Settlement talks in limbo
AGBeat has had a close eye on multi-state talks with the largest banks as over a year ago, all 50 states’ Attorneys Generals committed to negotiate terms on behalf of homeowners abused by banks leading up to and during the housing crash. Monday was the final deadline for all 50 states to declare whether they were committed or not to the $25 billion civil settlement between Bank of America, Ally Financial, Citigroup, Wells Fargo and JPMorgan Chase. The deadline has come and gone and several states are still holding out, namely key states like California and Nevada, both hard hit by the mortgage crisis who greatly impact the final dollar amount of the settlement.
The story has been nothing short of dramatic ranging from Iowa Attorney General Tom Miller, who has led the negotiations, kicking New York Attorney General Tom Schneiderman off of the leadership committee and President Obama swooping up Schneiderman to lead the task force for criminal investigations into mortgage crimes. Several key states have been committed then backed out, and now everything is in limbo as a number of states are at a stalemate.
The $25 billion settlement aimed to cut mortgage debt for distressed homeowners is said to not cover any mortgages held by Fannie Mae and Freddie Mac, only those held privately by the banks, a point of contention among states. Additionally, $17 billion would be put toward principal reductions for underwater borrowers and $5 billion would be in a reserve account for individual homeowners victimized by bad servicing. Another $3 billion would help homeowners refinance their current mortgages at 5.25 percent.
The settlement states that attorneys general would be required to release the banks from any further action related to the improper servicing of loans and claims against originating mortgages, which many attorneys general have called overly broad and vague, and has become a major hurdle many are unwilling to overcome.
Who is in and out, and why?
Greatly overlooked on Tuesday was the news that Oklahoma Attorney General, Scott Pruitt is said to have stated that they do not intend on participating in the settlement and while they are not as big a piece of pie as California, it is extremely notable that Pruitt made such a bold move.
Although over 40 states have committed to the final settlement agreement, as have the banks, multiple states are still holding out:
- California – continues to hold out, noting that in its current form, the terms are not beneficial enough to the victims. AG Kamala Harris made no comment on Tuesday.
- Nevada – the hardest hit state agrees with California that releasing these banks from all other civil charges is not favorable. This week, the state AG noted 38 of their submitted questions have yet to be answered which leaves them unable to join or abandon talks.
- New York – because the settlement conflicts with a recent lawsuit lodged against several banks, Schneiderman has not committed. After planning a press conference and then cancelling “indefinitely” on Tuesday, this key holdout may strongly impact the final settlement agreement.
- Massachusetts – AG Martha Coakley has raised concerns that agreeing to the settlement may become a “maximum level of assistance” lenders will be willing to give, also noting that her pending lawsuit for illegal foreclosures conflicts with the settlement and they have no intention of dropping the suits.
- Florida – originally on board, Florida echoes California’s sentiment of unfavorability, stating Tuesday that they cannot yet speak publicly about their position. They are considered a key holdout.
- Delaware – the banking commissioner has publicly stated that Delaware will join, but AG Beau Biden also has a conflicting lawsuit against MERS which his office says they will not abandon.
- Washington – in a letter to Washington Senator Cantwell, AG Rob McKenna said the settlement to release banks for all civil liabilities is a point of contention and the office is not saying whether it will commit or not.
- Arizona – AG Tom Horne said before they can commit, they want to resolve a separate lawsuit against Bank of America related to foreclosures, but cannot commit at this time.
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…
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.
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.
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.
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 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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