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Economic News

Bill introduced to merge Fannie Mae & Freddie Mac – realistic?



Merging Fannie and Freddie

Today, legislation was introduced by Republican Representative Gary Miller of California and Democratic Representative Carolyn McCarthy of New York to merge Fannie Mae and Freddie Mac, creating a single entity so that the government held organization can collectively purchase mortgages and sell them to investors as government backed securities.

The bipartisan effort seeks to operate under a not-for-profit setup, creating a “secondary market facility” for residential mortgage loans. Operation costs would be supported by buying home loans then pooling them into bonds sales which would generate income. All profits would be returned back into the U.S. Treasury and banks would pay a “guarantee” fee on loans, also financially supporting the new entity. The plan claims to address severe losses by requiring investors to pay a fee to finance an insurance fund.

Rep. Miller said, “we don’t want Congress meddling,” so the bill notes the new operation would be governed by a presidentially appointed board.

NAR and NAHB showed up to support

The National Association of Realtors and the National Association of Home Builders were present today to support the Miller-McCarthy bill.

House Financial Services Committee approved eight bills targeting the overhaul of Fannie and Freddie, one of which drastically cuts executive pay.

Weren’t Fannie and Freddie winding down?

In April of this year, we reported on eight bipartisan bills that sought to reduce Fannie Mae and Freddie Mac’s role in the mortgage industry. The bills were approved by the House Financial Services Committee, based on a white paper outlining three options for long term mortgage overhaul, authored by the Obama Administration, all seeking to wind down Fannie Mae and Freddie Mac dominance in the mortgage market.

Republican Representative Scott Garret of New Jersey who is leading efforts to eliminate Fannie Mae and Freddie Mac said today that the bill will not be heard before House Financial Services Committee, a critical path to becoming law.

Real estate just wants another bailout?

Garret said he is not surprised that real estate insiders such as mortgage lenders, investors and others in the housing business want to preserve as much of the current system as they can. “They wanted to be bailed out before and they want a system again where they can be bailed out.”

Unclear future, is this just an exercise in futility?

It is unclear the future of Fannie and Freddie given that bills have already been approved to wind the organizations down based on Obama’s recommendations and reduce their role in mortgage given that they now back roughly 90% of residential mortgages.

It appears that policy makers are in limbo and some believe these are stall tactics as no one wants to be responsible for further decline in real estate. The ultimate irony is that Republicans laughed when Barney Frank (of all people) proposed to abolish Fannie and Freddie and create a single new entity, yet here we are…

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  1. Joe Loomer

    July 8, 2011 at 9:17 am

    Complete waste of time – most bills die in committee, and the fact that the House Financial Services Committee won't be hearing this bill tells me this is a moot point.

    Navy Chief, Navy Pride

  2. Andreu Mecca I Charleston Homes for Sale

    July 10, 2011 at 8:37 pm

    Agree with you there, Joe! Our legislators couldn't think anymore of feasible and reliable options, that's why they'd resort to this! Another stall on the way…

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?



NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<


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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.



young executives

job openings

Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.


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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.



gas tax


Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.


Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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