability applications and reduce the length of time people must wait for a decision.

The group also claims the QI Medicaid program, along with the other Medicare Savings Programs (MSP), helps pay out-of-pocket costs for Medicare beneficiaries with limited incomes. Under the budget proposal, states would receive 100 percent federal funding to pay the Medicare Part B premiums of low-income Medicare beneficiaries with incomes between 120 and 135 percent of the federal poverty level, which would save beneficiaries over $1000 annually.

The President's budget provides level funding for both the congregate nutrition program, at $218 million, and the home-delivered meals program, at $441 million . This flat funding is expected to reduce the number of meals that are served which is unfortunate given the fact that there are already waiting lists for nutrition services.

Senior Community Service Employment Program (SCSEP)

The President's budget reduces funding for the Senior Community Service Employment Program (SCSEP) by $375 million, or 45 percent, and transfers it from the Department of Labor to the Administration on Aging. Older workers are experiencing very high unemployment rates and are more likely than any other age group to remain jobless for long periods of time. SCSEP is the only major jobs program targeted at older Americans with very limited incomes and is more important than ever during this time of high unemployment.

Community Living Assistance and Supports Program (CLASS)

The President's budget includes first-time funding for the Community Living Assistance and Supports Program (CLASS) which is being housed within AoA. The budget request of $120 million is to get the new long-term services and supports financing program, which begins collecting premiums in 2012, off the ground.

Low-Income Home Energy Assistance Program (LIHEAP )

The President's budget includes a nearly 50 percent, or $2.5 billion, cut in the Low-Income Home Energy Assistance Program (LIHEAP) saying that our nation is no longer in a period of steep increases in energy prices . However, many older adults, individuals with disabilities and low-income families receiving LIHEAP are struggling to meet basic needs. Forty percent of households receiving LIHEAP include an adult age 60 or older, and those seniors should not have to choose between buying food and medicine or paying for home energy. Full text of NCPSSM statement, click here. 02/17/2011

SPECIAL INSPECTOR GENERAL FOR TARP MONEY SENDS RESIGNATION TO OBAMA / NEIL BAROFSKY WANTS OUT OF GOVERNMENT SERVICE

More from the Emeritus Newsroom- The watchdog, appointed in 2008 to oversee the use of money from the TARP program, says he wants out of government service. Neil Barofsky sent his letter of resignation today to Obama saying he wants to return to the private sector. Barofsky's resignation takes effect March 30th. Actual letter not yet available. More in this article from the LA Times, click here. 02/14/2011

FEDERAL RESERVE GOVERNOR SAYS UNEMPLOYMENT AND HOUSING MAKE FOR "AGONIZINGLY SLOW" RECOVERY / TELLS MORTGAGE SERVICERS TO CHANGE

More from the Emeritus Newsroom- In a speech yesterday to the 2011 Midwinter Housing Finance Conference, Park City, Utah, Federal Reserve Governor Sarah Bloom Raskin said, "the critically important drag on the economy is the absence of any substantial recovery in the housing sector". And she linked that problem to continuing high unemployment and the high number of foreclosures. Raskin says the current economy, though growing, cannot recover without the housing sector.

"...demand for housing is weighted down by the enormous losses in income and net worth that households suffered in the recession. In addition, the persistent high rate of unemployment is further depressing housing demand, creating uncertainty about housing prices, and impeding that robust recovery in the housing sector that we generally see. With a pipeline full of distressed properties, the unfortunate consensus is that we should expect even more downward pressure on house prices. Potential buyers seem inclined to wait and see if they can get a better buy in the future. Builders, too, are deterred by the additional competition lurking in this reservoir of vacant and distressed properties".

"Significantly, uncertainty about house prices destabilizes expectations outside of the housing sector. When banks have troubled mortgages on their books, they may be required to increase their loss provisioning and implement troubled debt restructuring, which in turn reduces the amount of funds they have to lend. Uncertainty about house prices also clearly undermines consumer confidence and undercuts consumers' willingness to spend".

"According to the Census Bureau, home ownership rates have fallen so significantly in recent years that they have more than wiped out the increase in home ownership that had taken place between 2000 and 2007. When I think about this statistic, I see not only the drag on the nation's already-tepid recovery, but the millions of American families who have lost their homes and their hopes".

"When people lose their homes, the impact is felt not only by the homeowners, but by the broader community: the bonds of community are weakened, business investment is undermined, homelessness increases, children are uprooted, unemployment deepens, and even health problems multiply".

Raskin also targeted the business model used by banks and mortgage servicers, including fee structures, which, she says, is causing more damage to the housing sector.

"Servicing shops need to be diligent in pursuing these options, and investors need to be supportive of efforts to find net-positive alternatives to foreclosure. These actions will have a far-reaching positive impact: A lower inventory of distressed properties for sale results in higher house prices, which leads to a healthier pace of recovery in the housing market and the broader economy. I can't emphasize enough how important it is that servicers be willing and diligent in offering assistance to troubled homeowners: It is key to the pace of economic recovery".

"For those in the housing and mortgage fields, making needed changes will not be easy. In particular, for those in the mortgage servicing industry, it means difficult changes and significant investments to rectify broken systems. For those servicers who are subsidiaries or affiliates of a broader parent financial institution, the responsibility for change and further investment absolutely extends up to that parent company, many of which have enjoyed substantial profits while their servicing arms have been run on the cheap".

"In November, I spoke about the problems in residential mortgage servicing operations that were undermining the performance of this industry. These problems existed before November and as far as I can tell they remain un addressed. How do I know this? Late last year, the federal banking agencies began a targeted review of loan servicing practices at large financial institutions that had significant market concentrations in mortgage servicing. The preliminary results from this review indicate that widespread weaknesses exist in the servicing industry. The agencies intend to report more specific findings to the public soon, but I can tell you that these deficiencies pose significant risk to mortgage servicing and foreclosure processes, impair the functioning of mortgage markets, and diminish overall accountability to homeowners".

Text of Raskin speech, click here. 02/11/2011

JP MORGAN CHASE OFFERS APOLOGY FOR OVERCHARGING AND FORECLOSING ON VETERANS AND ACTIVE MILITARY PERSONNEL

More in this article from the Wall Street Journal, click here - 02/09/2011

FED CHAIRMAN BERNANKE SEES MORE EVIDENCE OF STRONGER RECOVERY IN 2011

More from the Emeritus Newsroom- During his testimony this morning before the House Budget Committee, Federal Reserve Chairman Ben Bernanke said the economic recovery continues and offered a more optimistic assessment of 2011.

Bernanke, in his prepared testimony, said, "...We have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold. Notably, real consumer spending rose at an annual rate of more than 4 percent in the fourth quarter. Although strong sales of motor vehicles accounted for a significant portion of this pickup, the recent gains in consumer spending appear reasonably broad based. Business investment in new equipment and software increased robustly throughout much of last year, as firms replaced aging equipment and as the demand for their products and services expanded. Construction remains weak, though, reflecting an overhang of vacant and foreclosed homes and continued poor fundamentals for most types of commercial real estate. Overall, improving household and business confidence, accommodative monetary policy, and more-supportive financial conditions, including an apparently increasing willingness of banks to lend, seem likely to result in a more rapid pace of economic recovery in 2011 than we saw last year. While indicators of spending and production have been encouraging on balance, the job market has improved only slowly. Following the loss of about 8-3/4 million jobs from 2008 through 2009, private-sector employment expanded by a little more than 1 million in 2010. However, this gain was barely sufficient to accommodate the inflow of recent graduates and other new entrants to the labor force and, therefore, not enough to significantly erode the wide margin of slack that remains in our labor market. Notable declines in the unemployment rate in December and January, together with improvement in indicators of job openings and firms' hiring plans, do provide some grounds for optimism on the employment front. Even so, with output growth likely to be moderate for a while and with employers reportedly still reluctant to add to their payrolls, it will be several years before the unemployment rate has returned to a more normal level. Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established".

"On the inflation front, we have recently seen increases in some highly visible prices, notably for gasoline. Indeed, prices of many industrial and agricultural commodities have risen lately, largely as a result of the very strong demand from fast-growing emerging market economies, coupled, in some cases, with constraints on supply. Nonetheless, overall inflation is still quite low and longer-term inflation expectations have remained stable. Over the 12 months ending in December, prices for all the goods and services consumed by households (as measured by the price index for personal consumption expenditures) increased by only 1.2 percent, down from 2.4 percent over the prior 12 months".

Full text of Bernanke prepared testimony before Budget Committee, click here. 02/09/2011

NATIONAL ASSOCIATION FOR BUSINESS ECONOMICS SAYS STRONGER RECOVERY AHEAD

More from the Emeritus Newsroom- A major group of business economists is predicting more growth ahead for the U-S economy. A report released today by the National Association for Business Economists shows:

• Industry demand increased for a sixth consecutive quarter during the final three months of 2010. About 55% of survey panelists reported rising demand versus 12% reporting falling demand. All four major industry sectors experienced demand growth.
• Expectations for economic growth have improved significantly. Over the last quarter, NABE panelists have become more optimistic. A majority (62%) assumes real GDP growth of 2% to 3% in 2011, and one in five panelists is building business plans based on an outlook of 3% to 4% economic growth.
• Profit margins expanded for a sixth quarter in a row as 38% of panelists reported that margins rose at their firm, versus 18% who reported declining profitability. The nearly 21-point spread between the two responses was the highest since the fourth quarter of 2005.
• Employment continues to improve, with 34% of firms reporting larger workforces compared to only 13% a year ago. The share of firms cutting jobs shrank, from an average of 13% over the past three quarters to 6% currently. The current NRI is the highest level it has been since 1998. The hiring outlook for the next six months also looks more robust—42% of respondents indicated their firms will be increasing employment, up from 39% last quarter and 29% in January 2010. The employment outlook NRI hit a 12-year high.
• The share of firms increasing their capital spending from the previous quarter rose slightly from the prior survey to 38%, while only 6% of panelists reported cutbacks in their firms. Expectations for future capital spending improved significantly, with 62% of respondents reporting higher planned expenditures, up from 48% last quarter.
• Materials costs continue to rise. The percentage of respondents reporting rising prices outpaced that of respondents reporting price declines, but not to the percentage highs seen in 2008.
• As for the expected impacts of the proposed 2011 tax package, more than half (53%) of the panelists, especially those from the goods-producing sector, anticipate a favorable impact on their firm’s sales. In contrast, a majority of the respondents (60%) said they do not anticipate any increase or decrease in investment spending or employment in response to new tax policies.
• More than half of the respondents indicated that some portion of their firms’ sales came from foreign-based operations, with 14% reporting that more than half of their sales were from foreign sources. Of those with sales from foreign operations, 44% indicated their share of sales from foreign sources increased in the last quarter, while only 2% reported they decreased.

“NABE's January 2011 Industry Survey confirms that the underpinnings of the U.S. economy continue to strengthen,” said Shawn DuBravac, Consumer Electronics Association. "The number of firms expressing positive hiring plans is at a level not seen in over a decade—a sign of improving labor-market dynamics. Supporting these hiring plans, industry demand continues to move higher, and profit margins are expanding. Firms are showing greater optimism, with one in five respondents expecting economic growth between three and four percent. Firms are increasing their plans for future capital spending. A majority of respondents anticipate no increase or decrease in investment spending or employment in response to new tax policies, suggesting business decisions are being driven by the fundamentals of an improving economy”. 01/27/2011

U-S NATIONAL DEBT AT 1.5 TRILLION / HIGHEST EVER / CBO SAYS CUTS NEEDED SOON AFTER JOBS REBOUND

More from the Emeritus News- The Congressional Budget Office today report that sharply lower revenues and elevated spending deriving from the financial turmoil and severe drop in economic activity—combined with the costs of various policies implemented in response to those conditions and an imbalance between revenues and spending that predated the recession—have caused budget deficits to surge in the past two years. The deficits of $1.4 trillion in 2009 and $1.3 trillion in 2010 are, when measured as a share of gross domestic product (GDP), the largest since 1945—representing 10.0 percent and 8.9 percent of the nation's output, respectively.

For 2011, the Congressional Budget Office (CBO) projects that if current laws remain unchanged, the federal budget will show a deficit of close to $1.5 trillion, or 9.8 percent of GDP. The deficits in CBO's baseline projections drop markedly over the next few years as a share of output and average 3.1 percent of GDP from 2014 to 2021. Those projections, however, are based on the assumption that tax and spending policies unfold as specified in current law. Consequently, they understate the budget deficits that would occur if many policies currently in place were continued, rather than allowed to expire as scheduled under current law.

In an overview of the lackluster job market, the CBO sees no significant improvement until late 2012 or 2013. The CBO summary points out the recovery in employment has been slowed not only by the moderate growth in output in the past year and a half but also by structural changes in the labor market, such as a mismatch between the requirements of available jobs and the skills of job seekers, that have hindered the reemployment of workers who have lost their job. Payroll employment, which declined by 7.3 million during the recent recession, gained a mere 70,000 jobs (or 0.06 percent), on net, between June 2009 and December 2010. (By contrast, in the first 18 months of past recoveries, employment rose by an average of 4.4 percent.) Consequently, the rate of unemployment has fallen by only a small amount: After climbing to 10.1 percent of the labor force during 2009, the unemployment rate declined only to 9.4 percent by December 2010. Other measures of labor market conditions suggest even more slack than does the unemployment rate. For example, almost 9 million workers who have wanted full-time work in the past two years have been employed only part time.

As the recovery continues, the economy will add roughly 2.5 million jobs per year over the 2011–2016 period, CBO estimates. However, even with significant increases in the number of jobs, a substantial reduction in the unemployment rate will take some time. CBO projects that the unemployment rate will gradually fall in the near term, to 9.2 percent in the fourth quarter of 2011, 8.2 percent in the fourth quarter of 2012, and 7.4 percent at the end of 2013. Only by 2016, in CBO's forecast, does it reach 5.3 percent, close to the agency's estimate of the natural rate of unemployment (the rate of unemployment arising from all sources except fluctuations in aggregate demand, which CBO now estimates to be 5.2 percent).

For the period beyond 2016, CBO's economic projections are based on trends in the factors that underlie potential output, including the labor force, capital accumulation, and productivity. The projections therefore do not explicitly incorporate fluctuations resulting from the business cycle. In CBO's projections, growth of real GDP averages 2.4 percent annually from 2017 to 2021, a pace that matches the growth of potential GDP over those years. The unemployment rate averages 5.2 percent in that same period.

Text of CBO summary and direct link to full report, click here. CSPAN video of entire CBO briefing with Director Doug Elmendorf, click here. 01/26/2011

FINANCIAL CRISIS INQUIRY COMMISSION FINDS 2008 CRASH WAS AVOIDABLE / FEDERAL RESERVE, OTHERS FACE BLAME

More from the Emeritus Newsroom- the Financial Crisis Inquiry Commission is set to release its report on the causes of the 2008 financial crisis. while the commission has not yet released the report, sources familiar with the contents say the commission blames a multitude of agencies and businesses. The agencies accused of failure,e include the Federal Reserve as well as the Securities and Exchange Commission, over issues already well known and documented from congressional hearings and federal investigations. Much of the blame centers around dubious bundles of mortgage securities and lack of execution on investigations into fraudulent practices of investment houses, banks and other financial services. The commission is due to release its report tomorrow (Thursday) during a news conference. Direct link to commission site, click here. 01/26/2011

HIGH UNEMPLOYMENT FEEDS MORE FORECLOSURES AND LOWER HOME VALUES / "DOUBLE DIP" VALUES LIKELY

More from the Emeritus Newsroom- The latest report on home values from the Standard and Poor's Case-Shiller Index shows, the 10-City Composite was down 0.4% and the 20-City Composite fell 1.6% from their November 2009 levels. Home prices fell in 19 of 20 MSAs and both Composites in November from their October levels. In November, only four MSAs – Los Angeles, San Diego, San Francisco and Washington DC – showed year-over-year gains. The Composite indices remain above their spring 2009 lows; however, eight markets – Atlanta, Charlotte, Detroit, Las Vegas, Miami, Portland (OR), Seattle and Tampa – hit their lowest levels since home prices peaked in 2006 and 2007, meaning that average home prices in those markets have fallen even further than the lows set in the spring of
2009. Various economists expect home values to take a "double dip", reversing increases since the last low point in April, 2009.

According to David Blitzer, Chairman of the Index Committee at Standard & Poor's,

"Looking at the monthly statistics, 19 of 20 MSAs and both Composites were down in November over
October. Fourteen MSAs and both composites have posted at least four consecutive months of decline
with November’s report. Thirteen of the MSAs and the 20-City Composite fell by 1.0% or more in
November. While not always consecutive months, 13 of the MSAs and both composites have posted at
least seven months of decline since the beginning of 2010. These markets saw home prices fall more than
half the months reported in 2010 so far.” Full text of Case-Shiller press release, click here. 01/25/2011

HOMELESSNESS REPORT SHOWS DEEPENING PROBLEM

More from the Emeritus Newsroom- Unemployment and foreclosure remain the biggest contributors for the increase in homelessness. The National Alliance to End Homelessness, in their just released report called, "State of Homelessness in America 2011", cited a number of key findings.

• The nation’s homeless population increased by approximately 20,000 people from 2008 to 2009 (3 percent increase). There were also increased numbers of people experiencing homelessness in each of the subpopulations examined in this report: families, individuals, chronic, unsheltered.
• A majority – 31 of 50 states and the District of Columbia - had increases in their homeless counts. The largest increase was in Louisiana, where the homeless population doubled.
• Among subpopulations, the largest percentage increase was in the number of family households, which increased by over 3,200 households (4 percent increase). Also, the number of persons in families increased by more than 6,000 people (3 percent increase). In Mississippi, the number of people in homeless families increased by 260 percent.
• After population reductions from 2005 to 2008, the number of chronically homeless people in the country remained stagnant from 2008 to 2009, despite an 11 percent increase in the number of permanent supportive housing units.
• While most people experiencing homelessness are sheltered, nearly 4 in 10 were living on the street, in a car, or in another place not intended for human habitation. In Wisconsin, twice as many people experienced homelessness without shelter in 2009 as did in 2008.
• It is widely agreed upon that there is a vast undercount of the number of young people experiencing homelessness. Underscoring this is the fact that 35 percent of all communities reported that there were no homeless youth in their communities in 2009.

LATEST FEDERAL RESERVE REPORT ON ECONOMY SHOWS STEADY GROWTH / HIRING LAGS

More from the Emeritus Newsroom- The U-S economy is continuing to grow. That growth remains too low to put a serious dent in the unemployment problem. The fed's Beige Book Report cites stats from the twelve Federal Reserve Districts that economic activity continued to expand moderately from November through December. Conditions were said to be improving in the Boston, New York, Philadelphia, and Richmond Districts. Activity increased modestly to moderately in the Cleveland, Atlanta, Chicago, St. Louis, Kansas City, and Dallas Districts. The economy of the Minneapolis District "continued its moderate recovery," while that of the San Francisco District "firmed further" in the reporting period leading up to the close of 2010. Conditions were generally said to be better in Districts' manufacturing, retail, and non financial services sectors than in financial services or real estate.

The Fed reports employers expect to hire additional worker in 2011, but are claiming fuel and health care costs are preventing them from hiring as many permanent workers as they would like. The Beige Book states,

"Labor markets in most Districts appear to be firming somewhat, but with virtually no upward pressure on wages. All District reports indicated that employment levels are rising in at least some sectors, generally by modest amounts; however, some employers in the New York, St. Louis, and Minneapolis Districts also mentioned job cuts. Staffing firms in the New York, Philadelphia, Cleveland, Richmond, Chicago, and Dallas Districts gave positive reports; Cleveland, Richmond, and Atlanta said some firms were raising work hours instead of or in addition to hiring. The Boston, New York, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, and San Francisco Districts indicated that business contacts planned to continue or increase their pace of hiring in 2011. Some employers in the Boston, Atlanta, and San Francisco Districts expressed concern about added costs for healthcare; the Boston, Cleveland, and Chicago Districts noted selected skill shortages in some sectors. Overall wage pressures remained subdued; the Philadelphia District reported "mostly steady wages," Cleveland said "wage pressures are contained," Chicago indicated "wage pressures remained moderate," Minneapolis and Kansas City stated wage increases or wage pressure "remained subdued," and the Dallas and San Francisco reports described wage pressures as "minimal" or "largely absent".

Full text of Beige Book Report, click here. 01/13/2011

MASSACHUSETTS SUPREME COURT DEALS BLOW TO WELLS FARGO AND U-S BANK IN FORECLOSURE CASE / COURT SAYS BANKS DIDN'T PROVE THEY HELD MORTGAGES /COULD HAVE NATIONAL IMPACT

More from the Emeritus Newsroom- It came as another shot heard round the banking world today. the Massachusetts Supreme Court today ruled against two major banks caught up in so called, "robo-signing" allegations, whereas, they, in the court's view, had not proven they actually held mortgages in foreclosure cases (SJC-10694). The cases involving Wells Fargo and US Bank upheld the decision by a lower court that the banks did not submit required documents and therefore were not entitled to the foreclosure actions they requested. In their opinion, handed down today, the court cited,

"...the plaintiffs' apparent failure to abide by those principles and requirements in the rush to sell mortgage-backed securities.

Conclusion. For the reasons stated, we agree with the (lower court ) judge that the plaintiffs did not demonstrate that they were the holders of the Ibanez and LaRace mortgages at the time that they foreclosed these properties, and therefore failed to demonstrate that they acquired fee simple title to these properties by purchasing them at the foreclosure sale".

Justice Robert J. Cordi , in a concurring opinion, said,

"...the utter carelessness with which the plaintiff banks documented the titles to their assets. There is no dispute that the mortgagors of the properties in question had defaulted on their obligations, and that the mortgaged properties were subject to foreclosure. Before commencing such an action, however, the holder of an assigned mortgage needs to take care to ensure that his legal paperwork is in order. Although there was no apparent actual unfairness here to the mortgagors, that is not the point. Foreclosure is a powerful act with significant consequences, and Massachusetts law has always required that it proceed strictly in accord with the statutes that govern it. As the opinion of the court notes, such strict compliance is necessary because Massachusetts is both a title theory State and allows for extrajudicial foreclosure".

The supreme court foreclosure case involved Massachusetts residents, Antonio Ibanez as well as Mark and Tammy LaRace.

Full text of Massachusetts Supreme Court ruling today, click here. 01/07/2011

TEXAS: THE CONSERVATIVE MODEL FOR STATE GOVERNMENT FACES $25 BILLION DEFICIT

More in this essay from Economist Paul Krugman, click here- 01/07/2011

ARE TAXPAYERS ON PRECARIOUS LIMB WITH BANK HOLDING COMPANIES SUCH AS GOLDMAN SACHS?

More in this MUST READ article written by former International Monetary Fund, Chief Economist, Simon Johnson, click here- 01/06/2011

NEW IN-HOUSE IRS REPORT CALLS FOR END TO HARD NOSED COLLECTION TACTICS / REPORT SAYS TACTICS DAMAGE TAXPAYERS

More from the Emeritus Newsroom- National Taxpayer Advocate Nina Olson has provided a new report to congress, taking the IRS to task over collection tactics and scores of other problems which have dragged on for years, with little resolution. Topics addressed by Olson, in her report, include:

1. Time for Tax Reform Is Now
2. The IRS Mission Statement Does Not Reflect the Agency’s Increasing
Responsibilities for Administering Social Benefits Programs
3. IR S Performance Measures Provide Incentives That May Undermine the IR S Mission
4. The Wage & Investment Division Is Tasked With Supporting Multiple Agency-Wide
Operations, Impeding its Ability To Serve its Core Base Of Individual Taxpayers Effectively
5. IR S Policy Implementation through Systems Programming Lacks Transparency
and Precludes Adequate Review Taxpayer Rights Issues
6. IR S Collection Policies and Procedures Fail to Adequately Protect Taxpayers
Suffering an Economic Hardship
7. The IR S Does Not Know the Impact of Ignoring a Non-IRS Debt When Analyzing
a Taxpayer’s Ability to Pay an IRS Debt
8. The Failure of the Office of Appeals to Document Prohibited Ex Parte Communications
May Violate Taxpayer Rights and Damage the Public’s Perception of its Independence
9. The IRS’s Failure to Provide Timely and Adequate Collection Due Process Hearings
May Deprive Taxpayers of an Opportunity to Have Their Cases Fully Considered.
10. Third-Party Reporting of Cancellation-of-Debt Events Is Not Always Accurate,
and the IR S’s Reliance on Such Reporting May Burden Taxpayers

11. The IR S’s Failure to Track and Analyze the Outcomes of Audit Reconsiderations
and Inconsistent Guidance Increase Taxpayer Burden and Inflate IR S Audit
Results and Cost Effectiveness Measures
12. Persistent Breakdowns in Power of Attorney Processes Undermine Fundamental Taxpayer Rights
13. IR S Collection Policies Channel Taxpayers into Installment Agreements They Cannot Afford
14. The IRS’s Over-Reliance on Its “Reasonable Cause Assistant” Leads to
Inaccurate Penalty Abatement Determinations
15. State Domestic Partnership Laws Present Unanswered Federal Tax Questions

Olson's office is a part of the IRS, set up to defend taxpayer rights and negotiate disputes between the agency and taxpayers. A MUST READ IRS press release on Olson's report, click here. Full text of executive summary of Olson's report, click here. 01/05/2011

BANK OF AMERICA TO REPAY FANNIE AND FREDDIE MORE THAN $2 BILLION FOR BOGUS LOAN BUYBACKS

More from Associated Press, click here- 01/03/2011

NEW CONGRESS MAY TAKE AIM AT HOME MORTGAGE DEDUCTIONS

More in this article from the LA Times, click here- 12/20/2010

PRESIDENT SIGNS TAX CUTS AND UNEMPLOYMENT BENEFIT EXTENSIONS

More from the Emeritus Newsroom- President Obama has signed a tax cut proposal that includes unemployment benefits extensions. The U-S House passed the proposal in a midnight Friday morning vote following delays on Thursday forced by liberal Democrats over the estate tax cuts. The Senate has scheduled votes for Saturday on the defense bill containing the repeal of the "Don't Ask, Don't Tell" policy involving gay service members and an immigration reform bill . Video of President's signing ceremony and speech from December 17 2010 below.

SENATE PASSES TAX CUTS AND EXTENDED UNEMPLOYMENT BENEFITS

More from the Emeritus Newsroom- The Senate today, by a vote of 81-19, passed a tax cut and unemployment benefit bill that will add nearly $900 billion to the federal deficit. The package contains more stimulus money to increase employment, including a one year payroll tax cut, as well as extended unemployment benefits up to 99 weeks, for those facing long term joblessness. The bill now goes to the House to approve changes made in the Senate. Thomas directory bill listing and summary, click here. 12/15/2010

SENATE OVERCOMES DELAY ON TAX CUT BILL / TUESDAY PASSAGE EXPECTED /HOUSE PASSAGE LIKELY BY WEEKEND

More from the Emeritus Newsroom- The Senate today defeated another Republican leadership delay, which sets up a vote Tuesday on the extension of the Bush tax cuts. the House is expected to vote on the package Wednesday. The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, also provides more extended benefits to several million workers, who have been unemployed for 27 or more weeks. The package does not include more benefits for more than 99 weeks. 12/13/2010

OBAMA REACHES DEAL WITH REPUBLICANS TO LIMIT TAX CUTS / EXTEND UNEMPLOYMENT BENEFITS

More from the Emeritus Newsroom- President Obama announced today he had reached a deal with Republican congressional leaders for a limited extension of the Bush Administration tax cuts, including those making more than $250,000 per year. the continuation of the Bush tax cuts also provides the $1,000 per child tax credit, and deductible expenses for education. Obama has agreed to extend provision of the estate tax cut. The agreement will expire in two years. At that time congress will have to determine whether to continue the cuts . Democrats often blasted the cuts for those making more than $250,000 per year because it would add $700 billion to the deficit over five years.

The agreement also provides extension of unemployment benefits for those considered the long term unemployed, or those out of work for more than 27 weeks. At least two million jobless have already exhausted their benefits this month. Again, it is unlikely any benefits will be extended to those who have collected more than 99 weeks of unemployment benefits. See video below of Obama speech on agreement. The votes on the deal could come as early as Wednesday.

12/06/2010

Copyright 2012 © Emeritus News and emeritusnews.com Click here to return to top of page