Hidden Gems in the Mortgage Deal

AP Photo/Paul Sakuma

In the end, as at the start, Thursday’s deal between five big banks, the Department of Justice, and the attorneys general of 49 states came down to New York, the center of mortgage securitization and securities misrepresentation, and California, the center of mortgage mis-origination. Those states’ attorneys general—New York’s Eric Schneiderman and California’s Kamala Harris, both progressive Democrats elected in 2010—weren’t about the give the banks a pass. Which is why it wasn’t until two a.m. Thursday that the deal was finalized.

The Mortgage Deal with the Devil

(AP Photo/David J. Phillip)

The long-awaited mortgage deal between the federal government, 49 state attorneys general, and five big banks that was announced Thursday is pretty thin gruel, but it could have been a lot worse.

Under the deal, the banks will provide relief to homeowners in a deal variously described as ranging from $25 billion to more than $40 billion. But a look at the fine print suggests that only about $5 billion cash will actually change hands. Some $1.5 billion will go directly to homeowners who went through foreclosure, with each receiving about $2,000. Other cash will go to states to help distressed homeowners.

Greece's Desperate Measures

A budget agreement reduces the minimum wage and cuts pensions.

(AP Photo/Thanassis Stavrakis)

After days of intense negotiations during which its membership in the eurozone seemed to hang by a thread, Greece finally reached an agreement today on the measures that will accompany the new loan package from its European partners and the International Monetary Fund.

A Homeowner Bailout

Today's Balance Sheet: Banks are finally being forced to pay for their bad form during the housing bubble.

(Flickr/Galt Museum)

After a year of talks and little action, government officials have worked out a potential $26 billion settlement with the nation's top five banks, the New York Times reported. The agreement could provide relief for up to two million Americans who have had their homes foreclosed on since September 2008; it totals up to $1,500 to $2,000 per borrower. The five banks involved—Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase, and Wells Fargo—collectively handle 27 million mortgages. Although this move is a good way to help hurting homeowners, bigger problems with the process need fixing. “If you don’t do something to help the foreclosure process, it’s not going to help the housing market,” said Christopher J.

Bernanke Tries to Predict the Future

Today's Balance Sheet: The recovery is still moving at a snail's pace, but campaigns aren't doing too bad at raking in cash.

Ben Bernanke is second only to Barack Obama when it comes to being a Republican punching bag for the economic downturn, but the Federal Reserve chairman spent some time explaining his decisions and expectations for the coming months during a session with the Senate Budget Committee yesterday. Bernanke said that his biggest worry was the federal deficit, which he said is on pace to become unsustainable in the next 15 to 20 years.

Long Time, No See Payroll Tax

Today's Balance Sheet: It's the most wonderful time of the year, the payroll tax cut extension deadline, again.

The payroll tax cut extension passed by tooth and nail at the end of 2011 expires at the end of February, and this month's battle to work out the re-extension's logistics looks like it will be just as painful. A 20-member conference committee is hammering out the details, with three hearings scheduled for this week, including one this morning. The committee has less than three weeks to craft a deal and get it to Congress for passage before the President's Day recess.

Mitt Romney: Liberal Economist

(Flickr/Gage Skidmore)

Say you’re a presidential candidate shifting to the general election after your place as the party's nominee seems firmly settled. The entire logic of your candidacy has been built on business experience as the answer to an economic downturn, and you plan to assail the community-organizer president for not understanding how the private sector works. A high rate of unemployment is your friend. Voters will be dissatisfied enough with the general state of their lives that you should easily waltz past the incumbent president without having to do the tricky work of laying out your own vision for the country. Except, after a year of laying the groundwork for this sort of campaign, the economy slowly begins to recover. Things are certainly not in good shape, but the trend lines are beginning to move in the right direction and people are once again hopeful.

Obama's Mixed Signals

Today's Balance Sheet: Obama needs a good nine months more of good news if he wants to win reelection. 

Before all eyes in the country turned to football last night, President Barack Obama told Matt Lauer in his annual pre-Super Bowl interview that he "deserve[s] a second term.” He went on: “We’ve made progress.

+243,000 Jobs in January

Today's Balance Sheet: January's jobs numbers came out today, and they were way better than anyone expected. 

The Bureau of Labor Statistics released January's jobs numbers this morning, and the economy added 243,000 jobs last month. Unemployment dropped from 8.5 percent to 8.3 percent—the lowest the rate has been in nearly three years. Forecasts had predicted that the economy would only pick up 150,000 jobs, so this morning's news is a unexpectedly good.

Help Wanted Again

AP Photo/Amy Sancetta

The latest jobs report was a welcome surprise. Jobs increased in January by 243,000, cutting the unemployment rate to 8.3 percent.

The question remains: Is this a blip, or has the economy turned a corner?

Earlier in the week, the Congressional Budget Report put out a more pessimistic report, showing unemployment rising to 8.9 percent by the final quarter of this year (which happens to include Election Day), and peaking at 9.2 percent in early 2013.

According to the CBO, we won’t return to pre-recession employment levels until 2019.

Why the grim picture? CBO assumes more budget cutting, as the Bush tax cuts sunset, the deficit keeps declining, and there is no further offsetting stimulus.

A Blockbuster Jobs Report

AP Photo/Madelyn Ruggiero

Earlier this morning, Nate Silver argued that 150,000 was President Obama’s “magic number” for job growth, in part, because 150,000 is the dividing line between a bad report—where the economy isn’t growing fast enough to keep up with population—and a decent one, where it is. If the economy could generate that many jobs on a monthly basis, then Obama is on OK footing for the election in November.

Facebook and Wall Street: It's Complicated

Today's Balance Sheet: Mark Zuckerberg "likes" Morgan Stanley.

Facebook filed for its initial public offering yesterday. The internet behemoth could be valued between $75 billion and $100 billion, making its IPO one of the biggest stock-market debuts in U.S. history and netting founder Mark Zuckerburg up to $28 billion. While Facebook is a company defined by its users, the company decided not to follow Google's example of holding a dutch auction.

It Pays to Be Rich


There's not a single state in the country in which the rich pay a higher percentage of their income in state (though not federal) taxes than the poor. According to a state-by-state scorecard from the Corporation for Enterprise Development (CFED), only Washington, D.C. has an equal tax burden for its wealthiest and poorest citizens.

Romney Wins a Double Header

Mitt Romney, who had a resounding victory in last night's Florida primary, also wins the unofficial award for most frightening super PAC. A Federal Election Commission release Tuesday revealed that pro-Romney super PAC "Restoring Our Future" raised over $30 million last year and spent $14 million on campaign ads for the first few crucial primaries. By way of comparison, the super PACs of all the other GOP candidates spent a combined $12 million, and the candidates' campaigns have spent a total of $20.7 million.

Austerity Über Alles

Germany's insistence on belt-tightening during the recession stems from a fear of history repeating itself.

BERLIN, GERMANY—Score another one for Angie.

Last night in Brussels, the leaders of 25 of the 27 European Union countries agreed to become more like Germany. Not in so many words, of course. There was talk of spurring growth, creating jobs, and liberalizing trade. But at the heart of the pact was the so-called debt brake.