Avoiding 'Regressive Mistake,' Fed Holds Off on Rate Hike — For Now
Update 3 PM EDT:
In a decision that aligns with progressive demands, the Federal Reserve ...
Update 3 PM EDT:
In a decision that aligns with progressive demands, the Federal Reserve announced on Thursday that it would keep interest rates near zero in light of "recent global economic and financial developments" and in order to "support continued progress toward maximum employment and price stability."
Presidential candidate Bernie Sanders issued the following statement today after the Federal Reserve announced that it would hold off on raising interest rates:
“It is good news that the Federal Reserve did not raise interest rates today. At a time when real unemployment is over 10 percent, we need to do everything possible to create millions of good-paying jobs and raise the wages of the American people. It is now time for the Fed to act with the same sense of urgency to rebuild the disappearing middle class as it did to bail out Wall Street banks seven years ago.”
The New York Times reports that the Fed’s decision, "widely expected by investors, showed that officials still lacked confidence in the strength of the domestic economy even as the central bank has entered its eighth year of overwhelming efforts to stimulate growth."
Progressives cheered the news, with Josh Bivens of the Economic Policy Institute saying, "Today’s decision by the Federal Reserve to keep short-term rates unchanged is welcome. [...] We hope they continue their pragmatic, data-based approach and allow unemployment to keep moving lower, and only tighten after there is a significant and durable increase in inflation."
He continued: "Tightening before the economy has reached genuine full-employment is not just a mistake, it’s a regressive mistake that would hurt the most vulnerable workers—low-wage earners and workers from communities of color—the most."
However, Reuters reports that "the central bank maintained its bias toward a rate hike sometime this year, while lowering its long-term outlook for the economy."
Which means that pro-worker organizations, which have largely opposed a rate increase that they say would slow the economy and stifle wage growth, will have to keep up the fight.
"We applaud Chair Yellen and the Federal Reserve for resisting the pressure being put on them to intentionally slow down the economy," said Ady Barkan, campaign director for the Fed Up coalition, which rallied outside the Federal Reserve on Thursday.
"Weak wage growth proves that the labor market is still very far from full employment," Barkan continued. "And with inflation still below the Fed’s already low target, there is simply no reason to raise interest rates anytime soon. Across America, working families know that the economy still has not recovered. We hope that the Fed continues to look at the data and refrain from any rate hikes until we reach genuine full employment for all, particularly for the Black and Latino communities who are being left behind in this so-called recovery."
Earlier...
Progressives are cautioning the U.S. Federal Reserve against slowing the economy by raising interest rates "prematurely"—a decision the Fed will announce Thursday.
The U.S. central bank will issue its highly anticipated short-term interest rate decision following a two-day policy meeting, with a 2 pm news conference led by Fed Chair Janet Yellen.
As CBS Moneywatch notes, "[t]he decision affects everything from the returns people get on their bank deposits to how much consumers and employers pay for credit cards, mortgages, small business loans, and student debt." That's because a higher rate makes it more expensive for individuals and businesses to borrow, with rising bank lending rates shrinking the nation's money supply and pushing up rates for mortgages, credit cards, and other loans.
Just before the announcement, the advocates, economists, and workers of the Fed Up coalition will be joined by Rep. John Conyers (D-Mich.) at a rally outside the Fed, calling on the central bank to keep interest rates low to allow for more jobs and higher wages.
"The point of raising rates is to rein in an overheating economy that is threatening to push inflation outside the Fed’s comfort zone," explained Josh Bivens of the Economic Policy Institute in the Wall Street Journal on Wednesday. "But inflation has been running below the Fed’s target for years—and its recent moves have been down, not up."
Furthermore, wrote economist Joseph Stiglitz at the Guardian earlier this month: "If the Fed focuses excessively on inflation, it worsens inequality, which in turn worsens overall economic performance. Wages falter during recessions; if the Fed then raises interest rates every time there is a sign of wage growth, workers’ share will be ratcheted down—never recovering what was lost in the downturn."
Progressive activists opposed to an interest rate hike overwhelmed the Fed's public comment system on Monday in a last-minute effort to sway the central bank. Raising the rate, they said, would be catastrophic for working families, particularly in communities of color that are still struggling. The Fed Up campaign, which includes groups like the Center for Popular Democracy, Economic Policy Institute, and CREDO Action, say the central bank "privileges the voices and needs of corporate elites rather than those of America's working families."
"A higher interest rate means that fewer jobs will be created, and that the wages of workers at the bottom will remain too low to live on," wrote Rod Adams, a member of Neighborhoods Organizing for Change in Minneapolis, in an op-ed published Wednesdayat Common Dreams. "That’s because when the Fed raises rates, they are deliberately trying to slow down the economy. They’re saying that there are too many jobs and wages are too high. They’re saying that the economy is exactly where it should be, that people like me are exactly where we should be."
However, at this point, "many observers believe the Fed will not raise rates this week," analyst Richard Eskow wrote on Wednesday.
"The Fed is really the central bank of the world. If the Fed raise rates a little bit, it will have an impact all over the world, particularly in emerging markets," billionaire private equity professional David Rubenstein told CNBC's "Squawk Box" on Thursday.
"I think the Fed is sensitive to that," Rubenstein said, "and I think therefore the Fed is likely to wait for another month or two to get additional data and probably telegraph a little bit better than it has now that it's about ready to do it at a particular time."
Meanwhile, global markets are fluctuating wildly in anticipation of Yellen's announcement and subsequent news conference.
But as Eskow noted, Thursday's real surprise "is that there’s any question at all what [the Fed] will do. That suggests that our economic debate is not yet grounded in economic reality, at least as most Americans experience it."
While the Guardian is providing live updates on the Fed's decision, others are making comment under hashtags that reflect the unbalanced economic recovery:
Source: CommonDreams
Donald Trump isn't crazy to attack the Fed
Today, as the Federal Reserve meets to set monetary policy, it will also be bracing for another round of attacks from Donald Trump. In one of the many twists of this strange election season, Trump...
Today, as the Federal Reserve meets to set monetary policy, it will also be bracing for another round of attacks from Donald Trump. In one of the many twists of this strange election season, Trump has gone straight after Fed chairwoman Janet Yellen, saying she should be “ashamed” of keeping interest rates low, and accusing the Fed of creating a “false economy” and doing “political things.” If the Fed declines to raise rates today, as is expected, he will likely attack the central bank yet again.
The implication of Trump’s attacks is that the Fed is just another institution rigged against Trump: that Yellen is keeping rates artificially low to help the economy, which helps the Democrats look better and thus helps his opponent, Hillary Clinton.
Economists, and a lot of political observers, have been horrified by Trump’s direct attacks: What seems normal for the pugnacious outsider candidate is a major violation of American political norms. Politicians aren’t supposed to push the Fed one way or the other; it's a point of pride for the Fed, and for the nation overall, that the central bank sets policy independent of political pressure. Economists credit central bank independence as one of the great economic success stories of the 20th century, paving the way for lower inflation and stronger growth.
But how far off is he, really? It's true that the Republican nominee is violating tradition: critiquing individual policy decisions shows that he doesn't respect the line between politics and monetary policy. And there’s an implicit threat that could genuinely damage the Fed’s autonomy: He’s signaling that Fed leaders would be on notice in a Trump administration, and could pay a price for making decisions he didn't like.
But the line between politics and the Fed is far blurrier than the conventional wisdom would have it—and politicians before Trump have crossed it in much more serious ways. Moreover, buried within Trump’s comments is a kernel of truth: The Federal Reserve is, by definition, not independent. Unlike the Supreme Court, the central bank is a creation of Congress and is accountable to lawmakers on Capitol Hill. It can be changed—or abolished—by Congress as well. And to pretend it's not—to treat the Fed as an entity totally removed from American politics—also leaves us powerless to talk about the ways it might be improved.
It's important to point out that Trump's immediate accusations are almost certainly wrong: Economists across the political spectrum reject Trump’s claims that Yellen is declining to raise interest rates to improve Clinton’s election odds. Yellen, who has also firmly rejected Trump’s claims, does not set monetary policy alone; it’s set by the 12 members of the Federal Open Markets Committee. (Currently, it has just ten members.) That means no individual member, or even small group of members, can tip the scales to benefit a certain candidate. And any collusion would also be difficult to hide: Transcripts of FOMC meetings are released publicly (though on a five-year delay), and Yellen testifies before Congress four times a year.
“The fact that I don’t happen to agree with the conduct of policy doesn’t mean that they are being political,” said Glenn Hubbard, the dean of Columbia Business School and former top economist to President George W. Bush, who believes rates should rise faster. “I think that’s very unfortunate.”
A real example of political interference with monetary policy occurred in the early 1970s. Taped recordings of Richard Nixon provide clear evidence that Nixon pressured then-Fed Chair Arthur Burns to adopt expansionary monetary policies to improve his reelection chances. For instance, before Burns was confirmed by Congress, Nixon told him: “I know there’s the myth of the autonomous Fed ... and when you go up for confirmation some senator may ask you about your friendship with the president. Appearances are going to be important, so you can call [Nixon economic advisor John] Ehrlichman to get messages to me, and he’ll call you.” Nixon met with Burns frequently and tacitly pressured the chairman to keep policy loose. The FOMC transcripts indicate that many Fed members had doubts about the policy decisions but voted for them anyways.
Trump’s criticism of the Fed on the campaign trail doesn’t approach Nixon’s actual interference in monetary policy from the White house. But it does raise the broader question of what constitutes "political interference" in the Fed, and what constitutes legitimate criticism. One key distinction: Nixon used his presidential powers to influence Burns, while Trump currently has no such power over Yellen. But Trump, if elected, will also nominate the next Fed chair. That inherently means his criticisms of the central bank veer closer to political interference than critiques from academics like Hubbard.
“The line is blurry,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics who has worked at the Fed intermittently for the past 30 years.
On substance, what constitutes a "political" attack versus a policy criticism isn't immediately clear: Trump’s comments on the Fed often are substantive, such as when he said the Fed’s policy has created “a big, fat, ugly bubble.” But given his penchant for changing positions on the institution—he first said he’d retain Yellen before saying he’d replace her, for instance—many economists have concluded that Trump’s motives are concerned more with his own advantage than any serious policy beliefs.
To some experts, the threat posed by "political" attacks on the Fed has always been overblown. “I don’t get as worked up as some people to do about what politicians say,” Gagnon said. “They are allowed to have their opinions. If they think the Fed should do something differently, they can say it.”
The long tradition of deference to the Fed’s policy independence can even pose a risk: It creates an environment in which any critique of the Fed is seen as out of line, including the idea of reforming how it works. "The Federal Reserve is a crucial public agency, so there are lots of important questions—including the selection of its leaders, the determination of their priorities, and the specific strategy that they're following—that should all be open to public discourse," said Andrew Levin, an economist at Dartmouth who spent two decades working at the Fed, including as a top advisor to Yellen and her predecessor, Ben Bernanke.
Levin has been part of a movement that has put a few cracks in the protective shield around the Fed this year. Earlier this year, he published a set of recommendations for reforming the Fed in conjunction with the Center for Popular Democracy’s Fed Up campaign; the goal is to make the Fed's board members—currently 83 percent white, nearly three-quarters male and nearly 40 percent from financial institutions —more representative of the American public. Although it hasn’t received as much attention as Trump’s attacks on the Fed, Hillary Clinton also quietly criticized the central bank when her campaign said she supported such reforms.
To Ady Barkan, the head of the Fed Up campaign, these efforts do not constitute an unacceptable interference with the Fed’s independence, and neither do Trump’s comments. The Fed’s independence, he said, comes from its structure; its leaders are appointed, not elected, for long terms, which inherently insulates the central bank from political pressure. The Fed must still be accountable to the public though, and one way policymakers fulfill that responsibility is through public comments. For that reason, Barkan added, monetary policy decisions “are appropriate topics for political debate.”
“The main thing about Trump’s comments is that they show real ignorance about how the Fed works,” he said. “I don’t object to the idea that Trump or Hillary would object to what the Fed is doing.”
By Danny Vinik
Source
¿A qué se exponen los dreamers arrestados por desobediencia civil en las protestas por DACA?
¿A qué se exponen los dreamers arrestados por desobediencia civil en las protestas por DACA?
“Aguilera fue una de cerca de 80 personas que fueron arrestadas el pasado lunes por bloquear las calles alrededor del Congreso, en una gran manifestación para pedir protección permanente para los...
“Aguilera fue una de cerca de 80 personas que fueron arrestadas el pasado lunes por bloquear las calles alrededor del Congreso, en una gran manifestación para pedir protección permanente para los jóvenes indocumentados del país. Unas 900 personas participaron del evento, según cifras dadas por los grupos que la organizaron, entre ellas el Center for Popular Democracy (CPD). "Muchas veces los consejeros legales les recomiendan que no tomen ese riesgo si tienen DACA. Pero muchas veces ellos dicen, ‘Entiendo los riesgos y estoy tomando esta decisión’", asegura Hilary Klein, quien maneja los programas de justicia para inmigrantes del CPD. "Creo que es un ejemplo de cómo los dreamers en esta batalla han liderado el camino con su valentía y su dignidad", agregó.”
Lea el artículo completo aquí.
Outside Clout in Final Report?
Times Union - August 10, 2014, by Casey Seiler - Between its draft and final versions, a report by...
Times Union - August 10, 2014, by Casey Seiler - Between its draft and final versions, a report by SUNY's Nelson A. Rockefeller Institute of Government on New York's controversial Scaffold Law incorporated changes that tended to increase its estimates of the law's cost and impact.
Some of the changes echoed suggestions made to researchers by the leader of an anti-Scaffold Law organization that paid $82,000 to fund the report — sponsorship that has led critics to attack the study as advocacy in the guise of research. Its authors, however, insist the changes reflect nothing more than their own good-faith efforts to clarify the analysis.
The Scaffold Law, which places "absolute liability" on employers for gravity-related workplace injuries, is supported by labor unions but opposed by business groups that claim it needlessly drives up construction costs. Opponents would like to see New York follow other states by adopting a "comparative negligence" standard that would make workers proportionately responsible when their actions contribute to an accident.
The Rockefeller Institute report was funded by the Lawsuit Reform Alliance, a leading opponent of the law, through its research arm, the New York Civil Justice Institute. The study, made public in February, drew initial controversy for a statistical analysis that concluded construction injuries in Illinois dropped after the state repealed its version of the Scaffold Law in 1995. That finding was highlighted by the law's opponents, and harshly criticized by labor groups such as the Center for Popular Democracy.
The director of the Albany-based Rockefeller Institute, Thomas Gais, subsequently backed away from that chapter, citing what he described as flaws in the Illinois analysis — conducted by a Cornell University researcher — and the fact that the report was released to its funders before a final round of vetting had taken place.
After that dispute came to light in April, advocates on both sides filed Freedom of Information Law requests to find out if pressure had been placed on the institute, either during its research or after the report's release.
Documents produced by the Rockefeller Institute in response to the Center for Popular Democracy's FOIL included email correspondence between researchers and Tom Stebbins, the leader of the Lawsuit Reform Alliance. The exchanges, described last month by the Times Union, included a July 2013 email containing two pages of Stebbins' suggested edits offered in response to a draft version of the report. While many of his suggested changes were merely typographical, others went to the substance of the report.
The institute initially refused to release the draft report, but produced it last week on the advice of SUNY's FOIL officer. Side-by-side comparisons of the two reports show that in several instances changes were made that addressed issues raised by Stebbins.
The contract between the institute and the LRA required the researchers to communicate regularly with their funders as the report progressed. In an interview last week, Stebbins said his suggestions were nothing more than an effort "to get the complete picture" of the costs of Scaffold Law.
The second section of the report, prepared by lead researcher Michael Hattery, attempted to assess the public sector costs and impacts imposed by Scaffold Law, including the annual average price of Scaffold Law-related injury awards for public projects. In the draft, researchers found that sum by taking total spending on state and local capital projects (not including public authorities) and applying the average percentage that the Metropolitan Transportation Authority reported spending for labor law injury award costs. (Because the MTA uses what's essentially an in-house insurance entity, it offered the researchers rich data on insurance costs, claim awards and construction value.)
In the draft version of the report, the formula estimates the cost of gravity-related claims costs by using half of the MTA's fraction (0.3 percent of total construction value) to estimate awards in urban areas and a quarter of the MTA average (0.15 percent) for non-urban awards. Using those multipliers, the average cost added up to $28.3 million for 2007-2011.
"Why do you use half of the MTA average .3%," Stebbins asked the researchers in his notes on the draft. He added that it seemed "very inconsistent" with the industry's estimate that Scaffold Law adds at least 4 percent to the cost of any public construction project.
"How can we reconcile?" he wrote.
Stebbins also pointed the authors to data available from the New York City School Construction Authority, which has in recent years buckled under escalating insurance costs for its projects.
The $28.3 million figure, he wrote, "does not include additional insurance costs, which is likely the driver of the 4% estimate. Any thoughts on getting to that number? ... Perhaps we could have an MTA estimate for payouts and an SCA estimate for insurance. That may help reconcile the two figures."
The final report uses calculations that doubled the potential claims costs.
A corrected version of the draft's calculation ($30.2 million) is offered as a "lower bound" for average annual injury awards, but the report provides a new "upper bound" of $60.5 million obtained by employing the full MTA average (0.6 percent) for urban projects and half of that fraction (0.3 percent) for non-urban work.
In a response to the Times Union's emailed questions last week, Hattery said that the injury award cost figure was always intended as "a very rough estimate" due to a lack of specific data.
"After reflection — after the first draft — we chose to use a range rather than a single point estimate," he said. "This is often done so that users and readers of the report do not overvalue the 'precision' of a single number when it is based on a significant set of assumptions."
The same chapter of the draft includes a two-page case study on the construction of the Lake Champlain Bridge, in which those interviewed — including the chief engineers on the New York and Vermont sides of the project, Vermont's attorney general, and the contractor's project engineer and risk control manager — said Scaffold Law had only marginal impact on the structure's price tag.
In his edits, Stebbins recommended scrapping the case study: "As discussed, suggest we remove this section unless we can get someone to talk."
"I felt that no one they interviewed knew what Scaffold Law was and how it affected the cost of construction," Stebbins said last week. " ... We were not able to get people who understood what the costs were."
The final report jettisoned the Champlain Bridge analysis.
Hattery said the case study was dropped because it failed to provide a contrast between insurance costs in the two states. Because New York was the principle partner in the bridge project, he said, "there was no contrast to compare in the execution of the project ... nor were there any fall-from-height claims to review and describe, to our knowledge."
In its place, a new case study was added that examined Scaffold Law's impacts on the School Construction Authority, and described the $1.1 million settlement of an accident claim that ended up costing half of the construction value of the project where the injury occurred.
Hattery said the SCA analysis was included because of the researchers' desire to offer "at least one specific Scaffold case in a higher-density urban environment. ... The case was completed later, in part, because it required a longer time frame for access to personnel, data, etc."
Stebbins said it would have been irresponsible for researchers to not have addressed the SCA in the analysis.
The final report was the centerpiece of February's annual Scaffold Law reform lobby day at the Capitol. The Lawsuit Reform Alliance touted its release with a news statement: "With the study in hand," it concluded, "Scaffold Law reform advocates look for positive traction in the legislature this year."
Instead, the session ended with no action taken on Scaffold Law.
Josie Duffy of the Center for Popular Democracy called on the Rockefeller Institute to release all the drafts of the disputed report.
"The public deserves a full accounting of SUNY's role in helping business groups attack worker safety laws," she said.
Source.
D-FW activists travel to annual Fed summit in Jackson Hole, Wyo., to spread their message
Lemlem Berhe is one of a handful of activists from the Dallas-Fort Worth area visiting Jackson Hole, Wyo., in hopes of getting their message heard. That message: Raising interest rates now would...
Lemlem Berhe is one of a handful of activists from the Dallas-Fort Worth area visiting Jackson Hole, Wyo., in hopes of getting their message heard. That message: Raising interest rates now would stunt wage growth and hurt working families and communities of color.
“Fed officials think the economy has recovered enough to raise interest rates, slowing down job and business growth, but working families like mine in Dallas know otherwise,” Berhe said. “That’s why we’re in Wyoming this week, to ask them to prioritize job growth and higher wages.”
As part of the national FedUp Coalition, local members of the Texas Organizing Project and the Workers Defense Project are in Wyoming for the Federal Reserve’s annual summit, where the world’s most powerful central bankers discuss economic policies that affect people everywhere. The top U.S. banker — Fed chairwoman Janet Yellen — is not attending the event, which began Thursday and ends Sunday.
This is the first time anyone from either group has traveled to the Fed’s annual summit in Jackson Hole.
This year’s Jackson Hole Economic Policy Symposium comes as the Fed faces a difficult decision on when to start raising interest rates, rising debates on income inequality and wages, and worries about slowing Asian economies, most notably in China.
With the U.S. unemployment rate at 5.3 percent in July, some say it’s time to raise interest rates, which have been near zero for nearly seven years. Recently, some economists and one Fed banker have called for a delay given concerns about slower global economies.
On Friday, the organizing groups in Jackson Hole held a public demonstration and teach-ins on topics such as full employment and the selection process for regional bank presidents, with renowned Columbia University economist Joseph Stiglitz. Today, he wrote an op-ed column in the Los Angeles Times about why the Fed should not raise interest rates.
In addition, the Texas Organizing Project also made a second request in a video posted to its Facebook page and in a tweet to meet with Robert Steven Kaplan, the newly named president of the Federal Reserve Bank of Dallas, soon after he starts his new job on Sept. 8. Kaplan is attending the summit.
Kaplan will replace Richard Fisher, who retired in March after a decade leading the Dallas Fed. Last week, immediately after the regional bank named Kaplan, the Texas Organizing Project suggested he meet with some of its members in Dallas once he arrives.
Earlier this year, the group and the FedUp Coalition asked to meet with Dallas Fed board members to seek more openness and participation in the search process for Fisher’s replacement. Their request was denied, but a meeting was arranged with two bank officials. I wrote about it.
FedUp claims that full employment is when the nation’s unemployment rate is 4 percent or lower. If that was the case this year, the Dallas economy would be $19.9 billion stronger at $476.8 billion, it would have 204,300 more workers employed, which would mean 162,500 fewer people would live in poverty.
In addition to Berhe, two other Texas Organizing Project representatives in Jackson Hole are from Dallas: member Nayeli Ruiz, 21, and community organizer Kenia Castro.
The Austin-based Workers Defense Project has two D-FW representatives in Jackson Hole: AdanArostegui andElliott Navarro.
“We believe that our members should be involved and learn what the Fed does,” said Diana Ramirez, a community organizer for the Workers Defense Project in Dallas. “No one really knows.”
Source: Dallas Morning News
Fed’s Mester Calls Case for Gradual Rate Increases ‘Compelling’
Federal Reserve Bank of Cleveland President Loretta Mester said there’s a “compelling” case for gradually raising interest rates, with the U.S. economy approaching the central bank’s targets on...
Federal Reserve Bank of Cleveland President Loretta Mester said there’s a “compelling” case for gradually raising interest rates, with the U.S. economy approaching the central bank’s targets on employment and inflation.
“Policy has to be forward-looking,” Mester told reporters Thursday following a speech in Lexington, Kentucky. “If you have a forecast and inflation is moving up to your target and you’re at full employment, then it seems like a gradual increase from a very low interest rate is pretty compelling to me. Pre-emptiveness is important.”
She declined to say precisely when she believed rate increases would be necessary.
The policy-making Federal Open Market Committee will meet Sept. 20-21 to decide whether to lift the target range for its benchmark rate. Fed Chair Janet Yellen said last week the case for an increase had “strengthened in recent months.”
Investors see a roughly one-in-four probability that the Fed will act later this month, based on pricing in federal futures funds contracts.
Too Low for Too Long
Mester, who votes this year on the FOMC, said the Fed must take seriously the risk to financial stability caused by keeping rates low for too long, although she said she didn’t think the central bank was currently “behind the curve.” Nor did she see signs of financial instability already in the economy.
In her speech, Mester rejected the argument made to a number of Fed officials last week by a coalition of community activists that continued low interest rates are needed to extend the benefits of economic recovery to disadvantaged minorities.
“I do not believe that at this point in the business cycle, the current very low level of interest rates is an effective solution to these longer-run issues,” she said.
Eleven Fed governors and regional presidents, including Vice Chairman Stanley Fischer, met with organizers from the Center for Popular Democracy’s “Fed Up” campaign on the sidelines of the annual policy retreat in Jackson Hole, Wyoming, hosted by the Kansas City Fed.
The U.S. central bank has kept rates on hold through five meetings this year following a rate hike in December that was the first in nearly a decade.
By Christopher Condon
Source
Do Hedge Funds Make Good Neighbors?
Nearly eight years after the start of the global financial crisis, hedge funds and private equity firms have...
Nearly eight years after the start of the global financial crisis, hedge funds and private equity firms have found yet another way to make big profits: distressed housing assets. Often, the very same corporate actors that precipitated the housing crash in the first place are buying and selling off delinquent mortgages and vacant houses that are a product of the crash.
Together, these Wall Street entities have raised over $20 billion to buy the notes for as many as 200,000 homes in the United States. The newly consolidated single-family rental market is a lucrative business. A 2014 study estimated that the four largest holders of these assets have seen as much as a 23 percent rate of return on the properties they purchased in the last three years.Meanwhile, low-income communities of color across the country have suffered. Millions of Americans lost all the equity in their homes or experienced the hardship of foreclosure during the housing crisis and have not recovered from losing their greatest source of wealth.
This new report, co-authored by CPD and the ACCE Institute, reviews the track record of the HUD and FHFA single-family loan sale programs. It explores the troubling record of four of the top buyers of the loans, corporations who are benefitting from the way the loan sales are currently conducted.
Read the report here
In replacing Dudley, NY Fed aims to avoid political pitfalls
Unions and groups advocating for retirees, teachers, housing, and workers' benefits are among those visiting the ornate conference rooms of the Federal Reserve Bank of New York to lobby for a less...
Unions and groups advocating for retirees, teachers, housing, and workers' benefits are among those visiting the ornate conference rooms of the Federal Reserve Bank of New York to lobby for a less conventional candidate to serve as its next president.
New York Fed directors leading the search for a successor to chief William Dudley, seen as the second most influential policymaker at the U.S. central bank, invited the guests to last week's meeting to seek their advice. According to attendees and others familiar with the search, the directors are close to a "long list" of candidates and appear set to begin formal interviews within weeks.
Read the full article here.
Hot topic of next Fed chair not on program at Jackson Hole
Hot topic of next Fed chair not on program at Jackson Hole
JACKSON HOLE, Wyo. — This year’s gathering of the world’s central bankers had a theme as lofty as the Grant Teton Mountains which loomed over their meeting place — “Fostering a Dynamic Global...
JACKSON HOLE, Wyo. — This year’s gathering of the world’s central bankers had a theme as lofty as the Grant Teton Mountains which loomed over their meeting place — “Fostering a Dynamic Global Economy.”
But while many hours were devoted to sitting in a windowless conference room dissecting the symposium’s academic papers on how to bolster lackluster global growth, one hot topic was not on the program — who will President Donald Trump nominate to be the next leader of the Federal Reserve once current Chair Janet Yellen’s four-year term is up next February.
Read the full article here.
Restaurant group preps for fight against Ariz. minimum wage boost
Restaurant group preps for fight against Ariz. minimum wage boost
PHOENIX -- The head of the state's restaurant industry is gearing up to convince voters to quash an initiative that would boost the state's minimum wage to $12 an hour by 2020.
Steve Chucri...
PHOENIX -- The head of the state's restaurant industry is gearing up to convince voters to quash an initiative that would boost the state's minimum wage to $12 an hour by 2020.
Steve Chucri, president of the Arizona Restaurant and Hospitality Association, said Wednesday the campaign against the measure will be based on showing them how much wages in Arizona have gone up since voters enacted the first minimum wage law in 2006.
Prior to that, Arizona employers had to pay only what was mandated in federal law, which was $5.15 an hour. The ballot measure pushed that to $6.75, with a requirement for annual adjustments based on inflation.
That has pushed the current state minimum to $8.05.
"The public will say, 'Enough's enough,'" Chucri said. And he said polls done for the industry in the spring show people believe that $12 is "too much."
The comments come as Arizonans for Fair Wages and Healthy Families is planning to submit its petitions for the $12 wage plus required paid leave today to the secretary of state's office.
Spokeswoman Suzanne Wilson said organizers have collected more than 250,000 signatures. That is 100,000 more than are needed to qualify for the ballot.
But Chucri said he's not convinced his organization will even have to fight the battle in November. He questioned whether petition circulators, both volunteer and paid, were careful to ensure that those who signed are qualified to vote in the state.
Arizona has become the latest battleground over what can be considered a living wage.
Several states have enacted their own laws, often through legislation. Most recently, California Gov. Jerry Brown signed a measure that will take that state's minimum, now $10 an hour, up to $15 by 2022 for large employers; small companies will get another year to comply.
Chucri said part of the campaign against the ballot measure will be to remind voters here that Arizona already has a minimum wage that's higher than what federal law requires.
And that same law requires annual revision. Chucri pointed out that has meant a boost every year except for two when the rate of inflation was too small for even a nickel more, the bare minimum adjustment.
The difference, though, is not great: That $8.05 an hour is just 80 cents more than the federal minimum.
What Chucri also faces is that $8.05, assuming it's a family's sole source of income, translates out to $16,744 a year.
For a single person, the federal government considers anything below $11,880 a year to be living in poverty. That figure is $16,020 for a family of two and $20,160 for a family of three.
That's part of what has driven similar living wage efforts elsewhere in the country. But Chucri said the idea of a $12 minimum won't sell here.
"That is too high of a wage for a place like Arizona,'' he said.
Chucri said part of the campaign against the ballot measure will be the argument that higher wages mean fewer jobs.
"Restaurateurs are going to survive,'' he said. But what they will do, Chucri said, is simply hire fewer people.
He pointed out the push toward automation already is underway.
At Panera Bread, customers place their orders through computer screens and then can pick up what they want. And even at more traditional sit-down place like Applebee's, orders can be placed through tablets at each table.
Chucri conceded, though, that is happening even in places where the minimum wage is not going up. What approval of this measure would do, he said, is hasten the day.
"I don't think it's a matter of 'if,' '' Chucri said. "It's a matter of 'when.' ''
He would not say how much his group and other business organizations intend to spend to kill the measure.
The most recent campaign finance reports show campaign organizers have raised more than $342,000. Virtually all of that comes from Living United for Change in Arizona. But Tomas Robles, former executive director of LUCHA, said much of that is from a grant to the organization from The Center for Popular Democracy, an organization involved in efforts to establish a $15 minimum wage nationally.
Another $25,000 came from The Fairness Project which has its own efforts to push higher minimum wages on a state-by-state basis.
By Howard Fischer
Source
6 days ago
6 days ago