A Few Positive Signs In An Otherwise Dismal Economy

Posted: October 17 2009

Washington insiders well paid. despite being the same people who caused the financial crisis, a record number of homeless in shelters in NYC, credit card and mortgage defaults continue, another bubble coming into view, reports show changes in jobless numbers

Some of Treasury Secretary Timothy Geithner’s closest aides, none of whom faced Senate confirmation, earned millions of dollars a year working for Goldman Sachs Group Inc., Citigroup Inc. and other Wall Street firms, according to financial disclosure forms.

The advisers include Gene Sperling, who last year took in $887,727 from Goldman Sachs and $158,000 for speeches mostly to financial companies, including the firm run by accused Ponzi scheme mastermind R. Allen Stanford. Another top aide, Lee Sachs, reported more than $3 million in salary and partnership income from Mariner Investment Group, a New York hedge fund.

As part of Geithner’s kitchen cabinet, Sperling and Sachs wield influence behind the scenes at the Treasury Department, where they help oversee the $700 billion banking rescue and craft executive pay rules and the revamp of financial regulations. Yet they haven’t faced the public scrutiny given to Senate-confirmed appointees, nor are they compelled to testify in Congress to defend or explain the Treasury’s policies.

These people are incredibly smart, they’re incredibly talented and they bring knowledge, said Bill Brown, a visiting professor at Duke University School of Law and former managing director at Morgan Stanley. The risk is they will further exacerbate the problem of our regulators identifying with Wall Street.

While it isn’t unusual for Treasury officials to come from the financial industry, President Barack Obama has been critical of Wall Street, blaming its high-risk, high-pay culture for helping cause the financial-market meltdown.

Import Price Index rises 0.1% MoM in September, -12% YoY

Mortgage applications fell a seasonally adjusted 1.8% last week, compared with the week before, as mortgage rates rose, the Mortgage Bankers Association reported Wednesday. This week-to-week drop follows a 16.4% week-to-week gain for the week ended Oct. 2. The MBA survey covers about half of all U.S. retail residential mortgage applications.

Applications to refinance an existing mortgage were down an unadjusted 0.1%, compared with the week ended Oct. 9, according to the MBA's weekly survey. Home purchase applications fell a seasonally adjusted 5%.

The four-week moving average for all mortgages was up 5.6% last week.

Refinance mortgage applications made up a 67.4% share of all applications last week, up from 66.3% the week before. Adjustable-rate mortgage applications made up a 6.2% share of all applications, up from 6.1%.

Rates on 30-year fixed-rate mortgages averaged 5.02% last week, up from 4.89% the previous week. The average rate on 15-year fixed-rate mortgages was 4.44%, up from 4.32%. And rates on 1-year ARMs averaged 6.71%, up from 6.56%.

To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 1.11 points, the 15-year fixed-rate mortgage required payment of an average 1.04 points and the 1-year ARM required an average 0.32 point. A point is 1% of the mortgage amount, charged as prepaid interes.

The economy may be poised for a rebound but for a lot of people times are very tough. According to a new report, the number of homeless people sleeping in New York City shelters has reached an all time high at 39,000 -- many of them are children.

Using New York City's own data, a homeless group claims a record number of people are in city shelters, particularly children, despite years of programs that were supposed to bring homeless numbers down. But perhaps the best way to understand this is to listen to a woman trying to hold her family together.

Most of us walk through the streets of the city thinking about our own problems. Hopefully, that does not include where we're going to sleep tonight. But for more and more New Yorkers, that's not the case, especially for children.

Mary Brosnahan, longtime executive director of the Coalition for the Homeless used the city's own data, and says homelessness has been increasing each of the last five years, and currently is at an all-time high. At the end of September, 10,494 homeless families lived in shelters, including 16,615 homeless children.

What does that mean for those children, and their future? That they will spend a substantial amount of their childhood, in a homeless shelter? asked Bill de Blasio, the chairman of the City Council General Welfare Committee.

Bank of America Corp. said Tuesday it will charge a limited number of its credit card customers annual fees ranging from $29 to $99 starting next year.

"We're testing this to see what the feedback is. In terms of any plans going forward, we haven't made any decisions," said Betty Riess, a spokeswoman for Bank of America. She said the fee is being "tested" on 1 percent of its credit card accounts globally, but declined to give specific numbers.

Bank of America, based in Charlotte, N.C., had 80.2 million credit cards in circulation last year, making it the third-largest issuer of cards, according to CreditCards.com. Chase was first with 119.4 million cards, while Citi had 92 million.

The Bank of America accounts that will be charged fees were selected based on "risk and profitability," Riess said. That means customers in good standing who never carried a balance - and never incurred interest charges or late fees - could be among those getting notices.

The volume of delinquent commercial mortgages jumped sevenfold last month as borrowers who got loans with lax terms fail to make debt payments amid sinking real estate values, according to Credit Suisse Group AG.

In September, installments on $22.4 billion of mortgages were at least 60 days late, up from $3.2 billion a year earlier, Credit Suisse analysts wrote in a report. The delinquency rate rose 33 basis points to 3.34 percent, according to the New York- based analysts led by Gail Lee. A basis point is 0.01 percentage point.

Commercial-property owners are struggling to repay debt as data from Moody’s Investors Service show prices have plummeted 38.7 percent from October 2007 peaks. Defaults on shopping malls, skyscrapers and hotel loans are increasing as borrowers that took out mortgages expecting rents and occupancies to rise miss payments, according to the analysts.

“As the credit crunch intensified over the past year, the poor underwriting on recent vintage loans has resulted in early defaults,â€